How to meet your mortgage repayments during COVID-19

While leading lenders are offering a repayment holiday to borrowers caught in financial strife, one expert shares some alternate avenues to help ease the pressure.

The industry has manoeuvred through a myriad of stages since the onset of COVID-19. As swiftly as the pandemic had enveloped household finances – leaving many borrower’s incomes compromised overnight – leading lenders had introduced relief packages to assist borrowers in sustaining their home loan repayments in their hour of need.

While this comes as a welcome measure by ultimately allowing a borrower to delay their monthly repayment for three months, and in some instances six months, generally, if your loan term isn’t extended also, then your deferred repayments including the interest could impact your total loan balance.

Senior finance consultant at Orium Finance, Luke Heavey, says, “Keep in mind that any pause in repayments will end up being capitalised into the rest of the loan term but this can ease the financial burden of the repayments when you need it [the] most.”

In this case, Heavey advises borrowers to meet with a qualified and professional mortgage broker to explore the options that are available to them and how a repayment holiday would shape their loan.

“With growing economic uncertainty as a result of the coronavirus, many of us may be wondering how we will meet our mortgage repayments should our incomes be affected,” Heavey says.

“The good news is there are avenues in place to minimise or even delay mortgage repayments, which provides a safety net should your income be disrupted.”

Heavey shares three other ways in which you can potentially reduce your repayments and relieve some of the pressure of servicing your home loan during these disrupted times.

1. Check that your loan still has a competitive interest rate

The downward pull of the property market last year saw the slashing of the interest rate to a historic low.

But just as buyers, particularly first-timers, had thought that they were entering a home loan on the most advantageous playfield, the mounting threat of COVID-19 over the industry and the broader economy saw the RBA cut the cash rate even further to 0.25% in March.

“With record low interest rates, there’s a good chance that a better rate is up for grabs,” Heavey notes. “Talk to your mortgage broker about refinancing your mortgage to ensure it is costing you as little as possible.”

A mortgage broker can also direct you in the instance that refinancing your home loan is not a possibility for you at this moment in time; considering that some lenders have started to show signs of tightening their credit policies to minimise the occurrence of borrowers having to default on their loan.

Nevertheless, there’s also the option of seeking advice as to how you can reduce your monthly repayment by re-moulding your current loan term.

“To reduce your repayment amount, extend your loan term to 30 years and move to minimum repayments to reduce your monthly financial burden,” Heavey proposes.

2. Focus on paying down only a portion of your loan

“One way to reduce the monthly financial burden of your mortgage is to move to an interest only loan,” Heavey says.

A mortgage broker will be able to inform you on whether you can qualify for this, even if it’s for a few weeks or months.

Heavey shares, “As an added benefit, if the mortgage is for an investment property you can deduct the interest, making an interest only loan more desirable.”

3. Tap into the available equity in your home

The current situation will require you to re-assess your household budget, but while drawing equity out of your home is usually done for the means of accessing a deposit for your next property purchase, the ‘normal’ applies less in the midst of COVID-19.

Heavey says that having equity within your property may give you “access to a cash buffer” if you are able to refinance.

“Equity is the market value of your property minus what you owe on your existing home loan,” he explains.

Another option is finding out whether you are eligible to redraw from your home loan.

“If your loan has a redraw facility you may be able to access any additional repayments you’ve made on your home loan that are over and above the minimum payments,” Heavey says.

With a number of potential avenues available to borrowers in navigating through these uncertain times, a qualified and professional mortgage broker can structure a mortgage repayment plan that best suits your financial situation and long-term goals, as well as discuss the options that are available with your existing lender.

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.


First Home Buyer Numbers Are Above Average Across Every State And Territory

According to ABS housing finance data for August 2019, first home buyers comprised the largest proportion of national owner occupier mortgage activity since early 2012.  The data showed first home buyers comprised 29.8% of the national market for owner occupier home loans; almost five percentage points above the decade average of 25%.  A similar trend can be seen across every state, with first home buyers a larger proportion of the market relative to the decade average.

