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Beware the pitfalls of going guarantor

noreply@blogger.com (Unknown) — Fri, 15 Nov 2013 22:45:00 +0000

Great article from the Sydney Morning Herald - below.

It outlines the dangers of providing a Parental Guarantee. If providing a Parental Guarantee the loan needs to be properly structured and a plan developed to exit the guarantee as soon as possible. Ask Premium Broker for more information about this.

Sydney Morning Herald

November 16, 2013
By John Collett - Personal Finance Editor

Source: www.smh.com.au

Going guarantor for adult children can seem like the simple solution to helping them onto the property ladder.

But going guarantor for your children's loans comes with considerable risk.
A guarantor is under a legal obligation to keep making repayments on a loan if the borrower is unable to continue to make the payments.

Sometimes the guarantor's home is required by the lender as security for loan but often the guarantee can be limited to a certain dollar value.

''I generally advise against it,'' says John Hewison of Hewison Private Wealth. ''I have seen it come apart many times. The mere fact that a lender needs a guarantor indicates the borrower has insufficient funds to justify the borrowings.''
What would happen if your son or daughter loses their job, divorces or separates, or suffers illness or injury and cannot manage the mortgage repayments, asks Laura Menschik of WLM Financial Services.

''What if they get into trouble with their business or they are sued, and their home goes into the pot to pay damages?'' Then the parents - looking forward to a comfortable retirement - can be stuck with their child's mortgage.
It is not just the finances of the guarantor that can suffer.

Disputes and ill feelings over money can pull families apart. Often the problem is not that the adult child cannot service the loan, but that they cannot save the deposit.

And in Sydney and Melbourne, even a 10 per cent deposit can be a considerable amount of money. House prices have risen faster than incomes and so the required deposit has risen faster than incomes.

There are alternatives.

If they can afford it and it does not disrupt their retirement plans, parents could lend the money to them, Ms Menschik says.

But they should draw up a formal loan agreement and seek legal advice.
The parents have to make it clear in what form the assistance is provided - whether it is loan that is to be repaid or a gift, says WealthPartners' Andrew Heaven.

The parents could have their offspring move back home for a while to help them save for the deposit, he says.

A lot of people want to give their kids a start in the market and think that buying them an investment property may be a good idea. But their children will likely want to do different things and may not want to live in the same city or even the same country.

''Don't go buy a unit for the kids thinking that they will want to live there,'' Heaven says.

Source: http://www.smh.com.au/business/property/beware-the-pitfalls-of-going-guarantor-20131115-2xmf0.html#ixzz2kkwsTiak

Six Mistakes of Investing

noreply@blogger.com (Unknown) — Wed, 31 Jul 2013 01:50:00 +0000

Learning from the mistakes of others is a great way to become a successful property investor. Here's a list of what to avoid on your way to the top.

1. Putting if off

'Too busy', 'too risky' or 'not the right time in the property cycle' are common excuses for not taking action, but in reality there may never be a perfect time. Live by the slogan 'never put off tomorrow what you can do today'.

2. Not enough research

Look at multiple properties and do financial analysis on many properties before committing to buy. Remember the real estate agent is there to sell the property so although they can be a good source of information, don't rely on their word alone.

3. Getting emotionally attached

Don't picture yourself living in the property; instead keep your thoughts focused on the big picture: 'can I sell this property at a higher price?'; 'will this property be popular with tenants?'

4. Over-extending your finances

You are investing to improve your life, not to end up with a mortgage that is too high. Circumstances change and your finances need to be ready to deal with an unexpected blow like losing your job, a period of rental vacancy or a rate increase.

5. Not having the appropriate insurance

Landlord's insurance can cover you for not only damage to buildings and contents, but also for rental default and damage by tenants. Make sure you read the fine print because cover and service can vary significantly between policies.

6. Not using the equity in your home

Using the equity in your home to buy an investment property reduces your reliance on savings. Equity is the difference between your home's market value and the balance of your home loan. Typically lenders will allow you to access up to 80 per cent of this equity and use it as a source of credit on your mortgage.

Ready to take the plunge into property investment? Contact us for more information on any of the above issues like financial approval, insurance and equity.

World Economy Explained with 2 Cows

noreply@blogger.com (Unknown) — Wed, 24 Jul 2013 00:53:00 +0000

Saw this and thought it it was a good economic explanation

SOCIALISM

You have 2 cows.

You give one to your neighbour.

COMMUNISM

You have 2 cows

The State takes both and gives you some milk.

FASCISM

You have 2 cows.

The State takes both and sells you some milk.

BUREAUCRATISM

You have 2 cows.

The State takes both, shoots one, milks the other and then throws the milk away.

TRADITIONAL CAPITALISM

You have two cows.

You sell one and buy a bull.

Your herd multiplies, and the economy grows.

You sell them and retire on the income.

VENTURE CAPITALISM

You have two cows.

You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.

The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.

The annual report says the company owns eight cows, with an option on one more.

AN AMERICAN CORPORATION

You have two cows.

You sell one, and force the other to produce the milk of four cows.

Later, you hire a consultant to analyse why the cow has died.

A FRENCH CORPORATION

You have two cows.

You go on strike, organize a riot, and block the roads, because you want three cows.

AN ITALIAN CORPORATION

You have two cows, but you don’t know where they are.

You decide to have lunch.

A SWISS CORPORATION

You have 5,000 cows. None of them belong to you.

You charge the owners for storing them.

A CHINESE CORPORATION

You have two cows.

You have 300 people milking them.

You claim that you have full employment and high bovine productivity.

You arrest the newsman who reported the real situation.

AN INDIAN CORPORATION

You have two cows.

You worship them.

A BRITISH CORPORATION

You have two cows.

Both are mad.

AN IRAQI CORPORATION

Everyone thinks you have lots of cows.

You tell them that you have none.

Nobody believes you, so they bomb the crap out of you and invade your country.

You still have no cows but at least you are now a Democracy.

AN AUSTRALIAN CORPORATION

You have two cows.

Business seems pretty good.

You close the office and go for a few beers to celebrate.

A NEW ZEALAND CORPORATION

You have two cows.

The one on the left looks very attractive.

A GREEK CORPORATION

You have two cows borrowed from French and German banks.

You eat both of them.

The banks call to collect their milk, but you cannot deliver so you call the IMF.

The IMF loans you two cows.

You eat both of them.

The banks and the IMF call to collect their cows/milk.

You are out getting a haircut.

