Home Loans on the other hand seem to have stayed in the dark ages. Banks know that the cost of homes has skyrocketed over the last 50 years yet they have not changed any of the fundamental lending requirements or the features of the home loans they provide to their customers.

Admittedly the CBA in Australia and Macquarie bank did try with a couple of innovative products however these were quickly withdrawn due to the GFC.

The only really great advance in the home loan industry came about 20 years ago with the introduction to the general masses thanks to Citibank of the Revolving Line of Credit.

This facility finally gave the home owner some control over his mortgage although for most of the people who have used one over the years they have ended up being a nightmare rather than the dream product they should be.

As the costs of building a home increase and as such the cost of buying a home increase the lending institutions really need to start looking at alternative ways of providing funds to our growing populations.

Saving up the 20% deposit and taking out a 25 year mortgage are pretty much things of the past now, due mainly to the fact that house prices will increase faster than most people can save the deposit and once people have that mortgage they realise that the banks will receive nearly twice as much back in home loan repayments as what was originally borrowed, once this little bit of knowledge is know people really set out to reduce their mortgage as quickly as possible.

With a little bit of planning, a reasonable amount of discipline and a dash of patience you can reduce the time it takes to pay off your home loan significantly and in turn reduce the amount of interest you pay to the lender by tens of thousands of dollars, in fact some people even save hundreds of thousands of dollars.

A home loan these days does not have to be the yoke around your neck for the rest of your working life, it can now be paid off quickly and with little change in your lifestyle giving you the freedom and extra cash to do the things you want to in your life.

We provide this service absolutely free of charge and we can look at options across not only a whole range of products but also across a whole range of lenders.

In the mean time check out some of the great rates available today!

Floating/Flexible Rates
Floating Interest Rate 6.24% p.a.
Flexible Interest Rate 6.20% p.a.

Fixed Interest Rates
6 months 6.35% p.a.
1 year 5.95% p.a.
18 Months 6.29% p.a.
2 years 6.49% p.a.
3 years 6.99% p.a.
4 years 7.45% p.a.
5 years 7.70% p.a.

Not sure what would work best for you? Drop us a line and we will help.

I will provide interesting facts which may cause folks to stop and think, things like the calculation of how much tax the client would pay between now and when they retire if they do nothing about reducing the amount they must pay, things like how much money they would pay on their mortgage between now and having it paid off and how much money they need for retirement etc.

Creating financial strategies for people to help them save tax and create wealth is what I love to do and when you see how much money goes to things like the mortgage and to tax you might just say….”can you do one for me too”.

The father was on WINZ and needed his daughter’s support for debt servicing to work. She was in stable employment on a good income. Both had clean credit and the daughter was moving back in to live with her father.

Our friendly lender approved the loan conditional upon the daughter becoming joint owner of the property, i.e. she benefited from the transaction too.

Do you know someone looking for a loan in a similar situation?

Contact us using the contact page

As a gift from the family the couple were able to purchase at an advantageous price.

This did mean the purchase was a surprise however and so a deposit had not been saved and the young couple required 100% funding of the purchase price. (this was possible due to the equity in the property being gifted.)

Both husband and wife were self employed and had a few defaults on their credit report.

Debt servicing appeared fine based upon self-declared incomes although financials provided indicated the income declaration was reasonable.

The successful loan was approved of just over  $190,000 at 10.35% pa for a 30 year term.

Do you know anyone in a similar situation?

Let us know, we might be able to help.

Proposed minimum standards of competence, knowledge and skills for authorised financial advisers (AFAs) were released last week. The Securities Commission and the Code Committee also conducted a consultative roadshow in the main centres. (Yay…about time)

Colleen Dennehy and John Commins attended the consultative meeting and found it very useful – not so much for clarification of what was contained in the Code Committee proposal document, but for emphasis on how implementing and supervising the new regime might evolve.

While the proposals deal with standards for AFAs, there are implications for those who deal exclusively with consumer loans (mortgages) and / or term life and disability insurance and / or general insurance. All of these are category 2 products. Advisers who give advice on these, would not, on the face of it, need to become authorised i.e. Mortgage brokers and insurance (risk) advisers.

But, as the Code Committee and Commission Director of Supervision, Angus Dale-Jones, took particular care to point out product categories are only one limb of the criteria for whether a financial adviser needs to become authorised.

The other limb is that those who provide a financial planning service – for any category of product, will also need to become authorised. The Financial Advisers Act 2008 defines “financial planning” very broadly. In fact, most advisers who provide “needs based advice” on more than one or two financial products for a particular client will need to be very careful that they do not cross the “financial planning” line.

Angus Dale-Jones said the Commission was not going to write “black letter rules” about what constituted a financial planning service. Rather, he said the Commission would take a “collaborative approach”. He made it very clear however that non AFAs operating in the category 2 product space should pay close scrutiny to what they do and if in any doubt, should become authorised.

Professional Lending Services and Professional Investment Services are committed to keeping you informed with updates on the new rules. PLS and PIS will also be providing assistance and resources exclusively for its advisers to become fully compliant with the new regulatory regime.

