Borrowers to consider refinancing as interest rates rise
June 30, 2022

Borrowers are being urged to conduct a home loan health check as the Reserve Bank of Australia continues on its rate hike cycle. While not always the first thing that comes to mind, exploring refinancing options may be the answer. 


Just a week after lifting the official cash rate by a whopping 50 basis points, in a bid to control inflation, RBA governor Phillip Lowe has warned more rate hikes are on the way - which may have you feeling at your lender’s mercy. 


While it’s currently unclear just how high rates need to rise to achieve that, Lowe has said it was reasonable to expect the cash rate would reach 2.5% at some point. 


The costs are already adding up

At the moment, the cash rate is sitting at 0.85% and a growing number of economists are predicting another double-sized 50 basis point hike when the RBA meets in July. 

Even without another rise, the increases in interest rates so far are putting immense pressure on some families. 


Already copping higher food and fuel prices, an additional rise in interest rates would just be another stab from the double edged sword the RBA has to use to bring down inflation. 

For a borrower with a $500,000 mortgage, the latest interest rate hike adds around $136 to the cost of their repayments each month, and more than $200 a month for a $750,000 mortgage. 


Have you considered refinancing?

However, there are ways to help make yourself feel more in control during these times. Currently, tens of thousands of mortgage holders around the country are refinancing their home loans in search for a better rate. 


While this may seem like a bit of an oxymoron as you generally refinance to get a lower interest rate, there are benefits - stay with me here while I explain.

The RBA estimates around 75% of fixed-rate loans are due to expire by the end of 2023, after which they’ll likely reset at a much higher rate. 


If you’ve fixed your rate in the last couple of years and your fixed-term is coming to an end soon, you’ll need to decide whether you want to fix your rate again, or whether you’d rather choose a variable home loan. 


As interest rates only look to be going up, now may be the time to lock in a fixed-rate before it’s too late. 


Not to mention, home prices have increased 35% nationally since the onset of the pandemic, so it is likely that your property has also increased in value. Refinancing would allow you to access your extra equity to fund a renovation or to invest. 


Lenders are looking to attract borrowers 

Now more than ever, lenders are looking to attract borrowers. 


Just because rates are going up, doesn’t mean you shouldn’t try to scope out a better deal - especially if you have a decent amount of equity and a strong track record of meeting your mortgage repayments.


If that sounds like you - you’re a good customer. And lenders need good customers right now. 


Make sure you benefit from refinancing

While refinancing may not be the best option for everyone, using an experienced mortgage broker will ensure your loan refinance improves your financial position.


With so many options on the market, it’s important to have expert guidance. Especially when considering the difference between a fixed and variable rate can be 1-2%. 


The worst thing that can happen is you discover that you’re already on the best rate for your situation and you stick with it. 


Things to consider before refinancing 

Before you refinance, there are a few things to consider.


Firstly, what are the fees involved? The possible cost of refinancing include discharging fees, application fees, new loan fees and more. Each lender is different so it is important to check. 


What is your return on investment? If you are refinancing to increase your loan for the purpose of investing, you should consider whether your return on investment is more than the cost of the additional interest of your new loan. 


Consider your long term debt. Make sure your new loan is structured correctly to avoid turning short-term debts (like credit cards) into long-term debt, which can cost you more interest in the long run. 


Let us navigate you through

Given how complex the lending landscape is, with hundreds of products in the market, it is near impossible for borrowers to know whether they have a ‘good rate’. This is why we suggest you talk to us. 


Our experienced team of brokers can help you navigate this confusing and often overwhelming landscape and help get you the best deal.


Get in touch with us today.

