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Spring / Summer 2007 Newsletter

Fixed
Awarded to Mortgage
Choic
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NEWS FROM
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MORTGAGE CHOICE Australians may says, “Many people

or
have a reputation are using fixed
for enjoying a mortgages to hedge
September sees Mortgage Choice punt, but a spate against the

not?
proudly celebrating its 15-year of interest rate uncertainty of
anniversary, a milestone of success further rate rises
hikes over the
we are very proud of.
last 18 months that they fear they
It is obvious the mortgage broker has seen many won’t be able to
proposition is appealing to all service on a fixed
home owners
participants when you look at our
take the gamble income.” He also
achievements during that short time –
from the transition to nationwide to the out of mortgage points to “A sharp
2004 Australian Stock Exchange listing repayments by rise in the use of
to continually winning industry awards. opting for a fixed fixed rate loans by
As at 30 June 2007, Mortgage Choice rate loan. It’s a property investors.”
featured 445 franchises, 663 loan strategy that can Interestingly,
consultants, 213 retail outlets and around 100 pay off, but with Australia is one of
corporate staff across Australia. interest rate only a handful of
movements countries favouring
notoriously variable rate
unpredictable, mortgages. Cannex
Gary Mackertichian Anthony Smith Mark Boulton Chris Howitt
it’s worth say the vast majority
Ph: 9585 7779
Fax: 8610 0365
Ph: 9585 7779
Fax: 8610 0365
Ph: 03 9533 5340
Fax: 03 8611 7915
Ph: 9333 4370
Fax: 9333 4376
Mob: 0418 155 565 Mob: 0413 439 761 Mob: 0403 047 147 Mob: 0401 334 599
considering a range of alternate of Americans lock in to a fixed rate,
gary.mackertichian@
mortgagechoice.com.au
anthony.smith@
mortgagechoice.
mark.boulton@ chris.howitt@
mortgagechoice.com.au mortgagechoice.com.au measures to take the sting out of while across the Tasman, around 85%
com.au
rising rates. of New Zealanders fix their home loan.
The August 2007 rate hike – the The appeal of a variable rate
fourth in little more than a year, hurt mortgage lies in the prospect of lower
Craig Micallef
Ph: 9308 9163
Jill O’Connor
Ph: 9585 7779
Mitch Jones
Ph: 9585 7779
Stephen Forrester
Ph: 03 9585 7779
the hip pocket of anyone with a repayments if market rates fall.
Fax: 9308 9257 Fax: 8610 0365 Fax: 8610 0365
Mob: 0417 655 577 Mob: 0412 647 506 Mob: 0412 881 907
craig.micallef@ jill.oconnor@ mitch.jones@
Fax: 03 8610 0365
Mob: 0409 250 347
stephen.forrester@
variable rate mortgage. Those who However with the economy running at
mortgagechoice.com.au mortgagechoice.com.au mortgagechoice.com.au mortgagechoice.com.au
had seen the writing on the wall, and full steam and the Reserve Bank
Mortgage Choice Limited switched to a fixed rate, were able to mindful of inflation, it could be that
302 Charman Road
shrug off news of higher rates. And rates are more likely to trend up
CHELTENHAM VIC 3192
Phone 03 9585 7779 not surprisingly, given our uncertain rather than down. That said, interest
Fax 03 8610 0365 interest rate environment, there is a rate movements can take everyone by
www.mortgagechoice.com.au/cheltenham1 surprise - including the experts.
growing preference among home
This franchise is independently owned and
operated by The Finassist Partnership owners for fixed rate loans. Fixing your home loan interest not
ABN 51 426 348 068 only offers protection from rate rises,
According to independent
researcher – Cannex, around 25% of it also makes household budgeting
all residential home loans are now easier. And if another rate hike is
fixed, up from 17% in early 2006. likely to put your household finances
Cannex analyst, Harry Senlitonga, Continued on p2...

