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In the past, prefabricated houses would connote images of tackiness and shipping container living, but prefab housing is now enjoying an avant-garde revival.

Today’s prefab houses consist of high end materials, follow strict green building practices and are designed by leading architects. Often they have substantially better thermal ratings than brick homes, meaning they actually cost a lot less to heat and cool.

Some new builders even start with a traditionally built lower floor, then build a prefabricated second floor, being less expensive and much faster than building a standard two-storey home.

To find out more, download my short introductory PDF article to this style of home that is growing in popularity – Absolutely Prefabulous.

https://www.mortgageaustralia.com.au/email/files/absolutelyprefabulous.pdf

Do you know what a lender will find when they look at your credit history report?

For many borrowers, it’s not until they apply for a loan that they even lay eyes on this document for the first time. Unfortunately, this is also when many people find out that their credit history is less than perfect.

There are lots of little mistakes you can easily stumble into when you’re not focussing on maintaining a healthy credit record. Don’t despair though – there are also ways to fix them, as long as you’re willing to be a little proactive.

Multiple Applications

Some people cast a very wide net when applying for a home loan. They complete applications with a variety of lenders in the hope that one of them will be approved. This tactic might have been a great idea when you were applying to universities, but it’s the worst possible way to apply for a home loan.

Unfortunately when you apply for a loan and you aren’t successful for any reason, this is noted on your credit record. There may be logical reasons for your application being declined – sometimes it’s as simple as not being a customer of that particular bank.

The problem is, when you have a few of these on your record it can start to appear that you aren’t a very good risk for a lender – since so many other lenders have already said no.

The best way around this is to engage a mortgage broker, who will investigate on your behalf before lodging and application with the most appropriate lender for your personal circumstances.

Digging your heels in

Let’s face it – there are some companies out there who are just shocking to deal with. If you spend a lot of time on the phone arguing over incorrect bills, you’re not alone. After lots of phone calls, it might seem like a good idea to ignore that incorrect phone bill and hope that it goes away.

The problem with that approach – the bill might be listed as a default on your permanent record. For your own best interests, it’s probably better to pay the bill, and then dispute it afterwards.

Not keeping on top of your bills

If you have moved house a couple of times, or if you don’t have the best filing systems in place, it’s possible that you might have misplaced or neglected to pay the occasional bill. Sometimes people have defaults listed on their credit history report due to moving house, and not receiving any bills or reminders relating to the debt.

Make sure that you have proper mail redirections in place when you move, and make a list of companies to update your details with as soon as possible.

If you have these sorts of defaults on your credit history report, you might be able to have them removed by communicating directly with the company who reported the default.

Failing this, you might be able to lodge a dispute through a credit reporting body such as Veda.

Are you managing a mortgage and starting a family?

Many a new parent has been caught out realising our once organised calm life is a thing of the past when we bring our bundle of joy home. It’s amazing how tiny babies can turn our household upside down.

We quickly learn that we need to be more flexible about when we eat, sleep, go to the shops and even have a shower.

It helps to be flexible in your financial life too when the impact of a reduced household income and the expense of a new addition to the family start to become apparent.

A little forward planning now can make it easier to focus on what’s important later – your family.

Here is a guide with some ideas on how you can relieve the financial pressure of starting, or increasing, your family – Can you manage a Mortgage and a Baby?

https://www.mortgageaustralia.com.au/email/files/amortgageandababy.pdf

With so many different loans on the market, it’s easy to get a little confused. It’s not always simple to work out which lender is offering the best deal, or who has the best interest rate.

One of the main choices you need to make early on, is whether to opt for a standard variable interest rate, or a fixed rate loan.

Many lenders offer fixed rate loans for 1 to 3 years, some even offer periods of up to 10 years without a change to your interest rate. So with all of this certainty on offer, what are the benefits of the old-fashioned variable interest rate?

Lower interest rate

Usually your rate will be lower than a fixed rate mortgage, meaning that you pay less interest. Variable rates are generally lower than fixed rates. If you choose to fix your rate, you’re paying for the certainty that this offers.

