I was curious to read today about HomeVic; the shared equity scheme to be introduced later in the month by the Victorian State Government to help First Home buyers break into specific growth and regional areas.

Targeting first home buyers in specific suburbs and income brackets, it could provide the helping hand many youngsters are looking for to break into the market.

While not available in Melbourne's leafy bayside suburbs, it does include suburbs such as Box Hill, Footscray, Frankston, Ringwood and Parkville and extend to so called regional areas including Geelong, Shepparton and Warrnabool.

Take a read of today's article in Domain and give me a call to discuss if you are interested!

Bernadette

Authorised Mortgage Consultant

The Edge Mortgages

You’ve been dreaming of that new kitchen and dining room for as long as you can remember, and now the time has come to put your plans in motion. But do you really have the budget to afford the works? Here are a few things to think about before making the leap from Pinterest board to blueprints.

Work out your budget

Before you look at borrowing any money, you first need to work out how much your renovation will cost. Get Ask An Architect to send you their comprehensive guide to costing a renovation.

Before your finalise your plans, you can arrange for a building inspector to help identify any structural work that might be needed.

Major work could significantly increase your budget, so it may be worthwhile to talk directly to a professional to get a more tailored understanding of how much you’re up for. Architects and master builders are usually happy to provide a quote, so think about getting more than one quote to give you an idea of the range.

In addition, add a percentage for contingencies: most experts recommend that you add another 10% to 20% to the overall budget to cover the inevitable delays and complications that arise throughout the renovation process.

Once you know what the costs may be, you can start to think about how to raise the cash. Of course, in an ideal world you’ll have saved up at least part of the amount beforehand, but renovations can run into the tens or even hundreds of thousands, so most people will need to borrow some money.

Unlock your equity

If you’ve been in your home for a while, chances are that you have considerable equity, both as a result of paying off your initial home loan and from rising property values.

Equity is the amount of your home that you own; that is, the value of your property, less the outstanding loan amount. For example, if your property is valued at $500,000 and you owe $300,000 on your loan, your equity is $200,000 ($500,000 – $300,000 = $200,000).

As long as you can meet the repayments and the renovations are likely to add value to your property, most lenders should be willing to lend you a percentage of your equity for home renovations. Depending on your situation, this equity could be accessed through redrawing, increasing your existing loan or refinancing your loan entirely. A Mortgage Broker will be able to advise on the best option for you.

Building loans

Most home loan providers will offer a product called a building or construction loan, which acts as a line of credit that you can draw on as renovation costs become due. The advantage of these are that you aren’t making repayments on the full value of the loan at once, but only on the progressive loan balance, which will change over time. That means you can start to pay off the first invoice before the next ones come in, saving you money overall.

Your broker can assist in checking with your home loan provider whether the loan is ‘interest only’ for an initial period. If it is, this will also help to keep your costs down during the crucial building period. If the provider doesn’t have a specific building loan, they may let you have a general line of credit, which functions similarly. Once the renovations are finished, the loan or line of credit can even be rolled into your home loan.

Personal loans

Especially where a renovation is small – perhaps you just want to update your kitchen without any building works – you might consider a personal loan. As personal loans are generally not secured against your property, the interest rates are usually higher. However, as the term of the loan is much shorter, you should pay less interest over time.

Each option has advantages, so it’s worth spending some time considering them carefully. Remember, it is my job as a Mortgage Broker to help you with any questions you might have.

Love to hear from you,

Bernadette

Authorised Credit Representative

The Edge Mortgage Consultants

So the silly season is over! What might have been a bit of Christmas cheer and decadence, can quickly turn into a shock when your post Christmas credit card bill hits your inbox.

Are you laughing...or are you a tad alarmed?

Here are five apps that can help you you stay on top of your budget right from the get go in 2018.

Money Health Check

Money Health Check assesses your finances and lets you know whether they’re in need of some tender loving care or whether you’re on the right track.

This free MoneySmart app asks some simple questions, and then gives you a breakdown of what areas need attention and where you’re doing well by looking at:

Financial goalsIncome and expensesDebtsSaving and investingInsuranceSuperannuation and retirementEstate planning.

The great thing about the app is that it’s personalised, and at the end it gives you the top five actions you need to take to improve your finances.

TrackMySPEND

Also created by MoneySmart, TrackMySPEND allows you to input all of your expenses so you can find out where you need to cut back and save.

Examples of expenses you can put in include medical, grocery, work or travel, gifts and coffees, lunches or dinners. You can also nominate a spending limit per week, fortnight, month or year, and the app will track your progress against this limit.

The key feature of this app is the ability to mark expenses as ‘need’ or ‘want’. That way, when you revisit your expenses you can see what you can cut back on and where there are opportunities to save.

Pocketbook

Pocketbook categorises all of your spending so you can see where your money is going. Categories include groceries, travel, clothing and fuel, among others. You can also set your budget so you can stick to it.

The great thing about this app is that you can link it to your bank account so you don’t have to manually input every expense – the smart technology does it for you. Another handy feature is the alerts. Notifications appear when money comes out of your account so you won’t miss any transactions or accidentally forget to input them. Finally, there are the encouraging words when you’re close to reaching a goal.

Splitwise

Ever had a friend or family member who constantly forgets to pay you back? There goes that money – and with it, the ability to save. Splitwise is a great way to remember who paid for what and how much people owe each other, whether it’s dinner, rent or a movie ticket.

This app lists what you’ve spent and what the other person has spent, then it does the maths for you. It also gives you the ability to send IOU emails.

