Winter / Spring 2009

OUR TEAM AT
MORTGAGE CHOICE
On the road to refinancing

Anthony Smith Mark Boulton

Ph: 03 9585 7779 Ph: 03 9585 7779
Fax: 03 8610 0365 Fax: 03 8610 0365
Mob: 0413 439 761 Mob: 0403 047 147
anthony.smith@ mark.boulton@
mortgagechoice.com.au mortgagechoice.com.au

Chris Howitt Craig Micallef Jenny Yu

Ph: 03 9333 4370 Ph: 03 9308 9163 Ph: 03 9585 7779
Fax: 03 9333 4376 Fax: 03 9308 9257 Fax: 03 8610 0365
Mob: 0401 334 599 Mob: 0417 655 577 Mob: 0402 793 886 With the potential to enjoy big savings repayments. Now, with the official cash
chris.howitt@ craig.micallef@ jenny.yu@
mortgagechoice.com.au mortgagechoice.com.au mortgagechoice.com.au off your monthly repayments and rate at historical lows, Tom is thinking of
better loan features, it’s no wonder refinancing a third time to take
that close to 20,000 Australians advantage of the current fixed rates.
refinance their mortgage every
“…getting the best deal”
month, according to ABS statistics.
While he acknowledges that “refinancing
Home owner Tom Scahill reckons there
Shaun Curtis Mitch Jones Stephen Forrester can involve some paperwork”, Tom
Ph: 03 9585 7779 Ph: 03 9585 7779 Ph: 03 9585 7779 are plenty of pluses in refinancing. A
Fax: 03 8610 0365 Fax: 03 8610 0365 Fax: 03 8610 0365 believes it’s worth the effort. “It’s all
Mob: 0423 720 340 Mob: 0412 881 907 Mob: 0409 250 347 seasoned convert, Tom has refinanced
shaun.curtis@ mitch.jones@ stephen.forrester@ about getting the best deal,” he reckons.
mortgagechoice.com.au mortgagechoice.com.au mortgagechoice.com.au twice in the last eight years and he’s on
Mortgage Choice Limited the road to refinancing once again. The prospect of interest savings is the key
302 Charman Road CHELTENHAM VIC 3192 motive for around one in four refinances.
When Tom first refinanced in 2003, he
Phone 03 9585 7779 Fax 03 8610 0365
opted for a competitive 5-year fixed rate As a guide, refinancing a $250,000
www.mortgagechoice.com.au/cheltenham1
This franchise is independently owned loan to shelter his budget from the home loan from a rate of 6.0% to
and operated by Gracetree Group Pty Ltd subsequent upturn in interest rates. another charging 5.75% could trim the
ATF Gracetree Trust ABN 47 921 528 245 total interest payment by as much as
By mid-2008, Tom had itchy feet again.
$11,400 over the course of the loan
With his fixed term about to end, Tom
(provided the new loan is written over
approached his broker, who tracked
the same period as the remaining loan
down a new variable rate loan offering a
substantial saving off his monthly continued on p2....

Be Quick to Secure $32,000 in First Home Owners Grants for New Homes
A window between July 1 and Sep 30 is open for
FHB’s who buy or construct a new home to gain $32K
in government grants.
These increased grants may help people overcome the strict new
policies banks have introduced recently regarding deposit size
and savings. While we are not normally big fans of these types of
properties,for people with little or no deposit it could be the last
chance to get into the market for some time. With high rents it is
hard to save the normal deposit required so if you fit into this
category this could be a great opportunity to become a home owner.
Mr R Crane from Cocoon R/E in Melb cautions that potential buyers
of lower-cost city fringe developments should not expect quick
growth in property values in areas with a high supply of property and
limited amenities, but once amenities increase,growth may follow.