MONEY SAVER TIPS FOR YOUR MORTGAGE


With the recent interest rate rise here are some simple but • Instead of buying your lunch each day make your own instead.
practical tips that can help save you money. • Cut up your credit cards or pay them off in full each
• Plan a clear budget and make sure you follow it. Try using month. Consider reducing your limits.
a simple pocket sized budget calculator such as • Combine multiple banks accounts to save on fees.
Spendtracker to help you. • Put your tax return towards your mortgage instead of
• Review your household and vehicle insurance policies to spending it all.
see whether there are any savings to be made on the • Look for a more cost effective mobile plan and curb your
premiums. Buying on-line can often create savings. mobile calls.

INSIDE • Rental Treadmill • Buying off the plan • It’s your choice winner
Rental Treadmill
...continued from p1
under serious pressure, it may be
worth fixing. Do think carefully about
the fixed term though. The longer the Renting a house or apartment is Setting your sights appropriately is
period, the greater the likelihood an exciting part of moving out of also important. Your first home does
market interest rates could swing home, but over the years it can not need to be your dream home, and
significantly – either up or down. become a seemingly endless simple renovations to a cheaper home
treadmill, as the money you’d can add substantial value when it
Rather than fixing your entire loan,
rather be putting towards a comes to moving on to your next
there is always the option of a ‘split’ deposit goes towards paying property. Looking in areas a little
loan. This provides an ‘each way bet’ someone else’s loan. further out can also save you thousands.
providing both fixed and variable
rate components. But while high property prices can And you don’t need to go it alone
make owning your first home a either. People are increasingly
To some extent however, the seemingly impossible task, there are purchasing homes in conjunction with
benefits of fixing may have passed. ways of making the process easier. family members or even with friends.
According to Cannex, the average Some Lenders also offer guarantee
Traditionally lenders have wanted a
3-year fixed rate is currently around deposit of around 20 percent of the schemes, whereby one family member
7.70%, compared to an average property’s value, but 100 percent loans may use equity in their home as
variable rate of 7.59% . This being the are becoming common. You’ll still need additional security for a portion of
case, it’s worth exploring other options around 3 percent of the property’s value another loan. Guarantors must be aware
to manage possible future rate hikes. to cover legal costs, and lenders will that they are limiting their own borrowing
require you to take out Lenders capacity until the loan is repaid.
A good starting point is to take a
Mortgage Insurance to protect their The First Home Owner Grant
close look at your current home loan
risk. If you choose this option, then it is provides a one-off payment of $7000 to
to ensure you are getting the best important to understand all the fees
possible deal. Refinancing to a cheaper owners that meet the eligibility criteria.
and charges and ensure you can manage For instance, you are not eligible if you
loan can provide instant savings, your repayments without financial stress.
though it pays to be on the look-out are purchasing a building for
But saving for a home isn’t just about investment purposes, or if you or a
for exit fees. These typically apply in
building up a deposit – lenders will co-owner have owned a house before
the first three to five years of the loan,
also look for a good savings history to July 1 2000. These criteria and benefits
and in some cases they can outweigh
know that you’ll be able to pay off your can vary from state to state.
the savings made by changing to a
loan regularly.
cheaper loan. You may also be eligible for a
If you are saving for a deposit, you’ll professional package discount, which
It may be possible to free up extra need a plan. Paying off and cancelling delivers a discounted interest rate in
cash for repayments simply by credit cards is a priority, as they always exchange for an annual fee and
revisiting the household budget. impose a higher interest rate than you commitment to a credit card and
Easing back on life’s little luxuries – can make on any saved funds. Reducing banking account with the lender.
termed ‘discretionary’ spending by your credit limit will also reduce your Qualification for such a discount varies,
economists, can be a simple way to apparent risk in the eyes of the lenders. but is usually tied to the size of the loan.
boost repayments. Ideally you should be saving 10 The minimum qualification is usually
percent of your pre-tax income, so $150,000, and lenders may discount up
It’s also important to re-evaluate all
analysing your spending will show you to 0.5 percent on a loan of $500,000.
your debts – not just the home loan.
Even at current levels, mortgage where your money goes and where you Some lenders are also offering
interest rates are well below those can cut back. That will help you to create joint-equity loans, where the lender
a budget, but the best budget in the world retains part of the ownership of the
charged on other forms of debt
won’t help you if you’re not disciplined. property and the subsequent proceeds,
including personal loans and credit
It might also be worth moving to when it is eventually sold, while others
cards. Making it a priority to pay these cheaper rental
off, or at least reduce the outstanding will allow you to roll your HECS fees
accommodation into your mortgage and pay them off
balance, will leave you less exposed to further boost together for an additional discount.
to higher interest charges. your savings.
Ultimately, every lender has different
Finally, if future rate hikes
products and criteria to determine
threaten your ability to
whether you qualify for a loan, making
meet mortgage it difficult to make comparisons on an
repayments, it’s worth apples-for-apples basis. Working with a
approaching your lender to home loan specialist can not only help
negotiate a manageable you understand your own situation, but
repayment plan. The best ease the burden in sifting through the
asset you have at this point is range of lenders and products out
a healthy repayment history, there, and hopefully get you off the
so take action well before a treadmill and have you owning your
payment falls due. first home sooner.
Planning to buy off
Checklist when buying off
the plan:
• Research, research, research.