Rent or Buy

noreply@blogger.com (Unknown) — Wed, 10 Jul 2013 01:47:00 +0000

If there's one topic that's bound to cause debate, it's whether you are better off buying or renting a home.

Although the debate has been around for decades, the climate of low interest rates and rising rents has once again stirred discussion. Numerous studies have attempted to compare the finances of each option but with so many variables to take into account, few studies have been able to reach a substantive conclusion.

Comparing like with like is a difficult task when factors such as interest rate charges, rent increases, maintenance costs and appreciation are hard to predict. Assumptions have to be made about how often rents increase, and likewise, any calculations of property purchase has to take into account costs like the deposit, loan establishment fees, property maintenance and strata/council costs.

Reasons for Buying

Thankfully money is not the only contributing factor in the decision about whether to buy or rent. The most obvious advantage to buying a home is the sense of security and stability it brings. It gives your family an asset to call their own that can be passed down through generations or downsized to fund retirement.

Another great advantage is that the family home is generally exempt from capital gains tax unless you rented it out for a time or it's on more than two hectares of land.

Property ownership also allows you the freedom to do what you want with the property. Whether it be hanging a picture, replacing a hot water system or owning a pet - it's your own little piece of Australia under your control!

Reasons for Renting

But perhaps you feel that you're not in a financial position to buy or you enjoy the freedom of being able to move around, in which case renting may be your best choice. Renting gives you're the opportunity to live in an area where you may not be able to afford to buy and you are free of the costs of maintenance, rates and insurance.

Renting also allows you to move homes more frequently, but on the other hand there is the uncertainty of not knowing whether you will be able to remain in a home you have grown fond of.

Ultimately the decision to buy or rent will be determined by your individual circumstances and finances. It's important you are able to meet the monthly mortgage repayments, and this is where we can help - by tailoring a home loan suited to your lifestyle and financial position.

What's the deal with Lenders Mortgage Insurance?

noreply@blogger.com (Unknown) — Tue, 09 Jul 2013 04:05:00 +0000

Great quick Article by Kevin Boyle - Tuesday 09 July 2013
www.mozo.com.au

Home Loan borrowers are being slammed for an insurance on their mortgage that they may not even fully comprehend, according to the Motely Fool Australia.

Lenders Mortgage Insurance (LMI) is often poorly understood by mortgage borrowers yet is compulsory for borrowers with less than 20 percent equity in their home, almost 25 percent of all home buyers. Many borrowers may not even realise that they are paying for an insurance to protect the lender against default, not the home owner.

The insurance provider is chosen by the lender and even if borrowers were given the option they would be limited to two main providers in Australia, Genworth and QBE Insurance. QBE lenders mortgage insurance premiums have reportedly risen by 17 percent since 2012. According to mortgage broker Home Loan Experts LMI for a typical $500,000 property for a borrower with 10 percent deposit has risen from around $6000 up to almost $9000.

While the insurance is enforced on those who can least afford it, it also puts a major barrier in front of those looking to switch to a cheaper home loan provider as it is not portable with the loan and borrowers looking to switch to a home loan with a better interest rate would be required to pay the LMI over again.

While homeowners do not yet have any choice for switching their LMI, those who are in a position to switch and save on their mortgage can have Premium Broker assist.

Have a question about lenders Mortgage Insurance? Give us a call.

Tips for Buying at Auction

noreply@blogger.com (Unknown) — Tue, 02 Jul 2013 18:00:00 +0000

The property you want is up for auction and you are determined to buy it. What can you do to ensure yours is the winning bid?

1. Attend multible auctions

It will take at least this many auctions to familiarise yourself with the process, the emotions and atmosphere. It can also help with understanding terminology like 'reserve' and 'vendor' bid, 'on the market' and 'passed in'.

2. Have your finances pre-approved

If you win you will need to have the deposit ready to pay straight away. Financial pre-approval is also a good idea because it gives you a clear idea of your borrowing power and helps you set your bidding limit. As your mortgage adviser, we can step you through this process.

3. Make a limit that reflects the property's market value

Pre-determine the maximum 'walk away' price you are willing to pay and make a resolve to stick with it. This price should be a fair reflection of what you feel the property is worth based on the research you have done of recent sales in the area and the prices of similar properties that are up for sale.
Set your maximum at an odd number because if two people have the same limit, which is more likely to happen on a round number, then the first one to get there can buy the property.

4. Check your state laws

In certain states all bidders are required to be registered - a tactic designed to stamp out 'dummy' bidding. As the legislation varies from state to state, check the laws with your real estate agent or fair trading body.

5. Have a solicitor/conveyancer go over the sale contract

Once the hammer has dropped, it is taken that you accept the sale contract in its current form. There is no cooling off period - when the contract is signed you are committed to buying the property. For this reason it pays to have a solicitor/conveyancer review the contract and any amendments you wish to make (such as the amount of deposit, settlement period, inclusions) need to be agreed by both parties prior to the auction.
Don't assume fittings, fixtures and appliances like the blinds or dishwasher will be included with the house unless they are specifically outlined in the contract.

6. Don't scrimp on inspections

If you are really serious about this property, you should consider having it inspected by a licensed building and pest inspector prior to the auction.

7. Be assertive when bidding

Bid with confidence because you know that provided you follow the above steps you are as ready as can be.

How walkable is your suburb?

noreply@blogger.com (Unknown) — Wed, 26 Jun 2013 01:52:00 +0000

As our lives become busier and our roads more congested, many buyers are prepared to pay a premium to be within walking distance of transport, shops and amenities.

Homes located in 'walkable' suburbs - those with a mix of common daily shopping and social destinations within a short distance - are reported to command a price premium over otherwise similar homes in less walkable areas.

Now Australian cities have been ranked by walkscore.com, a popular US website that measures walkability on a scale from 0 - 100 based on walking routes to destinations such as supermarkets, schools, parks, restaurants and retail.

With a 'walk score' of 62, Sydney comes out on top in the ranking of the most walkable Australian cities and suburbs. Melbourne rates a walk score of 56, Adelaide comes in at 53, Brisbane scores 51, Perth scores 50 and Canberra scores 39.

Australia's walking culture is thought to have begun with the Olympics when people got used to leaving the car at home. Now walkability is believed to add value to residential property just as additional square footage, bedrooms, bathrooms and other amenities do.

Being within walking distance of amenities is not just convenient; it has health and environmental benefits. With today's focus on green living and urban efficiency, being able to ditch the car and use your feet are important considerations when buying your next home or investment property.

