Stamp Duty and LMI Calculators

If your LVR (Loan to Value Ratio) is greater than 80% you’re going to need Lenders Mortgage Insurance (LMI) to secure a loan with most (if not all) lenders. You can read up on what LMI is, when it applies and how it’s applied here but in this article we’re covering the LVR Calculators offered by the main LMI providers and also those provided by lenders themselves. Most will return a reasonably similar outcome though as each organisation manages their own calculations and have their own risk/return views they won’t be the same. 


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Conveyancing Explained

If there’s one thing that really seems like a dark art amongst the property search, financing and settlements process its conveyancing. Having made it to a load of open for inspections when it’s time to get serious it’s time to start the legal process to make sure that if you actually buy (or sell) a property that your rights and obligations are clear and covered. 

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Coming Soon – Online Conveyancing and Settlement

Faster settlements and digitised conveyancing is here (almost!). Internet banking developments and electronic mortgage broking changed finance over the last few years as technology and customer preferences have collided, leading the way to online home loans (start to finish). What this has meant for customers is that finance is no longer a 9 to 5 service, it’s 24/7 and increasingly efficient as customer demand drives competition towards the best and most efficient process for brokerage, application and management of home loans. In the background a huge change is underway also in the property law, conveyancing and settlement space which will provide equally valuable benefits to the customer.
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Open Banking Data Could Herald Refinancing Made Easy

evenground open data banking refinanceAustralians are going to find out by late 2018 how a new set of laws mandating sharing of financial data between industry participants can make refinancing towards the cheapest home loan far more consumer friendly. The Treasurer Scott Morrison has this week confirmed Australia will be implementing an Open Banking Data system following a Productivity Commission recommendation in 2017. The Productivity Commissions recommendation is that an open banking system is a “key feature of workable competition in Australia’s Financial System” and that it should be implemented in a way that enables consumers to exercise comprehensive rights over their own data held by lenders and Government.
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Smart Moves and Refinance Tips from Expert Brokers

evenground refinance smart moveFollowing on from our recent report on why only 4% of homeowners refinanced in 2017 (see it here) our expert brokers have compiled a set of tips and handy knowledgebase for anyone considering a refinance in 2018. With the RBA leaving rates steady again in February 2018 it would be easy to wait it out and see how the year progresses but expert brokers aren’t sure this is going to be a smart move. With the deals available now (see here for the latest) evenground expert brokers see getting in before out of cycle rises by lenders take hold as being the smartest move. 
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Cheapest Home Loans – 2018 Kicks Off With Home Loan Discounts


2018 has begun with some significant discounts for the savvy home loan shopper. In 2017 the cheapest home loans were seen as opportunistic early in the year but it later became clear that the RBA was not going to budge soon and the regulators would renew their focus on prudential levers targeting foreign purchasers, refinancers, investors and those on IO (Interest Only) loans. Later in 2017 discounts became more broad based, moving beyond the non-bank and challenger lenders with the Big 4 joining the party later on. Particularly with the big 4 discounts were aimed at new borrowers and attempts by current customers to access the full discounts were met with some resistance. 2018 has kicked off though with some fairly broad based discounting and competition on interest rates which is welcome. evenground expert brokers expect these cheaper home loans to be available for the early part of 2018 and then become harder to get as the RBA gets closer to firming and lenders look at out of cycle increases to bolster profits. With this in mind we thought we’d provide a quick snapshot of some of the cheapest home loans in the market, offered through evenground expert brokers. Note: further discounts could be available for customers who are well positioned. 
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Expert brokers uncover why only 4% of home loans refinanced in 2017 despite record low rates

evenground refinance cheapest home loans2017 presented homeowners a golden opportunity to lock in a new and improved home loan with a cheaper rate and potentially a far better set of features than their existing loan through refinancing. ABS figures show that the proportion of Australians with a mortgage taking advantage of refinancing their home loan in 2017 was only 4% despite the fact that many are continuing with interest rates at times more than 1% over the current best rates. evenground’s expert brokers were puzzled by the low result and have asked some clients (former and current) why they believe many persist with higher rates rather than taking advantage of whats on offer. The top 3 reasons our clients have offered to explain this lack of interest in refinancing were as follows; Read More…

Are your finances in order for 2018?

