I thought the government had banned exit fees!

cloud-confusionBy law, all mortgages funded on or after 1 July 2011 will not include early exit fees. If your home loan was set up before July 2011 then you may still have significant exit fees.

Early exit fees were also known as deferred establishment fees, early termination fees, exit administration fees and break fees. They were commonly charged if you repaid or refinanced your loan within a predetermined period (usually the first three to five years) and were typically charged on variable home loans. In many instances the size of this exit fee did not equate to the true economic cost to the lender in establishing your loan.

The legislation was introduced to encourage lending institutions to be more transparent with their fees. Establishment fees are now  charged upfront, allowing borrowers to more easily compare loan options and increasing competition between the lenders.

As a result of the legislation, some lenders have reintroduced or increased upfront application fees, however these are now more reflective of the true cost of establishing a loan.

It is important to note that exit fees are different to those fees charged by a lender (more commonly known as penalty interest) as a result of breaking a fixed interest period loan.

As your mortgage consultant, we will explain and outline the costs you may still be charged when switching loans.

When switching loans, the required fees relate to the settling of your loan, removal of your existing mortgage and the establishment of a new loan and mortgage.

These costs may include:

  • legal fees,
  • settlement charges,
  • discharge fees,
  • lender’s mortgage insurance,
  • mortgage duty,
  • mortgage registration fee,
  • mortgage discharge fee,
  • valuation fees,
  • fixed rate penalty interest, and
  • application fees.

All these fees still apply.

These fees are further explained below:

Legal Fees

These fees may relate to the cost of preparing your mortgage and loan documents or the discharge of your mortgage.

Settlement Charges

This fee is to pay for your lender to attend your settlement. It may also be charged for an internal settlement.

Discharge Fee

This administrative fee covers the lender’s cost of removing the mortgage registered on the title of your property. It is usually between $150 and $600.

Lender’s Mortgage Insurance

Normally a lender will require lender’s mortgage insurance if you are borrowing more than 80% of the value of the property.In most cases the underwriter will not transfer the insurance to a new lender and you will require a new insurance policy.

Mortgage Duty

Mortgage duty applies in some states and is dependent on the purpose of the funds, for example if the loan is to secure financing an investment property.

Mortgage Registration Fee

This is a government charge to register a mortgage on the title. The mortgage remains in place until your loan is paid out in full or refinanced to a new lender.

Mortgage Deregistration Fee

This fee is usually charged to remove the mortgage registered on the title of your property.

Valuation Fees

This fee may be charged by the new lender in assessing your new loan application.

Fixed Rate Penalty Interest

This relates to the economic loss to the lender as a result of you breaking your fixed rate interest period.

Application Fee

This relates to the cost of the lender in assessing your loan application and obtaining the necessary approvals.

These costs need to be taken into account if you are considering changing loans to take advantage of the lower interest rate environment.

Even though ‘exit fees’ no longer apply, these additional fees may outweigh the savings to be made by switching loans.  Some banks have now also introduced a ‘settlement fee’ for each loan when they are paid out. This isn’t usually more than a few hundred dollars but those fees weren’t there when banks were ‘exit fees’.

Whilst there are potentially some great financial savings to be made by changing loans, the decision needs to be well researched and considered.

Contact us on 1300 887 748 and don’t get caught by not knowing or understanding the terms, fees and charges of a new loan.  If you are currently changing or in the process of changing loans please call us urgently to ensure you have all the necessary information to determine if it is in your best financial interest.

You may already have what it takes to be a good property investor…..and it’s not necessarily a six figure salary!

couple

You may already have what it takes to be a good property Investor…..and it’s not a six figure salary!

Did you know that your skill and experience in managing a tight budget could make you a better property investor than some big spending high income earners?

We often meet people who are hooked on the good life: living in expensive suburbs, fancy cars, frequent dining out and overseas holidays. You’d be surprised however, at how many don’t have adequate savings for retirement or redundancy, let alone a solid investment plan.

Income earners on five figure salaries are often the ones who knuckle down and save. Careful budgeting and discipline, coupled with motivation, are very important attributes of successful property investors. If you have had good practice stretching your dollar further and living within your means, you might already have what it takes.

Low to medium income earners also often have a more realistic view of investment risk.

They know they need to do something to get a better financial future. Many people are scared to invest in property because they just don’t like having debt. That’s a fair call… but you can reduce your risk.

Will you be part of the 20% of Australians who invest to secure their financial future OR will you be in the 80% who will need to rely on some form of government support at retirement?

To make changes you have to act.

Today:

  • Interest rates are at an all-time low.
  • Property is considered on the upside.
  • Financial institutions are keen to lend to investors.

Spring is approaching – traditionally a period when there are more properties advertised for sale. It is also sometimes easier to obtain an investment loan than your first home loan.

Call us today on 1300 887 748

We can help you look at property investment options suitable for your own financial situation now and in future. We can calculate how much you could afford to borrow to invest or explain how to use your home equity to allow you to get ahead financially with limited risk.

Doing it your way – Self-managed super is it for you?

Nest EggFor many Australians, super is one of the biggest investments, if not the biggest investment, they will ever have. That’s why most people keep their super money in professionally managed super funds. However, some people want the hands-on control that comes with a self managed super fund. Of course, with added control comes added responsibility and workload. So how do you know if self managed super is right for you?

You need to read our article about self managed super to see if self managed super is for you.

Capitalising on a buyer’s market

For Sale - SOLD

There are real opportunities awaiting home buyers and investors who are willing to take the plunge.

The property market has been relatively flat in some areas. We have seen prices soften across some segments and in the not to distant past home sales fell.

With the number of listings soaring and fewer buyers around the traps, it is prime time for those armed with a sizeable deposit.

Get your house in order

A buyer’s market, in which the volume of property listings exceeds buyer demand, typically exists during periods of weak or negative consumer sentiment.

Understanding the right time to buy is key to successful investment, and while the risks may appear high, the likely returns can make buying a worthwhile decision.

Many investors aim to capitalise on a market with fewer buyers actively in search of a new home as this puts greater negotiating power in the hands of those willing to buck the trend.

Investors and home buyers with a sizeable deposit behind them will have greater ability to influence the price of a property.

Even more important, buyers that have had their financial situation reviewed by a mortgage broker can more quickly and with more authority negotiate with a real estate agent as they will know that you’re a serious player.

If you’d like us to assess your current borrowing capacity with view to capitalise on the current market
call today on 0419 716 424 or 1300 887 748.

Thinking big – Investing, less than 5% do it more than once.

BuildingAn investment property can be the path to financial security.

Most of us are aware of this. So why are we so reluctant to go to the next level and invest in a second and third investment property?

To find out why we don’t and how you can read our article Thinking Big.

Finders keepers – How to find a good property manager

For RentWho can you trust with the day to day management of your investment property?

Selecting a property manager can be a difficult and time consuming task. Find out the questions you should be asking a prospective property manager by reading our article on how to find a good property manager.

Doing it your way – Self-managed super is it for you?

Nest EggFor many Australians, super is one of the biggest investments, if not the biggest investment, they will ever have. That’s why most people keep their super money in professionally managed super funds. However, some people want the hands-on control that comes with a self managed super fund. Of course, with added control comes added responsibility and workload. So how do you know if self managed super is right for you?

Read our article Doing it your way.