Current Market Conditions - Premium Broker's Perspective

noreply@blogger.com (Unknown) — Wed, 19 Jun 2013 01:24:00 +0000

The Reserve Bank has cut interest rates, fixed rates are dropping, rental returns are increasing and the supply of quality properties on the market are very low. This means that home affordability is up and quality properties are being snapped up very quickly. In our opinion there is no doubt that the property market is up, maybe by as much as 10%.

RP Data Market Indicators show that Sydney auction clearance rates are now around 75% up from 50% a year ago. New listings are down 12.7% from a year ago and the average time a property is on the market is down to 35 days.

Many economists have predicted that it was Sydney's time for some capital growth and it appears to be happening right now.

What to do if you are looking for property now.

RESEARCH

Does as much research as you can - Ask us for some Free RP Data Reports, attend as many open houses and auctions as you can.

PRE-APPROVAL

Make sure you have a pre-approval so you can jump on a property as soon as you can. You need to be more prepared than those other buyers in the market.

CONSIDER A PRE-AUCTION BID

Most vendors will consider an offer prior to auction. It saves them time an money. Don't be afraid of making an offer prior to auction . . . . just make sure you have an approval and the contracts are checked by your conveyancer or solicitor.

UPFRONT VALUATION

If you need act quickly, then Premium Broker can help with obtaining an Upfront Valuation. We have access to a number of lenders who allow us to order the Valuation upfront. This can save days that can be critical to obtaining your dream house . . . . . . before someone else does.

Negative Gearing for Tax

noreply@blogger.com (Unknown) — Fri, 31 May 2013 07:53:00 +0000

Negative gearing can have significant tax benefits but don't let it be your only motivation for buying an investment property. The property you choose needs to stand on its own merits so that it has the potential to make money in the long term through capital gains.

What you want to achieve is a situation where tax rebates and your rental income are used to pay off your home loan, and down the track when your property has increased in value you can sell it at a profit or keep accumulating multiple properties.

Indeed, one of the main advantages of negative gearing is that it may let you invest in a more valuable property than you would otherwise have been able to afford using only your cash savings.

When using negative gearing, it's important to be prepared for unexpected impacts on your cash flow, such as interest rate rises, unforeseen repairs in your rental property or a period of vacancy. In these situations you need to be in a financially strong enough position to be able to repay the shortfall and continue servicing your home loan.

You can overcome many of the risks of negative gearing by doing some homework and selecting your investment property with care. When you're ready to invest your mortgage adviser can help you find a loan that suits your needs.

What you can claim on tax

As a property investor seeking a tax benefit you should always look for the greatest amount you can claim in expenses on your rental property. Keep in mind that the Tax Office takes a close look at rental property claims so it's essential to keep good records of all expenses.

Expenses for which you may be entitled to an immediate deduction in the income year you incur the expense include:

• advertising for tenants

• body corporate fees and charges

• cleaning

• council rates

• gardening and lawn mowing

• insurance ( building, contents, public liability)

• interest expenses

• land tax

• pest control

• property agents fees and commissions

• repairs and maintenance

• travel undertaken to inspect the property or to collect the rent

• water charges.

Expenses that may be claimed over a number of income years:

• borrowing expenses

• amounts for decline in value of depreciating assets, such as carpet, furniture and appliances

• capital works deductions, i.e., certain construction expenditure.

Did you Know?

You can't claim these on tax:

• acquisition and disposal costs of the property - these are usually included in the property's cost base for capital gains tax purposes

• expenses not actually incurred by you, such as water or electricity charges paid by your tenants

• expenses that are not related to the rental of a property

• GST credits for anything you purchase to lease the premises

For more information about common mistakes made when claiming rental property expenses, see 'Rental Properties - avoiding common mistakes'.

http://www.ato.gov.au/content/00131327.htm

Rents increasing across Australia

noreply@blogger.com (Unknown) — Fri, 31 May 2013 00:55:00 +0000

Rents increasing across Australia

Wednesday, 22 May 2013

Brendan Wong

Australia’s capital cities are experiencing a healthy growth in rents, particularly two cities, according to figures by RP Data.

Most of the rental growth has been in Perth and Darwin, where rents have increased by more than 10 per cent over the past year.

In Sydney and Brisbane rents have increased at about three to four per cent, while Adelaide and Melbourne’s housing markets have experienced one to two per cent growth.

RP Data senior researcher Cameron Kusher told The Adviser that rents were generally trending higher. The exceptions were Hobart and Canberra where they had fallen by 1.5 per cent and 0.9 per cent respectively.

“[Rents] have typically grown at a faster pace than values over the past year, so we are tending to find that rental yields are improving,” he said.

“You’ve got strong yields in Darwin, up around six per cent, so too in Hobart and Canberra. There’s been some big improvements in yields in Perth, and Brisbane units are now yielding more than 5.5 per cent. From an investor perspective, some of those product types are becoming more attractive.”

Source: http://www.theadviser.com.au/breaking-news/8713-rents-increasing-across-australia

Negative gearing or positive cash flow?

noreply@blogger.com (Unknown) — Wed, 22 May 2013 07:50:00 +0000

There's no easy answer to the much-debated question: do negatively geared or positive cash flow properties make the better investment choice?
There are many investors who swear by negative gearing, which is when the cost of the property, including interest on the loan used to buy it, outweigh the returns it generates. This loss can be claimed on tax, which is where the appeal of negative gearing lies.

Others strongly believe having a positive cash flow is a wiser choice because it means you have more income than expenses and cash in your pocket every week. This is achieved either through positive gearing - where your property's rent returns are high in proportion to the purchase price and cover all the expenses. Alternatively you can achieve a positive cash flow with a property when its outgoings (loan interest, body corporate fees etc) are lower than the income you earn through rent and tax deductions (from claiming expenses and depreciation).
The reason for the divide in opinion is that there is no shortage of successful investors who can vouch for one or other of the strategies or those who have even used a combination of both. Much of the success of property investment depends on individual choice, circumstance and goals, which means that while something works for one, it may not for the next.

The beauty of a positive cash flow property is that it won't burn a hole in your wallet but you'll have to work hard to find one that also delivers good capital growth.
Keep in mind that any profit you make on the rental income is likely to be subject to capital gains tax (after depreciation and other tax deductions), so it's wise to put aside a component of your rent return to meet the tax bill.
Positive cash flow properties are suited to investors who are looking for a conservative investment strategy and are keen to use the extra cash in the pocket to pay down debt and/or increase their equity to make room for further investment.