Welcome to 2018!. 2017 was quite a year, not just for evenground and the mortgage broker market which evolved and grew again, but mainly for the nations housing markets and economy. Our domestic economy has started 2018 in pretty good shape really with historically low unemployment and interest rates at the same time and with mortgage delinquencies still at pretty low levels. However it might have been the break but newspapers in the new year now seem dominated by stories that expose some of the cracks in our housing market (inner city demand cooling), area’s where mortgages are carrying higher risk (eg interest only) and more indications of thinking around potential changes to negative gearing. 
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Find out how banks are now using your daily purchases to assess your borrowing power…

If you drive a car or buy cosmetics you’re in the sights of some of Australia’s largest lenders as they move to tighten their home loan approval criteria by increasing their scrutiny on the day to day spending habits of home loan applicants. From Monday 27th of November loan applications will not progress past the initial review stage AMP says as they implement the new measures.

evenground home loans cosmeticsWhat does this mean for applicants?

Applicants for AMP home loans will be asked to fill in a 14 question survey looking for detailed information about expenditure on a range of household items and discretionary spend like ordering in a pizza, catching an uber home or taking that weekend away. AMP says it also will reserve the right to request information at their discretion and of course as they will have access to your bank account statements in an application process they have the ability to check whether you’ve been truthful in your survey response. AMP hasn’t yet made clear what the next step is but there is no doubt that they have been working on detailed assessment criteria for the type of customer they ideally want to approve and not approve and this step is essentially bringing this out into the open to an extent. Whilst AMP has only 1% of the home loan market it is a large player in financial services generally and particularly in self managed super funds which invest in residential and commercial property. AMP is likely the first of many lenders to tread this path.

CBA has also recently announced that it is increasing scrutiny of borrowers credit card expenditure in an effort to reduce bad debts and late payments later on when the reality of customers spending habits combined with their new home loan begins to bite. APRA is driving quite a lot of this activity in the background as it attempts to “refine” criteria used by lenders in assessing home loan applications and will be heartened by the recent AMP and CBA announcements. 

So what type of spend is in the frame?

Information requested in AMP’s survey includes “household” items including clothes, shoes, cosmetics, transport, groceries and home and contents insurance. What is seen as “discretionary” might come as a surprise to some who regularly order in but the list here includes eating out, going to the movies, holidays, nannies, education expenses, private school fees and books. 

Online retailer catch.com.au recently conducted research on the amount the average Australian woman spends on cosmetics each day. Catch found that the average was a surprising $3,600 spend on beauty products each year, amounting to $300 per month. As a nation we’re heavier spenders than our US and UK contemporaries with their estimated spend being $2,880 and $2,000 annually. This might not be news to regular cosmetics shoppers or someone who just spent $500 on Eve Lom Night Cream but it’s certainly noteworthy to a bank home loan assessor reviewing whether to lend $700,000 or more to a customer.

As comprehensive credit reporting begins to take hold there are great benefits in the way of borrowing power and lower rates for those who keep track of their spend and manage their obligations. As the Banks begin to follow AMP and CBA’s lead and tighten the screws on spend assessment there are even more reasons to keep track and manage your spend. If you’re thinking of applying for a home loan in the next 3 to 6 months, particularly with Christmas on the horizon, evenground is advising clients to take care and keep your credit score clean and your spend smart. If you’d like to know more get in touch any time on evenground.com.au.

