First Time Home Buyers

Buying a Property With Family: Good or Bad Decision?

Posted on by Max

Buying a home in Sydney or Melbourne seems to be an increasingly distant prospect for many first home buyers, who either find their savings don’t seem to climb fast enough, or there’s never enough income to service the ever-increasing debt. 

“We get lots of enquiries about this at Golden Eggs, either with two siblings who want to use both incomes to get started, or with parents trying to help their kids. It sounds ideal, two incomes, or a bigger deposit sounds like it solves all the problems, but in reality it just leads to a whole new set of issues,” Max Phelps said. 

Max Phelps is a money coach, founder of Golden Eggs, best-selling author and creator of the FIVE 2 Money Diet. He has a list of important reasons why teaming up with family to buy property could be the worst decision you ever make.

“First and foremost, at the end of the day, who’s house is it? Buying a property is a very personal choice, so in my experience, normally the older one or whiniest one get’s their way and the other has to go along with it. Over the long term, this can cause a festering problem, or lead to steadily worse passive-aggressive conversations,” Phelps explained.  

“Another factor that can lead to you stumbling out of the property gates is the trials of the application process. Applications are not as easy as they first seemed. If one of the applicants is buying to live in, the other has to be able to cover their own mortgage, or rent. Even just lodging an application means the application isn’t complete until both have provided all their information, and you know that one of you is probably no good with paperwork.

“As your circumstances change you aren’t going to want to live in your sister’s, mother’s, brother-in-law’s, or second cousin’s house, so why on earth would you start on a 30-odd year investment journey together today? Take for instance this example: Coco and Talulah bought a property together with their sister Maddie. When Maddie got married and wanted to move in with her new husband, she had to continue paying her share of the mortgage, yet struggled to rent out her old room.  Coco and Talulah didn’t want just any random person moving in with them, but didn’t want to rent their sister’s room off Maddie either, because that didn’t seem fair. As the family’s circumstances changed, a joint mortgage can draw a wedge between each of the investors.”

According to Phelps, there are a number of other reasons that buying property with family is not a wise decision, or long term investment, including: 

  • Costs of buying out. Following the previous example, to solve Maddie’s problem, Coco and Talulah had to pay stamp duty all over again to buy out Maddie’s share of the property. They also had to afford the whole mortgage with one less income. Often the property just gets sold, which is not ideal and defeats the initial reason that they co-bought the property together in the first place.
  • Half the rent, all the debt. Coco and Talulah later moved out of the property and rented it out. Coco wanted to apply for another mortgage, however the problem was that lenders would only allow Coco to count half the rent on the property, but counted all the debt, since both were jointly and severally liable for it. A good broker can solve this problem, but a bank might just say no. 
  • Partners double any problems. Two siblings might get along really well and not mind helping each other out if one is short for their share of the mortgage, but once they both have their own partners, there’s no guarantee they will all get along the same. If the property is bought jointly and one of the siblings died, the other would become the sole owner, leaving the surviving partner with no inheritance, regardless of their partners will.
  • First home buyer benefits disappear. If both siblings are first home buyers, then they each get one shot at getting the benefits of a grant, or stamp duty savings. If one family member has already bought before, then the other family member may lose all, or most of their first home benefits.

According to Phelps, pooling your savings with family members is not the only strategy you can employ in order to afford a property. He has suggested alternative strategies, such as:

  • Consider setting up a family trust to own the property. Both can contribute and have their incomes taken into account, but it provides more flexibility long term as circumstances change.
  • Consider unequal partnerships. An 80 to 20 ratio makes it undoubtedly clear that one person is helping the other to achieve their goals. It minimises the future strain on the minor party’s share, it’s much cheaper to buy 20 percent of the other sibling than 50 percent if circumstances change. 
  • Buy something cheaper on your own and rent it out long term. Even if you have to live in a dump for a short term period to qualify for the first home buyer benefits, it will be worth it in the long term.
  • Improve your savings skills. If savings are the problem, contact a money coach to help. It may put the dream of home ownership back by a year or two, but think how much better it will feel to be the one to beat your siblings to buying a solo property.
  • Ask your parents to be security guarantees only. You can get an 80 percent loan on the property in your own name and then get a 20 to 25 percent loan secured by your property and your parent’s property too. 
  • Look for more income. Not just a second job or promotion, but a life partner who earns as much, or more than your siblings – just make sure that assets are still protected in case that relationship goes south. We often forget that the basis for marriage historically was economic, not romantic.
  • Consider rent-vesting. Rent where you love to live and buy investment property where you can afford.  Most people that say they can’t get into the housing market don’t realise how many areas of Australia have median prices for only $300,000. 
Uncategorized

