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April 2014

 

Welcome to our April Newsletter


At its April board meeting, the Reserve Bank of Australia (RBA) decided to keep the official cash rate on hold at 2.5 per cent. This is the seventh consecutive meeting where RBA Governor Glenn Stevens has announced that the cash rate will remain on hold.

In his monthly statement, Governor Stevens said once again that "On present indications, the most prudent course is likely to be a period of stability in interest rates." But despite this statement, borrowers are warned to start preparing for higher costs. Analysts are predicting that the cash rate will probably rise in the fourth quarter of this year, or early 2015. Meaning now is the time to plan ahead!

According to the RBA's biannual Financial Stability Review released in March, many Australians are doing just that and are using the low interest rate period to pay off their mortgages. Data from the report indicates that mortgage holders are on average 24 months ahead on their mortgage repayments, which places them in a strong financial position should interest rates eventually rise.

Recent data would also indicate that the low interest rates have been stimulating a property market recovery across the country. In March, the average house price rose by 2.3 per cent nationally, taking the total home price growth for the first quarter of 2014 to 3.5 per cent. On average, national home prices are up by 10.6 per cent compared to a year ago.

The pricing recovery is being led by hot markets in both Melbourne and Sydney. Melbourne had the strongest three month growth at 5.4 per cent, while Sydney was up by 4.4 per cent.  Other cities showed a more modest capital gain, with only Perth showing a slight decrease for the quarter.

Meanwhile, the low interest rate environment has also been stimulating new home construction. In the past year, new building approvals have risen by a very strong 34.6 per cent. Most of this residential construction has been centred on approvals for apartments and multi-unit dwellings which were up by 46.3 per cent over last year. Approvals for detached houses rose by 26.4 per cent over last year.

The increased number of new homes coming on to the market is great news for first home buyers and investors looking to purchase property whilst interest rates are low. Increased availability should help to keep these sectors of the housing market at affordable levels, with plenty of opportunities available to those on the lookout for a bargain.

Trends would also indicate that more and more borrowers are looking to fix their mortgage interest rate now, whilst rates still remain low. Some very competitive rates are currently available to those anticipating a rate rise by the end of the year.

There are plenty of very competitive loan options available to those looking to purchase property with a low deposit, those looking to refinance and invest. If you'd like to find out more about your property financing options or property market trends, please call us.

Sincerely, Matt McCombe

 
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Insurance explained


When taking out a home or investment loan, there are many insurance products that are relevant and all have a different purpose. Choosing the right cover or combination of insurance products can be very confusing. This article describes the insurance products that you may need to know about if you're considering taking out a mortgage.

Lender's Mortgage Insurance (LMI)
Lender's Mortgage Insurance (LMI) is in place to protect your lender if you default on your mortgage repayments. LMI is a government regulation and it's compulsory for your lender to charge you a fee for LMI if they are lending you 80% or more of the purchase price of your property. It is a one off payment made to your lender when you set up your loan.

It should be noted that LMI does not cover you if you should have a problem repaying your loan. In the unfortunate event that you cannot make your repayments and your home is repossessed and sold, LMI covers the gap between what the property is sold for and what is still owing to your lender.

With LMI, the fee is added to the total of your loan and paid off as part of your monthly mortgage repayments. Even though LMI may help you secure a lo-doc loan or a loan with a small deposit, you will still have to meet all the statutory credit checks to ensure you can meet your mortgage repayments when you apply for your loan.

Mortgage Protection Insurance
Home buyers often confuse Mortgage Protection Insurance with LMI but it is a completely different product.

Mortgage Protection Insurance is taken out by you to protect your home in the event that you are unable to meet your mortgage repayments due to sickness, injury, unemployment or death. (LMI is designed to protect the lender.) It should be noted that Mortgage Protection Insurance only provides cover for your mortgage and if you require coverage for other expenses in case of sickness, injury, unemployment or death you should consider the other forms of insurance listed below.

Like most personal insurance products, Mortgage Protection Insurance requires you to pay a premium either annually or monthly. The size of your Mortgage Protection Insurance premium will depend on the size of your home loan and how much of it you need to cover. Cover will vary depending on the provider, so be sure to read the PDS carefully so you understand what you are covered for.

Total and permanent disability insurance (TPD) & Life insurance
Total and permanent disability insurance cover is designed to give you a financial safety net if a permanent serious injury or illness makes it impossible for you to continue to work (depending on the the definition of the policy). It usually covers the costs of rehabilitation, debt repayments and the future costs of living, but this varies according to the provider. Life insurance usually only pays an agreed lump sum in the event of your death.

TPD insurance can often be taken out as part of Life insurance cover. You may have this cover with your superannuation, or you can organise it as a separate insurance product if you don't. Remember that Life insurance only covers you if you die, so TPD insurance should be considered as a separate issue.

Income protection insurance
Income protection insurance is usually only designed to cover you if you are temporarily unable to work. It can usually be arranged so that it covers you for up to 75% of your normal income, until such time as you're able to return to work or for the prescribed benefit period on your policy. It can be arranged so it covers you for illness and redundancy, depending on the policy and provider.

