Mortgage Brokers connect people who are looking to borrow money to purchase property or refinance and existing loan, with a bank that is best for them. Simply, brokers provide value to clients by saving them time, money and stress.
We’ve all been hearing about the ‘RBA’ in the news, but what is it? and why does it impact how much homeowners pay on their mortgage?
The Loan to Value Ratio (LVR) shows how much a property is being bought with debt (bank loan) compared to cash. Homebuyers should understanding this ratio as it determines how much interest and fees borrowers will pay. Click here to learn about interest.
The RBA is expecting over 800,000 households to experience a massive increase in loan repayments as there fixed-rate mortgages expire in 2023. On average, loan repayments will increase by $1,114 per month as the interest rate moves from 2% to 5.25%. To minimise the rising cost of interest, homeowners will need to refinance their home loans before increasing rates make them ‘mortgage prisoners’.
When assisting our clients through the process of purchasing a home, a question we often receive is; “Should we fix our interest rate or go for a variable rate?” Although there is never a clear winner between variable and fixed, the correct decision is always determined by the client’s situation and requirements, as well as the current and expected economic environment.
Regarding home loans, interest is basically the cost of money charged to the borrower (homebuyer) in order to compensate the lender. An interest rate is applied to the loan amount which produces a dollar amount of interest that is charged to the borrower. As such, loan repayments made by the borrower will cover the interest charged during the period and a portion of the actual loan amount (principal).
When talking about property, Equity refers to the amount of the property value that is owned by the home-owner. When purchasing property, equity is initially dependent on how much of your own cash you use and is then over time is affected by changes in the property value.
As borrowers, we should know all the strategies to save as much money as possible over the loan term. If you have the spare funds, making extra repayments can save a significant amount of money over the loan term.
Credit Scores – They’re the hidden numbers that constantly track our credit card behaviour, bank account balances, and loan repayments. These scores can go unnoticed for years until they are really required.
Refinancing… It’s been the hot topic of the housing market as rising interest rates and inflationary pressures push consumer confidence down to the lowest level last seen during the Global Financial Crisis.