Here are 10 top tips for finding positive cash flow property:

1. Buy a property that generates a strong rental yield (the return your property generates compared to the property's market value).

2. Know your statistics. Look for indicators that will drive rental prices upwards like a low tenant vacancy rate or suburbs with a shortage of properties for sale/lease.

3. Look for market cycles that are ready - places which have not grown for a while and get in at the right time.
4. Look for property that you can add-value to through renovation.

5. Regional areas are great places to find positive cash flow properties, but make sure your property is exactly what the market wants otherwise it won't make any capital growth. Thoroughly research both property and town: look for high employment rates, a spread of employment sectors and a growing population.

6. Look to buy in places where huge infrastructure spends are being projected.

7. Borrow as little as possible to fund the property. The interest cost on an investment loan can be one of the more significant expenses of a rental property, so the less you borrow, the lower the interest cost.

8. Don't give up on capital growth. In areas that command high rental yields, it's harder to find properties with good capital growth, but not impossible. It's still worth looking for locations where there are factors in place to support property price growth like shops, restaurants, transport links and job opportunities.

9. Buy new. A new property is more likely to provide a positive cashflow than an older dwelling due to its depreciation benefits.

10. Seek advice. Talk to real estate agents, property managers and other investors. The more advice you seek the more you will learn about growth areas and tenant demand. Contact us to find out how the right loan can play a key role in generating positive cash flow for your property.

A trusted Mortgage Adviser

noreply@blogger.com (Unknown) — Wed, 08 May 2013 00:56:00 +0000

Wouldn't it be great to know you can trust your mortgage adviser to give you the best advice and steer you down the right path? Well you can! Here's why...

We are licensed

The mortgage industry is regulated by the industry bodies MFAA and FBAA, with a Code of Practice that requires high professional standards, fair business practices, ethical behaviour and compliance with laws and regulations.

New national regulation for the credit industry, including mortgage advisers, commenced in July 2010 (known as the National Consumer Credit Protection Act), bringing the regulation of residential investment property under the control of ASIC (Australian Securities and Investments Commission).

By law mortgage advisers have to practice "responsible lending", which means extending credit that is unsuitable to the needs and financial capacity of the consumer is an offence.

We are honest

It's standard industry practice for mortgage advisers to be remunerated by lenders and receive commission on the loans we settle. This puts us in the position to be able to negotiate with a range of lenders and mortgage providers on your behalf to find the best situation for you.

We are up front about the fees associated with our service and we will happily provide client testimonials.

We offer premium advice, service and support

It is our job to advise, educate and help you to meet your financial needs. We are well versed in financial services, have years of market experience and a wealth of market knowledge.

Combined with this expertise is the personal commitment we make to our clients to listen and respond to their needs. We care about our clients and thrive on keeping you happy and being available when you need us most.

We recently had a client who told us "you made this so easy for us - I couldn't have done it without you."
It's feedback like this - from a happy client - that reminds us why we became mortgage advisers and why we love our job!

Premium Broker

Equitimax Pty Limited ABN 40 105 746 692 trading as Premium Broker
Australia Credit Licence 392625

Vow Premium Brokers are Accredited Members of Vow Financial Pty Ltd & Mortgage & Finance Association of Australia. (MFAA)

The Right Time to Buy?

noreply@blogger.com (Unknown) — Wed, 01 May 2013 00:49:00 +0000

The right time

Predicting the perfect time to buy is difficult, even for the experts, yet many investors get caught in the fear of buying at the 'wrong time'.

The truth is that when to buy is not nearly as important as actually buying a property, particularly if you are planning to hold onto it long term. As long as you are prepared to keep your property through the good times and the bad, you needn't worry too much about temporary shifts in prices because it is still likely to end up being profitable in the end.

If there's a timing issue that's important, it's getting your personal timing right: are your finances ready, do you have a plan...

Do you have a plan?

Write down your goals for property investment - do you want to become a landlord or would you rather renovate and sell properties? Do you want a positive cash flow property, a high capital growth property or a balanced investment? Be clear on what you are seeking to achieve and what type of property fits your strategy.

Are your finances ready?

Your finances should be in place before you go shopping for a property. As your mortgage adviser we can help ensure your finances stack up, which will narrow down the most suitable areas for your research efforts.

Have you researched?

As an investor you need to use statistics to not only find the right suburb but also the right property within the suburb. Look for areas with low vacancy rates, broad buyer and tenant appeal, high employment and good transport links.

Are your emotionally ready?

You need to be prepared to put your emotions aside and think like an investor, not a home owner. The property you buy doesn't need to be one you love, or even particularly like, as long as it meets the needs of the rental market. You also need to be detached enough to walk away from the property if the deal doesn't work out the way you wanted.

Are you prepared for risk?

Events such as a major repair, employment change, extended sickness or sudden interest rate rise could put you in an uncomfortable financial situation. Make sure you are ready for the ups and downs of investing to ensure that your journey as a property investor is a long and profitable one.

Have you sought good advice?

By talking to experts you will be able to avoid many of the pitfalls that inexperienced investors encounter. As your mortgage adviser we can help guide you through the property investment process and refer you to expert advice where required.

Self Managed Super: A Growing Trend

noreply@blogger.com (Unknown) — Wed, 17 Apr 2013 00:46:00 +0000

Self Managed Super: A Growing Trend

Lenders continue to launch new loan products to cater for the soaring popularity of self-managed super funds (SMSFs).
With many of the features of regular home loans, these products entitle trustees to borrow within their SMSF to buy residential investment property or refinance an existing SMSF loan. The loans are repaid from rental incomes and contributions paid into the funds.

Since the laws were changed in 2007 to allow SMSFs to borrow funds to acquire residential property, this type of property transaction has become increasingly popular. Currently more than 800,000 Australians invest around $280 billion of superannuation through the SMSF structure and this is a trend that is expected to accelerate. SMSFs make up around one-third of the overall superannuation sector and have an asset value of $14.87 billion.

One of the many attractions of a SMSF is that is puts you in the driving seat and allows you to do something pro-active about your financial future. As the trustee of the fund, within the boundaries of the law, you have the flexibility to decide how your funds are invested and how the fund is to operate. Unlike the ups and downs of the share market, property investment provides the security of yielding positive returns for investors, especially if it is a long term investment.