Income protection insurance is a good idea if you don't have money saved to act as a safety net in the event you're out of work. It could be used to cover the costs of day to day living and your mortgage.

Landlord's insurance
If you purchase an investment property and want to rent it out, Landlord's insurance can cover you for accidental or malicious damage to your property and any contents that you may have leased to your tenants for their use. It's a great way to get peace of mind when you're placing your most valuable asset in the hands of tenants!

Individual policies for Landlord's insurance can vary greatly from provider to provider – in some cases it may be considered an add-on to building insurance or home insurance, so be careful to choose the product that's right for your needs and particular circumstances.

Building insurance/home and content insurance
Building insurance is a product that you can take out if you are constructing or renovating a home, or if you wish to insure the building separately to the contents of your home. Home and contents insurance usually covers both the home and the contents.

This type of insurance product usually covers you for disasters like fire, flood, and damage caused to your home, garage and sheds due to accidents. It is designed to provide you with adequate cover in the event you need to repair or rebuild your home after an insurable event has occurred.

Policies for all these insurance products and what they cover vary a great deal from insurer to insurer. You should always read the product disclosure statement carefully before you take out any insurance product or policy, and ask questions of the provider to make sure you get the cover you need.

The various insurance cover you need will depend on your personal financial situation and the eventualities you need to cover. For more information or a referral, please get in touch today.

 
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Keeping a good credit history


Australia's new comprehensive credit reporting regulations came into effect last month, so we thought we'd give you an update on how to keep a good credit history under the new regulations. These new regulation reforms are an amendment to the existing Privacy Act 1988 and affect the kind of credit-related personal information that can be collected about you. The new type of information credit providers can collect about you is called 'repayment history information'.

Repayment history information is designed to give credit providers enough information about you to assess whether or not you can afford to take on more debt, and how much you can afford to repay. It includes information about whether you make your payments on time or whether you have missed a payment, so it can include both positive and negative information about you.

Previously, lenders were only able to access negative information like major credit infringements, bankruptcy situations and declined applications for credit. Now lenders will be able to see all this plus account information for a variety of repayments including mortgages, personal loans, credit cards, utilities and more. They will be able to access actual account information like the dates accounts were opened and closed, credit limits, type of credit account and 24 months repayment history on all your credit accounts.

Be protective about your credit rating
The new data allowed under comprehensive credit reporting will give lenders access to your data as far back as March 2012. This may not appear on your credit report immediately, and not all credit defaults will appear because consumer credit defaults of less than $150 may be removed or omitted from your report entirely.

Nevertheless, under the new system it's important that you pay your bills on time. To avoid accumulating a lot of minor defaults that can add up to make you appear as if you are under financial stress, you can pay the minimum amounts on your credit cards, loans and regular bills via auto-pay or direct debit to avoid being late.

Always make sure your name is removed from utility bills when moving house or vacating share accommodation. And take extra measures to protect your personal information to avoid minor fraud situations and identity theft. Remember, under the new system good credit behaviour will be taken into consideration and may make it easier for you to obtain a loan when you need one so paying your bills on time will be in your best interests.

Come to us if you're shopping for credit
Some people shop around for credit and submit applications to several lenders and credit providers to see who will offer the best deal. Under the new credit reporting regulations, this may not be a good idea as each time you make an application, it is recorded on your credit report and may give a credit provider the impression that you're under financial stress when you are not.

That means being rejected for credit could prove to be a black spot on your credit report! So to protect your credit report, you should only submit a credit application once you have made your choice of loan or credit product and done your best to make sure that you will be eligible for approval.

Happily, that's where we can help. We will only submit a credit application on your behalf once we have helped you thoroughly assess your personal financial situation and helped you to select the right loan product for your needs. We do the legwork shopping around for the best deal from a variety of different lenders and only submit your application to the one you finally select. We will also help you assess your eligibility and capacity to comfortably make repayments on any loan that you apply for, considering your other repayment commitments. (Please note, we can also help with car and asset finance, as well as your mortgage).

For more information about keeping a good credit report, or how yours might affect your application for a mortgage or loan, please don't hesitate to get in touch. We'll be happy to discuss your credit report history, how it may affect your capacity to borrow and how you can manage it in the future.

 
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Road trips – what's on your wish list?


Australia's great outdoors provide the perfect environment for all kinds of outdoor relaxation activities. Whether you're taking a road trip just to see the scenery, setting off on a fishing adventure or taking the family away for a campervan holiday, there's something to see and do for everyone. With the long-weekend get-away being one of our favourite ways to unwind, here's a look at the most popular ways to get your fair share of the road trip adventure.

There's a road trip for everyone
Every state of Australia offers a variety of different driving holidays for you to enjoy in the family car, camper van or four wheel drive. From coastal journeys and outback adventures, driving is one of the best ways to see the country.