There are a variety of factors that have provided first time buyers with a leg up into the housing market.  Housing affordability has improved through the recent housing downturn, mortgage rates have come down, home loan servicing rules have been relaxed and some states have provided additional incentives for first home buyers in the form of stamp duty exemptions or discounts as well as existing first home buyer grants which generally apply to the purchase of new dwellings across most states.  

There’s also the fact that first home buyers haven’t had to compete as fiercely with investors, with investor activity generally trending lower since peaking in 2015 at 43% of mortgage demand.  The August update shows investors comprised only 26% of mortgage demand which is well below the decade average of 34%.

First home buyers are the most active across the Northern Territory and Western Australia where this segment of the market comprises 45% and 37% respectively of owner occupier mortgage demand.  These are also the two regions where housing values have fallen the most, providing a substantial improvement to housing affordability.  Dwelling values are down 27% since peaking across the Northern Territory and 23% lower since peaking across Western Australia.  

The regions where first home buyers are the least active are South Australia and Tasmania where first time buyers comprised 22% and 24% of owner occupier mortgage demand in August.  Despite being the lowest of any state, first home buyer participation remains above the decade average in these regions. 

Looking forward it’s likely first home buyer’s will reduce as a proportion of overall market activity.  Housing prices are once again rising across most regions of the country while growth in household incomes remain sluggish, which will create renewed housing affordability pressures in markets where home values are rising faster than incomes. 

Source: The Real Estate Conversation 4th November 2019

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.


CPI continues to provide good news for buyers and renters

The September 2019 quarter CPI figure continues to be good news for home buyers and renters, according to the Real Estate Institute of Australia (REIA). 

“The All Groups CPI increased by 0.5 per cent in the December quarter giving an annual increase of 1.7 per cent,” said REIA President of Adrian Kelly. 

“The annual changes for the analytical series of trimmed mean and for the weighted median were 1.6 per cent and 1.2 per cent respectively.

At a glance:

  • All Groups CPI increased by 0.5 per cent
  • Housing Group increased by 0.3 per cent for the quarter
  • Rents increased by 0.1 per cent for the quarter

“The annual change in the trimmed mean has been below 2 per cent since December 2015 and for the weighted median since March 2018 ensuring the continuation of historically low official interest rates for some time yet. 

“The Housing Group increased by 0.3 per cent for the quarter and 0.4 per cent for the year to September 2019. 

“Rents increased by just 0.1 per cent for the quarter and increased by 0.4 per cent for the year.

Mr Kelly said the average annual change has been less than 1.0 per cent since December 2015. 

“With the RBA meeting next week home buyers can be comfortable in the knowledge that the latest inflation data would suggest that the RBA will not be increasing official interest rates for some time yet,” said Mr Kelly. 

Source: The Real Estate Conversation 17th October 2019

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.


Women must improve financial literacy to shoulder hard times, survey shows

On International Women’s Day, a new survey shows many women lack the financial literacy to cope with a major set-back, such as the loss of a job or a divorce. We look at how women can educate themselves, and prepare, just in case things do get tough one day.

A new survey, released just ahead of International Women’s Day, is a stark reminder that women must empower themselves with financial knowledge and be involved in financial decision making to ensure the best financial and housing decisions are made during difficult times.

The study, which was commissioned by non-bank lender State Custodian Home Loans, showed nearly half of single women surveyed (46 per cent) and nearly two-thirds (60 per cent) of single mothers said poor financial literacy would prevent them getting back on their feet in financial and housing terms after a difficult life event.

The survey showed that one in three women (32 per cent women in general, 29 per cent single women, and 34 per cent of single mums) would be reluctant to sell the family home due to a “strong emotional attachment” after a crisis, even if it meant getting them out of debt.

“The home can hold great emotional attachment and is familiar for kids,” says State Custodians General Manager, Joanna Pretty.

“When women lose their jobs or get divorced, often they want to hold onto a home so they’ll feel secure. However, you need to think about it in practical terms. If you can’t handle the mortgage and it’s going to financially wipe you out in two years’ time, get advice and consider your options,” she said.