Better tax management is another attraction as investing in an SMSF has numerous tax advantages. There is also the ability to pool funds with up to four members, which means family members can pool their savings to buy a property that would otherwise be beyond their reach.

Data from the Australian Taxation Office shows that more than 3,000 SMSFs are set up every month and that the sector is growing at a rate of 10% a year. In the four years to 30 June 2012, the SMSF sector grew by $109 billion, which makes it the strongest growing sector of the superannuation industry.
The statistics show that SMSFs have truly positioned themselves as one of the most popular forms of superannuation savings. If you are tempted to join this growing trend, speak to us today about how we can help you set up your own SMSF.

NEED HELP ?
Give Premium Broker a ring and we can help with getting the finance approved for a SMSF and even put you in touch with specialists if you need to set one up.

Housing Affordabilty - Best in a decade

noreply@blogger.com (Unknown) — Wed, 17 Oct 2012 22:40:00 +0000

Probably a good indication of how expensive Housing Affordability has been over the last decade. This article shows that house ownership is cheaper now than it has been for a decade.

An Article from The Adviser
http://theadviser.com.au/breaking-news/7838-housing-affordability-on-the-up

Housing Affordabilty - Best in a decade

A spate of interest rate cuts over the last 12 months has helped housing affordability to reach its best levels since the first half of the last decade.

According to the Australian Housing Outlook report, housing affordability has improved across almost every capital city over the last 12 months.

“Outside of 2009 when interest rates were at 40 year lows, housing affordability in Sydney is at its best level since 2001, despite being the least affordable capital city,” the report read.

“Similarly, affordability in Brisbane is at its best level since 2003, and Adelaide and Perth are at their most affordable since 2004.”

The report said the combination of a fall in median house prices, coupled with a 95 basis point reduction in the standard variable interest rate over 2011/12, has seen housing affordability improve across all cities.

And while affordability has already improved significantly over the last 12 months, BIS Shrapnel’s Robert Mellor told media in Sydney yesterday that he expects further improvement in housing affordability over the coming year as the average standard variable rate is expected to fall another 40 basis points in 2012/13.

As per the report, homes in Sydney were considered to be the “least affordable” of all the capital cities, while Canberra was considered to have the “most affordable properties” when monthly mortgage repayments and the average income are taken into account.

Mortgages - Leasing - Conveyancing - Insurance - Wealth

ANZ cuts rates by 0.20%

noreply@blogger.com (Unknown) — Mon, 15 Oct 2012 00:36:00 +0000

ANZ recently cut is variable rate by 20 basis points , becoming the last major to pass on the RBA's cut.

The bank announced it will reduce its standard variable rates by 20bps effective next Friday. The move takes the bank's variable rate to 6.60%, the same as CBA and lower than Westpac's 6.71%, but higher than NAB's 6.58%.

ANZ Australia CEO Philip Chronican stated
“While this increase in competition is benefiting the majority of our customers through historically high deposit rates relative to the cash rate, last week’s decision from the RBA has provided some scope to once again reduce our variable lending rates,” he said.

Major Banks Standard Variable Rates
ANZ - 6.60%
CBA - 6.60%
NAB - 6.58%
WBC - 6.69%

But remember the Standard Variable is half of the story.
The real story is:
   1. What discount can you get - ie the Actual Rate you pay
   2. What are the other Fees
   3. What features will the loan have

Give Premium Broker a call - We make finance easy

PremiumBroker - making finance easy

www.PremiumBroker.com.au

iPhone App - as seen on TV

noreply@blogger.com (Unknown) — Mon, 24 Sep 2012 03:28:00 +0000

iPhone App - My Mortgage Kit as seen on the Today Program

The Vow Financial iPhone App
My Mortgage Kit

My Mortgage Kit was featured and demonstrated on The Today Show this morning in the "Best Property Apps" section. We have also received good reviews in the Sydney Morning Herald!

Today Video - Click Here

Top free apps to save you time and money - SMH

Download the app here in iTunes

Premium Broker - A new name for Equitimax

noreply@blogger.com (Unknown) — Tue, 18 Sep 2012 09:53:00 +0000

PremiumBroker

A new name for Equitimax Pty Ltd.

We are the same old people
with a slightly new look.

Why have we changed our name?
PremiumBroker better describes what we do. We are Mortgage Brokers providing loans for over $100,000,000's of client loans in the past few year's.

Over the years we have added some new products and services. We are more than just mortgages. We have been working closely with our Aggregatore Vow Financial Pty Limited and a few our good business friends.

PremiumBroker therefore can assist you with:

Mortgages
Equipment Finance & Leasing - Darren Goodman
Conveyancing
Financial Planning
General Insurance
Investment Property buying service
Accounting - through our friends at Hudson Financial

You really dont need to go anywhere else.

Sydney prices will continue to grow: RP Data

noreply@blogger.com (Unknown) — Mon, 10 Sep 2012 00:21:00 +0000

Sydney prices will continue to grow: RP Data

An Article from The Adviser's Jessica Darnbrough
10th September 2012

The Sydney property market has been labelled the one to watch by RP Data.

Speaking to The Adviser, RP Data’s Cameron Kusher said Sydney will always perform strongly thanks to the supply issue and growing population. “Sydney will continue to be one of the better performers. There are many reasons for this. The first reason is that Sydney has not performed to the same level as some other capital cities over the past 10 years. As such, the capital city has plenty of room to make up,” he said.
“When you adjust for inflation, property prices Sydney are still 7 per cent below their peak in 2003 and 2004. If you team that with the fact that there is still population growth in the capital city and an undersupply of properties, the market is well positioned for the future.” According to the latest RP Data-Rismark Hedonic Home Value Index , the median property price in Sydney is currently $530,000 – 1.1 per cent lower than this time last year.

That said, values look to be steadily increasing once again, with the Index showing prices had grown by 0.1 per cent over the last month.

http://theadviser.com.au/breaking-news/7678-rp-data-identifies-capital-city-to-watch

Fixed Rates - Is now the time?

noreply@blogger.com (Unknown) — Wed, 29 Aug 2012 01:20:00 +0000

I thought you might be interested in, and possibly benefit from, this latest news.

Over the past few weeks almost 50 lenders have slashed their fixed rates - bringing the average fixed rate down to the lowest it's been in over 3 years!

If you've ever considered fixing all or part of your loans, now could be the time to discuss the fixed rate options available to you.

No-one has a crystal ball when it comes to interest rates, but if the idea of having your loan repayments set in stone for the next few years is comforting, we should talk.