Mortgage Broker Expert FAQ’s

With mortgage brokers arranging almost 60% of all home loans settled in Australia and evenground growing fast we thought it’s a good time to provide our top 3 Frequently Asked Questions and their answers. Whether you’re looking at a mortgage for your first home, investing in property or buying a home for a growing family most of the questions we are asked are fairly similar. In a follow up we’ll provide FAQ’s focussed specifically on first home buyers, investors and seasoned buyers. 

home loan for beautiful homeHow do expert mortgage brokers get the best deals?

Mortgage brokers generally work with an organisation that negotiates in bulk (on behalf of a number of brokers) with the banks and other lenders. This way we obtain some great rates at times not available directly from the banks or lenders. You might have seen this from time to time as a broker mentions a rate you couldn’t find on a lenders website. Brokers also negotiate special deals with lenders on behalf of customers in a strong position. At times these can turn out to be the very best rates available so it’s worth checking with your broker as to whether they think you might be eligible. Also, some home loan lenders who offer great interest rates don’t have branches or their own sales teams so they rely on customers selecting their products via a mortgage broker as part of their business model. 


Which lenders are more likely to approve me

Lenders vary significantly in the type of customers they are after at any given time and which products they want to sell more of versus others. At times some lenders want to be in the market but are very selective about taking on new business as they may be reaching some internal limits or reducing risk in their portfolio of loans. At the same time, there may be a lender who has a product that fits you perfectly and will approve your home loan application in a snap. The key benefit of working with a mortgage broker is that they work with a range of lenders and understand which scenario fits the policies of each lender and therefore where to go.

If you can take the time to explain your scenario to your mortgage broker in some detail you will find that they will be able to answer this question relatively quickly. For example, a couple with one income earner recently retrenched and starting out in a new career but with a good level of equity in their home and a good credit score is possibly a perfect fit for a more flexible non-bank lender. A young couple with professional jobs seeking to borrow for their first home can generally choose lender but some products are a better fit than others and allow more flexibility later on for property investing, changing up or renovation. evenground recently helped a couple in Appin NSW who had been through a bad experience working with a lender who advised initially that they would be able to refinance but then rejected the application after over a month of work. Quickly our evenground broker was able to assess the situation and identify a more appropriate lender for the situation and a positive response to the application was relatively immediate. 

Fixed or Variable Rates

Fixed rates protect the borrower from potential rises in interest rates during a defined term usually 1 to 3 years. Generally, fixed rate home loans are more expensive than variable rates at the time of application (though this is not always true) but from that point on the borrower will benefit if rates rise. At the end of the term (fixed period) the rate with change to a “revert rate” which is a variable rate which the lender will advertise alongside their fixed rate. The revert rate will tend to be higher than current variable rate and it is advisable for anyone coming off a fixed rate to ensure that they are getting the best deal (the end of a fixed rate being an ideal time to refinance. Fixed rate home loans are able to be repaid early or refinanced though this will usually come at a significant cost which the bank will calculate and advise you at the time of refinancing (or repayment). This break cost represents the costs that the bank faces in breaking its own commitments in respect of the loan (in the wholesale debt market) as well as its own internal costs and foregone revenues. So, all in all, there are some great advantages with fixed rates with the main one being the ability to avoid interest rate increases. Drawbacks are low flexibility in terms of ease to refinance or pay down the loan quickly or the inability generally to use an offset account to offset interest costs.

A variable rate loan is (as it says) subject to the lenders own decisions on changes in the interest rate. Whilst lenders take direction from the RBA, recent history has shown that they will make their own decisions and can raise rates independently quickly at times or lower them also. Variable rate home loans though are easy and free (almost) to refinance, pay down early or vary and you can use an offset account in most instances to reduce your interest costs. What does all this mean, well, if you’re concerned about rates rising then fixed rates might be for you.  If you’re not or you’re unsure then maybe select a product which is variable but can be switched in part or in whole to fixed down the track. The decision though is always made by the client based on their individual circumstances. At evenground though we’re happy to advise and provide our own views and experience to help make the decision. 

If you’d like to know more about anything we’ve written here or would like to speak to an expert mortgage broker about your specific question, get in touch anytime at evenground.com.au