Are you spending too much

Posted on by Max

Are you spending too much and saving too little?

We’ve found that most people with less than 5 bank accounts across 2 banks, will find it really hard to control their spending and save consistently.The 5-2 system will free up more of your income for fun, holidays and saving for your future.
I’m Max Phelps, a Money Coach from Golden Eggs.
Context:
If you’re on a career path in the city, It’s easy to believe that the cost of living is expensive and saving will be easier after the next pay rise, but isn’t that what you thought before the last pay rise?The real problem is that banks encourage us to have access to all our income and more and it’s in our nature to use all the available resources.Imagine someone trying to maintain their weight, while eating at an unlimited buffet for breakfast, lunch and dinner every day? We tend to eat more when there’s more available and we tend to spend more when there’s more money available.
Value
The great news is that access to money is easy to fix in 3 steps.
1. Separate bank accounts into at least 5 different pots, to know how much you have for each type of spending
2. Then splitting accounts across at least 2 banks, so variable spending is with one bank and fixed spending and savings are done with a different bank with no card access.
3. Get your income paid into the bank that you CANT access, then you can put a fixed amount into your variable spending bank.
Yeah But…
You’re probably thinking, yeah but, I put everything on credit card to get points.
Going back to our food analogy, that’s like saying, ‘but the buffet gives free gym access’.We all know we’ll eat way more at the buffet than we can burn off in the gym. And after studying people’s behavior with finances for 10 years, I know anyone can save enough with the 5/2 approach to be able to pay for the formerly ‘free travel’ and save more to invest in property.
Martin and Amy thought the same thing when I met them 2 years ago, but based on the rate they were saving year to year, not monthly, which they would dip into, it would take them 8 years to save the deposit for a house.They implemented the 5-2 system, which we adapted to 7 bank accounts across 3 banks for them and 2 years later, not only have they bought their first home, but they also took maternity leave and have an almost 1 year old baby.You can’t get either of those with points!
The Point
Once you rearrange your banking to fix your variable expenses and unlink them to your income, then you’ll find the more you earn, the more you save.The more you save, the faster you’ll buy a property and the better the holidays you’ll go on.
Next Step
To find out more, google ‘Golden Eggs Info’ and email or phone to ask us when our next free workshops will be.These genuinely free workshops will show you how to manage your expenses, hit your savings goals and how to get into property without over-extending yourself.
Thanks for watching. I’m Max Phelps and may you live long and prosper.

Uncategorized

Why Spend Tracking Apps Don’t Work

Posted on by Max

I’ve been seeing adds all over the place for free spend tracking apps from banks, supposedly to help you control your spending and they’ve been driving me nuts, because they are a complete waste of time!
My name is Max Phelps and I’m a mortgage broker with Golden Eggs Home loans, here to give you a better solution using less time and helping you build for the long term

I’m going to use an anology here. Imagine that this colander represents any bank account that you have with card access, or a credit card account. The water represents your income pouring into that account each pay cycle.
Tracking your spending is a bit like trying to figure out which hole in the colander the water is pouring out from. Now let’s say you decide that you’re spending too much on lunches, so you plug that hole by bringing your lunch to work. Then what, the water keeps pouring through at almost the same rate as before, but maybe a little more from one of the other holes. Plugging them all is impossible, unless you happen to be one of the 10% of the population who spends no money at all, regardless of income! This video is not for you, please turn off now!