Having a fixed rate can also help you budget and plan your cash-flow, because you're not exposed to interest rate rises. Of course you don't benefit from interest rate cuts, but some people do prefer certainty over savings.

Alternatively we are currently seeing some bigger discounts - maybe we can negotiate a better variable rate for you.

If you'd like us to investigate your financial situation, with no obligation of course, simply reply to this email now or give Equitimax a call on 02 9411 5322

I hope you are well and I look forward to talking with you soon.

Warmly

Robert Ward & John McLennan
E: loans@equitimax.com.au
W: http://www.equitimax.com.au/recommendus.html

P.S. If you have a friend or family member who might benefit from this latest news, please forward this link to them and I'd be happy to help them too.

CLICK HERE FOR OUR FIXED RATE FACT SHEET

Recommend Premium Broker

noreply@blogger.com (Unknown) — Wed, 25 Jul 2012 05:10:00 +0000

Recommend Us

We are always extremely grateful to receive recommendation from happy clients.
Thank you for recommending us to your friends, colleagues and family.

Having trouble seeing this page or you would like to refer someone to us - Click here

Misconceptions of Brokers

noreply@blogger.com (Unknown) — Fri, 20 Jul 2012 01:23:00 +0000

An article by
Caroline Dann of BrokerNews

20/07/2012 7:30:00 AM

Consumers' Misconceptions of Brokers

Consumers believe going direct to the bank will secure a better deal, according to new research.

A Loan Market survey of brokers found the two biggest misconceptions:

1. that a direct-to-bank approach results in a cheaper loan.

2. that broker services came at a cost.

Loan Market spokesperson Paul Smith said it was crucial consumers know the value of using brokers, not only to secure a good deal but to utilise their experience in the market.

“The reality is that a mortgage broker can negotiate your needs between several lenders and uncover discounts not available to those shopping on their own,” he said.

However, new research shows nearly 50% of home loans are written through mortgage brokers, showing a shift in attitudes of lenders.

“The banks and lenders are moving to recognise mortgage brokers as a preferred distribution network for mortgages because of the number of customers using them and the fact there are no fixed costs associated with brokers such as a branch facility,” he said.

My personal experience:
I recently went into a major bank to get my Corporate Credit Card changed to a Business Credit Card. I thought it was quite a simple thing to do . . . . .just needed the product switched.

I was served by a branch loans processor who had

No idea what they were doing,
Limited English skills and
No experience in business lending

It got so bad I literally had to spell out business terms such as "depreciation" and "addbacks".
After the loan was declined. I did not even realise I was makeing a formal application, nor did I sign anything including a mandatory privacy form.

I was advised I would need to speak to a business lender. It took me 2 weeks to arrange a meeting with the Business Specialist. She seemed a little more knowledgable and was then told they will speak to someone and get back to me in 2 days. That was over 3 months ago, and although I have left emails and phone calls and I still waiting for some help . . . .

Questions:
1. Why did I go into a Branch?
2. Why would you?

Newsletter - July 2012

noreply@blogger.com (Unknown) — Wed, 11 Jul 2012 05:12:00 +0000

Hello

July 2012

Please find your Jul/ August newsletter below. If you have any questions or changes please email john@powerport.com.au
There is a lot of media hype about out-of-cycle interest rate movements but little in the way of explanation. We have fielded many questions from clients about why lenders are moving their interest rates out of cycle with the RBA and what it means for home owners.
Our page two article attempts to answer these questions by explaining the case for both sides of the argument. To understand more about this topic, your mortgage broker is always a good person to turn to for reliable unbiased advice.
In this issue we also look at how to build equity in your home loan quickly - page 3 - and the changing face of the Aussie household - below. Our page 4 article explores the topic of empathy and how important it is for effective relationships and communication.
Kind Regards,

Robert Ward & John McLennan
Directors - Equitimax Pty Ltd

Equitimax Pty Ltd
PO Box 929
Chatswood NSW2057

Tel: 02 9411 5322
Mob: 0417 448 691
Fax: 02 9411 5200


	1. A Typical Home In Profile


	2. Out-Of-Cycle Rate Hikes


	3. Book Review


	4. Useful Tips When Purchasing A Property


	5. Finding Empathy

A Typical Home In Profile

The stereotypical Aussie family home made up of mum, dad and a couple of kids is on the wane, as couples without children fast become the family norm.
As our population ages and baby boomers become 'empty nesters', it is predicted that couples without children will increase the fastest of all family types, making up 43% of all families by 2031.
Other big changes include a massive increase in the number of Australians living alone - again largely a result of an ageing population. This type of household is expected to increase by up to 91% over the next 25 years, representing the fastest growing household type over the period 2006 to 2031.
The number of people in our households will continue to decline until it reaches an average of between 2.4 and 2.5 by 2031. By 2016 Australia's household size is projected to be the same as Japan and New Zealand and larger than England (2.2) and Scotland (2.1).
Although there will be fewer people per house, the number of households continues to rise. Estimates place the number of Australian households at over 11 million by 2031, an increase of 4 million households since 2006. Over the same period, Australia's population is projected to increase by 39% to 28.8 million people.
So what picture does this paint for property investors? It shows there will be plenty of demand for property into the future but it will pay to keep an eye on projected demographics when planning your next property purchase.

Out-Of-Cycle Rate Hikes

There's a very public stoush going on between the banks and the politicians about out-of-cycle rate rises.
While each side argues its case, consumers are left confused about whether they are getting a raw deal.
Since the RBA began cutting interest rates by 125 basis points from last November, there has been a shift in the tradition of lenders moving their rates in line with the RBA. Lenders have instead chosen in many cases to withhold part of each reduction and to make their rate announcements up to two weeks after the RBA's first-Tuesday-of-the-month announcement.
We have lately fielded many questions from confused clients, asking 'who is driving rates', 'am I being ripped off', 'why are out-of-cycle rates rises happening'?
Here we'll take a look at both sides of the argument and what it means for you as a mortgage holder.
The government argues ...
The banks are protecting their profits at the expense of consumers. We've all heard Treasurer Wayne Swan's very public criticism of the banks for moving out of cycle with the RBA. He has suggested they have a responsibility to match the RBA's rate cuts and their 'high returns' give them the profitability to be able to do so.
The banks argue ...
They have always been independent of the RBA when setting their interest rates and they are under no obligation to follow the Reserve Bank.
Their profit margins have been hurt by an increase in 'funding costs' (the amount of interest cost paid by a financial institution for the money they have acquired from various sources), largely as a result of Europe's debt problem and they have a duty to shareholders to adjust rates based on these pressures.
The Australian Bankers Association has warned that lenders can't follow the Reserve Bank's cash rate moves without risking the stability of Australia's financial system. "The risk is that if international investors become concerned that the banks in Australia are politically constrained from managing their higher costs, they will perceive us as riskier and they will reflect this in what they charge for the money we raise, adding further funding cost pressures on the banks, and ultimately, customers."
We say...
If you feel unhappy with the rate movement your lender has made, give us a call to find out if there is a better alternative out there for you. When you come to us you can be sure we will help you find the best deal, answer your questions honestly and provide clear unbiased advice.

