The stakes were high for David and Karen, who were dealing with a child’s ill health and, as a result, extreme financial and emotional stress.

David and Karen were facing a number of difficulties in their life. First, their second child had fallen seriously ill. The family was regularly flying interstate to a Melbourne hospital for the best treatment available, leading them to require time off work. Ultimately, the situation began to take a toll on their finances and they were struggling to juggle their mortgage and three overdrawn credit facilities.

Not surprisingly, it was also taking its toll emotionally and Karen developed depression, which led to further time away from work. That’s when their friends referred them to an MFAA accredited finance broker.

“David and Karen were robbing Peter to pay Paul. Not only were they staring down the barrel of losing their home, but they were battling the very challenging emotional strains of caring for an unwell child and a partner with depression,” their finance broker recalls.

In such extreme circumstances, the adviser employed the services of a debt collector for the first time. While the fees were hefty ($550 was payable on each refinanced facility, as well as 15 per cent of the total amount saved), it was imperative that the financial stress on the family was resolved as quickly as possible.

“It was a non-conforming situation, so I decided the debt collector was the simplest step to take,” says the adviser.” He negotiated their collective credit card debt down from $48,000 to one payment of $15,000. I then arranged for a property valuation to be done and started to work backwards from there.”

The finance broker was also able to refinance David and Karen’s home loan, negotiating far more manageable repayments that avoided them losing their home.

“This course of action not only enabled David and Karen to return to full-time work, but also saved their family home,” says the adviser. “They were faced with losing their house and their health, but after working together with a lender and debt negotiator, we were able to turn their lives around.”

David and Karen’s child has recovered and the family is now looking forward to what the future holds.

Find a Trusted Mortgage Broker whose expertise can help you find a lender and loan suited to your needs.

** Names have been changed to protect clients’ privacy.

Trusted Mortgage Broker has a great range of mortgage calculators to help with all those tough decisions that come with finding the right loan. Have a look at our calculators on our website to help you further. www.trustedmortgagebroker.com.au/calculators/
Do you need more Information?

• Ask A Trusted Mortgage Broker
• Receive Quotes and Comparisons
• Benefit From Quality Advice

Getting your mortgage application together can require quite a bit of financial scrutiny. In order to figure out your serviceability, your potential lender will look deeply into your finances.

It’s a no brainer to take your credit card debts into consideration when applying for a mortgage. But what many people do not realise is that high credit card limits will not bode well for a home loan application.

If you have a high credit limit, you also have a high debt risk in the eyes of your lender. As the logic goes, there is no stopping you from boosting your credit card limit the day after your loan is approved.

“We have to take account of 3% of the total credit card limit, regardless of what the applicant owes,” says Homeloans Ltd BDM Sally Carmichael.

“If they had a $10,000 limit but they only owe $1000, we still have to assess $300 a month and that comes directly out of their liability. It does make quite a difference.”

Even if you haven’t put a cent on your credit card for the past five years, a high credit limit will negatively affect your serviceability. The best thing you can do is lower your credit limit, or cancel that credit account entirely.

“You need to pay out your credit cards and avoid having any other debt,” says Carmichael. “You need to be able to use your full amount of income.”

For those that have to pay off their credit account before dreaming of cancelling their liability, it is imperative that you pay your debt on time, according to your minimum repayments.

Trusted Mortgage Broker has a great range of mortgage calculators to help with all those tough decisions that come with finding the right loan. Have a look at our calculators on our website to help you further. www.trustedmortgagebroker.com.au/calculators/

Do you need more Information?

• Ask A Trusted Mortgage Broker
• Receive Quotes and Comparisons
• Benefit From Quality Advice

With the RBA setting the official cash rate at all-time lows, it’s a good time to work out how this impacts the interest rate on your home loan and whether you are getting a good deal or not.

When the interest rate on your home loan fluctuates, it can feel as though you don’t have control of your debt. Despite being frustrating, interest rate changes are a part of every loan’s lifespan and warrant your consideration.

The interest rates that banks charge on their home loans are influenced by the Reserve Bank of Australia’s (RBA) cash rate.

The cash rate is reviewed by the RBA on a monthly basis in order to safeguard Australia’s economic stability. The cash rate is the rate charged on loans made between the RBA and your lender. This, in turn, has a very strong impact on the interest rates your lender charges you.

“The RBA supports the banks with liquidity facility,” explains Advantedge General Manager Brett Halliwell. “The RBA is a bank to the banks. The cash rate is effectively the rate at which the RBA will lend to the banks, and what the banks effectively use as a reference rate for other things.”

When the cash rate is changed by the RBA, lenders decide whether or not to mirror the new rate in the interest they charge their mortgagees.

