Is it time to roll all your debts into one?

Freedom Finance WA • Jan 14, 2021

It is fair to say 2020 was a bumpy ride, and for some of us, this has been equally true financially. For others, looking at the advertised low interest rates on a range of loan products may have us thinking about refinancing, and wondering if it isn’t best to clear all our debts by rolling them into one low interest loan.

While getting a handle on all your outstanding debts and loans is always advisable, debt consolidation or debt refinancing isn’t always straight forward and without caution, may not put you in a better financial position.

It is wise to start by talking to your lenders and service providers – it may be possible to sort out a repayment plan that is more manageable. In terms of any loan products, all lenders have programs to help you in tough times, which you can find out more about by asking to speak to their hardship team about a hardship variation. Ensure you understand any late payment fees or interest charged on these negotiated payments.

If you’ve decided refinancing is your best bet, this is where it can get more complex, and where the team at Freedom Finance WA can help. Our business and passion is taking the stress out of finances and helping people make the most of the money they have. We speak lenders language, and we know what to ask to help you weigh up and find the most suitable products. We can answer your questions, and most importantly, take the stress out of refinancing. Even better – we come to you, obligation and fee free.

What to watch out for

The ATO cautions not all companies claiming they can help free you from debt are equal, and some can leave you worse off. They recommend you avoid companies who make unrealistic promises, such as being able to get you out of debt no matter how much you owe. They also recommend avoiding companies who:

· are not licensed

· ask you to sign blank documents

· refuse to discuss repayments

· rush the transaction

· won't put all loan costs and the interest rate in writing before you sign

· arrange a business loan when all you need is a basic consumer loan.

Our team is licensed and enjoy a well-earned reputation for working tirelessly to ensure we identify and recommend the most suitable loan products, but to ensure you understand what each product offers and what it means for your finances moving forward. We welcome questions and pride ourselves on transparency in every transaction. Visit our website to read our client testimonials and book an obligation free consultation on how we can help your personal circumstances.

Get in touch

Freedom Finance WA is a proud member of the Mortgage & Finance Association of Australia and the Mortgage & Finance Association of Australia, so we're well equipped to help you refinance after a rough year.

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What Type Of Loan Is Right For You?

By Lisa Chapman • 17 Sep, 2021

The array of mortgages available helps a good mortgage broker tailor a package to suit your needs. Here are just some of the options.... Fixed Rate Mortgages With a fixed rate loan you know exactly how much you'll pay per fortnight or month for the fixed period of the loan (usually 1-5 years). Variable Rate Mortgages Repayments can change during the life of a variable rate loan, so you may pay more or less as interest rates rise or fall. If you're fairly sure that rates are set to fall, this is a good option. Principal & Interest Mortgages In this mortgage, you are paying the amount lent to you plus the interest Interest Only Mortgages With interest only, you are paying just the interest on the loan - you are not paying off any of the original principal amount Split Home Loan (Fixed and Variable) You can choose to have part of your loan at a fixed rate and the other part can be at a variable interest rate. If rates do fall, the interest will go down on the variable part of your loan, but you aren't taking as big a risk should rates rise. Redraw Facility If you have a variable rate loan and you make extra repayments, then you can withdraw that additional money when you need to (you can not do this on most fixed rate loans) Land Loan A land loan lets you buy a block of land without the pressure to build on it as soon as possible. Land loans are usually variable interest for up to 30 years. Construction Loan For buying land, building or substantially renovating your home, a construction loan may be the best way to go. You can usually borrow 90-95% of the expected completed value. Non PAYG Loans For self employed people, a home loan can still be arranged using differing supporting documentation that shows your ability to service a loan and might include BAS and bank statements. You self certify your income, which will need verification. Equity Release This loan type allows you to convert a portion of your residential property 'asset' into cash or an income stream while still allowing you to continue to live in your home

What Is LMI?

By Lisa Chapman • 28 Jul, 2021

Not to be confused with mortgage protection insurance (which is designed to protect the borrower), LMI is insurance that covers the lender’s risk within a residential mortgage transaction should the loan go into arrears and the borrower is unable to resolve the situation satisfactorily. LMI is a fairly common practice within the industry, particularly for new home buyers who may struggle to save a deposit. It allows an additional fee to be paid by the borrower and usually applies when the loan is more than 80 percent of the purchase property’s price. The purpose of LMI is to ensure security for the lender in case the borrower fails to make loan repayments. Even though the actual house acts as security, the nature of the property market, like any investment class, means there is a chance that its value could decline, resulting in a financial loss for the lender. The cost of the premium is dependent on several factors, such as the loan size and property value, and most insurers are flexible when it comes to the method of payment. It can either be a one-off upfront premium payment or that premium could be included in the overall cost of the loan and included in monthly repayments. It is not transferable, which means a new loan may require a new fee depending on how much equity the borrower has. What’s in it for me? While it may appear that it is exclusively favourable to the lender, there is value to borrowers in paying the premium. Opting for LMI means it allows a borrower to independently purchase a property sooner than they otherwise might. LMI is the alternative to using a guarantor or having to save for a bigger deposit, both of which are not feasible options for many first home buyers. A deposit of at least 20 per cent of the desired loan amount is required for a borrower not to be deemed ‘high-risk’. If you consider that the average price of a home in Perth is $500,000, that would mean a deposit of around $100,000 is required. The beauty of LMI is that it buys time, which means borrowers with smaller deposits are able to enter the market sooner rather than later. The major benefit of LMI is that it allows the dream of homeownership to become a reality for a lot of first home buyers.