let’s make the right move

....continued from p1
term being refinanced. Alternatively, you
could extend the term to reduce your
monthly repayments.) If your mortgage
is larger, or the rate gap is even
wider, the interest savings can be far
more substantial.
A further 15% of home loans are
refinanced as part of a debt consolidation.
Folding a personal loan or credit card
balance into a mortgage can make the
repayments more manageable and may
also provide big savings, especially for
credit card debt which can attract interest
charges as high as 20%; however, this
will depend on a person’s individual
circumstances and repayment ability.
Crunch the numbers
Along with the benefits, refinancing can
involve costs. So before bailing out of
your current loan, it’s essential to check
that the numbers stack up. In addition to
upfront fees imposed by the new lender,
it’s worth enquiring about ‘exit’ fees, also
known as ‘deferred establishment’ fees,
charged by your current lender.
Frank Lopez, financial analyst with
research group Canstar Cannex, says,
“Exit fees are payable on around 80% of
all mortgages, generally if you leave your
loan within the first 3 to 5 years”.
Some lenders charge a fixed exit fee,
and Lopez notes that “all the major
banks charge between $700 and $1,000
if you exit during the first 3 to 4 years”.
Other lenders charge a percentage of
the outstanding loan or a multiple of
monthly repayments, so this definitely
something worth enquiring about.
Borrowers may also face additional
Lenders Mortgage Insurance (LMI)
charges if the value of their home has
dropped, or the loan size has increased
over 80% of the property’s market value.
Faced with a today’s wide choice of
loans and lenders, a mortgage broker
can provide a clear picture of whether
refinancing will leave you better off and
which loan is suitable for you. A simple
home loan health check may be all it
takes for your broker to confirm whether
your current loan is still the best option
for you.
Tips for interstate buyers
Investing in property interstate can He then recommends looking at
allow you to take advantage of websites to gauge the style and price
growth opportunities from new of properties available and speaking to
infrastructure projects or changing local real estate agents.
demographics, or simply the
“If you stick to the basic formula of
opportunity to turn your investment
doing the research, ringing around and
into a holiday home later.
sticking to where money is going to be
But there can be problems with spent and jobs created, then rents are
purchasing in a market that is likely to increase and property prices
unfamiliar and far away, particularly in tend to follow,” Huxley says.
terms of property inspections.
According to Dennis Kalofonos from
Thankfully, there are plenty of tools and Sydney Property Finders, it is important
services to minimise some of the legwork. to purchase in an area with a steady
rental income. Understanding the
Firstly, each state has different legal
area’s unemployment figures and
requirements and fees for property
demographics will give an indication of
transfer. For state specific information,
the tenants the rental property will attract.
look up the local State Revenue Office
website, which provides a good Local infrastructure, such as public
overview of state property incentives transport, entertainment, schools and
and tax legislation. childcare, is also important to tenants
and can be easily researched on
When deciding where to buy, Robert
the Internet.
Huxley from the website Next Hot Spot
says a good starting point might be to “The neighbourhood is probably more
look for new infrastructure that will important these days than the property
generate jobs, such as a new freeway. itself,” Kalofonos says.
Keeping it safe – landlord’s duty of care
In our increasingly litigious society, landlords can’t afford to overlook their
legal responsibility to provide a safe property.
From the moment you own your own property, you face the prospect of legal action in
the event that anyone suffers an injury as a result of your negligence.
Taking out landlord insurance is a sensible precaution for all investors and most
policies provide around $10 million in legal liability cover. Premiums vary widely;
however, the cost can be claimed as a tax deduction.
Even with cover in place, landlords are still required to minimise
the risk of injury to tenants and a few simple precautions can
significantly improve the safety of an investment property.
As a starting point, a pre-purchase pest and building
inspection is essential (expect to pay around $400). Following
this up with an annual property inspection will allow you to
identify problems at an early stage. Any repair work should
always be carried out by licensed tradespeople.
Dealing with a reputable property manager, who responds
promptly to a tenant’s request for repairs, will also help to
minimise exposure to legal claims.
let’s make the right move
Toughened lending
criteria and what it
means for you
In recent months, financial institutions have adopted a
more cautious approach to their lending policies in a
bid to safeguard their organisations and customers
from deteriorating economic conditions.
The market is seeing a return to lending requirements not
seen for many years - back to a time when a
home loan approval
relied on an upfront
deposit built from
genuine savings in
some shape or form.
Some financial institutions
are currently stipulating
that borrowers must show
five per cent genuine savings
for home loans when the
loan-to-value ratio (LVR) - the
percentage of the property’s
value you’ll borrow - is over 80%.
Others require that borrowers
show genuine savings when the
LVR exceeds 85%.
Make your bricks and mortar go further
Thinking of updating your bathroom or replacing some tired
fences? Perhaps you want to make some significant
structural changes to better suit your home to your
current lifestyle, such as installing a long-awaited
walk-in wardrobe, decking or an extra room. If
you’re keen to renovate, an equity loan could
help bring your vision a step closer to reality.
Equity loans allow you to access the equity
in your property for a range of purposes,
including completing renovations. The
potential loan amount accessible to you will
depend on the amount of equity you have
built up in your property. Your loan
repayments will be increased to cover the
expanded loan amount and stretched
out over your remaining mortgage term.
A Queensland couple recently used an
equity loan to breathe new life into their
$635,000 home which they purchased
in early 2008. Being able to access
let’s make the right move
Gone are the days when homebuyers could access loans for
100% or even 95% of the total purchase price. Today first
home buyers cannot rely solely upon the First Home Owner
Grant alone to use as a deposit.
For instance, someone borrowing $360,000 for their first
property may be able to borrow up to 90% of the purchase
price; however, the borrower would also need to contribute
at least 5% of their own money, in addition to any money
received from the First Home Owner Grant, plus any other
state or territory based incentives into the loan, and the
borrower will need to pay for additional costs related to the
purchase, such as building inspections and solicitors, rather
than use the loan amount to cover this.
Dave, who recently obtained a loan pre-approval to buy his
first property in Sydney’s eastern suburbs, was able to
borrow 90% of the property purchase price; however, he had
to show evidence of genuine savings over at least a six
month period.
“90% LVR was the magic number for us,” Dave explains.
“Because we’d been thinking of buying for some time, we
had been careful to put away some cash regularly every
month for about the past year. This made the loan pre-
approval process that little bit easier.”
If you’re concerned about how changing lending policies could
potentially affect you, committing to a regular savings plan
before buying is a great way to start. This will help prepare
you for making regular mortgage repayments and illustrate to
lenders that you are capable of sound financial management.
$20,000 in equity allowed the couple to complete
kitchen and bathroom makeovers and install
new fences.
You should always conduct comprehensive research
to determine which renovations
will add value to your property.
It’s important to think further
ahead than the latest fad
in housing or it could
cost you in the long
term. Borrowing a little
extra now to complete
some cost-effective
renovations may be a
great way to add
value to your property
in the
long run.
 WINNER!
Congratulations to the
winner of the Summer/
Your chance to
WIN $5000 cash
Autumn Escape on your
dream holiday competition. when you settle a New Mortgage with Mortgage Choice
Ms C Shackle from Castle Hill
has won $6,000 to spend at
Flight Centre. To enter, all you need to do is confirm your current contact details
and your communication preference and send it to with one of our loan
consultants and you’re in the draw. It’s that easy.
Phone: 1300 302 668
TESTIMONIALS Fax: 03 8610 0365