What if you put some of your income into savings before you started pouring it into the leaking account? – you’ve probably heard the saying “pay yourself first”.
That’ll definitely help, but what happens when your annual holiday, or xmas, or car rego comes due, or there’s simply not enough money left at the end of the month or fortnight? That’s when you’ll dip into your savings and top up your account.

The problem with credit cards and bank accounts with debit cards attached is that there’s no feedback on whether should buy something right now, or not. Or whether it’ll be ok next week, or month, but not now. In fact in my experience:

people Spend the money they can access.

Using a credit card simply gives you access to money you haven’t even earned yet.

What if I told you that you could have complete control of your finances without ever worrying about what you or your partner spends their money on? What if I said that it’s possible to get instant feedback on whether to say yes, or no to a purchase, without spending any time studying your spending habits?

You see I spent over 10 years doing what most people do – using credit and debit cards to pay for stuff, sweeping my credit card bill in full every month and never hitting my savings goals for fun stuff, or important stuff like buying assets to set me up for the long term. I thought the answer was more income, working harder, getting a promotion, we even hosted foreign students, but no matter what we tried, the more we earned the more we spent and the more we argued about money.
Luckily we made a change, quite by accident at first, but it worked for us. Then when I got into finance, spending the last 9 years of being a mortgage broker, seeing hundreds of peoples detailed savings spending pattern, I realized that the people who manage their finances the way I do now have better weddings, holidays and more savings and property than people who manage their finances how I used to.

The answer is strikingly simple – it’s Actually very difficult manage your finances with less than 5 bank accounts spread across 2 different banks, yet super simple once you make this change. Don’t scream at the screen, more accounts makes your life simpler, not more complicated.

The first thing to recognize is that you need 2 types of transaction accounts – 1 for fixed bills, like electric, car rego, rates, phone bill, insurance, or even the gym. And 1 for the Every day stuff that you do week in week out. The reason is simple – your weekly spending pattern should be fairly predictable, based on your habits, but your bills are predictable yearly and not at all weekly, fortnightly or monthly. So stop doing them together, otherwise how will you know if going for dinner tonight will actually leave you short on your annual car rego due in 2 months time?

The 2nd set of accounts you need are savings, but these need to be split into different buckets – long term savings, for your future so that one day you won’t have to work for a living, holiday savings to go to amazing places or make great family memories and then the other fun stuff we like to do – buying gifts, gadgets, clothes, special occasion things.
The reason for separation is simple – imagine you had $5k in a holiday account and $25k in your house deposit account, how much will you spend on your holiday? You’re far more likely to take a $5k holiday, than if you just had 1 big savings account with $30k in it. People who put all their savings in 1 place end up doing one of 2 things – blowing it all on the holiday, or never spending anything and going years without taking a break.

Having separate accounts is the first step. Controlling the flow of funds is what makes it all work and sets everything on autopilot – regular allowances paid into the right accounts at the right time, but let’s start out with where your income goes in.

Pouring your pay into the account with your debit card and trying to quickly scoop out enough to cover bills and different savings is too hard and too easy to mess up.

Turning it around the other way, to put your pay through the bills account is like putting down the water jug. This allows you to escape the pay cycle nightmare.
Getting paid monthly sucks – it works for a lot of the bills, but there’s always too many weeks in the month.
Getting paid weekly sucks – great for weekly spending, but quarterly, or worse, annual bills are terrifying.
Fortnightly pay is the worst of both worlds – pay week is great, the other week isn’t and the awkward lumpy, quarterly and annual bills are still horrible.

But putting your pay into the bills account and setting up an automatic WEEKLY allowance, now means you always have money for the things you do every week –groceries, lunches, coffees, petrol, regular entertainment. It’s like taking some of your pay each week and putting it through the old system and it doesn’t matter what you spend the money on, just that when it’s gone, you might need to wait a couple of days for some more.
This is what budgeting actually is – having a budget for something and sticking to it. The difference being, you now know how much you’ve got and you’ll quickly learn if you keep blowing it all in the first 2 days that you need to re-prioritise the money to make it last. But it’s probably better to have the money land just before the grocery shopping is due and then spending the leftover on Saturday night, than having a big weekend and trying to grocery shop using the leftovers!

