Summer / Autumn 2008 Newsletter

Wishing you peace, happiness and prosperity for 2008.
As we begin the new year, Mortgage Choice would like to say a special thank you to all our clients, friends, family and business partners for your support during 2007. It’s also time to look ahead to the promise and opportunities of the upcoming year. With 2007 being a year filled with multiple interest rate rises, it’s important to be aware of your current financial situation to ensure that you are prepared for the year ahead and will achieve the financial goals that you aspire to.

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Invest today for a better tomorrow
It’s the start of a bright, bold and happy new year - and perched at the top of your New Year’s Resolutions list is your goal of becoming a property investor. But where do you begin? There are many aspects to consider. Research, research, research. Be sure to read as much as you can about investing in property, including industry magazines, property and/or investment columns, radio programs, TV shows and reputable property and investment websites. You may also like to consider attending seminars held by reputable organisations and financial services businesses that are licensed in Australia. Be sure to add books written by licensed Australian advisors to your list, too. Do your sums and seek advice. Find out whether you can truly afford to make the investment. Consult with your financial advisor and talk to your accountant to determine whether you can afford mortgage repayments, factoring in interest rates, taxes, and clarifying whether it is likely to affect any social security payments or benefits. Determine your strategy. There are many ways to invest and you may not want to put away all your spare cash into superannuation, for example. Work out your personal motivations. What are your personal goals in life? What will ultimately bring you satisfaction and contentment? What your friends, family or peers want for themselves does not necessarily apply to you. Consider what you want to achieve financially over a period of time – whether that’s a five year, ten year, or twenty year period and so on. It is also an idea to consider what your comfort zone truly is, in regards to how long you want to invest the money for and when you ultimately want to reap the rewards from your investment strategy. Continued on p2...

Gary Mackertichian Chris Howitt Anthony Smith Mark Boulton Ph: 9585 7779 Ph: 9333 4370 Ph: 9585 7779 Ph: 03 9533 5340 Fax: 8610 0365 Fax: 9333 4376 Fax: 8610 0365 Fax: 03 8611 7915 Mob: 0418 155 565 Mob: 0413 439 761 Mob: 0403 047 147 Mob: 0401 334 599 gary.mackertichian@ chris.howitt@ anthony.smith@ mark.boulton@ mortgagechoice.

Jill O’Connor Mitch Jones Craig Micallef Ph: 9585 7779 Ph: 03 9773 3438 Ph: 9308 9163 Fax: 8610 0365 Fax: 8610 0365 Fax: 9308 9257 Mob: 0417 655 577 Mob: 0412 647 506 Mob: 0412 881 907 jill.oconnor@ mitch.jones@ craig.micallef@

Stephen Forrester Ph: 03 9773 3438 Fax: 03 8610 0365 Mob: 0409 250 347 stephen.forrester@

Mortgage Choice Limited
302 Charman Road CHELTENHAM VIC 3192 Phone 03 9585 7779 Fax 03 8610 0365 This franchise is independently owned and operated by The Finassist Partnership ABN 51 426 348 068

Did you know that up to 60 different areas of the law could make the difference to the purchase of your property?

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During the course of the purchase, the solicitor or conveyancer will assist you with:

A solicitor or conveyancer will help you understand the legal obligations of the purchase of property and advise you on any modifications to the contract to ensure your needs are met. Even if you believe it’s a standard contract it’s wise to discuss it in detail to ensure you understand the commitment you are making and the meaning of the more technical terms that may be used.

Conducting extensive searches into the land title, development plans, council zoning, and any restrictions and ownership interests on the property Ensuring the transfer of ownership to you stays on track and assist with ensuring that both sides of the party fulfil their obligations

If you are purchasing an apartment, your solicitor or conveyancer will also review the strata minutes, which will provide information regarding noted building structural issues, the Body Corporate, common area problems and any noted trouble with neighbours.