Book Review

A young woman walks into a laboratory. Over the past two years, she has transformed almost every aspect of her life. She has quit smoking, run a marathon, and been promoted at work. The patterns inside her brain, neurologists discover, have fundamentally changed.

Marketers at Procter & Gamble study videos of people making their beds. They are desperately trying to figure out how to sell a new product called Febreze, on track to be one of the biggest flops in company history. Suddenly, one of them detects a nearly imperceptible pattern--and with a slight shift in advertising, Febreze goes on to earn a billion dollars a year.

An untested CEO takes over one of the largest companies in America. His first order of business is attacking a single pattern among his employees--how they approach worker safety--and soon the firm, Alcoa, becomes the top performer in the Dow Jones

Useful Tips When Purchasing A Property

How to build equity in your home quickly
Every home owner has the chance to build equity in their home over time, but here's how to speed up the process.
Equity is the difference between the market value of your property and the amount you still owe on your loan. The quicker you build equity, the earlier the opportunity to invest further, expand your portfolio and build your wealth.
Buy at a good price
At the start of your investing career, it doesn't hurt to knock $25-50k off an average priced home. Paying a lower price not only saves money up front, but also long term through reduced interest payments.
Mastering the art of negotiation is your best bet for knocking down the purchase price. Start by doing your sums and knowing your limit, but never let on to the seller what your top price is. Place a time limit on your offer and tempt the seller with something like a quick sale. Stay calm during the process; keep a clear mind and a cool heart.
Buy in an up-and-coming area
Look to buy your property in areas that market demographics show are just about to boom or that will soon receive new infrastructure or an injection of new business. It can take time to put in the research but the payoff is you will be able to buy a property for a reasonable price and it won't be long before its value starts to rise.
Buy a property that can be improved
Renovation can increase the value of a property but be aware that it takes time, money and experience. For those would-be-investors not able to make this kind of commitment, the alternative is to buy a property that only needs a bit of cosmetic work. Freshening up the exterior, a lick of paint, new storage areas or a simple bathroom/kitchen tidy up will cost less and can significantly improve property value.
Pay your loan off sooner
Aim to make your initial down-payment at the time of purchase as high as possible. Then look for ways to repay your home loan early: increase the regularity of your repayments, make larger repayments and make lump sum repayments (ensure your loan has the flexibility to allow this without penalty). Another option is to use the interest offset accounts that come with many loans - these reduce the amount of interest that is charged by offsetting your savings to the value of your loan.
As your mortgage broker we are happy to guide you through various strategies for building equity in your home loan.

Finding Empathy

Despite the common adage 'never judge a man until you have walked a mile in his moccasins', many of us are too quick to judge others without considering the full picture.
How long since you have given someone the benefit of the doubt rather than forming a quick judgement? How long since you stopped to take in someone else's perspective? If your answer was 'today', then congratulations, it means you have what it takes to be empathetic - to place yourself in the shoes of another person and be able to identify and understand their situation.
It has been said that a common characteristic of people who are successful as business leaders, teachers, parents, spouses and healthcare professionals is their ability to be empathetic. By gaining an insight into what others are feeling and thinking, they are able to create bonds of trust. They are also able to understand how or why others are reacting to a situation and use this to inform their decisions.
Empathy is sometimes wrongly confused with being too soft, giving in or not being assertive. You can be empathetic and yet disagree with another person - it simply means you are in tune with what they are going through and respond in a manner that acknowledges their thoughts, feelings or concerns.
How to develop empathy
You can strengthen your ability to emphasise by learning to listen attentively and ask questions.
To listen attentively means putting your complete focus on that person without getting distracted. For example, if you're doing chores and your child wants to tell you something, stop what you're doing and turn to your child. If you need a few minutes to finish that task or email before comfortably being interrupted by an employee, then let the person know that.
To be curious; to ask questions is to learn what the person is feeling and to gain a clearer understanding of the full picture. It also demonstrates you want to know more and you care about what they have to say.

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 2012.

Click here if you would like to unsubscribe from future newsletters.

SMH Article - Your Credit Report

noreply@blogger.com (Unknown) — Thu, 05 Jul 2012 09:09:00 +0000

Tougher stand taken on credit files

John Kavanagh June 30, 2012

View the www.smh.com.au/money article here

Credit reporting agencies will get greater access to your information in exchange for stronger consumer protection.

The information held on consumer credit files will change in the coming year so that lenders, utility suppliers and telcos can find out more about the way we use credit.

OUR NOTE: If you have concerns please give Equitimax a ring and we can check your credit rating with Veda and advise on your current position.

The government has agreed to make Australia's credit reporting system more comprehensive in return for tougher consumer protection. Consumers have access to their credit files and the right to demand that mistakes are corrected. With big changes on the way - which will involve more information going into files - this is a good time to check your credit file and make sure there are no incorrect entries.
Any incorrect default listings or other errors could make it hard for you to get access to credit, a mobile phone contract or a utility service account.

And it is not just low-income earners who are affected.
Veda Advantage, Australia's biggest credit reporting agency, says while people living in ''blue-collar areas'' account for the majority of default listings on credit files, that profile has been changing and there is now a broader spread of people affected.

Under the current reporting arrangements, a credit reporting agency can include the following information in a credit file: payment on a credit contract is at least 60 days overdue; a cheque for $100 or more has been dishonoured twice; a bankruptcy order has been made against the individual; a credit provider considers that the individual has committed ''a serious credit infringement''; the individual's current credit provider status; and details of recent credit inquiries.

The new scheme, which was introduced in an amendment to the Privacy Act by the Attorney-General, Nicola Roxon, last month, will allow credit reporting agencies to add the following information: the date a credit account was opened; the type of each current credit account (mortgage, credit card, personal loan and so on); the date a credit account was closed; the current limit of each open credit account; and repayment performance history.

