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Dear Customers,
Better Products, Better Pricing
It's important to review your mortgage every two years.
Products change and what was previously a good deal is always surpassed by what is currently out in the marketplace.
That's why you need to see us regularly to make sure that you always have the right loan for your circumstances.
Technology plays a big part in how home loans are funded and so as our technology gets better, we can do more amazing things with your loan products.
So make sure you call us soon to book your home loan review.
Kind Regards
Rick Hancock
Managing Director
Equity Ideas
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MEET OUR STAFF |
Justin Williamson
AMC, Cert III Mortgage
Justin commenced with Equity Ideas in 2002 and is a valued member of our team. He currently managers the relationships with our panel of lenders while ensuring all customer loans get to settlement as quickly and efficiently as possible. Justin lives in Alexandria Sydney and was born in Brisbane. Justin has just gotten engaged to be married to Kate in February 2006
We feel that getting to know us is very important. We are a dedicated team and we are glad to be at
your service.
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Reverse Mortgages
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There is a growing band of cash-strapped seniors with a small fortune locked up in their most valuable asset – their house.
A reverse mortgage can allow them to access this equity whilst still living in their home.
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A reverse mortgage enables the consumer to borrow a lump sum or, in some cases, receive regular payments against the value of their home.
The allowed borrowings will depend on the consumer’s age and are linked to a proportion of the value of their house. According to a report by the consumer association Choice, maximum loan limits vary between 11% and 45% of the property value. Repayments are not required until borrowers leave the home and move into a care facility, sell their home or pass away.
Reverse mortgages are very useful for some people. They allow the borrower to supplement their income and help bridge the gap between retirement expectations and reality - without being forced to downsize their home or take out a personal loan.
A reverse mortgage can, however, have a long-term impact on the borrowers' finances, and if entered into without careful thought could limit their future financial options.
For example once the borrower passes away, their house may have to be sold in order to repay the reverse mortgage. This will reduce the assets of any deceased estate and therefore reduce any benefit to the estate beneficiaries. |
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"It enables you to access your equity whilst still living in your own home." |
If you're considering a reverse mortgage, It is important to think about the potential length of the loan, the impact of fluctuating interest rates and house values, and whether you may wish to relocate or downsize your home in five or ten years' time. Also, you should be aware of any break costs in the event that you wish to repay the loan early. A reverse mortgage may also impact on your eligibility for age pensions.
It is prudent and, for some lenders, a requirement to seek advice from a lawyer or financial planner before committing yourself to a reverse mortgage. The aim is to ensure you can meet your current financial demands, but not at the expense of future needs.
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Fixed Versus Variables
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No one size fits all when it comes to the wide range of home loans that are available.
One of the major choices that you may need to consider is between fixed and variable rate interest products.
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Certainly a good understanding of your financial position and goals will help you make the right choice. Over the different stages of the life of your mortgage you may find one or more of the below options appropriate, influencing your choice of product:
Fixed rate products are for a set term, usually one to five years, although some lenders offer up to ten-year terms. The fixed rate generally reverts to a variable rate at the end of the fixed term or, depending on the terms of the loan, you may have scope to renegotiate a further fixed term at that point.
Fixed rate loan products provide certainty in your monthly payments, and in a time of rising variable interest rates can provide peace of mind. On the other hand if interest rates go down, you could end up in a situation where your fixed rate is higher than the variable rate.
They generally have fewer features than variable rate loan products - however every product is different and must be considered on its merits. They may also have penalties for early payout or additional repayments.
According to CANNEX fixed three-year rates start at a comparison rate (including fees) of approximately 6.80%, but some can be lower, therefore it is worth looking at different lenders' products. |
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"Knowing your financial position and goals will help you make the
right choice." |
Variable rate products are more suited to a borrower who is prepared for the up-and-down fluctuations in interest rate movements. Many variable rate products also offer flexibility in repaying the loan (i.e. they don’t penalise the borrower for repaying the loan early).
And of course, the faster you are able to pay off your loan the cheaper it will be. Variable loans can also offer features such as redraw, offset, portability and split loan facilities.
Split rate loans can offer a combination of the two options where one portion of the loan is fixed and the other is at a variable rate. You will have certainty on repayments for the fixed portion while retaining flexibility on the rest. You are normally able to make extra repayments, or pay off the portion of the variable, without incurring penalties.
Of course all loan products will differ greatly from lender to lender. You should read the terms of any loan agreement carefully, and obtain independent advice from an appropriately qualified professional before entering such an agreement.
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Make A Super Choice
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The Australian Super Funds Association estimates that five million workers now have the right to choose their own super fund.