But fun money is best managed on a monthly cycle – you get a decent chunk of money at the same time every month, but because it’s monthly, it triggers your brain to quickly figure out where to prioritize it – For us it’s all about birthdays and events, like weddings, or planned weekends or something. If it’s a light month for those, then spend it on clothes, gadgets, or some other treat.

Holidays can now be planned for, so you simply work out what you want to spend and when and put enough in your holiday account each fortnight or month to hit the target.

Long term savings is actually the part I care most about – it’s the deposit for your house, or paying it off, or the deposit for an investment and should be fixed at 15-20% of your income. 10% as an absolute minimum if you’re struggling to make ends meet, because you can always get by on 90% of what you earn.

Now lets get back to the banks and the reason why none of them will ever give you this advice. You see we’ve all got these mobile phones with internet banking apps, so putting all these accounts in one bank just makes it way too easy to cheat and nick money from one account if you’re a bit short. So what we want is to put your day to day account and fun accounts – the 2 spending accounts into Bank A and then everything else with any bank except Bank A.

Setting up a system like this takes you about an hour, once and then it’s done. Sure you can review things every so often and dial up or dial down the amount going to each account, but once it’s all automated, you’ll find it way easier to stick to it than not.

If you’ve already got all your direct debits set up on your regular bank account and it’s one of those accounts that you have to put a minimum of $2k/month into it to avoid fees, then why not convert this into the Bills account, but cut up, or hide the debit card. Most importantly, stop carrying it with you everywhere you go – it’ll keep your wallet lighter and avoid the risk of accidentally spending the money for the annual car insurance bill due next month.
You can set up new accounts, with banks like ING, NAB, Citibank, ME bank for your weekly spending and monthly fun. Most of these you can open up online after hours. For couples, I’d recommend having a weekly allowance each, just so you each have a bit of freedom, but just be clear about who pays for what when you go out together and who has the grocery budget.

Once the accounts are set up, you just need to decide how much needs to go into each account, but it’s not an exact science. Work out the bills properly and add 5-10% on top to allow for increases and stuff you might have missed. Work out the Long term savings properly based on your income and savings goals. Then just guess the weekly and monthly amounts and be prepared to adapt after having a go for the first 2-3 months.

Then set up the automatic transfers from your bills account to the others and get on with it.

If you’ve got questions, please post them on our Facebook page, or web page and we will get back to you. And if you like this video, please like, share and tag your friends and subscribe to our youtube channel. And once you’ve become brilliant at saving and got a deposit together, get in touch and we will help and guide you to becoming great brilliant at property buying and investing too.
I’m Max Phelps from Golden Eggs Home Loans, where we’ll help you grow your golden eggs!

Home Loans

How do Offset Accounts Work

Posted on by George

What is an offset account and do I need one?

Offset accounts can have the following benefits:

  • Save: reduce interest charged to your loan
  • Tax benefits: pay less tax*
  • Flexibility: for your future

An offset is a transaction and / or savings account that is linked to your loan account. It works just like a regular bank account but there can be significant benefits to have this coupled to your loan. This is because the balance of this account is ‘offset’ against your linked loan, where this amount is deducted from your loan balance before interest is calculated, so any money in your offset saves you interest on the loan, and helps you pay it off sooner.

An example is given below. Say you have a loan of $250,000 with a linked offset account that has an average balance of $15,000; in this case you would only be paying interest on the notional balance of $235,000. This means that you are not paying interest on $15,000, saving you money which is instead reducing the principal so you will pay off your loan even more quickly.

In the above example, if interest rates were 7% you would be paying about $1460 a month interest without an offset, or $1370 with an offset, saving you over $1000 a year. And by continuing to make repayments at the higher amount, you would pay off the loan 4.5 years sooner and save over $61,000.

To see how much you can save on your loan with an offset account, please contact us to do some calculations for you.