This is entirely up to the lender in question and depends on the market and how the lender is performing at the time of the cash rate change.

“If you look at the mortgage market, specifically by itself, it is very competitive,” Halliwell says. – “It is about the lender trying to get the right outcome on the deposit side of the balance sheet within the context of a very, very competitive marketplace, but recognising that a reference rate has changed and, therefore, looking at where they stand.”

Some lenders choose to shift their interest rate changes higher than the RBA’s cash rate change and, in these instances, other lenders may be offering lower interest rates than the one you currently have.

Keeping track of how your lender manages cash rate changes and where that leaves you as the person paying the interest can be time consuming, and is made more difficult by fees, charges and the flexibility offered by different loan products, which all need to be weighed alongside the interest rate.

A simple way to regain control of your interest rate is to lock it in for a period, if you believe rates are not likely to fall further. Fixed rates offer less flexibility, but more certainty.

Trusted Mortgage Broker has a great range of mortgage calculators to help with all those tough decisions that come with finding the right loan. Have a look at our calculators on our website to help you further. www.trustedmortgagebroker.com.au/calculators/

Do you need more Information?

• Ask A Trusted Mortgage Broker
• Receive Quotes and Comparisons
• Benefit From Quality Advice

When was the last time you looked closely at your loan, the progress you are making on paying it off and how it compares to others in the market? Analysing your mortgage could mean savings for you, as well as the opportunity to pay it off more quickly, invest in other assets or reach financial freedom sooner.

Make smaller payments, more often

To cut the size of your payments, make more of them. This could even see you pay off your loan faster, and therefore pay less interest overall.

If you pay your mortgage monthly, consider changing to fortnightly repayments. For example, if your mortgage equates to $2400 a month, cut this in half and pay $1200 each fortnight. As well as having more manageable payments to make, by the end of the year you will have paid off $31,200 rather than $28,800.

Pay just a little bit extra

A minimum repayment is just that – for most loans there is no reason you can’t pay more, whether here and there or regularly.

By rounding up to a full number or contributing an extra $100 or even $10, you’ll significantly reduce your mortgage. It may also be worth considering putting all bonuses, tax returns and gifts into your mortgage.

Don’t decrease repayments when interest rates fall

Even if your repayments are lowered when fees and interest rates decrease, it doesn’t mean that’s all you have to pay and, by keeping your repayments at the same level when interest rates are lower, you will pay down more of the principle with each payment and make speedy progress on your loan.

Offset it

If you can, use an offset account. A mortgage offset account is linked to your loan and the interest payable on the loan from month to month is calculated by deducting what is in your offset account from your current loan. For example, if your mortgage is $500,000 and your offset account has $10,000 in it, you will only pay interest on the remaining $490,000.

An offset account will save interest while still giving you access to your savings. It also means investors can preserve the tax deductibility of the mortgage.

Find a better deal

Ultimately, your mortgage needs to suit you and your circumstances, or you will wind up paying too much. If you think your current loan no longer matches your situation, speak to your finance broker. They will be able to find the right product for you, as well as negotiating appropriate rates on it.

Of course, it is important to make sure that your lender doesn’t charge fees for extra repayments, refinancing, or any other steps you take in an attempt to save on your loan. Your finance broker will be able to provide details and make sure you have a loan that lets you pay down your balance sooner.

A Trusted Mortgage Broker has the expertise to make sure you aren’t paying too much and are in a loan that suits you.

Do you need more Information?

• Ask A Trusted Mortgage Broker
• Receive Quotes and Comparisons
• Benefit From Quality Advice

Late payments and loan defaults leave marks on a credit history that can complicate any effort to refinance or secure a loan in the future. Default can also lead to a home being repossessed and sold by the lender, so it’s very important to act quickly to avoid it.

While late bill payments and a loan in arrears can impact your credit report and lead to difficulty securing finance in the future, the worst case scenario is repossession of a property.

In the past, lenders may have taken months to start the proceedings that lead to repossession. However, according to the Financial Rights Legal Centre (FRLC), this is not the case anymore.

“Lenders work to a timetable to begin court proceedings and this can be very difficult to stop once this process has started,” the FRLC explains in its Mortgage Stress Fact Sheet.

Once a mortgagee has defaulted on a loan by failing to make repayments as agreed, they can be sent a Default Notice, which gives them 30 days to catch up on the repayments that are in arrears, as well as continuing to make any repayments that are due in the 30-day period.

“This notice will include an acceleration clause,” the FRLC explains. “This means that if the arrears are still outstanding after the 30 days has lapsed, the entire loan becomes payable.”

Thirty days after the Default Notice, the lender can take vacant possession of a property that is not occupied, or seek a court order for possession of a property that is occupied.

