Most Australians don’t like change…
“Don’t fix it if it ain’t broken” is such a common saying and another one that I hear often is “better the devil you know than the devil you don’t”
This attitude towards things can have merit however, this should be the last way to look at things when you talk about money or more importantly, your mortgage.
Let me explain…. Generally speaking, it usually takes the average person ages to save for a deposit to buy their first home. There are so many different hurdles one must go through in 2021 to even save that 5-10% required just to get into the market. When you finally reach your goal deposit you are so, over-the-moon, excited about the dream home that you have found or in the process of building that the mortgage is generally a secondary thought.
Who could blame you? I mean, even for my family and I, it took 10 years of renting to realise that we wanted to own something for ourselves. We went down the construction path and designed our home with a volume builder in an area that was slightly outside of where we wanted to live however, we absolutely wanted our own space where we didn’t have to ask the owner if we could hang up a frame or paint a wall.
With one child already under our belt and $2500+ for rent each month, saving money was really hard, but we did it… just. By the time we had already gone through the many, many stages of the house and land rabbit hole, the last thing we really cared about was the mortgage.
We simply wanted to get approved. So we really didn’t care who it was with and what we were getting into. Even though I wasn’t a broker at the time, I did work in finance and knew that dealing with a broker would be much more convenient than dealing with a bank directly which it absolutely was. Our mortgage broker came to us at a time convenient to us and helped us get what we wanted…
Approval
That’s pretty much the story for 70% of Australians. You save your deposit, you find the house you want and then you source approval. For Many, it stops right there. This is exactly how the banks trap you. If you take this 30-year mortgage and leave it alone for 30 years then you will pay the initial investment plus almost double back. To explain, let’s talk numbers.
If we wanted to assume that you were a first home buyer and we wanted to take the government stamp duty incentive, we would need to cap this off at $600,000. So even at this level, let’s say we wanted a 10% deposit to move forward with..
So, you have your deposit ready to go and you find a place, you get pre-approval and bang, you won the auction! Lucky you!! Lets say your new loan is $539,766.33 including LMI and lets assume the rate is 2.19 (which would include a lower fixed rate to start and then a small growth in rates and this is not really accurate however, for the sake of the discussion) the total interest paid back here would be $197,066 if we continue on this low rate for the next 30 years which is not likely but again, this is almost half the price of your original loan.
Your bank is not your friend
Just because you have been with your bank for over 20 years it doesn’t mean they like you. If you had $200K in the bank would you simply hand this over to your friend at the bank and say “hey mate, thanks for giving me that home loan. Here is $200K tip” I think not!
As you can see, its in the banks best interest for you to set and forget not your best interest. In fact, post royal commission, dealing with a bank doesn’t mean that they have any liability to deal with you under best interest duty. They have to deal with you via responsible lending however, being a broker , we have to deal with you under the best interest duty.
This is why being a client of mine will automatically give you a review every two years. This makes sure that you are always on the best rate and allows us to reconfigure your loan so that it continually suits your needs, not the banks.
Our business is growing and we want you to grow with us. This year I have hired an assistant Avi Dhindsa, who comes from within the Community Financial Banner, that brings with her experience in both financial planning and mortgage broking. This month, we also brought on Irene who heads up our marketing department.
We recently renovated the current Maidstone office and expanded its space, so that we could fit even more people in the office. Really watch this space because there are some exciting things to come.
To recap, if you want a broker that will look after your Best Interest then reach out to us and we will assist you with your mortgage needs. We do this all day, everyday with the desire to help many like yourself that are either looking to purchase their first home or refinance their loan to clean up the mess that they are currently in.
Put your details down below and let us help you achieve your goals to reach financial freedom.
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