INSIDE • Living with your home loan • Lenders mortgage insurance • Tips and tricks to save a deposit

...continued from p1 Think about the type of investment you are looking for, too. Do you want what’s known as an ‘income’ investment (a type of investment that gives you an income from earning interest but generally has little or no capital growth) or a ‘growth’ investment, which, as well as earning you income, increases the value of your original investment. Know your market. Find out everything you can about the area in which you intend to purchase. Are prices increasing, decreasing or stagnating? Are there any major infrastructure projects planned in the area? What are the average prices like? While weighing up the pros and cons behind your decision, seek an independent evaluation that includes all recent comparable sales and rentals in the local area. Is the value of your property likely to increase over time? Seek an independent evaluation. Secure your paperwork. Get into the habit of keeping your paperwork in good order – contracts, policy documents and so on. Keep it in a file that is easily accessible – it will come in handy when you need to refer to any documents relating to your financial affairs as well as bringing you peace of mind. Don’t be pressured into signing anything you are not comfortable with. Be careful not to let other people pressure you into a decision you are not comfortable with – be prepared to say no! Seek the assistance of a solicitor before signing anything. And steer clear of ‘get rich quick’ schemes or other promises to make you an overnight millionaire. See a reputable mortgage broker. Choosing a property loan to suit your lifestyle and financial circumstances is paramount. This is where a reputable mortgage broker can assist you. Mortgage Choice loan consultants can meet with you to discuss your loan options and tailor a loan product for your needs, from its panel of leading lending institutions. A Mortgage Choice loan consultant can assist you with your property loan either at one of their offices during business hours or they can make an appointment at a time that’s more convenient to you.

Living with your home loan
A mortgage brings the thrill of home ownership, but once the champagne stops flowing it’s essential that you can live comfortably with your loan. Try our few simple steps to get the most from life – and your home loan. Life will be a lot easier if you only borrow what you can comfortably repay - even after allowing for possible rate hikes. If you can manage it, additional repayments will fast track your way to mortgage freedom. Even small extra payments can have a big impact. On a $250,000 mortgage, paying just $50 more each month on a 30 year mortgage could trim your total principle and interest repayments by up to $51,379 (assumes interest of 8.25%). A redraw facility lets you tap into these additional repayments – a real plus for meeting unexpected bills. Offset accounts are also worth considering. Rather than being paid interest on your spare cash, any savings are used to reduce (or ‘offset’) the interest on your loan. It means more of your regular repayments go towards whittling away the principal. Many mortgages, including line of credit loans, accept salary deposits, letting you use your loan as a one-stopshop. Cash can be redrawn when it’s needed, while any surplus goes to reducing the mortgage. This way every cent is put to work paying off the balance. But you do need to be disciplined about withdrawals. If your loan is truly testing your mettle, think about refinancing. It may be possible to find a loan that suits you better. Karen and Peter Orr recently refinanced, discovering their loan can be a useful financial tool. Karen explains, “Refinancing gave us a better deal on our rate, and it also meant we could tap into our home equity to access low-interest funds to build a new swimming pool.” If rising rates are making your mortgage a tough task master, it may be worth fixing, since this gives the certainty of knowing what your repayments will be. Anthony O’Brien did just that 12 months ago, and now he’s thumbing his nose at rate hikes. “A fixed rate hasn’t just meant savings on interest,” explains Anthony. “It’s also allowed me to budget for mortgage repayments. As a self-employed worker with an irregular income, that’s definitely helped me live with my loan.” Your home loan can also streamline debt management. Consolidating other debts, including credit cards, into your mortgage can make for easier money management, often reducing the total monthly repayment you have to make. Sticking to a disciplined repayment schedule and controlling credit card spends can mean valuable savings in total interest. And that’s something we can all live with!