The aim of the reforms is to facilitate better assessment of consumer credit risk by creating greater transparency. Information about repayment performance will be available only to licensed credit providers.
In return for giving the industry a more comprehensive view of the consumer's credit position, the government has included tougher consumer protection provisions in the amendment.

Consumers will be compensated if they are adversely affected by a contravention of the credit reporting provisions and courts will be given power to order compensation in cases where a civil penalty provision has been contravened. The new law includes a substantiation rule for corrections.

If a person requests a correction and is refused, the credit reporting agency or credit provider must furnish evidence to substantiate the correctness of the information.

A big problem with credit files is that errors creep in, because questions such as whether someone has committed ''serious credit infringement'' can involve a degree of subjective assessment. The Financial Ombudsman Service reported last month that it was dealing with several disputes in which consumers raised concerns about serious credit infringement listings on their credit files.

The Ombudsman found that credit providers did not always investigate sufficiently to determine that the consumer's actions indicated they were not going to comply with credit obligations. The Ombudsman also found a lender that was listing commercial debts on consumers' credit files. Commercial debt does not fall under the legislation.

''Errors in credit listings continue to be an area that raises systemic issues,'' the Ombudsman said.
Changes to the credit reporting system were first proposed by the Australian Law Reform Commission in 2008, and those recommendations were accepted by the government the following year. Change has been slow in coming because the issue has continued to be hotly debated.

The Consumer Action Law Centre has argued that some lenders target borrowers who have a high likelihood of defaulting because they pay high fees, rates and penalties. More detailed credit files allow those lenders to identify targets more easily.

The joint chief executive of the centre, Carolyn Bond, says all the overseas research shows that more comprehensive credit reporting leads to more lending and ''we are putting a lot of trust in lenders''.
Lenders have argued that the current system forces them to rely on a ''very limited snapshot'' of the credit applicant.

Access Economics has produced a report that says more comprehensive reporting would help overcome financial exclusion. A small number of adult Australians have no access to credit.
Access says lenders that rely on the current credit reporting system have to fall back on information about income when assessing credit applications.

One result is that people on low incomes may miss out on credit, even though they could service a debt. A more comprehensive report would highlight the fact that they had a good repayment history.

Beware credit repair companies

The co-ordinator of the NSW Consumer Credit Legal Centre, Karen Cox, says consumers should be wary of dealing with credit repair companies, which, in some cases, charge large upfront fees to investigate a consumer's credit file and ''clear'' the file. Cox says some consumers are being charged hundreds of dollars for having errors in credit files corrected, which they could do themselves for nothing.

In other cases, the credit repair companies have used aggressive tactics to try to persuade the lender or credit reporting agency to remove legitimate listings. And in some instances that Cox's staff have dealt with, the credit repair company has persuaded the consumer to enter Part IX insolvency arrangements, which they subsequently administer for a fee.

''It is a completely unregulated area,'' Cox says.
Australia's two main credit reporting companies, Veda Advantage and Dun & Bradstreet, provide access to credit files, via their internet home pages.

OUR NOTE: Websites referred above are:

Veda www.mycreditfile.com.au

D&B http://dnb.com.au/

Veda offers an alert service that informs consumers of any changes to their credit file.
Consumers should try these services first and take the matter to a dispute resolution service if unhappy with the outcome. A credit repair company might be an option as a last resort.

SMH Article - Build your savings using Offsets

noreply@blogger.com (Unknown) — Thu, 05 Jul 2012 06:43:00 +0000

Build your savings

Sydney Morning Herald - Lesley Parker July 4, 2012

www.smh.com.au/money/saving/build-your-savings-20120703-21dt8.html

Redraw and offset facilities can be tax-effective ways to save, but there are pitfalls that must be avoided.
Using your mortgage as a place to save gives you the best after-tax return outside super.
But financial advisers warn there can be traps if you're not disciplined.
Anyone with a redraw facility or offset account can, in effect, ''save'' by putting money on, or alongside, their mortgage.

With a redraw facility, the money goes in as an extra repayment, with the ability to redraw it if needed.
An offset account works slightly differently, sitting alongside the mortgage. If it's a 100 per cent offset account, any money in the account is fully offset against your mortgage and you pay interest only on the balance left after that.
So, for example, if you had a $350,000 home loan and $50,000 in the offset account, you'd pay interest on $300,000.
Because you continue to make your usual monthly repayment, the impact of extra repayments and offset deposits is that you pay your loan off faster.
And because you're not actually earning interest, there's no tax to pay on those savings.
A minority of offset accounts provide only a partial offset.
In this case you'll pay interest at a reduced rate on the amount of home loan equal to the money in the offset account.
In the example above, you might pay 5 per cent, instead of 6.5 per cent, on $50,000 of your home loan.
Redraw and offset were once features of ''premium'' loans but have become more standard in recent years.
Nevertheless, check you won't be hit with extra monthly or annual fees or a higher interest rate on the sort of loan that comes with this kind of facility.
If so, do the sums to see whether you'd be better off taking a basic loan with a low interest rate and no fees. On the RateCity database, loans with offset or redraw had interest rates ranging from 5.65 per cent to 7.46 per cent, application fees ranging from zero to $795 and annual fees ranging from zero to nearly $400 - all much the same span as for home loans in general.
If the facility is attached to a basic home loan, there can be a fee for redrawing. McPhail HLG Financial Planning principal Anne Graham says using redraw and offset are tax-effective ways of saving. But such facilities - including line-of-credit loans - require discipline. ''People get trapped when they don't keep track of what they've taken out,'' she says.
''They're feeling good that they're paying a lot off but they forget about the money that comes back out.
''They can end up with no movement at all in the [home loan] balance.''
Also, care needs to be taken if you want to use the money you've parked in your mortgage to help buy an investment property.
''It's very important that you separate the interest charged on the amount used for investment purposes versus the interest charged on your home loan - the reason being that the investment-loan interest is tax deductible and the home-loan interest is not,'' Hewison Private Wealth client adviser, Andrew Hewison, says.
That can be a little messy with redraw. So Hewison's advice is to refinance, take what was the redraw money and establish a separate investment loan account.
Key points
❏ Redraw allows extra repayments to be withdrawn if needed.
❏ Be careful not to redraw more than you put in.
❏ Money in an offset account sits alongside the mortgage, in effect reducing the balance.
❏ Check for extra fees or a higher interest rate on loans that feature these facilities.