In the Wednesday ruling, Justice Keith Long reaffirmed his March ruling that invalidated two Springfield foreclosures. After the mortgages had been spun through Wall Street and turned into exotic “mortgage backed securities,” Long ruled, the foreclosing lenders, U.S. Bank and Wells Fargo, couldn’t legally prove they actually owned the mortgages in question.

http://www.necn.com/Boston/Business/…255562400.html

Official cash rate 2.50% (unchanged)

90 day bill rate 2.78 (unchanged)

1 year swap rate 3.14 (up from 3.03)

3 year swap rate 4.73 (up from 4.63)

10 year bond rate 6.05 (up from 6.00)

Kiwi dollar 0.7205 (up from 0.6960)

Good News on the Economy

According to official GDP figures, during our last quarter we experienced a tiny amount of growth, which officially means we are moving out of recession, (according to the economists).

This is positive news but I think the good times are still a way off (here’s an article The ghost fleet of the recession anchored just east of Singapore that is pretty grim and indicates that not everything is as rosey as some would like us to believe) .

We are still susceptible to any one-off hits, such as a major company collapse, an international crisis such as a terrorist attack, or an oil price surge. Our unemployment numbers will continue to increase over the next twelve months (even if Key is saying that he thinks it has leveled out now on last nights news).

Our currency is high (and went higher overnight) which makes an export or tourist related recovery unlikely. Overall though the latest result is positive for our economy but we are still in a fragile state, and need another two improving quarters before we can say the recession is truly behind us.

Current Rental Market

Those wanting to rent a residential property are seeing a greater choice available. This is not unexpected in a recessionary environment, as younger renters return home, existing renters may get an extra flatmate to cut costs, and householders may get a boarder to supplement their income.

There are more “To Let” signs appearing around our cities and Trademe has also noted an increasing number of properties available.

I believe this will be a short term phenomenon, as the rental market over the median term is likely to firm up. This is because our population is increasing both naturally and via immigration.

Experienced investors recognise the difference between good debt (tax deductible) & bad debt (non-tax deductible used to acquire assets that don’t produce an income).

Less well recognised is that there are good ways to pay down debt.

Financial experts have teamed up with API to identify 12 creative strategies to help exterminate your debt faster.

Here are just a few tips:

SIMPLE SACRIFICES
If you’re willing to make some simple sacrifices in your lifestyle, you might well find the dollars saved will have a big impact on your mortgage over the long term. Here are five ideas to set you on the sacrifice path.

1. Make your lunch
2. Give up smoking
3. Give up your morning coffee routine
4. Hire rather than buy clothing for weddings & major events
5. Sell unwanted items.

GOLDEN RULES
As well as looking for creative ways to reduce your debt more quickly, it’s always worth keeping in mind the golden rules of debt reduction.

1. Consolidate your debt – if you have any out of control debts spread among credit cards and personal loans, which charge high interest rates, it’s often a good idea to consolidate all of that debt under your home loan so that you’re paying a lower interest rate.
2. Pay off non-deductible debt first – credit card debt, personal loan debt and even debt on your own home isn’t tax deductible. For this reason, it’s often best to pay off this debt before paying off deductible debt, such as that used to buy an investment property.
3. Pay off debt with the highest interest rate – if you have a number of debts using different facilities, prioritise them by looking at the interest rate you’re paying. The debts with the highest interest rates must go first.
4. Budget – budgeting is the biggest factor in being able to reduce debt quickly. “How you manage your cash flow has by far the greatest impact”
5. Pay more frequently – paying more frequently pays big dividends, especially switching from monthly payments to fortnightly repayments, while keeping the amount paid at half of a monthly payment. This is because borrowers paying fortnightly end up making one extra payment per year.
6. Pay more than the minimum – paying just a little bit extra in each repayment cycle will make a big impact on your debt over time. Another option is to keep your repayments at the same level as before interest rates fell. By ignoring rate cuts and maintaining higher repayments, borrowers hasten the pace of their journey to outright property ownership.

Australian Property Investor August 2009 www.apimagazine.com.au

Oliver believes the signs of improvements are virtually everywhere. “Firstly, money markets are almost back to normal and credit markets have improved dramatically. Secondly, economic indicators in most countries seem to be rebounding almost as quickly as they collapsed,” Oliver said. “This is illustrated in the OECD’s leading economic indicators, which are combinations of indicators such as consumer confidence and building approvals, which lead future activity.”

In his view, there are several lessons to be learned from the GFC. “First, the GFC has provided a reminder that the capitalist system is inherently unstable thanks in large part to human psychology, and that the idea of an efficient market that can never go astray is completely fallacious.

“Second, there is a role for government to stabilise the economic cycle. Most importantly, policy makers have a decent, albeit not perfect, set of tools in their tool kit to do this.”

The third lesson – these things happen. “While after each economic crisis there is a desire to make sure it never happens again, history tell us that manias, panics and crashes are part and parcel of the process of ‘creative destruction’ that has led to exponential increase in material prosperity in capitalist countries,” Oliver argues.

And, he says, the basic lessons remain the same: higher returns come with higher risk; the role of sentiment can’t be ignored; be wary of financial engineering and products that are hard to understand; be wary of having too much debt; don’t think that having a well diversified portfolio of growth assets will necessarily protect you in a financial panic.

© 2009 financialalert, Brillient Investment Publishing Pty Ltd ABN 19 122 531 337.