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Hello,
There have been some monumental changes in lending policy over the past few months which has resulted in making it more difficult to qualify for a home loan.
Due to the global financial crisis the banks feel it is prudent that they tighten their policies. I cant argue with this but it has really negated some of the good work done by the First Home Owners Boost. A lot of first home buyers can now not obtain finance since they dont have sufficient deposits.
A summary of the main changes are as follows:
- The maximum loan to valuation ratio offered by most lenders now is 90%. There are still a few lenders that are still offering loans of up to 95% of the purchase price + lenders mortgage insurance but they are becoming more difficult to qualify for. 100% home loans are no longer offered by any of the lenders on our panel. 100% loans are only available where you have a guarantor.
- Lenders are now requiring borrowers to show that they have genuinely saved at least 3% to 5% of the purchase price of a property over a period of at least 3 months. This needs to be confirmed with bank statements. There are still some lenders though that will consider lending up to 90% of the purchase price of a property without this genuine savings requirement.
- Low doc loans have become more expensive and most lenders now ask for Business Activity Statements to confirm the declared income. There are a few lenders though that dont require this. No Doc loans, where an income doesnt even need to be declared, are all but extinct.
- The interest rate discounts that can be obtained on loans are less than could have been achieved a year ago. For example I was able to arrange a 0.80% p.a. discount off the standard variable rate for customers who borrowed more than $500k a year ago. Nowadays it would be difficult to get any more than 0.70% p.a.
Although things are tougher there are still options out there. Just call me to discuss your individual situation.
Enjoy this newsletter and feel free to pass it on to family and friends.
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PO Box 319
Toongabbie NSW 2146| Tel: | 1300 66 12 11 | | Mob: | 0404 037 663 | | Fax: | 02 8214 6592 |
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Responsible Lending Laws
When you take out a home loan you want the peace of mind to know you are dealing with a broker who has demonstrated knowledge, experience and integrity.
It's with this in mind that the federal government has introduced the National Consumer Credit Protection Bill 2009, which puts in place new national responsible lending laws for all consumer credit.
Read More >>
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Serious About Saving
From childhood most of us are taught the value of saving money, a lesson that can now pay dividends for those entering the home loan market.
As banks and other lenders tighten their lending criteria in the face of the global economic crisis, the requirement for borrowers to show genuine savings to secure a home loan is fast becoming the norm.
Read More >>
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Budget Boost for Home Buyers
The Federal Government's 2009 Budget has generated optimism in the property market thanks to a $22 billion infrastructure program and extension of the First Home Owner's Grant.
Both initiatives are considered as positive steps in the move to stimulate our economy and give first home buyers a foothold in the housing market.
Read More >>
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Redraw and Offset: A Step Ahead
While interest rates remain low, it pays to stay ahead of your minimum monthly repayments by using a redraw facility or offset account.
Since mortgage rates have dropped, nearly one in three suburban families continue to make more than the minimum required monthly home loan repayment*, a choice that will save years off their mortgage and thousands of dollars in interest.
Read More >>
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Mortgage & Finance Association of Australia
Mortgage World Australia is a full member of the MFAA. As a member we must adhere to an Industry Code of Practice, which requires professionalism, ethical behaviour, transparency and a commitment to you, the borrower.
This helps to ensure that your best interests are at heart whenever we make a finance recommendation.
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News & Specials
- Bankwest have brought back their Rate Tracker Home Loan which offers a 0.90% p.a. discount off the average standard variable rate of the big 4 banks for the first 3 years of the loan. There is also no early repayment penalty on this loan which means you can refinance after 3 years without being charged a hefty exit fees.
- As of Monday 13th July RAMS are offering a FlexiFix product where up to a maximum of 50% of the loan amount can be fixed for 2 years at 4.99% p.a. rolling over to the Smartway Variable rate after 2 years. Variable portion can only be taken as a Smartway Variable loan which currently offers an interest rate of 5.49% p.a.
- St.George are offering a 0.15% p.a. discount off their fixed rate home loans if taken under their Advantage Package. Westpac are offering a 0.20% p.a. discount off their fixed rates under their Premier Advantage Package.
- Although most lenders are no longer offering cheap low doc interest rates RAMS are still very competitive in this market.
- Go into the draw to win $10,000 in Cold Hard Cash by either booking an appointment with us, using our services to take out a home loan or by referring a friend. Competition ends on 31st July 2009.
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Disclaimer: This newsletter is intended to provide general news and information only. Readers should rely on their own enquiries before making any decisions regarding their own interests. Please do not rely on any part of this newsletter as a substitute for specific legal or financial advice. All material is copyright 2009.
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