Post: 302 Charman Road CHELTENHAM VIC 3192

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WIN $5,000 CASH PROMOTION: To enter, either make an appointment with a Mortgage Choice consultant by calling 13 6678 or by filling out the entry form on
www.mortgagechoice.com.au. Alternatively, if you are a Mortgage Choice client, complete the entry form in the Mortgage Choices Winter/Spring 2009
newsletter. The opening date of the competition is 30/07/09. All entries must be received by Mortgage Choice by 5pm AEST on 29/10/09. The draw will be held
at 4pm AEST on 30/10/09 at the offices of Mortgage Choice. The name of the winner will be published in the Australian on 04/11/09. There will be 1 draw and
the first valid entry will win. Complete terms and conditions and the privacy notice are available from www.MortgageChoice.com.au. The promoter is Mortgage
Choice Ltd at Level 10, 100 Pacific Highway, North Sydney, NSW 2060. Authorised under NSW Permit No. [LTPS/09/04825] and ACT Permit No [TP 09/02043].
Anthony & Mark show off their
recent industry awards bounty

State of the market

The Melbourne property market is being driven by three factors: improved affordability, increasing population and the
financial assistance being provided to first home buyers. 15 of the 20 top growth suburbs in Victoria for the quarter
have a median price of under $500,000 shows the significant impact of the first home owner activity and has resulted
in the strongest quarter for houses in four years.
The median house price for Melbourne decreased 3.1% over the March quarter 2009 compared to a decrease of 8.4% since the
March quarter 2008.
Vacancy rate data show that the availability of rental homes in Melbourne remained stable, with a vacancy rate of 1.4% across the
whole quarter. Inner city vacancy rates are the lowest with a rate of 1.2%. The vacancy rate in the middle suburbs improved slightly
from 1.4% to 1.6% and improved from 1.2% to 1.4% in the outer suburbs.
There was very little change in the availability of rental accommodation in key regional Victorian centres. The vacancy rate increased
by just 0.3% to 1.9% during the period.
Written by Real Estate Institute of Australia for Mortgage Choice

Privacy: There will be occasions where we would like to send you valuable information directly related to property finance, as well as other related offers, tips and opportunities. However should you wish to
receive only certain types of information or nothing at all, please contact your local franchise principal. Disclaimer: The content of this newsletter is written expressly for education purposes and is based on the
opinions of the authors. The authors and agents for the authors are unable to accept any liability or responsibility whatsoever to any error or omission or any loss or damage of any kind sustained by a person
or entity arising from the use of this information. It is recommended that you seek professional advice relevant to your specific circumstances before acting on the information based in this document.

let’s make the right move