Expensify

We’ve all been there – tax time comes around and you simply can’t find all the receipts you need to claim tax back on. Expensify lets you scan your receipts when you get them and stores them in a nice bundle so you can access them at a swipe or tap of your finger.

The great thing about the app as well is that it actually extracts the data, including the merchant, date, time and amount, and puts it all in a downloadable file for you.

As your broker, I will be able to give you advice to help you save money throughout the loan process. On top of this, sticking to your budget so you can be more financially fit is not difficult – sometimes you just need a bit of technological help.

Let's have a chat.

Bernadette Leahy

So many features, how do you know which one to choose?

Loans are by no means ‘one size fits all.’ Different loan types suit different age groups, different living situations and even different attitudes to money.

A common trap some home-owners fall into is to consider a mortgage ‘set and forget’. You did your research, shopped around, found the right option and now you’re reluctant to revisit the process – even if your personal circumstances have dramatically changed.

Before you start shopping around for a new loan, or an upgrade to your old loan, it’s worth knowing a little bit about the options available. The three most common options are variable rates, fixed rates and combo rate loans:

Back to the basics?

You could also consider purchasing a white-label loan. White-label loans are increasingly popular – but for those unfamiliar with the term it can be confusing. A white-label loan is essentially a home-branded loan, much like the home-branded products you see in the supermarket aisles. Like these products, white-label loans aim to deliver many of the same great features as bank-branded home loans, but for a lower cost to the customer.

You can access different types of white-label loans – whether variable, fixed or combo. White-label products are known for being high quality, low-cost and flexible. They are particularly suitable for home-buyers looking for a simple, straightforward product as through white-label you can have access to the loan-features you need, (like redraw, debit card access and a customer care facility), and you don’t have to pay for bells and whistles you won’t use.

If you’re not sure which of these options sounds right for you, it is my job as a Mortgage Broker to provide you with the answers you need and a helping hand to make this important decision. I have access to a myriad of loans from a range of different lenders – you can receive independent, unbiased advice based on my many years in the industry. Just ask.

It’s one of the less glamorous home loan features, but the redraw facility deserves a second look. Here’s why:

The redraw facility explained

A redraw facility lets you make additional repayments to reduce your variable rate home loan balance and save on interest. If you pay more than your minimum scheduled repayments, then you’ll have money available to redraw from your home loan.

The redraw facility is a common feature of many home loans. It’s not available, though, on construction loans and only some lenders allow it for fixed rate loans.

You can redraw funds if, and when, they are needed, or you can keep the funds in your home loan to pay off your principal faster. The amount available for redraw is the difference between what you have paid and how much you were required to pay, less one month’s scheduled repayment.

Accessing redraw You can check your loan account online to view your available redraw amount at any time. Alternatively, you can call your home loan customer care team and ask them to check for you.

You can withdraw your funds from certain ATMs depending on your lending provider, but this may attract certain fees and come with restrictions on minimum amounts.

What happens after using redraw? After you redraw money from your home loan, you continue to make your regular repayments as normal. However, be aware the interest component of the repayments you make will increase since you’re now paying interest on a higher loan principal amount.

What are the benefits? Like an offset account, a redraw facility can help reduce the total interest paid on your loan and shorten the life of the loan. And, of course, when you need some cash it’s easily accessible.

Depending on your lender, additional payments can be made at no extra cost and redraw funds can be accessed at any time.

When comparing loans and choosing the option that best suits your financial needs, remember to consider the redraw facility.

In Australia, there are a number of ways to structure your home loan repayments. Finding the best option may save you time and money on your mortgage. Here is some information to help you choose the repayment structure that works best for you.

Variable rate loans

Variable interest rate loans are all about flexibility. Essentially, with a variable rate loan, the interest rate moves up or down as the market moves. This means your loan repayments may also change month-to-month.

If the interest rate drops, then your repayments may drop as well. However, in the event of an interest rate rise, your repayments could also increase.

Many variable rate loans come with additional features, which can reduce the amount of interest paid over the life of the loan. For example, a variable rate loan with a 100% offset arrangement links your loan account to your savings account. Any funds held in your savings account are offset against the borrowed amount, reducing the interest you have to pay.

Many variable rate loans offer flexibility in terms of increased payments, allowing you to pay off your loan faster if you have additional funds available.

Fixed rate loans

A fixed rate loan is one where the interest rate is fixed for a limited period, and immune from any movements in the market. The most popular choices are three and five-year fixed interest loans, although options ranging from one to ten years are available.

Fixed rate loans allow you to make steady, regular repayments. They’re great for borrowers on strict budgets, or if you’re entering into a mortgage at a time when interest rates are likely to rise.

In the event of a drop in interest rates, being locked into a fixed rate may mean your repayments are higher than they otherwise would be. It’s also worth noting that breaking a fixed rate loan can potentially cost thousands of dollars in fees.

Additionally, many banks will charge you a fee for making extra payments towards the loan during the period it has been fixed.

Split rate loans – a foot in each camp

A split rate loan is when you break your mortgage into two loans – one with a fixed rate and one with a variable rate.

It’s something of an ‘each-way bet’. A split loan offers borrowers protection from rate rises (with the fixed portion of the loan) alongside the advantage of rate drops (with the variable portion of the loan).

Most banks will allow you to split your loans from the outset, without having to pay for two separate loan applications.

Choosing the right kind of loan depends on your personal situation, earning capacity and long-term goals for your property. Speaking with a mortgage broker can help you to figure out the best way forward, and could help you save money along the way.