6 Mistakes to avoid when refinancing in 2023

With interest rates on the move, many people are shopping around for home loans.

In January, the value of external refinancing for total housing fell 2.1%, but remained close to record highs at $18.6 billion.

If you’re considering refinancing, it’s a good idea to be aware of a few pitfalls when doing your research. Here are six mistakes to avoid.

Mistake #1: Only looking at the interest rate

Sure, getting a more competitive interest rate is appealing, but there are other factors to consider when comparing loans. For example, you may benefit from features such as an offset account or redraw facility, even if the interest rate is not necessarily the lowest one available.

An offset account is a bank account that’s linked to your home loan. Any money in this account is offset against the money owing on your home loan. This reduces the amount of interest you pay – which can add up to a lot of savings over time.

With a redraw facility, you can make extra repayments on your home loan, but still access the funds later if needed. This allows you to reduce your interest – so it’s another great option to consider.

Aside from these kinds of features, you may want to think about what else is important to you in a lender. Maybe it’s customer service. Bottom line is the interest rate is not the be all and end all.

Mistake #2: Not considering the comparison rate

You may have noticed lenders often list an interest rate, as well as a comparison rate.

The comparison rate factors in the interest rate, as well as any fees and charges relating to a home loan. This is the one you want to be looking at when shopping around for a mortgage.

The comparison rate gives you a clearer idea of the true cost of a loan and enables you to compare different options.

Mistake #3: Forgetting about the fees

Don’t forget to budget for any costs involved in switching lenders. There may be mortgage discharge fees, mortgage registration fees, new application fees and Lenders’ Mortgage Insurance (if you owe more than 80% of the property’s value).

If you are currently on a fixed home loan, there may also be break fees. Ask your lender for clarification.

Mistake #4: Being bedazzled by cashback offers

With so much competition for business, many lenders are offering refinance cashback offers to lure you in. “Come hang with us and we’ll give you $4000.” Sounds awesome, right?

While we all love a cash injection, it’s important to look at the big picture and whether a home loan is appropriate for you now and in the future. Does the home loan have the features you need? And is it suitable for your financial situation and goals?

Mistake #5: Not investigating debt consolidation

If you have multiple debts on the go, it’s a good idea to speak to us about whether debt consolidation may be appropriate for you. This is where you essentially roll all your debts into your home loan.

Debt consolidation can be beneficial in that you have one repayment to make, instead of multiple debts to repay. The interest rate on your home loan may also be lower than on say personal loans or credit cards, so it’s worthwhile exploring this option.

Mistake #6: Trying to go it alone

So, you do a little Google wizardry, you find some obscure home loan provider with a rock-bottom rate and you think ‘boom – this is the home loan for me!’ Unfortunately, it’s not that simple.

Changing home loans is an important financial decision, which is why you need professional mortgage advice. We are across all the latest borrowing requirements and changes in the market and can guide you about which home loan is appropriate for your specific needs.

To chat about refinancing in 2023, get in touch today. 

4 Reasons to consider investing in property now

Have you been patiently waiting in the wings, wondering whether or not to buy your first investment property in 2023?

You’re not alone. Many buyers have been spooked, what with all the changes in the market.

Whether or not now is the right time to buy really depends on your financial situation and goals, but there are certainly some compelling reasons to at least consider it.

The drop in housing prices may be stabilising

As a first-time investor, it may be a good time to take advantage of lower property prices.

Property values have been falling for several months following consecutive cash rate increases by the Reserve Bank of Australia (RBA). But recently there have been signs the decline in property prices could be easing.

According to CoreLogic, the national decline was only -0.14% in February – the smallest monthly fall since May last year.

CoreLogic’s research director, Tim Lawless, said the stabilisation in housing values over the month coincided with consistently low advertised supply levels and a rise in auction clearance rates.

“This trend towards a below average flow of new listings has been evident since September last year, coinciding with a loss of momentum in the rate of value decline.”

Rents are on the rise

Migration has returned with a bang. Demand for rental properties is outstripping supply in many markets and rents are going through the roof.

Last year we saw rents surge to a record high of 10.2%, reaching a median of $555 per week.

