Can you believe that the holiday season is upon us already?

No matter how or what you celebrate, I hope that you can take some time to rest and enjoy what’s left of 2018. I’ve loved bringing you all the latest finance news each month and have 4 great articles for you to round off the year.

• Why home loan pre-approval is so important

• What you need to know about comparison rates

• How to make your property more ‘in-demand’

• RBA paves way for rate cuts.

Have a great break and I’ll catch you in 2019 for more festive finance!

Why pre-approval is so important.

One of the most critical steps in the process of purchasing property is getting your home loan pre-approved before you start seriously shopping.

As you can see in the charts below, prices over a year have fluctuated significantly and even the smallest movement can equate to a difference of thousands of dollars . For example, a 1% rise in Brisbane, is a $3,850 potential price increase whilst a 6.2% decrease in Melbourne is worth $48,000. 

So why pre-approval?

A formal pre-approval from a lender gives you the dollar figure that’s the maximum amount you can spend. From here, you’ll know exactly what your repayments will be at certain price points and you can confidently shop and bid knowing your finances are approved.

So, if you see prices rising or dropping in an area you want to live in, I can help you run the numbers to see what properties might be in your price range and what your repayments would be.

Does pre-approval cost anything? How long is it good for?

A home loan approval won’t cost you anything and it’s usually good for around 3 months. If you don’t find a property in those 3 months, it's a simple process to re-apply.

Call me about a Pre-Approval.  

Lending is up - make sure you’re comparing!

Despite the absence of an RBA rate movement in over 2 years, lenders continue to move interest rates in order to attract more customers and/or appease shareholders. Although lending criteria has really started to tighten, the Australian Bureau of Statistics just released data that shows growth in lending for October. 

You need to compare rates movements closely

Nowadays, some lenders may appear to reduce their advertised rate but if you’re not careful, the loan might cost you more in the long run. The best metric customers have to compare loans is the comparison rate. Advertised rates can often be exclusive of fees or be a rate that reverts to a higher one later.

What is a comparison rate?

A comparison rate is a single percentage figure that gives you a more realistic idea of what your loan will cost you. It combines the lender’s interest rate with all the extra charges and additional fees related to that loan.

Lenders are legally required to disclose this rate in their advertising - so you should always see one next to the advertised rate.

Why it’s important to get help when comparing.

A broker will help you compare the details that matter to your home loan. The interest rate is important but there’s also a few other things to consider such as your income, Loan-to-value ratio and your credit history. Getting expert help will make sure you get it all right!

Talk to me about comparing loans.  

What to do if your property demand is dropping

The latest data from REA has shown a small drop in year-on-year demand for property but unfortunately apartments took a big hit. 

Obviously, it’s a general figure and there are micro-economies and suburbs that buck these trends but if you’re a homeowner and worried about the price of your asset, just remember that property is a long-game and price corrections and low demand are natural parts of the property curve.

If you’re keen to explore ways to improve the price and demand for your property,why not consider improving it with upgrades or a renovation?

The 3 main options most borrowers have for renovations are;

1. Getting a personal loan to cover renovations costs

2. Adding the renovation total to your existing home loan

3. Finding a new home loan

If you’re interested in chatting about any of the above, get in touch!

RBA paves way for rate cuts

The Reserve Bank has paved the way for further cuts to the official interest rate. In a major speech, RBA deputy governor Guy Debelle said the RBA was prepared to “go fast, go hard and not die wondering” by stimulating the economy. He also said that a lending slowdown could hurt the economy, commenting: “There is a risk that a reduced appetite to lend will overly curtail borrowing with consequent effects for the Australian economy.”

Noting the Reserve Bank had “repeatedly” said the next move in interest rates was more likely up than down, Debelle said there was “still scope for further reductions in the policy rate”.

“It is the level of interest rates that matters and they can still move lower,” he said, in remarks that could foreshadow a reappraisal of the outlook by the Reserve Bank board when it next meets in February. The official interest rate has been unchanged since August 2016, when former governor Glenn Stevens reduced the cash rate to a record low of 1.5% - the final in a series of cuts that has seen the rate fall from a 10-year peak of 4.75 per cent in late 2011.

Thanks for reading my December newsletter. Have a Merry Christmas and a Safe and Happy New Year.

If you need any help with your finances, please call me on 0402 408944