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What Should You Do With Your Mortgage Rate Cut?

So this week the Reserve Bank of Australia (RBA) cut interest rates by 25 basis points to new all time lows of 2.00%. Wooohooooo!!!! This is great news for those of us with mortgages. Provided the banks pass on the full cut, it is expected that the 25bp cut would save around $45 per month on a home loan of $300,000. So the big question is what should you do with the extra cash that you will have post the cut?

  1. Spend it
    This is one option and it is certainly what the Reserve Bank (RBA) would like us all to do. The whole reason the RBA are cutting rates to put more money in our pockets so we will spend it. This helps the economy as roughly 70% of the economy is consumption – you and me spending. The more we spend (up to a certain point) the better the economy […]

By |May 5th, 2015|Mortgages|6 Comments

How To Finance Your Home Renovations

This post is brought to you by Newcastle Permanent

Renovating your home can be a fabulous way to add serious value to your home and improve your prospects at resale.  Interest rates are low and property prices are high, so renovating does appear to be an attractive investment option.  So the big question is, once you have picked out your new bathroom or kitchen, how are you going to finance it?

Here are some of the more common financing options when you don’t have the cash to pay for the renovations up front.

(1)    Take out a home equity loan or line of credit.

A line of credit or home equity loan is a loan against the value of your house but unlike a mortgage which must be used to purchase your home, a line of credit can be spent on anything, including renovations.  A line […]

By |December 5th, 2013|Mortgages|10 Comments

How Does A Line Of Credit Work?

Quite often people are offered a line of credit when they go to take out their mortgage.  But what is it?  A line of credit or home equity loan is a loan against the value of your house but unlike a mortgage which must be used to purchase your home, a line of credit can be spent on anything.  A line of credit can be spent in one hit or a little bit at a time.  Interest is calculated on the outstanding balance and you only have to pay the interest every month, that is it is an interest only loan.  Having a line of credit is a bit like having a blank cheque book against the value of your home.

Yippeee I hear you say, it sounds like fun but be cautious.  As the saying goes ‘with great freedom comes great responsibility’ and the same is definitely true of a […]

By |November 7th, 2013|Mortgages|16 Comments

How To Choose The Right Home Loan For You

Yesterday, I went to my first ever blogger event for the launch of Macquarie Bank’s new “Flyer Home Loan”.  It is a home loan where you can earn Qantas Frequent Flyer Points directly through your mortgage.  It is a sign of the times that these types of products are starting to appear.  Competition in the mortgage market is starting to increase and the players are starting to think of innovative ways to get new customers, so you can expect to see more of these types of home loans in the future.

However, as you all know, I am a big fan of the KISS principle (Keep It Simple, Stupid) and especially so when it comes to mortgages.  I believe you should get the cheapest loan you can, with the right features (free extra repayments and withdrawals or offset account or both) and pay that sucker off as fast as you can […]

By |October 17th, 2013|Mortgages|11 Comments

Should I Fix My Mortgage Rate?

How freakin fabulous would it be to know the future?  I am sure you are the same as me, I did not see coming half the things, both good and bad, that have happened to me.  No one can predict the future.   The same goes for interest rates.  The finance gurus can tell you what they think will happen with interest rates, but when it comes down to it, the reality can be quite different.  However, with interest rates in Australia at historic low levels of 2.5%, it is not an unreasonable to ask “Should I fix my mortgage rate?”   So here are some of the things you need to consider if you are thinking about fixing your mortgage rate.

The biggest benefit of fixing your mortgage rate is that it gives you certainty.  Most likely your mortgage is one of your biggest expenses, with a fixed rate you know exactly […]

By |October 3rd, 2013|Mortgages|23 Comments

How To Use An Offset Account to Pay Off Your Mortgage Faster

For those who missed part one of this series on how to pay off your mortgage faster, please click here.

Ok, now on to the second part of how to pay off your mortgage faster, and this week it is all about how to use an offset account.  Many of you probably have one of these accounts as part of your home loan package, but it never ceases to amaze me how many people don’t really understand how it all works.  Most of the time I think it is because the banks don’t want to explain it to you properly because it is not in their best interests for you to pay off your mortgage early.  They would prefer to charge you the fees for the facility and not have you use it!  So here is my attempt to explain it all […]

By |September 10th, 2013|Mortgages|55 Comments

How to Pay Off Your Mortgage Faster

Paying off your mortgage early can be a great investment.  Not only do you get the banks off your back but it frees up cash to be put towards other investments and most importantly it saves you thousands of dollars in interest.  Most people don’t know this but if you let your mortgage run for the full 30 years you will end up paying the banks almost as much in interest as it cost you to buy the house in the first place!!!  You can see why the banks make so much money!!!

In a nutshell, paying off your mortgage quickly is not rocket science, there are only two things you need to do.  Firstly, you need to find the cheapest home loan you can.  Then you need to make as many extra repayments as you can, as quickly as you can.  This two pronged approach means not only is it […]

By |August 29th, 2013|Mortgages|41 Comments