Take advantage of decreasing cash rate

If your lender reduces their standard variable interest rate, your interest will be reduced accordingly, meaning that you always pay the lowest standard rate that your lender is offering. So when the Reserve Bank lowers the official cash rate, there is a good chance that your repayments will reduce.

Features and Flexibility

Usually standard variable rate loans offer an array of features that you don’t get with a fixed rate loan.

Most variable rate loans give you the flexibility to make additional payments when you want to, but then redraw the extra money again later if your situation changes.

Many lenders also allow offset accounts for your savings which reduce the overall interest charged on your loan – because the bank takes your savings into account before calculating your interest.

When you opt for a variable rate loan, you always have the flexibility to fix your rate later, meaning that you can wait and see if rates are further reduced, potentially saving you money. If you have already fixed your rate, you will continue to pay the same interest rate even when the official cash rate continues to decrease.

On the other hand though, if the official cash rate rises, your loan repayments will increase accordingly. Did you make the mistake of borrowing too much? If you opt for a variable rate loan, and then interest rates start to rise, you might find that you struggle to meet your repayments.

To avoid issues in the future, it’s really important that you take the time to compare the loans available to you, and choose the loan that suits your lifestyle and budget.

We often meet people who are hooked on the good life: living in expensive suburbs, fancy cars, frequent dining out and overseas holidays. You?d be surprised however, at how many don?t have adequate savings for retirement or redundancy, let alone a solid investment plan.

For more details, click here to read my “You may already have what it takes to be a good property investor” article.

https://www.mortgageaustralia.com.au/email/files/whatittakestobeagoodpropertyinvestor.pdf

“Money doesn’t grow on trees,” we tell our kids. But do we help them understand where it comes from and what to do with it?

Like most good habits, financial responsibility needs to be taught and modelled.

How you handle money probably has a lot to do with what your parents did or didn’t show you. Here are some great tips for kids of all ages.

AGES 4-7

Needs vs wants

In a world of instant everything, the idea of a treat is fading fast. But, it’s never too early to learn we can’t always have – or afford – everything we want.

In fact, it’s one of the most important financial lessons you can teach your child. Use ‘wants’, such as new toys and junk food as a treat or a reward and explain in ways your child understands why you sometimes say “no.”

Spare change

Give kids your coins at the end of the work week to put in a jar or money box and help them to count it once a month to see how much their stash has grown. When the jar is full, take them to the bank to deposit it in an account of their own.

This is one of the simplest (and oldest) ways to teach kids about savings because it shows them first-hand how a little eventually adds up to a lot.

AGES 8-12

Earn and learn

While some families believe children should help out around the house for nothing and others think kids should get an allowance without lifting a finger, the fact is that pocket money teaches children about earning and budgeting – both necessary in adult life.

Set a consistent amount of money for certain tasks and be specific about what you want done. Your idea of a tidy room may differ to your child’s so show them what you mean by “clean.”

Game of life

Use Monopoly money to talk about the cost of living, spending and saving. Count up $5,000 – roughly an average gross monthly income. Start by taking out the income tax – about $1,200 (whoa!).

Then pay for household bills, mortgage or rent, groceries and other necessities, all based on realistic amounts. Once all the expenses are covered, ask the kids what they think should happen with the remainder, so you can talk about saving and spending.

Kids will be shocked by how much life actually costs.

AGES 13-16

Texting and tunes

Pester power cranks up a notch with teenagers, especially when it comes to mobile phones.

The smartest move is a pre-paid account, which keeps a lid on costs while teaching kids restraint. Get them to research the best deal and then discuss the fairest way to pay for it.

Mobile phones are as valuable as oxygen for teens so parents have an excellent bargaining chip.

Freedom of choice

This is a good age to give your child a taste of financial liberty. Take your child to the bank and get an ATM card attached to a zero-fee account so they can access at least some of their savings.