Pretty says “it’s vital single women financially educate themselves in the event of a crisis. This also applies to women in a couple, who leave money matters up to their partner because they’re also at risk if they suddenly become single and don’t know how to handle finances.”

Pretty advises that women can empower themselves with knowledge by talking to various financial institutions and experts, such as financial advisors or accountants.

“Find people who can give you the right information and products,” she said, adding that “trust” is crucial in difficult times.

On International women’s Day, here are some steps women can take to financially empower themselves.

In preparation for a financial set-back

1. Have savings that can be used in an emergency.

Aim for at least three to six months’ worth of savings that can support you.

2. Live within your means.

Understand your essential and non-essential expenses, and be honest about your present and future earning capacity. Only spend what you can afford.

3. Educate yourself financially.

Look at how well your super is performing, make sure your bank accounts aren’t attracting unnecessary fees, consider re-negotiating your mortgage to a lower rate. Consider seeing a financial planner to map out your financial goals.

In the aftermath of a financial set-back

1. Get advice from experts.

Contact a range of experts such as financial advisors, accountants and other institutions, and explain what’s happened. The more you talk to people, the more likely it’ll become clear who can best assist you.

2. Be realistic.

Work out what’s do-able and what’s not. If you sell the family home, you may not be able to afford to buy where you want to live, so proceed carefully.

3. Work out how to invest your money.

Be open to suggestions on how to move forward. For example, if you don’t want to move from your neighbourhood, consider renting and buying an investment property elsewhere.

The research was conducted by Galaxy Research, and involved a survey of 1,005 people nationwide.




This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Alternative Deposit Sources

Alternative Deposit Sources for First Home Buyers


Saving a large enough deposit to buy your first home can seem like a daunting process. Not only are you expected to save sufficient funds to cover the deposit amount, but you also need to save enough money to cover the fees associated with buying a home.

Fortunately, there are some alternatives available that might help boost your savings amount or even reduce the cost of your fees. Here are some incentives and options that might help make it easier to get into your first home sooner.

First Home Owner Grant

Most people are aware of the First Home Owner Grant (FHOG). The FHOG is a once-off grant payment given to any first home buyer who meets the eligibility criteria.

The amount paid varies between different states, but in South Australia a first home buyer who enters into a contract with a licensed builder to construct a new home or purchase any house never previously lived in (e.g. a show home) may qualify for $15,000. You can use the funds from your grant to help cover the costs associated with purchasing your property.

Stamp duty concession

If you intend to buy an established home at a price of $350,000, you’ll pay $13,830 in stamp duty costs. However, if you choose to buy an off-the-plan apartment in a qualifying area for the same purchase price, you might qualify for a stamp duty concession.

For example, if you enter into a contract to buy an off-the-plan apartment for $350,000, you’ll receive an off-the-plan stamp duty concession of $10,100. You’ll only pay $3,730 in stamp duty costs.

There’s also the difference in how stamp duty is calculated on different types of property to consider. For example, if you buy an established home the stamp duty amount is calculated on the full purchase price.

By comparison, if you buy a house-and-land package you only pay stamp duty on the land component of the package amount. So, let’s assume your land cost is $175,000 and your construction cost is $175,000.

Your total house-and-land package price is still $350,000, but you won’t pay the same $13,830 that you’d owe if you’d purchased an established home. Instead you only pay stamp duty on the land purchase price, which is $175,000. In this instance you would pay $5,830 in stamp duty costs, which is an $8,000 saving.

Family Guarantee

If your parents have built up plenty of equity in the family home, they may be willing to use some of it to help you get into your first home sooner. Rather than give you a gift of a large lump sum of money, a Family Guarantee allows Mum and Dad to use some of the equity in their property as collateral or security for the kid’s loan.

The bank allows the first home buyer to borrow the amount of money they need to purchase a home. However, as the bank has security over some of the parents’ equity, the first home buyer may potentially avoid paying Lender’s Mortgage Insurance.

Use your super to boost your deposit

In the 2017 Federal Budget, the government announced a new First Home Super Saver Scheme designed to help first home buyers save a deposit. The basis behind the savings scheme is to allow you to potentially withdraw up to $30,000 from your superannuation savings to put towards your deposit.