Lender’s Mortgage Insurance
Have you started reading about purchasing a home and come across the term Lenders’ Mortgage Insurance – but unsure about what exactly it means to you? Lenders’ Mortgage Insurance, or LMI, is a type of insurance taken out by banks, building societies, credit unions and non-bank lenders, designed to protect the lenders in the event that the borrower cannot meet their repayment obligations and the funds from selling the borrower’s assets don’t cover the loan. LMI is generally a one-off payment made at the outset of a home loan and it is generally required for borrowers who have less than a 20% deposit. Lenders Mortgage Insurance can sometimes be confused with Mortgage Protection Insurance (MPI), which covers you, the borrower, for the payment of your mortgage instalments in the event that you are affected by unforeseen circumstances such as unemployment, illness or death. This type of insurance is paid annually and varies according to the outstanding loan balance.

Saving has rarely been easy for most people and saving the deposit needed for a home can be difficult. But with planning, commitment and a few smart strategies it’s possible to build a decent nest egg. A vital first step is to establish a savings goal – usually between 5% and 20% of your ideal property value. This gives you something concrete to work towards plus a benchmark of your saving achievements to date, which most lenders will want to see. Revisit your household budget for a clear picture of how much you can realistically tuck away on a regular basis. Adding lump sums like your annual tax refund will turbocharge your deposit. It can be counter-productive to build savings if you’re also carrying high interest debts, so aim to reduce outstanding credit card balances or personal loans by repaying more than the minimum. Lenders will enquire about existing debt commitments when you apply for a home loan, and in addition to helping build a deposit, reducing personal debt demonstrates you have the discipline to manage a mortgage.

Tips and tricks to save a deposit
Now, make building a deposit your key financial goal. This may mean sacrificing a few of life’s luxuries but your commitment will be amply rewarded. It’s often a good strategy to save first and spend what’s left. Stay on top of your savings target by asking your employer to pay part of your pay cheque into a separate savings account – or arrange a direct debit of your own.

Once you have a firm idea of how much you can save, shop around for a suitable investment vehicle. Some of the best short-term returns – as high as 7% annually - are offered by online savings accounts. Websites like offer comparison tables of a wide range of accounts. Be sure to read the fine print on any accounts though. Some offer tiered rates, only paying top interest on balances over a certain limit. It’s important to have every cent working for you, so look for a decent rate that applies across the board. And keep an eye out for regular account fees – these can quickly eat in to your savings pool.


Congratulations to the winner of the Spring / Summer 2007 Mortgage Choice It’s Your Choice promotion. Steven Caruana of Highgate Hill in QLD has won $6,000.

Singling out a great opportunity
Saving for a home loan is rarely easy, but it can be harder still if you are going about it alone. But every year many singles successfully purchase their first home - all it takes is a little knowledge and a lot of discipline. The rules for a homebuyer are the same for a single as a couple. But despite their best efforts, salaries for single people will generally be below the combined income of a couple, resulting in a lower deposit. This in turn may mean that you are more likely to be asked to pay Lenders Mortgage Insurance, which protects the lender should you default on the loan repayments. As the sole person responsible for the loan, you may also be asked to demonstrate that you can make the repayments in the event that you are incapacitated and enable to earn an income for a period. Although no-deposit loans are becoming more common, lenders will generally look for a minimum deposit of 5 percent. This means setting a budget and savings goals and then sticking to them. Eliminating luxuries – even taking simple steps such as taking your own lunch to work - can add up over a year and increase the size of your deposit. Your chances of securing a loan can also be enhanced by bringing on a guarantor, such as a family member. It is also increasingly common for a relative – or even a close friend - to become a co-owner of the property. This gives you a chance to compete equally with couples. But it is important to have a clear plan, usually in the form of a legal agreement, for when one of the partners in the loan wishes to sell out, or should one party become unable to meet their commitments.

Similarly, newer loans that split the loan with the mortgage provider might also lower the deposit you need, along with reducing your repayments. The key is setting a savings goal and making a commitment to those goals by being disciplined in your approach to savings to ensure those goals are met, even if it means some sacrifices for a period of time.