the plan
Investigate past developments
built by the developer you
have chosen.
• Make sure you have a clear
understanding and documentation
of all aspects of the property you
are buying such as room sizes,
finishes and materials.
• Secure a full list of pre-agreed
finishes along with a
comprehensive understanding of
recent sales/comparable sales
found a property that is being built and projected rental returns. Get
by a builder they know and trust. the complete picture.
Buying off the plan is not for everyone, • Get a third party involved to help
So a vacant piece of land has however. It demands the ability to you read and clarify all the
captured your attention and a read architectural plans and make details of the plan… the process
‘Home For Sale’ sign has been significant decisions without seeing a is all about attention to detail.
erected on the property’s border. property in the flesh,” Castle adds.
• When buying off the plan, the
While the foundations are yet to When buying off the plan it may be date for completing the contract
be poured, already you are challenging for some to buy a property is usually not until the building
thinking you have found the they cannot inspect, too. “Some people is finished and the strata plan is
location you’ve always dreamed prefer to see, feel and touch things… registered. The buyer usually
of. Now could be the time to others can look at architectural plans pays a deposit and the balance is
consider buying off the plan. and be comfortable in their decision- paid at the time of settlement
But what exactly does ‘buying off making based on those plans,” she once the building has been
the plan’ mean? Buying off the plan said. “For others it can prove to be a completed.
means that a purchaser buys the very foreign experience,” added Castle. • Closely check the conditions of
property before construction of the The purchaser cannot see what the the contract. Seek legal advice on
project has commenced so decisions property looks like, the quality of the the benefits or restrictions
are made upon scale models, strata finishes, the layout, the property’s provided by the terms of the
plans and a scheduled list of finishes. physical size and dimensions or the contract. For example,
property’s view or even the outlook. consideration should be given as
The question for many is why buy
to whether there are any
off the plan? Some people choose this Like any property purchase there are penalties for withdrawing from
purchase method because it allows always pros and cons to be considered. the contract. Other questions
people to secure a desired property
When buying off the plan there have worth considering may be: Can I
within a specific development,
been cases where buyers haven’t make changes to the finishes in
according to Joel Hollis from Elders
necessarily been delivered what they the kitchen and bathroom?
Real Estate in metropolitan NSW. And Can I select appliances (ovens
they may even be able to tailor finishes were promised – such as different
and dishwashers) and items such
to their own taste. sized living spaces, different finishes
as floor and wall tiles? Can I visit
and so on, according to Joel Hollis –
Others favour buying off the plan the site during construction?
and some projects may experience
because it allows people to secure a time delays, he said. These are all Always read your contract and
property without having to pay for it factors to consider when buying off the seek appropriate legal and other
immediately: property buyers enjoy plan. Certainly, buying off the plan is advice before signing documents
the peace of mind of having secured a or making payments.
not a decision that should be made
property ahead of time, says the
without conducting thorough research
President of the Real Estate Institute
because you are entering into a
of NSW, Cristine Castle.
contract to buy a property without
Congratulations to the winner of the
WINNER