You’re able to pay up to $15,000 in extra contributions per year for two years, up to a maximum of $30,000. If you’re saving with a partner or spouse, you can withdraw up to $60,000 – or $30,000 each.

After the agreed date on your First Home Super Saver Scheme application, you’re able to withdraw those additional funds to put towards your home deposit.

However, there is a catch. You can’t withdraw any cash from the balance you already have in your super fund today. You will need to open a First Home Super Saver account with your super fund so those funds are kept separate.

The scheme is set up to give you the opportunity to contribute additional amounts of money into a separate savings account. Your voluntary contributions are those you make over and above the amount paid by your employer.

You can choose to make voluntary concessional (before tax) or non-concessional (after tax) contributions. Some employers may offer salary-sacrifice options that could help with your before tax contributions.

Now for the second catch. The extra contributions you’ve paid into your Super Saver Scheme are counted towards your concessional or non-concessional contribution tax. This means you’ll pay tax on the amount of money you withdraw from the fund at your current marginal rate with a 30% tax offset.

If you’re considering the option of putting your super savings to work for your home deposit, it’s best to discuss your options with your financial planner or accountant and seek advice about what might work for your individual financial situation.

Are you ready to buy your first home?

Buying your first home is a big step, but there are plenty of options available to help you get into the market sooner rather than later. If you’re not sure what your next step towards first homeownership should be, call one of the finance consultants at Assured and discuss how we can help.

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

Home Loan When You’re Self-Employed

How to Get a Home Loan When You’re Self-Employed

A growing number of Australians are choosing to sack their boss, quit their day job and go out on their own. The appeal of being self-employed means choosing the hours you work, making all the decisions on your own, and enjoying the freedom of not having a boss.

Unfortunately, being self-employed also means accepting a few extra challenges when it comes to borrowing money. Self-employed people still have access to all the same mortgages as salaried people, but the banks may require additional information rather than simply handing over your last pay slip to verify your income.

If you’re finding it challenging to qualify for a mortgage as a self-employed person, here are some tips that could make things a bit easier.

Qualifying for a self-employed home loan

The majority of lenders in Australia will happily lend money to self-employed people, as long as you can verify your business income is stable and is sufficient to cover your financial obligations.

In order to qualify for most regular self-employed home loans, you’ll need to provide some information that includes:

  • Your last 2 years individual and business tax returns
  • Your Australian Business Number (ABN) verifying that you’ve been trading for at least 2 years

If your last tax return is already 5 or 6 months old, you may also need to provide recent Business Activity Statements (BAS), verifying cash flow is steady and consistent throughout the current financial year.

As long as you’re able to verify your income with the right financial documents, you’ve been self-employed for at least 2 years and you have a good credit history, the banks may give you access to the same types of home loan products as a salaried person.

Self-employed Low Doc home loans

If you’re like many self-employed people, it’s likely you’ve set up your business for tax efficiency. As a result, your tax returns may initially appear as though you don’t earn sufficient income each year to qualify for the home loan amount you want.

You might also not have completed your latest tax return yet, so the documentation you have to show the bank may be out of date. Alternatively, you might have had some one-off costs that reduced your business profitability in the last financial year, so your numbers look worse than they really are.

If this is the case, you may need to consider a Low Doc home loan, which looks at other ways to verify your business income.

Low Doc home loans are intended specifically for self-employed borrowers who don’t have current tax returns or who are unable to provide full financial statements. You have the option of declaring your income on an Income Declaration Form.

Some lenders may ask you to prepare supporting documentation that helps demonstrate your ability to keep up with your loan repayments. For example, some may request documentation from your accountant or a Profit and Loss statement plus other information that could support and strengthen your application.

What is different with a self-employed home loan?

In most cases, a home loan for a self-employed person should provide the same loan facilities as any other mortgage. You can use your home loan to buy a home to live in or purchase a rental property. You can choose between a variable or fixed interest rate. You can even opt to link a 100% offset account to your mortgage if you wish.

However, one of the most obvious differences between a self-employed home loan and a mortgage for a salaried person is that the interest rate is sometimes a little higher than traditional loans.