Another benefit of an offset account is that interest is ‘earned’ at the same rate as your linked loan, which is usually higher than what you would earn in a savings account. And as this interest earned on your offset is used to pay the loan, it is not taxed*, unlike interest that you earn on a regular savings account. An example below demonstrates the potential savings.

The offset account is usually fully transactional where you can have your salary deposited into it if you wish, and you can access your funds anytime via internet and phone banking, ATM, EFTPOS, etc. You may choose to replace your existing transaction and savings accounts with the offset account, possibly saving you on fees and charges for your other accounts.

Do I need an offset account?

 If you like the sound of the benefits listed above, an offset might be for you, but ensure that it is 100% offset (some only offer partial offset).

Note that you can get many of the same benefits just by having a loan that allows you to make extra repayments and to also redraw any surplus funds out from it. However in this instance the extra money is not in a separate account which doesn’t suit everyone as some people like separating spare funds as they use the offset to save for a car, holiday, etc. Plus surplus funds in your loan account are not always instantly available (it can take a few days to process a redraw) and there can be minimum redraw amounts (often $1000 to $2000) and redraw fees may apply.

An offset account may have an ongoing fee and / or may be at a slightly higher interest rate than a loan without an offset, but as seen from the examples above, by having money in your offset account you may well save more in reduced interest repayments. At Golden Eggs Home Loans, we can let you know what options there are for loans with and without offset and show you any difference in fees and interest rates, and help you decide if it suits your circumstances. Note however that there is one scenario where an offset is highly recommended, please see following.

Potential as an investment property

If there is any chance at all that your owner occupied home may become an investment property in the future (for example, as you pay down the loan and / or as the value of the property increases and you upgrade to a new property), then it is worth considering a loan structure that is interest-only with a mortgage offset account. By paying at least the difference between the interest only (IO) and the principle and interest (P&I) repayments into the offset account, the surplus funds mean that the borrower would not pay any extra interest compared to a standard principle and interest loan. Down the track if the property becomes an investment, any funds accumulated in the offset account could be used towards the next purchase, and the borrowers would still have a loan for the same amount as initially borrowed, and where the interest charged from that time on would be fully tax deductible. If no offset account was used, repayments made against the principal would result in a lower loan balance and the amount that is deductable could be markedly less. On the other hand, with an interest only loan and an offset account, the borrower has not paid any more interest on their loan than they would have if taking a more traditional loan, plus they have maximised their future tax deductibility if the property were to become an investment (and if it doesn’t, they are no worse off). This shows the importance of using an expert such as a mortgage broker to ensure that you get the correct loan for your current and future circumstances

Please contact us if you would like additional information, to ask any questions, or to set up a time to review your situation.

* Golden Eggs Home Loans does not offer any legal or taxation advice to customers – we recommend you obtain your own professional advice regarding taxation implications.

Home Loans

Fixed Loans – Pros & Cons

Posted on by George

Fixed Loans VS Variable Loans

So you’re about to take out a home loan – should you fix the interest rate or take a variable rate…. or both?

Fixed loans – pros and cons

The interest rate will stay the same throughout the fixed period of your loan, so regardless of interest rate changes in the market, your repayments will remain unchanged – this security of an stable interest rate means you know what your repayments will be, which gives peace of mind.

The fixed rate does not last for the whole period of the loan and is typically between one and five years. After the fixed period has ended, the rate will change to a ‘revert rate’ which will be variable, and which may not be the lender’s most competitive rate. At this time, Golden Eggs Home Loans can assist you to determine if your loan is still suitable or whether it is in your best interest to switch products or re-finance to an alternative loan.

A fixed rate mortgage is often less flexible and has fewer features than variable loans – for example you may not be able to make extra or early repayments, or have access to offset accounts or redraw facilities, although some products will allow these so it is important to ensure that any fixed loan you are considering has the features that you require. Even if you are able to make extra repayments, these may be limited and if you pay over and above your allowance, you may be charged a fee.

Fixed rate loans have significant penalties for early termination (and the earlier you terminate, the higher the penalty) to compensate for the lender’s lost interest, so if there is the possibility of you selling the property, wanting to re-finance or pay out the loan during the fixed period, this type of loan would not be suitable.