If you're in Sydney and looking for a long driving holiday, you could try the Pacific Coast Touring Route that takes you north on a spectacular journey along the eastern seaboard to Cairns. This route offers a wide variety of stopovers from the city lights of Sydney through the wineries of the Hunter Valley, sparkling beaches on the Central Coast and tropical oasis all the way to Cairns in the far north of Queensland.

Heading south from Sydney, there's the spectacular beaches of the Sydney to Melbourne Coastal Drive. It's a journey that could take the better part of seven days if you stop along the way at all the recommended locations to enjoy the spectacular scenery and wildlife - which could include everything from whales to sea eagles.

If you're on the western seaboard, you could try the Indian Ocean Drive from Perth to Geraldton – a particularly good drive for those towing fishing boats as it offers opportunities to find some of the most spectacular fishing spots in the country. It offers a wide variety of things to see and do for the whole family, with great places to camp out and enjoy the countryside.

If you're in the south, try the South Australia Loop from Adelaide to the Barossa Valley and Kangaroo Island. This is a great adventure for those who love fine food and wine and want to get an up-close and personal view of Australian wildlife. It also offers great opportunities to swim, surf, snorkel and bushwalk and can take anywhere from 3 to 14 days of driving depending on how far you want to go and how long you want to be away.

There's even a spectacular driving holiday you can do in Tasmania! The Circle Tasmania tour takes you right around the island. Starting in Hobart, it takes you to stunning Freycinet National Park, Historic Launceston, Stanley, Cradle Mountain, Strahan and back to Hobart in just 6 days.

Take off in a touring car, campervan or 4WD
Australia offers driving holidays for every type of vehicle. You can take a touring car and stay at a huge variety of gorgeous accommodation along the way, camp out in your own campervan, or go the scenic route in a four wheel drive. Whichever way you want to go, if exploring the country sounds appealing, you'll want to consider the right vehicle for the job.

What's on your wish list?
The sales at the end of the financial year are the perfect way to buy that vehicle that will set you free on the roads of our beautiful country. It's the perfect time to shop for a bargain and it pays to have your budget set and financing in place before you set off to make a purchase.

So why not talk to us about your wish list today? We have access to a wide variety of lenders who can offer you financing for everything from a family car, to a campervan or even a boat. And as with your mortgage requirements, we can help you find the right loan for your personal financial situation so your purchase fits in with your lifestyle.

For more information about the great Australian road trip, visit www.australia.com and click on Explore and then the Drive Australia tab.

 
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Wine review

Pikes 'Traditionale' Clare Valley Riesling 2013

If you love oysters, you may already be familiar with this popular Clare Valley Riesling. Brilliant pale green in colour, this fresh and bright wine is the perfect companion to them. You'll find it has an aroma and subtle flavours of lemon and lime zest and even tropical fruits. The palate is fresh, crisp and dry, making it eminently drinkable. The 2013 version won the top award at Canberra's International Riesling Challenge, but go ahead and buy earlier years as the wine keeps well and they're all of a high standard.



Rating : 5 stars
RRP : $25.00

 

App review

Passpack Password Manager

Having trouble remembering multiple passwords and security numbers? Passpack is a highly secure way to manage and organise your passwords and PINs and it's particularly good if you have multiple online passwords to remember. It's built on AES-256 military grade data encryption and includes host-proofing so you can be sure your secret data is never accessible by anyone but you. Passpack is available to you from any browser, anywhere and anytime so there's no need to install it on multiple devices or computers. Passpack is free to subscribers for up to 100 passwords, after that you pay a subscription fee based on usage. To find out more, visit passpack.com.



RRP : $FREE
Available  :  via your web browser

 
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Contact us

 
 

 

 

 

 

 

Mobile: 0400 952 897
Phone: 08 9400 6310
Fax: 08 9400 6320

Emailmatt@extrememortgages.com.au
Website: www.extrememortgages.com.au

Address:
1/7 Wise St Joondalup WA 6027

PO BOX 3010 Joondalup WA 6027

Australian Credit License Number: 386571
ABN: 28710229405

   

 

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Disclaimer.This newsletter does not necessarily reflect the opinion of the publisher or supplier. It is intended to provide general news and information only. While every care has been taken to ensure the accuracy of the information it contains, neither the publishers, supplier, authors nor their employees, can be held liable for any inaccuracies, errors or omission. Copyright is reserved throughout. No part of this publication can be reproduced or reprinted without the express permission of the publisher and supplier. All information is current as at publication release and the publishers or suppliers take no responsibility for any factors that may change thereafter. Readers are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this newsletter as a substitute for professional advice. We are committed to protecting your privacy. We use the information you provide to assist you with your credit needs, including the preparation and submission of loan applications. We also use it to send you product information and promotional material. From time to time this will include direct marketing communications but we will always give you the option of not receiving these communications. We do not trade, rent or sell your information. Our Privacy Policy contains information about how you can access and ask us to correct your information, or make a privacy related complaint. You can obtain a copy by contacting us directly.