Meanwhile, rental vacancy rates hit record lows in February. Nationally, just 0.8 per cent of rental properties were vacant.

If you’re in a position to invest, you may be able to take advantage of the current conditions and find a property with an attractive rental yield. Imagine what you could do with that extra cash flow.

We may be over the worst of the cash rate hikes

While nobody has a crystal ball when it comes to monetary policy, some experts believe that the majority of cash rate hikes may be behind us.

RBA Governor Philip Lowe did indicate recently that the board was considering a pause after 10 consecutive interest rate rises, but the timing would depend on incoming economic data.

“We also discussed that, with monetary policy now in restrictive territory, we are closer to the point where it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy,” he said.

“At what point it will be appropriate to pause will be determined by the data and our assessment of the outlook.”

Potentially less competition

With all the uncertainty about where interest rates and property prices will go, many buyers are waiting and watching.

In January 2023 in seasonally adjusted terms, the value of new loan commitments for total housing fell 5.3% to $22.1 billion, after a fall of 4.3% in December. It was 35% lower compared to a year ago.

For owner-occupier housing, it fell 4.9% to $14.7 billion, which was 35.1% lower compared to a year ago. Meanwhile, for investor housing, it dropped 6% to $7.4 billion and was 34.8% lower compared to a year ago.

The reduced appetite for finance indicates there’s less buyer competition, so you may have a better chance of scoring the property you want.

Ready to get started?

Whether or not you should invest in property at the moment comes down to your individual situation, but one thing’s for sure – all the right essentials are in place for opportunistic property investors.

If you do decide it’s right for you, talk to us about your finance options. We’ll explain your borrowing capacity and line you up with the appropriate investment loan to suit your needs.

Get in touch today.

Why you need a conveyancer when buying a property

Understanding all the different parties involved in buying a property can be a minefield.

The real estate agent. The building and pest inspectors. The mortgage broker (hi there!). The buyer’s agent. The auctioneer.

Well, here’s another one to add to the list – the conveyancer. Conveyancing is an important piece of the puzzle to ensure things go to plan with your shiny new property acquisition. Let us explain.

What is a conveyancer?

Conveyancing is the process of transferring ownership of the title to a property from the seller to the purchaser. A conveyancer is a licensed professional who takes care of this for you.

In some instances, they may be a solicitor, but not necessarily. There are solicitors who specialise in conveyancing.

What do conveyancers do?

Conveyancers may perform a range of tasks for the buyer, including:

  • Preparing and lodging legal documents such as the sales contract and transfer of land document
  • Conducting searches about the property and its title (including easements, planning restrictions and zoning regulations that could affect the property’s value, plus other important information you need to know about)
  • Transferring your deposit into a trust account
  • Providing advice about your obligations under state and Federal law (stamp duty)
  • Working out the settlement adjustments (the splitting of rates, land tax, water charges and body corporate levies between the seller and the new owner)
  • Overseeing settlement, liaising with financial institutions, and acting on the buyer’s behalf during the sale process.

On the other side of the coin, conveyancers can assist sellers with things like drafting the sales contract and liaising with the buyer.

Why do you need a conveyancer?

How good are you at understanding complex legal jargon? How about nutting out adjustment calculations? Are you across all the latest laws surrounding stamp duty and taxes in your state or territory?

Don’t worry, most people would be drawing a blank here, which is why they’d enlist the help of a conveyancer.

While you can opt for DIY conveyancing, it isn’t advisable unless you are really across the ins and outs of property law.

Your conveyancer can decipher all the legal terminology and requirements for you, guiding you through the settlement process. They take care of the finer details so that you can concentrate on the fun stuff – like planning your housewarming.

How much does a conveyancer cost in 2023?

The cost of conveyancing depends on where you are, the type of property you’re purchasing and the complexity of the sale.

As what you can expect to pay can vary greatly, make sure to factor in additional charges such as disbursement costs, which are the costs incurred by the conveyancer to third parties for things like settlement fees, certificates and searches.

Finding the right conveyancer

We work closely with conveyancers to ensure our clients have a smooth experience come settlement time.

For tips on what to look for when choosing someone to help you with sale contracts and settlement, contact us today.