Note that the fixed rate on offer at the time of initial discussion or application may change (increase or decrease) during the period from the loan application to settlement of the loan. In other words, the fixed rate on the loan may be higher (or lower) by the time the loan settles. Many lenders offer a ‘rate lock’ facility, where they charge a fee to guarantee that the rate will not move from the point of application through to settlement (generally around 0.10% to 0.25% of the loan amount).

A fixed rate loan may have a higher rate than variable rate loans, and even if the fixed rate is lower, variable rates may drop and catch up with, or become more competitive than, the fixed rate.

Variable loans – pros and cons

A variable rate home loan has a fluctuating rate for the term of your home loan, so if interest rates go up, so do your monthly repayments. Conversely, if rates go down, so do your payments – this introduces risk as no one really knows what rates will do in the future. Also, lenders do not always mimic changes made by the Reserve Bank of Australia – this makes it more difficult for you to budget and does not offer the same security as the fixed rate.

Variable rate loans are often more flexible in areas such as redraw and early repayments – in which case you can pay extra when you can afford it. Making extra repayments reduces the total interest payable on the loan, also reducing the term of your mortgage and increasing the amount of equity in your home (providing your home value remains constant or increases). If a re-draw facility is available, you can withdraw some or all of those funds if they are needed down the track. You can also pay out your loan if you re-finance to a better loan, or move house.

So what should you do?

No matter what economists, media and the market say, no one knows which way rates will go – in addition to market cycles and Australian economic conditions, there is still a lot of uncertainty and the chance of more volatility ahead.

If you are considering a fixed rate, you need to:

  • check that the loan has the features you want
  • understand that getting out of the loan before the fixed period expires will have financial consequences, and these could be severe
  • make sure the interest rate will be honoured while the lender processes your loan (and note that there is often a fee to lock in the rate)

The key with fixed rate loans is to view them as a way to achieve repayment certainty – not necessarily as a way of saving money.

When considering a variable rate loan, you need to plan and budget for increases in interest rates, and make sure that you’re able to meet your repayment obligations should rates rise by, say, an additional 2%.

Note that you can split the home loan so it is part fixed and part variable, giving you the security that at least part of your loan is locked in at a rate you can count on. Please contact us with any questions or to discuss your options.

Home Loans, Interest Rates

Four ways to get a better deal on your home loan

Posted on by George

The RBA has yet again kept interest rates on hold, but that doesn’t stop you getting a better deal on your home loan right now!  Here are four simple ways to lower your repayments, or pay your loan off faster in today’s competitive environment. As a quick guide, a 0.3% interest rate saving on a $400,000 loan, will save you $1,200/year in interest costs – that’s $100/month!

1.  Negotiate a better deal with your current lender – just give us the go-ahead and we can do this for you; with several banks so inundated with these requests, that they’ve automated the process online. No exit fees, minimal paperwork and very fast to implement, but from recent experience with this, they may not be as flexible with the rate as with other suggestions.

2.  Top up your current loan, to access existing equity – this will trigger a new loan application, which automatically gives you access to the better rates that your lender is giving to new borrowers, that previously wasn’t available to you.  We would need some documents from you and we can then apply for extra funds for another investment property, some renovations, or a new car and the repayments at the lower interest rate are likely to be similar to the old loan at the old rate.

3.  Switch lenders – with the current red-hot November special being offered to anyone with a loan of less than 80% of the CURRENT market value 4.69% ongoing variable (1.3% below SVR) – with a up to 10 offset accounts and NO ANNUAL FEE for the life of the loan.   There will be some discharge fees and state government fees to pay, but these are typically only around $500 and the annual fee saving alone is worth $375/year.

4. Switch to a fixed rate – Just let us know how long you’d like to fix for an how much of the loan you’d like to fix and we can access 1 year rates as low as 3.99%, 2 years at 4.49%, 3 years at 4.59% and 5 years at 4.69%, but these also vary by lender, so your current lender may have fixed rates higher than this, but still better than your current rate.  Again, minimal paperwork and costs, just let us know.

