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Posted: Apr 17th, 2010
Cash and fixed interest is the term given to a type of investment.
Cash is the tangible money that you use everyday to make purchases and it is the money you can access from your bank account – the more cash you save, the more cash you have. The cash that you earn and save can be deposited into a financial institution in 3 ways – into your bank account, into a term deposit, or into a cash management trust. You own this money and it can be accessed at any time.
All financial institutions will set a fixed interest rate on your cash deposit. This allows you to earn some interest on the cash that you have deposited into your savings account. All financial institutions have different fixed interest rates, so it is best to do some research in order to get the best fixed interest rate deal – as a general rule, the higher the interest rate the more money you are earning on your cash deposit. Generally banks don’t set the fixed interest rate to high as this form of investment is quite secure and safe. As a result, the returns are equally never very high.
For example if you deposit $100 of cash and the fixed interest rate is 3%/month then you would earn $3/month or $36/annum interest on your deposit.
Best of luck with your investing!
Posted: Apr 14th, 2010
Answered by: Paul Ryan
Co founder of Wizard Home Loans in 1996 and in 2007 launched new non bank lending business Opportune Home Loans. Having 20 years experience in home loan lending there are two key components to ensure all consumers receive a better home loans experience, a healthy mortgage market and greater education for consumers to understand more about their mortgage and financial stability.
However the real estate agent should advise all buyers that there are other interested parties and that your offer could be more or less then the other parties.
They don’t have to disclose figures as it is unfair to the other buyers.
In an auction though all offers are on the table on the day or night and all buyers get to know their competition.
Best of luck with the buying process
The home loan process can be quite complicated and all loan scenarios are different but we will try and outlines a few of the issues you may have experienced.
Firstly, you say you did not require mortgage insurance, however you should be aware that some home loan providers mortgage insure all of their loans regardless of how much you are borrowing as a percentage of the value of the security. So while you may not be paying for a lenders mortgage insurance premium, the home loan provider is still required to gain their approval to satisfy their requirements.
When you apply for a home loan it will always be subject to “standard credit assessment criteria” or similar. Unfortunately, a home loan provider and their mortgage insurers are not required by any laws to give to you an in depth reason for not granting you approval for a home loan. It is at their discretion how much information they choose to share with you and by simply saying “You fail to meet our minimum lending criteria” is satisfactory in meeting their responsibilities.
While this is frustrating, the truth is that mortgage insurers use a complex “point scoring” system to credit assess their loans. These systems apply a certain amount of points for things like how long you have been in your job, your address, your credit history etc and reaches a “risk total” which essentially tells them whether you qualify or not. Further to this, the home loan provider is generally not told why you have been declined beyond that you have not met the scoring criteria and in most cases the full reasons are not visible to the mortgage insurers either, their system simply looks at your application and says “pass” or “fail”.
So while you may think you meet their criteria and that they are being stubborn by not releasing information to you, it is more likely that your application has failed to meet certain key criteria of their scoring system and they are unable to give you a detailed reason why this is.
In regards to your rights, you have opportunity to escalate a complaint to the management of the home loan provider who should provide you a detailed written response. If you are still unsatisfied with this outcome you should consider contacting the banking ombudsman to formalise your concerns.
Also we suggest you speak to an experienced home loan expert who should be able to give you some guidance as to why your loan was not approved. Such an expert will have the experience and reviewing your application and provide some guidance for you.
If you don’t know a home loan expert you can click on the talk now button and we will have a suitable home loan expert contact you.
With regards to employment, there is no definitive answer to your question but you should keep the following general guidelines in mind.
• Fulltime permanent employees should be in their current job at least 3 months and not subject to a probationary period. They should also be able to demonstrate a stable employment history for a total of two years
• Casual and part time employees generally need to be in their jobs for 12 months before they can be considered.
We stress that the above are just guidelines, but if you have not had more than two jobs in a two year period and are currently employed, it should not be an issue for you.
As for your extra deposit funds, there is a preference for providers for you to create equity in your home and the more you can pay towards your mortgage the better. This will mean you will be paying off your home loan more quickly and allow you to explore other financial opportunities.
