#debt / 23 posts found
Case study: avoiding settlement penalties
Jarrod Harrison** was well on his way to becoming a first-home owner when issues cropped up prior to settlement that threatened to cost him his deposit. Having found the house he wanted to buy, and exchanged contracts for sale, Jarrod found himself considering a costly settlement extension due to unexpected problems with his deposit. While he had thought that having a deposit sitting in his account would make the process simple, Jarrod had not realised that he needed to have the funds in his account for a minimum of three months before a lender would consider them genuine savings. His […]
Home loans 101
There are a range of home loans available in Australia, so it can be hard to understand their features and whether they are right for you. This guide explains all you need to know. Variable loans Variable loans are loans that are subject to interest rate fluctuations. Whenever your bank increases or decreases interest rates, you will end up either paying more or less for your loan, depending on what the bank has decided to do. A typical owner-occupied mortgage is taken out over 25 or 30 years, although you can reduce the overall term by making higher or more […]
Six mistakes business owners make when taking out a business loan
A small business loan can be invaluable when you’re establishing your business or when an unforeseen setback occurs, but you don’t want a loan to be short-term gain and long-term pain. Here are six common mistakes businesses should avoid when it comes to commercial finance. Mistake #1: Not getting the right loan A thriving business requires enough capital to meet expenses, expand and invest, but it’s important to know why you need the funds and what loan best suits that need. Do you need to cover short-term cash flow shortages, for example? A line of credit could help, where you […]
Five questions potential first-home buyers should ask themselves
As a new home owner, you may be asked by friends and family interested in buying their first home what to consider before diving in. Here are five tips you can pass on. Is it the right time? Moving house can be stressful and time-consuming, so consider whether it’s suitable right now. Will your children need to move school? Are there work obligations that could make a move challenging? If you’re planning major life changes like having a baby, you’ll need to factor these in. 2. Am I ready? When considering your financial situation, do you have debts (like a personal […]
Why location is crucial when buying an investment property
The first thing most of us look at when selecting an investment property is its location. If the property itself isn’t quite right, you can always renovate, but it’s not as easy to move a house to a better location. That’s why you should consider the location carefully. Here are some of the most important things to look for. Love thy neighbour Before you buy, familiarise yourself with the local community. If possible, visit the neighbourhood during both day and night to get a feel for whether it’s a safe place to live. Are there kids playing outside or security […]
How low can you go: making the most of record-low rates
After all the talk, December 2020’s decision by the Reserve Bank to cut rates didn’t come as a surprise. The RBA’s call sent the cash rate to a historic low of 0.10 per cent. And as of recently held RBA Board meeting on 2nd Feb 2021, it remains at 0.10 per cent. The call was the latest attempt by the RBA to drive economic growth, and while much of the current conversation surrounds just how low the RBA can go and how fast, there are some good ways for you to make the most of these new financial conditions. Shop around for […]
Overcapitalising: What it is and how to avoid it
There are certain things to look out for when selecting and applying for a loan for your investment property. Here we look at the main differences, the most popular loan types, and how to get the best mortgage for your situation. Interest-only, fixed, variable, offset – finding the investment home loan that’s right for you can seem like a minefield of financial jargon and conditions. The key to finding the right loan is to have a clear investment strategy: are you going to renovate and sell, or stay on for the long term and ride the property wave? Fixed interest […]
Overcapitalising: What it is and how to avoid it
As a home owner or property investor, you may have heard the term ‘overcapitalising’. But what exactly is it and why is it considered bad? While adding a new deck or kitchen can increase the value and enjoyment of your property, overcapitalising can end up costing you more than you planned. Here’s a closer look at what overcapitalisation is, why it’s bad, and how you can avoid it and still increase the value of your property. What is overcapitalising? Simply put, overcapitalisation is when the cost of a home improvement is more than the value it adds to your property. […]
The art of the possible: how to pay off your mortgage sooner
It’s a simple equation. Paying down your mortgage sooner can save you thousands of dollars in interest in the long run. Here are some ways to make the most of every dollar while paying off your loan quicker. Increase your repayments… Let’s take a look at repaying a $500,000 home loan, using the mortgage calculator available on Xchange Finance’s website. If such a loan was taken at a fixed rate of 5% and paid back at $2700 a month along with $10 in monthly fees, it would take one month shy of the Australian average of 30 years to pay off. And […]
Does the gig economy make it harder to get a mortgage?
For lenders, the ideal customer has a steady income, ongoing employment and the ‘right’ paperwork. Here’s what you can do to get a loan in the gig economy. From launching a start-up to contracting in the ‘expert economy’ or just renting out the spare room as an Airbnb, more and more Australians have sources of income that would have been considered unusual even a decade ago. According to Independent Contractors Australia, self-employed workers – in what is widely called the ‘gig economy’ – now total more than 17 percent of the Australian workforce. That’s two million people who don’t conform to […]