While the interest rate might be slightly higher at first, keep in mind that many lenders will give self-employed people the option to switch over to a traditional loan after a period of time if you’ve kept up with all your repayments on time. Once you’ve switched over to a regular home loan, your interest rates will drop accordingly.

Another difference with self-employed home loans is the deposit or equity amount required. Most lenders will limit the amount you can borrow to a maximum of 80% of the property value.

If you’re self-employed and finding it difficult to qualify for the home loan you want, call an Assured finance consultant and ask how we can help. We have access to a range of different lenders that could help you get the finance you need.

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

mortgage application

Things That Can Impact Your Mortgage Application

On the surface it can seem as though applying for a home loan should be a simple process. You show the bank your pay slips, they figure out how much you can borrow, and you go out house-hunting. Right?

In reality, there are multiple steps that occur behind the scenes that turn your simple application into quite a complicated process. Australian law requires your lender to only lend money responsibly. They have an obligation to ensure that you are able to afford your repayments and are likely to be disciplined enough to keep up with your financial obligations.

In order to determine your credit-worthiness, lenders perform a range of thorough background checks on you as part of their qualification process.

Before you head into your local branch to ask for a home loan, take a moment to consider some of the things that could impact your mortgage application.

Income verification

All lenders need to verify that your current income will be sufficient to allow you to meet your financial obligations. As a rule, most lenders will ask you to provide copies of your latest pay slips and your most recent tax assessment notice or group certificate (PAYG certificate).

If you’re self-employed, you may be asked to provide your last 2 years individual and business tax returns, as well as providing Business Activity Statements (BAS) if your financial documents are already becoming dated.

Employment history

Lenders want to know about your employment history, as it could be a reflection on your capacity to earn income. If you’ve had the same job for a few years, or if you’ve moved jobs but stayed in the same industry, the banks may view this information favourably.

However, if you’ve been in your current job only a few months or you have a history of hopping between different jobs in a range of industries, this could have an impact on your application.

Savings history

Providing your lender with evidence of your savings history can play a big part in the success of your home loan application. Not only does your income allow you to pay for your living expenses, but being diligent enough to put cash into savings means you’re also disciplined with your money.

Credit assessors view customers who are able to save money regularly as being more likely to be financially responsible when it comes to keeping up with mortgage repayments over the long term.

Loan repayment history

If you haven’t had a home loan before, lenders may want to assess how well you kept up with any other loan repayments. If you’ve had a personal loan or car loan, showing that you were financially responsible about making all your repayments on time can have a positive effect on your home loan application.

Credit score

When you apply for any type of credit, lenders run a check on your credit report. The information on your credit report tells the bank much about your borrowing history and your repayment history.

Your credit report shows the bank any types of credit you’ve applied for in the last five years. They can see whether you applied for car loans, credit cards, store cards, and other types of credit.

Your credit report also contains a credit score, which ranges anywhere between 0 and 1,200, depending on the credit reporting agency used to calculate your score. Credit scores are broken down into categories. These are:

0 – 509 – Below average

510 – 621 – Average

622 – 725 – Good

726 – 832 – Very Good

833 – 1200 – Excellent

Your overall score is calculated based on a range of factors, including:

  • Your age
  • Your address
  • The amount of credit you’ve borrowed
  • The number of credit applications you’ve made
  • Any unpaid or overdue loan payments
  • Any debt agreements or insolvency agreements you’ve entered into with creditors

A low credit score could prevent you from borrowing money. By comparison, if your credit score is very good or excellent, you’re more likely to get your home loan application approved. The average Australian credit score is around 770.

Submitting through a mortgage broker

When you walk into your local bank branch, you only have that bank’s home loan products to choose from. You’re also limited to working with that bank’s individual lending policies, which may not be right for your financial situation.

By comparison, when you apply for a home loan through a mortgage broker, you have access to a broad variety of different mortgage products and lending policies. Your finance consultant is able to narrow down the right options to help maximise your chances of getting your home loan approved. Call an Assured consultant today and let us work with you to get the right home loan at competitive rates to suit your needs.

This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.

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