Lenders mortgage insurance (LMI)

While LMI can be viewed as being exclusively beneficial for lenders, we explore the value for first home buyers.

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 e.g. if the lender sells the property and there’s not enough to pay out the loan in full. LMI is a fairly common practice within the industry, particularly for new home buyers who may struggle to save a deposit. It usually applies when the loan is more than 80 percent of the purchase property’s price.

LMI is a one-off up-front insurance premium that is added to the loan amount borrowed. It is not to be confused with mortgage protection insurance (which is designed to protect the borrower).

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. It is generally 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 allows a borrower to purchase a property sooner than they otherwise might. LMI is the alternative to using a family security guarantor or having to save a bigger deposit.

Generally, a deposit of at least 20 percent of the property purchase price is required for a borrower not to be deemed ‘high-risk’ and so avoid the need for LMI. LMI can mean that 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.

Fixed rate loans

With interest rates at an all-time low, and many lender’s fixed rates lower than their variable options, locking in an interest rate on your home loan to guard against possible future fluctuation may be attractive. However, it pays to know the ins and outs of fixed rate loans before committing to one.

When purchasing, refinancing, or renegotiating with your current lender, you can generally decide between one of two loans; fixed interest loans, which maintain the same interest rate over a specific period of time, or variable rate loans, that charge interest according to market rate fluctuations.

Fixed rate loans have stability and predictability, and can be locked in at an agreed amount of time between you and your lender. We often recommend one to three years, as so many things can change over this time frame, but some lenders offer up to 10 years.

You can choose to lock in the interest rate when you apply for a fixed rate. At the point of loan application, you can choose to pay a fixed rate lock-in fee, which will generally give you between 60 and 90 days from the time of application to settle the loan at that fixed rate.

In addition, you can consider a ‘split’ loan. This option allows you to split your loan between fixed and variable rates at a ratio of your choice. This allows you to have a portion of your loan with fixed repayments while the remainder is on a variable rate, giving you more flexibility when interest rates change and potentially minimise the risks associated with interest rate movements.

Of course, a fixed rate loan can come with a few provisos; you could be restricted to maximum payments during the fixed term, and you could face hefty break fees for paying off the loan early, paying lump sums into the loan or switching to variable interest during the fixed rate period.

Also, be aware that at the end of the fixed-rate term, your loan agreement will include information about how the loan will then be managed by the lender, usually to a ‘revert’ variable rate – which may not be the lowest the lender offers. We will contact you in the lead up to your fixed rate expiring to go through all your options at that time.

Buying a property in Metro Melbourne?

“Times and conditions change so rapidly that we must keep our aim constantly focused on the future.” -Walt Disney
If you have been on the hunt for a home or investment property recently, you would have noticed very few properties on the market. Most likely, you have put your search on hold for the time being.
For those lucky enough to find ‘the one’, you are still not able to physically inspect. Of course, you do not have to physically inspect a property to buy it – some agents are offering video remote inspections – but it would certainly make a big financial decision even harder, and may not provide quite enough confidence to make the purchase decision.

However, there is a possible silver lining… The money you would normally spend on things like petrol, transport, entertainment, and eating out can be put aside to give a boost to your savings. As soon as the market starts to open up, you will have a bigger deposit and be in a stronger buying position.
Contact us if you want to talk about getting yourself in a great position to buy your dream property.

Buying a property in Metro Melbourne?
Here’s a brief summary of the changing restrictions as they stand today:

Stage 4 / Second step (from 13th September)
Auctions – online only
Inspections – online only

Third step (proposed from 26th October)
Auctions – outdoor only and subject to gathering limits
Inspections – private inspections by appointment

Last step (proposed from 23rd November)
Auctions – physical distancing is required & records of attendees
Inspections – physical distancing is required & records of attendees

If you can’t make your loan repayments – contact us!

If you can’t make your loan repayments – contact us!

In these unprecedented times, we want to let you know how we can support you, our customers and our community, to get through the uncertainties we all face.

In order to contain the spread of the highly contagious COVID-19, governments around the world are taking extraordinary measures to limit person-to-person contact within their populations, which in turn is taking a great toll on economic activity.

The impact of these measures will be felt across all sections of our community, incomes are at risk and we expect there to be a rise in financial hardship.

We want you to know that we are here and available to support you and to assist with any of your finance needs and to answer any finance questions you may have.

What should you do if you experience financial stress or hardship?

Our Government and all banks want to help customers keep their homes.

The Reserve Bank and Federal Government are providing strong underlying support for the banking system to ensure they are able to assist home loan and business customers.

We expect all lenders will provide customers in financial hardship with a range of solutions to help you keep your homes.

These support packages will vary from lender to lender and we are staying informed of the options as they are being made available.

At this stage we expect some of the options will be:

– A deferral of scheduled loan repayments

– Temporary interest-only periods to assist with cashflow

– Debt consolidation to make repayments more manageable

Also, one of our favourite financial planners, Simone McMullin, has generously offered a complimentary phone/video consultation to any of our clients who are in financial stress. Please contact us if you would like to arrange this with Simone.

