Home Loan Advice

Loan Advice for Home Owners

There are varied commentaries on the subject of whether the Great Australian Dream is still achievable, or not?  

However, we are here to encourage you that if you can believe, all things are possible. 

At Mortgage Excellence our goal is to assist and guide you towards achieving whatever your dream may be. Not only that, but we believe property is a foundational key that will give you a comfortable lifestyle now, as well as ensuring a lifestyle in your latter years – one that may only be a dream right now. 

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The Great Australian Dream

A traditional list of immediate “basic needs” is food (and water), shelter and clothing, which means we all need to live somewhere either as a tenant or an owner. 

Once you are an owner, it becomes easier to progress to a Landlord and own more than one property. 

In October 2012, News Limited reported that the average Aussie is sitting on a nest egg of nearly $200K, making us the richest people in the world. 

Australians have a median wealth per adult of $US194,000 beating out Japan, Italy, Belgium and Britain, according to the Credit Suisse Global Wealth Report 2012, which surveyed 216 countries. 

And the Good News is that it’s about to get a whole lot better. 

The report forecasts that our 905,000 millionaires will swell to 1.6m over the next five years – a staggering 82 percent increase. With plentiful land, sparse population, natural resources and high home prices, Australia’s proportion of individuals with wealth above $100,000 is the most of any country and eight times the world average. 

“Notably, Australia’s median wealth per adult of US$194,000 is the highest in the world, well ahead of Switzerland at $US87,137 and Norway at $US79,376,” the report says. 

Wealth per adult on average in Australia was $US355,000, the second highest after Switzerland, despite exchange rate changes and diminishing wealth in Europe. 

Very few Australians had a net worth of less than $10,000, reflecting relatively low credit card use and student debt. Australia’s financial standing has been boosted by the strong currency, with most of the wealth held in property assets and the $1.2 trillion held in superannuation. 

The report also shows that for the first time Asia-Pacific has overtaken Europe as the world’s richest region, with holdings of $US74 trillion.

Building wealth through property is possible and not just for the rich!

History is the best teacher. Since the commencement of property ownership records in England (1857), values of property in good locations has on average doubled every 7-10 years.  

Why do Australians Love Property? 

  • Well researched property doubles in 7–10 years  
  • Relatively low risk  
  • High leverage available  
  • Rental income 
  • Tax savings 
  • Generally minimal or little cash needed 

Consider Sydney in recent years as we look at predictions made by the Real Estate Institute of Australia some years ago. The following data was extracted from an article published in 2008 by the REIA. 

  • 1980 median house price $64,800 
  • 2008 median house price $529,000 
  • Averaging 7.79% p.a. over 28 years
  • Doubling every 9.2 years 
  • By 2018 Median House Price could reach $1,120,000 

If you wish to discuss your individual situation please contact Greg direct for a discussion regarding your options and strategy.

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Many people just look at the interest rate when they’re shopping for a home loan, but at Mortgage Excellence we consider many other aspects that will result in savings, benefits and convenience for our clients for years to come. 

For instance; Loan features (bells & whistles) can be just as important, and if they are not relevant you may be paying for them in interest and fees. 

Would-be borrowers might baulk at the suggestion of paying $400 annually for a package fee, when in fact that investment could save them money. Not only in interest rate discounts, but other features of the loan facility that can save additional interest when utilised properly.  

Keeping this in mind, here are our top tips for saving money on your home loan: 

1. 100% Offset Account 

An offset account is a transaction account that is linked to your home loan. The credit balance of your transaction account is offset against your outstanding loan balance, reducing the interest payable on that loan. An Offset account enables you to make the most of your income and other funds to reduce the interest payable on your home loan, thereby reducing your loan term.  

At Mortgage Excellence, we advise that you get as much money in your Offset Account as you can and keep it there for as long as possible.  This is because every dollar in your linked everyday banking account can save you interest, so it makes sense to keep your balance as high as you can.  

2. Use your credit card for everyday purchases 

Every dollar sitting in your linked everyday banking account matters, so taking advantage of interest-free days on your credit card can help you save money. Rather than spending money from your everyday account, use your credit card throughout the month for your purchases. This maximises the amount in your offset account and makes your money work harder. 

You just need to ensure that when your credit card is due, use the money in your linked everyday banking account to pay the closing balance (in full) and avoid paying interest on your credit card. If you have a rewards credit card, you’ll also be earning your rewards points. 

3. Fortnightly Repayments 

Many Australian workers are paid fortnightly, yet most mortgage repayments are structured monthly. With 26 fortnights in a year compared to only 12 months, making fortnightly repayments is a sneaky way to pay extra off your mortgage without really noticing it.  

At Mortgage Excellence, Greg will calculate with you and advise you on the best way to make your repayments.   

4. Increase Regular Repayments 

Another fantastic cost-saving strategy is to increase your regular mortgage repayments. While it can be easier said than done for some households, making an effort to find some extra spare cash for your mortgage each month can reap big rewards. An extra $100 per month payment, for example, onto your already lower interest rate loan could add a big difference to interest payable over the term of the home loan. 

5.  Lower Interest Rate Makes A Massive Difference. 

At Mortgage Excellence, we will annually review your product to ensure it still suits your needs. You will be surprised at how much you could potentially save as an interest rate reduction of 0.4% on a $500,000 home loan can mean a saving of $2000 a year in interest. Not to mention the reduced pressure on monthly cash flow.

If you wish to discuss your individual situation please contact Greg direct for a discussion regarding your options and strategy.

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I found Greg to be knowledgeable and took the "hassle" out of finding the best mortgage deal.”

I found Greg to be knowledgeable and took the “hassle” out of finding the best mortgage deal. When problems arose or more information was required for the application process, Greg fixed it. Altogether; a very time efficient way to get a mortgage deal done. 

Scott Small, CEO 
Smalls Recruiting 
Sydney CBD

Mortgage Excellence is the Best Choice for Home Loan Advice!

If you wish to discuss your individual situation please contact Greg direct for a discussion. Mortgage Excellence is here to serve you!

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Authorised Credit Representative 519056 of Vow Financial, Australian Credit License 390261.

Get In Touch

PO Box 2, Belrose Sydney NSW 2085

greg@iLend.com.au

+61 0412 008 277