Fi­nan­cial

Hills to Hawkesbury Living Magazine - - In The Issue - by San­dra Dig­nam

10 Years ago, I met a most de­light­ful wo­man when I pro­vided her a Se­niors Loan, oth­er­wise called a Re­verse Mort­gage. She had the most adorable timber cot­tage that matched her bub­bly per­son­al­ity and which she had de­signed her­self. The cot­tage nes­tled into the veg­e­ta­tion and a flo­ral trimmed timber deck and sunny sit­ting room over­looked a lush and fern filled gully. She had the whole house filled with quaint sou­venirs from all over the world which were a trib­ute to her trav­els, and she had no de­sire to ever leave her beau­ti­ful haven and the won­der­ful gar­den she had cre­ated. She wanted to take some of the eq­uity from her home to add to her life­style and trav­els.

Re­cently she called me again as the 10-year loan term had passed and she now needed to re­new her loan. She wanted to take out ad­di­tional eq­uity and do more trav­el­ing. The value of the home had in­creased and she was now 10 years older so her cir­cum­stances now qual­i­fied her to take a new Re­verse Mort­gage, a bet­ter loan with a spe­cial­ist Se­niors Loan provider at a lower in­ter­est rate and with no on­go­ing fees, and this new loan pro­vided her with her up­dated needs.

Rea­son num­ber one for re­fi­nanc­ing is to bring your loans into line with your cur­rent po­si­tion and cur­rent needs.

This week I met a lovely cou­ple who have down­sized into a peace­ful mod­ern gar­den com­plex. Like so many, they had found it harder and harder to keep up with pay­ing the daily ex­penses on the pen­sion. They had a Re­verse Mort­gage with a ma­jor bank and high-in­ter­est credit cards with in­creas­ing bal­ances. Re­fi­nanc­ing their Re­verse Mort­gage with a spe­cial­ist lender at a lower rate and no on­go­ing fees, as well as in­cor­po­rat­ing the credit card debt into the Re­verse Mort­gage, will save them sev­eral thou­sand dol­lars in in­ter­est and fees in the first year - and ev­ery year af­ter that! They will now be free of in­creas­ing credit card re­pay­ments and have enough sav­ings to take a hol­i­day, or ren­o­vate, or ful­fill some wish from their bucket list.

The se­cond rea­son to re­fi­nance is to con­sol­i­date debt, and make re­pay­ments eas­ier, re­duce in­ter­est and fees, and save con­sid­er­able money.

Both the above clients re­fi­nanced a Re­verse Mort­gage or Se­niors Loan to ob­tain a bet­ter out­come. If you have a Re­verse Mort­gage and you would like to in­ves­ti­gate some en­hance­ments to your cur­rent loan, maybe see if you qual­ify for a lit­tle more money for some spe­cial treats, or maybe pay out some credit card debt, it may well be pos­si­ble to im­prove your cur­rent sit­u­a­tion. The best Re­verse Mort­gage on the mar­ket is cur­rently 6.19% in­ter­est.

It re­ally is worth the ef­fort of hav­ing your loans as­sessed by a qual­i­fied fi­nance and mort­gage bro­ker who has ac­cess to a large spec­trum of loans. Some bro­kers charge a bro­ker­age fee which can be min­i­mal or quite ex­pen­sive, how­ever many bro­kers will pro­vide this ser­vice at no charge and will be able to sug­gest bet­ter op­por­tu­ni­ties to save money if you re­fi­nance to a bet­ter loan. Make sure you check that you have a bro­ker who will pro­vide this ser­vice for free.

Take the young fam­ily strug­gling to meet the mort­gage re­pay­ments each month while pay­ing all the mount­ing ex­penses of rais­ing chil­dren. If they have a mort­gage of $500,000 and an in­ter­est rate of 4.5%, they will pay $1,875 ev­ery month just in in­ter­est. If they re­fi­nance to 3.89% they would pay $1,620 per month in in­ter­est and save $254 ev­ery month that can be spent on other things for the fam­ily. That is a sig­nif­i­cant sav­ing - $3,050 in 1 year – enough to go on a fam­ily va­ca­tion. What about an even lower rate of 3.69%? Now the sav­ing in in­ter­est be­comes $4,050. Sup­pose their cur­rent in­ter­est rate is higher, say 5%, then the sav­ings from re­fi­nanc­ing go up to $6,550. What could a fam­ily do with an ex­tra $4,000 - 6,000 a year? Per­haps con­sol­i­date a credit card or two that sim­ply seem to grow in­stead of get­ting cleared, and the sav­ings get even big­ger. This should en­cour­age ev­ery home owner to get their home loan as­sessed reg­u­larly with an ac­cred­ited Fi­nance and Mort­gage ex­pert.

The third rea­son to re­fi­nance is to save in­ter­est and use your money for bet­ter things and more im­por­tantly to stop giv­ing the al­ready rich banks more of your money than you need to.

When it comes to those of you who have one or more in­vest­ment prop­er­ties the need to as­sess your loans is even more crit­i­cal. The sav­ings an in­vestor can make over sev­eral loans when re­fi­nanc­ing can mount up to a very sig­nif­i­cant amount.

If you have fixed rates you can usu­ally only re­vise the loans at the end of the fixed rate pe­riod or there may be penal­ties amount­ing to the in­ter­est the lender will miss out on when they re-lend that money, es­pe­cially if the rates have dropped.

If you have vari­able rates the banks can in­crease the rates when­ever they wish, so you need to keep very aware. All in­vest­ment loans should be as­sessed ev­ery 12-18 months and re­fi­nanced if sig­nif­i­cant sav­ings can be made. That may sim­ply re­quire your Bro­ker ne­go­ti­at­ing with the cur­rent lender but more likely there will be spe­cial of­fers in the mar­ket that will be more ap­peal­ing.

In­vest­ing in prop­erty is a busi­ness and as such costs need to be kept to a min­i­mum and in­ter­est is a cost of do­ing that busi­ness. Your Bro­ker will be re­vis­ing your loans pe­ri­od­i­cally and will con­tact you if you need to make some changes. Ul­ti­mately how­ever, no-one can look af­ter your money as well as you can, so call your Bro­ker ev­ery 12-18 months and have a chat. They will be able to up­date your ser­vice­abil­ity and eq­uity po­si­tion and may sug­gest when you have the ca­pac­ity to pur­chase an­other in­vest­ment prop­erty.

The fourth rea­son to re­fi­nance is to keep your in­vest­ment busi­ness costs to a min­i­mum and to be al­ways ready for fur­ther in­vest­ment.

For more in­for­ma­tion about an as­sess­ment of your loans, con­tact San­dra from Ev­ery Loan on 96532034 who will be happy to clar­ify your op­tions in spe­cific de­tail.

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