In the event you experience a change to your financial circumstances and feel you may find it difficult to meet your loan payments, please contact us for a discussion about your options.

First Home Savers Scheme (FHSS)

It’s certainly tough saving enough deposit for your first home.
The government’s First Home Savers Scheme (FHSS) initiative is one way you can access concessional tax savings to help boost your savings.
It’s not for everyone, and there are quite a few rules which are all on the ATO website, but in a nutshell…
If you are a first home buyer, you can voluntarily contribute some of your salary to your superannuation fund.
The benefit for you is that the tax that the superannuation fund pays on the salary sacrificed amount is less that the income tax you would have paid if you had received your salary as cash.
Once you have saved enough to start the house hunt in earnest, you can apply to your super fund to release your excess contributions to put towards the purchase.

Things to consider:
– Check that your superannuation fund will allow you to release your savings
– Not all employers offer salary sacrifice arrangements
– You can release a maximum of $15,000 per financial year (a maximum total of $30,000)
– You have to purchase within 12 months of the release
– The savings released will be added to your taxable income
(information sourced from Australian Taxation Office website October 2019)

How important is an ethical bank for you?

The mirror was held up to the major banks earlier this year during the Royal Commission into misconduct. The treatment of clients and ethical behaviour was questioned and investigated.
Most Australians have some sort of banking product with one of the major banks. But if you want to, it’s actually not that hard to change to a bank or lender who acts within their stated ethical objectives.
We can provide you with several ethical, community minded, socially responsible and customer focused lender options… these loans can also come with great interest rates & leading edge technological capacity for all of your banking needs.
If this is important to you – let us know and we’ll give you some brilliant options.

Contact us by calling our office 03 8372 0775 to arrange a time to have a chat.

Welcome aboard, Kellie!

Her primary focus is on EquityVision’s clients, making sure their experience is exceptional and that they are always aware of how things are progressing. Kellie has worked in finance broking since 2009 and her experience and contacts in the industry always result in the best possible loan outcomes for our clients. She prides herself on her tenacity and getting loans approved when many others may have given up.

Kel’s persistence and focus comes to good use when she is at the gym (every day). With her love of chocolate, it’s just as well she exercises as much as she does! She is originally from Perth so if you want to talk footy, she’s a mad West Coast Eagles supporter.

Kel looks forward to chatting to you real soon!

Comprehensive Credit Reporting

Your public credit history now holds much more information than it used to, which means that now when you apply for any loan or credit facility, the lender you are applying to will be able to see much more than ever before about how you manage your credit.

Australia used to run a reporting approach where only ‘negative’ financial information was available. The focus was on the number of credit enquires you’ve made, whether you had defaulted on loan repayments (over 60 days and follow up action taken by the lender), bankruptcies, insolvencies and court orders and judgements – the really serious stuff.

Now, credit reports are likely to show much more about how you run your credit facilities. The report will provid a two year, month by month snapshot of whether your monthly loan repayments have been on time or how late they have been.

Also reported are the account type (credit card, pesonal loan) open and close dates and the current facility limit you can borrow up to.

You can obtain a copy of your own credit file at any time for free, which could take up to 14 days to be sent to you. If you need it quickly, we can access same day reports for a small fee.

Contact us to discuss your unique personal financial situation.

We’re expanding!

Loans for Commercial, business, car, personal – the list goes on…

We’re expanding our finance offerings to much more than home loans, and we can now help people and businesses with any of these types of loans below – plus more!

If you need any sort of finance or loan advice, call us on 8372 0775 or email advice@equityvision.com.au

  • Asset & equipment finance
  • Car loans, chattel mortgages & leases
  • Personal loans
  • Secured Business term loans
  • Business overdraft
  • Purchase Commercial property
    • Aged care
    • Childcare
    • Service stations
  • Chattel mortgages – new or second hand goods
    • Trucks, trailers, kitchen equipment etc.
    • Re-finance balloon payments
  • Unsecured short term cash flow loans 3-24 months
    • Fund expansion and / or moving premises
    • Working capital, stock purchases
    • Maximise tax deduction opportunities or purchase discounts
    • Marketing
  • Unsecured mid-term cash flow loans 1-5 years
    • Growth & acquisition
    • Renovations, fit-outs & expansion
    • Trail book business loans (rent rolls, financial planners etc)
  • Debtor finance / factoring
    • Revolving credit facility
    • ATO debt
    • Rapid growth & expansion
    • Deposits for new equipment
    • Cover seasonality fluctuations
  • SMSF loans
    • Residential, including off the plan
    • Commercial (owner occupied or investor)
  • Aged care loans – to fund RAD
  • Lease docs
    • Owner occupiers or investors
  • Development finance
    • Residential or Commercial
    • No pre-sales required
  • Lite-docs or Low docs
  • Rural properties