If you are one of these, it is important to make the most of your choice.
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A report by Australian Super Funds Association on the implications of super choice, which came into effect on 1st July, suggests 26% of workers are considering switching funds. The Association says that the important issue, however, is not whether to change but if you have considered the important points when evaluating funds. The most cost effective and appropriate fund may be the one you are currently in!
Most funds can be divided into industry or retail funds. Industry funds are generally open to workers in a particular industry although some industry funds are open to the public. All retail funds are open to the public.
Fees and charges are the headline-grabbing issues in the current debate between fund types, but whilst important, there are other factors to consider.
Flexible investment strategies, for instance, allow you to tailor your fund to your stage in life.
For example, if you are relatively young and beginning a career, you may be prepared to invest in a high risk profile in the belief that you may receive higher returns over the next 30 or 40 years of your working life. |
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"Up to 26% of workers may consider moving to another fund." |
However, if you are approaching retirement, you may decide to change your profile to a low risk profile which is often represented as yielding lower growth but with less overall risk.
Some other points of comparison between super funds include:
- Fees and costs, including management costs as well as contribution, withdrawal and termination fees. According to the government’s Super Choice booklet if you pay an extra 1% in fees you could lose up to 20% from your retirement benefits over a 30-year contribution period.
- Investment options. How flexible are the investment strategies? Are you able to select a risk profile that suits your stage of life?
- Investment history. Take a long-term view: how does the fund’s investment performance compare? Please note, however, that nobody can reliably pick which fund will perform best in the future.
- Additional benefits. Does your current fund offer important benefits such as additional employer contributions and redundancy benefits that may be lost if you switch funds?
Further Information
The government has compiled a very helpful booklet called Super Choices. You can download it by visiting www.superchoice.gov.au.
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| Choosing the Right Car
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Buying a new car can be a big purchase and one not to be taken lightly!
With some basic planning you can match the needs of your lifestyle with the appropriate vehicle and finance.
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Whether you are buying a car new or second hand, you'll need to look at your
budget and then answer a couple of key questions: how much will it cost to run
and how will I finance the purchase.
Running Costs
Your budget costs will be determined not only by the price of the car, but also by running costs such as depreciation, fuel and insurance.
According to the NRMA Vehicle Operating Costs Passenger Cars and Petrol report, depreciation accounts for up to 45% of the total weekly cost of running a small new car, and up to 50% of running cost for larger cars. A second hand car will depreciate at a slower rate than new, but your gains may be wiped out by increased maintenance costs and fuel consumption.
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"Depreciation accounts for up to 50% of the
running costs." |
Financing Options
Think about how to pay for the vehicle – cash purchase or a loan? There are various options for financing vehicles, including commercial hire purchase, finance leases and personal loans. If you are using the vehicle for business purposes there may be some tax benefits with leasing finance.
One of the lower interest options is to borrow against the available equity in your property. The interest rate will then be the same as your home loan, which may be lower than other types of loans.
You should carefully consider, however, whether financing a car through your home loan is right for you. For example, could you use the available equity for investment purposes instead?
Remember, in most cases a car is a liability rather than an asset – unless it’s a collectable it won’t be worth the same next year. Stick to your budget, and don’t get drawn into buying above your means. Bigger engines burn more fuel, which adds to running costs. Also make sure your insurance matches your vehicle – can you afford to replace the vehicle if it gets struck by lightning? And if you’ve borrowed, keep up with your repayments!
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Other Professional Services offered through Equity Ideas
From time to time, you may wish to seek advice from other professionals. Your Equity Ideas Client Services Manager is happy to suggest a range of accountants, solicitors, licensed financial planners and stockbrokers. These professionals are available to clients throughout Sydney, Melbourne and Brisbane/Gold Coast. Please note, If we receive a referral fee from any third party as a consequence of this referral, details of the fee will be fully disclosed to you.
Some of our business partners include:
- Compliant Investment Properties (CIP) - www.cip.net.au
- Sydney Financial Services (Superannuation advice, 250310)
- Cube Financial Group Pty Ltd (AFS License, 232455)
- Steven Ingate Soliciting / Conveyancing
- Steven Nictas Accounting
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We are members of the MIAA, the peak industry body. All members are bound by a strict code of ethics to ensure the highest levels of service, integrity and professionalism. |
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Please feel free to contact us if you require additional information on any of the above services.
Remember to look out for our next edition of Equity Ideas News.
Best regards from the team at Equity Ideas!
www.equityideas.com.au
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Sources
- Mortgage Industry Association of Australasia MIAA
- FairTrading.com.au
- Gadens Solicitors
- News.com.au
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