“It allows people to buy at a having first been able to view and Winter/Spring 2007 Mortgage Choice
convenient time – and at today’s assess the finished product. It’s Your Choice promotion.
prices,” Castle explained.
Be aware too that a valuation “off
Jenny Tucker from Oaklands Park in
“Others may feel comfortable the plan” may differ substantially from SA, has won $6,000.
buying off the plan because they have the estimated value at completion
Mortgage Choice Limited
302 Charman Road
CHELTENHAM VIC 3192
Win $6,000
Phone 03 9585 7779
Fax 03 8610 0365 towards..
www.mortgagechoice.com.au/cheltenham1
This franchise is independently owned
and operated by The Finassist Partnership
ABN 51 426 348 068

It’s your
8 Tips on how to
reduce theft during an
choice!
Simply call 1800 110 170 to make an appointment with one of our consultants and
open home: request to be entered into the draw.
1. Ensure that you have at You could save $1,000’s in 15 minutes, try us!
least two real estate That’s all the time we need to show you how to get the real savings you want on your mortgage.
agents present. With a Free Mortgage Choice Home Loan Health Check, your local Mortgage Choice consultant can help you
2. Ask all viewers to fill out find out if your current home loan is the most suitable one available or if there are other products out there that
a sign-in sheet with better address your specific needs. With the backing of Australia’s leading mortgage broker - you’re in safe hands.
their identification and • Wide choice: We have many of Australia’s leading banks and lenders on our panel
contact details. • Professional home loan advice

3. A real estate agent should • Local knowledge: We’re Australia’s leading mortgage broker because we combine local knowledge with over
14 years experience
monitor the back and
front door at all times Call now on 1800 110 170 or fill in your name and contact details below and

4. Secure and hide all • Fax it to: (02) 9954 4913 or


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

5. Reduce the clutter in NAME CONTACT NUMBER


and around your house.
6. Store all your personal ADDRESS POSTCODE
documentation e.g.
bank statements, credit
EMAIL ADDRESS PREFERRED CONTACT TIME
cards, passports.
THE “IT’S YOUR CHOICE” PROMOTION: Call 1800 110 170 to make an appointment with a Mortgage Choice consultant and once you’ve
7. Store all your valuables 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
and fragile belongings notified by telephone and confirmed by mail. The opening day of the competition is 30th October 2007. All entries must be received by Mortgage
Choice at the above address by 12pm Eastern Standard Time on 29th January 2008. The draw will be held at 4pm Eastern Standard Time for the
away. first draw on 30th January 2008 at the office of Mortgage Choice. The name of the winner will be published in The Australian on the 2nd February
2008. *Complete Terms and Conditions and the privacy notice are available from your local Mortgage Choice consultant or by logging onto the
8. Ensure your public liability Mortgage Choice website at: www.mortgagechoice.com.au. Authorised under NSW Permit No, [LTPS/07/25638], A.C.T. Permit No. [TP 07/03823],
insurance is up to date. VIC Permit No, [07/3968], and S.A. Permit No. [T07/4018].

STATE OF THE MARKET


The June quarter saw the strongest growth in the residential market since 2000 with a 10.2% increase in
Melbourne’s median house price. Price growth was concentrated in the inner city suburbs where the
median price grew by 14% to $650,000.
The other dwelling market showed strong growth as well. Median prices for other dwellings grew
8.8%, reaching a high of $350,000. Unlike the market for houses, there was more consistent growth across
greater Melbourne, with inner city prices growing by 8.8% to reach a median of $397,000, the middle
suburbs by 5.4% to reach $315,000, and outer Melbourne by 6.7% to reach a high of $240,000.
Solid demand is also evident for property in many of Victoria’s regional centres. Geelong had
the most expensive median price of $310,000 and growth of 5.3% in the quarter. Ballarat’s
median price reached $227,500 increasing by 7.1% over the quarter. Bendigo’s median reached
$232,500 increasing by 1.1%.
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.