We’d love to hear from you, especially if it’s been a while since you have reviewed your loan. Our office is expanding so we can help more people buy and hold property over the long run.

P.S. please feel welcome to share this with your friends and family and we’ll be happy to help them too.

Credit Ratings

Benefits of a Strong Credit Rating

Posted on by George

A few months ago we sent a newsletter to advise that changes to credit reporting had been introduced, and that any repayment more than 5 days late could be listed on individual’s credit reports.

For those of you that are financially responsible and not expecting to have any negative listings on your credit report, the news probably didn’t seem too relevant. What might be of interest though is that the new laws may bring about positive changes. On-time repayments can now also be included on credit reports. In addition, credit reports now have a score.

It has been suggested that Australia may follow the path of other countries where there may be access to lower interest rates for lower risk borrowers. So paying your loans and bills on time will not only avoid a black mark on your credit report, but should also lead to a better rating. It could take some time for this to filter through as banks may need to update their systems to be able to report and make use of this information, but it is worth keeping in mind.

If you would like a copy of your credit report, you can apply here and it will be supplied by Veda within 10 days. If you don’t want to wait that long, contact us to request a copy of your report.

Mortgages

Mortage Wars

Posted on by George

5 August 2014: True to form, the Reserve Bank of Australia announced today that rates would be kept on hold again. The RBA have judged that rates are at an appropriate level to support growth in the economy and still expect “a period of stability in interest rates”. They do note that “long-term interest rates… remain very low”.

You may have recently seen reports in the news of ‘mortgage wars’, with many of the banks dropping their fixed rates. This caught the media’s attention when the ‘big 4’ got to below 5% for longer term fixed rates, but as many of our clients know from their own loans, a number of non-major banks already had rates below this and remain very good value.

We periodically review loans of existing clients of Golden Eggs Home Loans and make contact if there is scope for further savings. For those of you that we haven’t yet assisted, we would love an opportunity to chat to you. There is a lot of competition between banks at the moment so there’s never been a better time. Contact us today.

Interest Rates

NEW FINANCIAL YEAR – NEW CHANGES

Posted on by George

1 July 2014: As widely expected, the Reserve Bank of Australia announced today that rates would be kept on hold again (Media Release/2014).

The RBA still note a mixed bag of economic indicators, some improving and some stubbornly unhelpful (hello, Australian dollar). The bottom line continues to be “a period of stability in interest rates”.

In related news, with the start of the new financial year today there are some changes as follows:

  • Additional 2% levy for taxable income over $180,000
  • Medicare levy to increase to 2% (from 1.5%) payable on taxable income
  • Superannuation guarantee to increase to 9.5% (from 9.25%)
  • Concessional (pre-tax) superannuation contributions caps will increase to $35,000 for those aged 49 and over; and $30,000 for everyone else
  • Non-concessional contributions caps increase to a annual limit of $180,000 (from $150,000).

If you have any questions regarding these points, contact us at Golden Eggs Home Loans.

Interest Rates

NO CHANGE TO INTEREST RATES – MAY 2014

Posted on by George

At the May board meeting of the Reserve Bank of Australia, it was decided to keep rates on hold again (Media Release/2014). This is no surprise as the RBA have been advising that there will “be a period of stability in interest rates”.

The RBA note that in Australia, there appears to be moderate growth in consumer demand, and some indication that business conditions and confidence have improved. In addition, there has been some improvement in indicators for the labour market although they expect it will be some time before unemployment declines consistently.

However resources sector investment continues to decline significantly and public spending is also expected to be subdued (we will know more in next week’s Federal Budget).

Inflation is expected to be within target over the next two years, and the RBA reiterate that rates are expected to be stable to foster sustainable growth.

As to when they might rise, the Sydney Morning Herald reports that according to Credit Suisse, financial markets have wound back their rate hike expectations, with around a 50% chance of an increase in rates in the next 12 months.

In terms of home loan interest rates, fixed rates can in some instances still be lower than variable rates, so if you would like to find out more, please contact us.