The key to avoiding this substantial trouble is, of course, to keep making repayments. From time to time, circumstances such as unexpected job loss or illness will impact a mortgagee’s ability to make payments and, when this happens, the key is to act quickly, as there are more options before a Default Notice is served than there are after.

“Don’t be scared,” advises the FRLC. “Lenders make repayment arrangements all the time.”

Many lenders will negotiate short-term variations to repayment schedules as long as there is a plan to get back on track, and there are circumstances in which lenders are obligated to agree to such arrangements. It is important, however, not to agree to payment terms that cannot be met.

“Make sure you think through your plan as to when you will resume making payments. Do not promise something you are not certain you can achieve or is not realistic,” warns the FRLC. “If you don’t know when things will improve, ask for an initial arrangement to be reviewed at the end of the agreed repayment arrangement.”

One of the advantages of recognising a looming problem before you get behind in repayments is that a finance broker may be able to assist you to pinpoint the source of the problem, as well as identify savings that may be available by refinancing to a lower-rate or lower-fee loan. Once there are clear signs of financial distress, this will become much more difficult.

If you are struggling to make your mortgage repayments, a Trusted Mortgage Broker may be able to help you negotiate with your lender or find a more manageable loan.

Do you need more Information?

• Ask A Trusted Mortgage Broker
• Receive Quotes and Comparisons
• Benefit From Quality Advice

When Bronwyn set out to build her dream home, luck was not on her side. In fact, it was an all-round disaster zone.

At 63 and with a couple of investment properties under her belt already, Bronwyn was ready to demolish her home and rebuild as a dream home for herself, her daughter Lisa and her daughter’s partner Rob.

She didn’t expect to run into any trouble; after all, she’d been through all the process of securing finance and purchasing property before. She visited her bank and, after a slight drama when the bank couldn’t locate the title deed to her unencumbered property, had a verbal confirmation that a loan had been approved.

She demolished her home, excited at the prospect of a fast construction and getting into the new house.

Then, the bank called. Her finance had actually been declined. To compound the problem, the demolition bill had skyrocketed when asbestos was found in the property.

Bronwyn was referred to an MFAA Approved Credit Adviser to try to sort out finance.

“She was living in a caravan on the front lawn of the daughter’s house next door at the time,” Bronwyn’s credit adviser recalls. “It was really difficult for her, $50,000 out of pocket and living in a tent and caravan on her daughter’s front lawn, and staring at her vacant block of land next door.”

Arranging the loan at that point was slightly complicated because many lenders wont look at an aged pensioner, but with the other properties as security, the loan was finally approved – formally, in writing.

The builder poured the slab on the block of land, kicking off construction, and promptly went broke.

“It just got better and better,” quips Bronwyn’s credit adviser. There was one piece of luck though: “A day before we were going to disburse the funds for the slab, we received confirmation that the builder had gone broke, so we were able to stop the transaction.”

Meanwhile, Bronwyn was still stuck next door for a few months, while her credit adviser tackled the problem of having the loan agreement amended to allow completion of construction with a new builder – with the slab having gone down, it was technically a partially constructed house.

An even bigger problem was the fact that the builder had arranged frames and windows from contractors who were also set to be out of pocket.

“We had to negotiate with the lender to bring in a new builder, and then with that new builder to utilise the contractors who already had the frames and windows,” Bronwyn’s credit adviser explains. He also got involved in the insurance tussle when the original builder went broke, liaising with a legal team when the insurer was, in his words, “bucking a bit”.

While this is more involvement than a credit adviser would usually have in the process, the credit adviser describes the chance to pitch in and solve problems as highly rewarding.

“We do usually get involved with negotiating with the builders, but not usually to the extent where we get involved with their subcontractors,” he says. “It was a fairly complex one, but it was pleasing that, when we had these obstacles come up, we were able to negotiate with all the different parties to get the desired result.”

The desired result was the completion of construction, so now Bronwyn lives in her dream home and is renting out another two investment properties in the same street. Two years on, she is looking for opportunities to expand her property portfolio to increase her rental income.

“While we are here to make a living, the part that gives you most pleasure is seeing the smiles on people’s faces when you overcome these obstacles,” her credit adviser says. “I think when you step into that void and fill the gap you’re doing a lot more than what a bank can offer, and it’s a pleasure coming to work, because you know youâ’re making a difference.”

*Names have been changed to protect clients’ privacy.

Trusted Mortgage Brokers are MFAA Approved Credit Advisers and are industry experts who are always on your side. Contact us here.

Do you need more Information?

• Ask A Trusted Mortgage Broker
• Receive Quotes and Comparisons
• Benefit From Quality Advice