Mortgage Choice Limited 302 Charman Road CHELTENHAM VIC 3192 Phone 03 9585 7779 Fax 03 8610 0365

Win $6,000
towards.. This franchise is independently owned and operated by The Finassist Partnership ABN 51 426 348 068

It’s your
According to Mortgage Choice’s latest independent online survey, Australian consumer sentiment for 2008 is more positive than it was for 2007. 83% of respondents were confident that our economy will be strong next year, while interest rates remain the biggest concern for almost half (45%), followed by economic management at federal government level (25%). Despite interest rate rises in 2007, mortgage market growth remains steady, demonstrating the ‘great Australian dream’ of property ownership is moving forward relatively unabated - a trend that looks to continue. Warren O’Rourke, National Manager Corporate Affairs, Mortgage Choice Ltd

Simply call 1800 110 170 to make an appointment with a Mortgage Choice Consultant and request to be entered into the draw.


You could save $1,000’s in 15 minutes, try us!
That’s all the time we need to show you how to get the real savings you want on your mortgage.
With a Free Mortgage Choice Home Loan Health Check, your local Mortgage Choice consultant can help you find out if your current home loan is the most suitable one available or if there are other products out there that better address your specific needs. With the backing of Australia’s leading mortgage broker - you’re in safe hands.

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Wide choice: We have many of Australia’s leading banks and lenders on our panel Professional home loan advice Local knowledge: We’re Australia’s leading mortgage broker because we combine local knowledge with over 15 years experience or fill in your name and contact details below and

Call now on 1800 110 170
Fax it to: (02) 9954 4913 or

Mail it to: Reply Paid 74789, Mortgage Choice It’s Your Choice Promotion, McMahons Point NSW 2060






THE “IT’S YOUR CHOICE” PROMOTION: Call 1800 110 170 to make an appointment with a Mortgage Choice consultant and once you’ve attended that appointment you’ll automatically go in the draw to win $6,000. There will be 1 draw and the first valid entry will win. Winners will be notified by telephone and confirmed by mail. The opening day of the competition is 30th January 2008. All entries must be received by Mortgage Choice at the above address by 5pm Eastern Standard Time on 30th April 2008. The draw will be held at 4pm Eastern Standard Time for the first draw on 1st May 2008 at the office of Mortgage Choice. The name of the winner will be published in The Australian on the 5th May 2008. *Complete Terms and Conditions and the privacy notice are available from your local Mortgage Choice consultant or by logging onto the Mortgage Choice website at: Authorised under NSW Permit No, [LTPS/07/20443], A.C.T. Permit No. [TP 07/04901], VIC Permit No, [07/5211], and S.A. Permit No. [T07/4965].

Melbourne has experienced extraordinary growth over the past months. The overall median house price in Melbourne increased to $431,000, which is up by 13.1% over the year. In the September quarter the greatest increase in median prices occurred in the middle band suburbs where the median increased by 8.1% from $390,000 to $421,795. The greater increases in the middle and outer suburbs indicate that buyers are looking for value outside the very expensive inner suburbs. Increases in the median values for other dwellings were much more uniform with the inner suburbs increasing by 6.3% from $395,000 to $420,000, the middle suburbs by 4.6% from $315,000 to $330,000 and the outer suburbs by 2.9% from $240,000 to $247,000.
Written by Real Estate Institute of Australia for Mortgage Choice

Privacy: There will be occasions where we would like to send you valuable information directly related to property finance, as well as other related offers, tips and opportunities. However should you wish to receive only certain types of information or nothing at all, please contact your local franchise principal. Disclaimer: The content of this newsletter is written expressly for education purposes and is based on the opinions of the authors. The authors and agents for the authors are unable to accept any liability or responsibility whatsoever to any error or omission or any loss or damage of any kind sustained by a person or entity arising from the use of this information. It is recommended that you seek professional advice relevant to your specific circumstances before acting on the information based in this document.

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