Of course, these are just our thoughts and we have made the assumption that this is the property in which you will be living in and therefore it is not an investment loan.
It is always advisable to seek guidance from a financial expert if the loan is for investment purposes or if you want this purchase to form part of a long term strategy.
Best of luck.
The cost of the redraw feature within a home loan is dependent on which home loan provider you choose to borrow funds from.
Most home loan providers don’t have a cost associated with a redraw however some do, so it is really important for you to ask your home loan advisors the question upfront before you make any decision on which provider to go with.
This is an important to understand because if you plan to use your redraw extensively then you should aim for a home loan with no fees for redraws. If you only plan one or two redraws a year and there is a small cost associated might be appropriate especially if you are able to obtain a lower interest rate.
We hope this information helps you.
This is a difficult question to answer as we are not a real estate agent, property research business or investment advisors.
What we would recommend is that you speak to an investment advisor and discuss your dreams and vision in developing a property portfolio.
There are some many things to take into consideration when looking for a property and the areas you should research to buy.
Researching property through websites like www.realestate.com.au, investment groups such as www.destiny.net.au, reading investment magazines and understanding how regions are growing are all good options in determining where you should look to buy.
The information that you are seeking would be considered quite specific to an individual circumstances.
There are no real laws as such however each home loan provider would have different interpretations to your question and the circumstances surrounding it and how it may affect the borrower’s ability to meet their monthly commitments.
If someone had their home loan interest deducted from their salary and they resigned from their job then as a borrower they would still be expected to meet their monthly repayments on their home loan.
Without knowing the intimate details of this scenario we would assume the borrower would need to contact the home loan provider to alter the arrangements of how the home loan repayment would be made in the future.
We do however recommend that you meet with a home loan expert to understand your specific situation.
If you do not know of a home loan expert please do not hesitate to click on the Talk Now button through the website and we will have an appropriate and experienced home loan expert to make contact with you.
Best of luck
All lenders will have hardship teams who are designated to look after people who are in situations like yours. People within these teams are specialists in providing customers with information and options to help ease the financial burden. The options available could range from postponing your payments for one month, to advising you that you will need to sell your property.
Unfortunately we are unable to advise what is best for you or what the ramifications are without knowing your full financial history and current financial position.
One tip is to be honest and upfront with your current lender and any future lenders and provide them with consistent updates on your financial situation.
If you would like to have a confidential and more in-depth discussion with a home loan advisor we can arrange this. Simply click on the ‘Talk Now’ button on the home page and fill in your details.
Best of luck, we hope it all works out for you.
Firstly we will outline the assumptions we have made as they will provide the answer.
We are assuming you and your wife have no children, no personal loans and are looking to build a home to live in and therefore not an investment.
One suggestion would be to try and use the equity of your current loan by extending the loan balance or refinancing the loan.
If the value of the property is $220,000 then you can borrow up to 80% of the value of the property without having to pay mortgage insurance on the loan.
80% of $220,000 is $176,000 so this will provide you with an additional $56,000 in equity based on your existing loan.
This would mean the new loan is approx $300,000.
So depending on which house you live in will determine what taxation advantages you can obtain and we suggest you meet for your accountant to discuss the best way forward in this regard.
In terms of the loan package we suggest you look at an interest only loan to start with as long as it provides you with the flexibility of being able to make additional repayments at any time to reduce your principal and monthly interest commitment.
Have a look through our website for the definitions of features of loans that maybe able to assist you.
When a home loan provider assesses a loan they most definitely will take into consideration the conduct of any of your loans and your repayment history. Obviously making payments on time or additional repayments will be a positive for you.
As we stated in the beginning we have made some assumptions to provide this answer. For more specific details we suggest you contact and experienced home loan expert to help you understand exactly what you can achieve – or if you would like to click on the talk to a home loan advisor through this website we can arrange for a suitably experienced home loan expert to contact you.
Thank you again for your question and best wishes.
If you are unsure of any aspect of the definition please do not hesitate to send through further questions.