You may prefer to only give them the card during school holidays or when they travel with sport or school. Start off with access to smaller amounts (no more than $50-$100) and encourage your kids to talk about the sorts of things they buy.

You should also share your own examples of having to decide between saving and spending.

AGES 16-20

Direct debit

If your kids have a job – part or full time – offer to set aside some of their pay for savings. Young people with a strong savings ethic may not need support, but having access to real money is likely to prove too exciting for most.

Agree on an appropriate amount and get a direct-debit to a savings account set up with their regular pay. They might begrudge it at first, but they are likely to thank you when they see a growing bounty after several months of saving.

Vroom, vroom

Your child’s first big financial responsibility is likely to come with four wheels.

Whether you buy their first car, ask them to save up or share the load, it’s important to work out ahead of time the running costs, including fuel, insurance, registration and maintenance, and who is going to pay for what.

You should also explain the enormous legal and financial implications of not paying for insurance and registration.

Under 25s can save on insurance by being included on their parents’ cover but be aware a steep young-driver excess (usually $2,000 or more) applies if they cause a collision.

If you set up a direct debit from their pay (above) the funds could go towards car costs.

Parents can also lend a helping hand by borrowing against their mortgage for their child’s first car to help reduce repayments and secure a newer, safer car.

Whatever option you choose, remember this is another opportunity to teach your kids financial responsibility and independence, which will be worth more than the thrill of a brand new car in the long run.

We may not have met in person yet, but I thought you would appreciate knowing that I’m always quoting and arranging home loans for people across our suburb.

If you are even remotely thinking about buying or selling, or you are just not sure what your home is worth and how much you can borrow, why not ask me to help you work it out? That way you will know exactly what you can do…and it doesn’t cost anything either!

You could even jump on our website to see how much you could borrow by using our finance calculators – www.mortgageaustralia.com.au/calculators.

I have access to home loans for just about everyone and every situation so please try me out. It usually only takes a few minutes and the privacy act ensures our conversation is entirely confidential.

A cuppa and a chat

It could be as simple as that.

Do you find that you’re usually attracted to the same type of person? We all have a mental image of our perfect mate – some people are even lucky enough to wake up next to that person each day.

Just as the dating market can be tricky to navigate, it’s easy to miss the signs and find yourself attracted to the wrong home loan.

To help you find a loan that loves you unconditionally, here is a quick run-down of the different types available.

Basic Loan

The basic home loan usually doesn’t have a lot of fees. What you see is what you get. Usually you get a low interest rate, but you don’t get much else. If you want some features, and flexibility this might not be the match made in heaven.

Introductory Rate loan

Otherwise known as a ‘Honeymoon loan’ this one is a bit like some new relationships. You get a really good deal at the beginning, and everyone is happy. After a year or two the honeymoon is over, and you find out what the loan will really cost you.

A good option if you want to keep your repayments down in the beginning – but make sure you investigate the interest rate that you will be charged after the introductory period.

Standard Variable rate loan

For those who want to be able to pick and choose their features, the standard variable rate loan could be your perfect mate. You generally get a low interest rate, but the flexibility to select some options that suit your needs.

Low-doc Loan

A low-doc loan is a good alternative for Self-Employed borrowers who are often unlucky in love when it comes to finding their ideal mortgage.

Low-doc loans allow you to use different methods of proving your income. The rules are usually a little less restrictive – but you will pay a much higher rate.

On top of this – most lenders require self-employed borrowers to contribute a 20% deposit, and cover all upfront costs such as Stamp Duty and Lenders Mortgage Insurance (LMI). This is a good option for people who don’t have any other options.

100% home loan

Also known as a ‘No-deposit’ loan, this one allows you to borrow 100% of the purchase price. Don’t be fooled though – this is not a free ride.

Most lender still require you to save a 3% deposit to cover the LMI, and you’ll also need to make sure that you have enough left over to cover stamp duty, moving costs and conveyancing – and any other associated costs.

Sometimes these loans are available, sometimes they are not, it depends on the current lending environment – but it never hurts to ask.