6 Reasons why you should use a Finance Broker

December 1, 2022
Whether you’re planning on investing in rural or commercial property, buying an asset for your business, or purchasing your dream home, you will need to consider your lending solutions. While your first instinct could be to talk to your bank about a loan, there is another option that may save you time, effort, and ultimately money - that you won’t be able to get from your bank. Experts in banking and finance, Central West Finance Solutions will help you take the legwork, guesswork and stress out of securing a loan. Independent from a bank, we have access to a broad range of loan products, making us your new best (financial) friend. Choice of Lenders Finding the right fit loan is just as important as finding the perfect property. In the Australian market, there are now hundreds of lenders available and often, it can be hard to work out which one is right for you. As a finance broker, we don’t have access to just one lender’s products, we compare many products from a whole panel of different lenders. Knowing you have loan options is one thing, but having the confidence you signed the best deal is another. We can give you this peace of mind. With our industry connections, we will ensure that you are getting the best loan solution that suits your circumstances. Experience The team at Central West Finance Solutions has over 100 years combined experience in banking and finance. This means we can provide the best possible service and advice for any lending requirements. Convenience and Flexibility As a small, local business, we pride ourselves on our flexibility. Our team doesn’t sit in an office from 9-5 taking appointments. We are mobile and will happily travel to you at a time that works within your schedule. The beauty of technology means that we can bring all our information and online services with us. Thanks to this, you get the convenience of staying where you are while still getting the same great resources you would get from the office. Saves you time The choices available now in the mortgage and lending market can seem limitless and completely overwhelming. Not to mention, you are probably already time poor, with a limited capacity to take on more of a workload. While you can choose to research the subject, the lenders and their products yourself, securing a loan can be quite a process - particularly if you are seeking a good deal. So why not let us take care of the heavy lifting for you? As experienced brokers, we already have knowledge and information on the subject, meaning that sourcing quotes and talking to lenders will be much faster if we do it. We know that every financial situation is unique and there are certain products on the market that are tailored to particular purchases and financial profiles. Allowing a broker to be the middleman gives you the freedom to carry on with your week, while we compile a wide range of options that are short-listed for you. Tailored solutions that benefit you As locals we know you and we know what’s best for you. That’s why we know that the best deal is not necessarily the cheapest interest rate. We will thoroughly examine your circumstances and future plans to ensure we recommend a loan or financing solution that is right for you. We will work with you to determine your finance needs, repayment ability, and cash flow requirements to select a loan or financing solution suited to your circumstances. Unlike some brokers, we prioritise your needs over what might be easiest or most beneficial to us. We want to ensure you are looked after and not borrowing beyond your financial capacity. With that, we will manage the entire process for you. From application, through to settlement, as well as any on-going assistance you may need with your loan. Help you avoid pitfalls Due to the sheer amount of lending products available, it is easy to get lost in the jargon. Many products seem to offer great deals, but what’s the catch? While at the surface they look great, they may have hidden penalties, fees and charges that may not be visible to the untrained eye. There is more to a loan than interest rates and loan repayments. A trained finance broker will scrutinise the fine print for differences that may impact your bottom line. Some of the other elements they look for are flexibility and the ability to make extra repayments. Having someone walk you through the pros and cons of each option can be invaluable in identifying the most viable loan option for you. As a finance broker, Central West Finance Solutions can help you avoid taking out a loan you might regret later. The Central West Finance Solutions Difference Here at Central West Finance Solutions, we pride ourselves on our customer-centric approach. We live and work in your community. We understand your job, your business, your family, so we are empowered to make decisions locally, ensuring you don’t get lost in a maze of call centres, red tape and decision-makers. Many people that come to us have gotten sick of the lack of personalisation that comes with big banks and other large broking firms. We get to know our clients and their circumstances - that’s our difference. If you are looking for a finance broker that puts its clients first and values each of their unique circumstances, then get in touch today. Our team of friendly staff will walk you through your options and get you started on your new financial journey.

5 Home Loan money saving tips

December 1, 2022
We all know the song - ‘Give me a home among the gumtrees with lots of plum trees…’ The great Australian dream of owning a home has been part of our country’s identity for centuries. Of course, it was a much more affordable dream back then!  Saving money in today’s inflated world is no easy feat. Often daunting and oh so tedious, it’s understandable that young people feel overwhelmed by the thought of saving to buy their first home. However, we are here to tell you it’s not impossible! Just like anything, making a habit of saving by regularly doing it will help you stay on the right financial track and reduce the overwhelm. Your dreams are important to us and we want to make them come true. So here are 5 sustainable and realistic tips you can use to achieve your goals of buying your first home. Understanding your finances Assessing and understanding your financial status is vital to setting yourself achievable saving goals. In doing this, it is important that you have a solid understanding of the basics - like your net worth, your debts, interest rates and monthly expenses. Don’t let the jargon put you off. Finances seem like an intimidating area, however, with a little research and education, they really aren’t that scary! The best thing to do would be to speak to someone with knowledge in the field and start improving your financial literacy. Make record of your spending Once you understand what you are looking at, it’s time to start making records of your spending. Sit down with your bank statements and start the month with a certain amount of money both in your wallet and your bank account. At the end of the month, take note of everything you spent money on - each payment you made - and how much money you have left over. Completely go through your finances and analyse your spending. Note where your money is going and what you can cut back on. It’s also a good idea to list all major repayments that come up regularly. For example, car registration, health insurance, electricity bills etc. Make note of when they are due and add up how much you need to put aside for these. Based on all this information, set yourself a reasonable and realistic monthly budget. This should include a portion of your income going into a savings account each time you get paid. Set bite-sized goals Once you’ve decided an amount you can comfortably live off, based on your income and spendings, decide a reasonable goal for your deposit - then break it down. If you say you want a deposit of $40,000 it is going to seem an impossible ask. But if you set incremental, bite-sized goals, it can be done. Do this by setting monthly, biannually and yearly goals. As a first home owner it may be to put $1000 into your savings each month, pay off your debts within a year etc. As a first home buyer you’re currently exempt from stamp duty, but you need to remember you still need to put money aside for things like solicitors fees and pest and building inspections. Something else that is very important when considering your budget and goals, is that the deposit is not the only thing you need to consider. You also need to think about repayments - how much can you afford to pay each fortnight? What kind of lifestyle do you want? Use your budget to decide on the maximum amount you can afford to pay so you don’t find yourself overstretched later on. **Try pay off any debts ** Debt can sometimes affect how much someone is willing to lend you. It will be a big load off your chest if you can rid yourself of this before taking on a mortgage. Once it is paid off you are already used to not having that money. Try and put that money towards savings if you can. While this is definitely not essential, if your debt is under control, it will be a big help in the long run! Find an institution you can trust Taking out your first home loan is a daunting step into adulthood, but it can also be really exciting! Finding an institution you can trust is a huge part of this process. Here at Central West Finance Solutions we have credentials with numerous lenders via our aggregator Connective so we are able to source you a loan from a lender you know and trust. Are you ready to buy your first home? Get in touch today and we can help you get started on the process.
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