Clinton Waters, Author at AXTON Finance

Five Reasons To Refinance Your Home Loan

Posted on 08/02/202302/05/2023 by Clinton Waters

With interest rates set to continue to increase in early 2023 it has been in the news everywhere that you should be looking at ways to save money in your daily budget and one of the biggest savings that can often be had will be looking at your current mortgage rate. While you should always call and haggle with your current lender we often see customers paralyse themselves with choice and end up comparing apples with cantaloupes which can end up with a borrower making a poor decision.

Take a look at these five reasons to refinance your home loan and reach out to us to discuss your options or book a free mortgage review meeting with one of our professional team online here – most meetings usually takes only 15 minutes to provide you with some tailored advice.

Five reasons to consider refinancing your home loan;

Lower Interest Rates: Of course one of the main reasons to refinance your home loan is to take advantage of lower interest rates. If interest rates have dropped since you first obtained your mortgage, refinancing to a lower rate can result in significant savings on your monthly payments and overall interest paid on the loan.
Cash Back Offers: Many banks and lenders in Australia are currently offering cash-back incentives for refinancing your mortgage. These cash back offers can be significant up to $5,000 and can provide a welcome injection that can be used to pay off high-interest debt, make home improvements or even to go on a well-deserved holiday. It’s important to check with different lenders to compare the cash-back offers and weigh them against the potential savings of refinancing.
Consolidate Debt: Refinancing can also be used to consolidate high-interest debt such as credit card balances or personal loans. By rolling these debts into your mortgage, you can often lower your interest rate and simplify your monthly payments. There are some catches with doing this which can extend the total cost of your lending structure so it pays to get some professional advice before you do this.
Switching to a Different Type of Loan: There are many different types of home loans available in Australia, such as fixed-rate, variable-rate, and interest-only mortgages. Refinancing allows you to switch to a different type of loan that may better suit your current financial situation or goals.
Accessing Equity: Finally, refinancing can also be used to access the equity in your home. This can be done by either increasing the size of your mortgage or by taking out a separate home equity loan or line of credit. This can provide you with the funds you need for home renovations, investments, education fees, or other expenses.

It’s important to note that refinancing a home loan is a big decision and should not be taken lightly. It’s important to consider the costs associated with refinancing, such as application fees, legal fees, and lender’s mortgage insurance, and weigh them against the potential savings. It’s also important to shop around and compare rates, cash back offers and fees from different lenders before making a decision.

Why not book a time with one of the experienced team at AXTON Finance today – you have nothing to lose other than maybe years off your mortgage.

Book an online meeting here with one of our professional brokers.

How Does Bridging Finance Works?

Posted on 06/09/202222/04/2024 by Clinton Waters

Bridging finance is a term often thrown around in client meetings but not many people really understand how this policy works. So lets start at the top and work our way down.

Imagine that you have seen your dream home come up for sale and you haven’t sold your current property yet or even considered selling it yet – then you might need bridging finance.

In its simplest definition, bridging finance is a type of loan that enables you to buy a property and settle it before you sell your current one. So you can buy before you sell!

Bridging finance enables you to fund the purchase price of a ‘to be purchased’ property, usually in its full entirety plus closing costs (ie stamp duty and legal costs) and allows you to keep your current property and sell it within a reasonably short time frame (less than six months ideally). The lender charges you interest on the bridging loan and adds it to the balance each month until you pay it down with the sale proceeds of your existing property (less any existing debts/costs).

Let’s look at a simple example. Say you own your current home worth $1.0m and you owe $500k to the bank already (a 50% LVR / Loan to Valuation Ratio), you haven’t sold it and you might not even have it on the market yet, and you want to buy an amazing new home that you have seen for $1.5m – you might need bridging finance.

The purchase price can be funded with a new loan of say $1.6m to say cover stamp duty. At peak, you will owe $500k (existing) plus the $1.6m so call it $2.1m owing. If you have any cash deposit you could use it to reduce the total loan size required.

This $2.1m loan does not usually need you to make monthly repayments on the bridging component (ie the $1.6m loan) but you do need to keep repayments up to date on your current home loan. Interest however does accrue daily on the bridging loan component and is added monthly to the balance. This can get pretty expensive if you are in a bridging position for too long.

Of course, the main pro of this structure is you might be able to buy a property before you sell and minimise the risk of having to move twice if you sell first and can’t find your next home before the settlement of your current home. Furthermore, lenders will give you a loan size (in the short term) much larger than what your income might otherwise support to hold both properties for a period of time.

So what are the cons – well to be honest there can be a few and this list is by no means totally exhaustive so lets go through them;

Market Risks

Without doubt, the biggest risk of using bridging finance is mainly around factoring in that you may not sell your current property in time or be forced into a situation that makes you accept a lower price than you might have otherwise been happy to accept. A falling market can be a risky place to be in a bridging finance position so being realistic in what you would sell for is an absolute must.

Costs

Like any mortgage interest is calculated daily and charged monthly. With a bridging loan is the same but a little different. You must keep repayments up to your existing loan balance (or a calculator whereby the lender works out what the approximate loan balance will be at the end of the bridging period). The bridging loan interest is still calculated daily (usually at a higher rate) and the interest is added to the loan balance each month and paid out with the sale proceeds at the end of the transaction.

Timing

Most lenders will want you to be in a bridging finance position for not more than six months and in some limited cases up to 12 months. But remember a bridging loan is usually a very large sum of money that you have borrowed and while you may not need to make monthly repayments the interest accruing could be adding up quite quickly.

The good news is that if you can negotiate a longer settlement on the property you have just purchased you might not need bridging finance for a very long time frame or at all. This is because bridging finance only kicks in from the settlement date of the purchase property. We can help inform you of what sort of solutions and purchase negotiations might work as an alternative to bridging finance that could help save you a lot of money and stress.

Market conditions

Bridging finance favour certain market conditions better than others. As a general rule, a declining property market could be risky if you are using bridging finance and you have purchased before you sell. If the sale of your property takes longer than you anticipated and you are unable to meet market conditions the sale price you might be able to secure as the weeks and months roll on could be accelerating down to your detriment. Conversely, in a rising market, the opposite can be true – you bought a nice new expensive home before prices take off and you are selling your old home in an environment that favours you as a vendor. There is a degree of luck to this so it might not be for the faint-hearted unless you go into a structure with your eyes completely open.

Deposit

So we have identified that bridging finance might be an option but you need a cash deposit to secure your new home on the auction day! This is often an overlooked consideration by many buyers – but doesn’t the bank just give it to you I hear you ask? Not quite – you need to have finance approved to release equity against your current property first to release the deposit required (if you don’t have sufficient cash) or utilise redraw or offset funds to pay the required deposit. Increasingly we are seeing vendors accepting deposits less than the standard ten per cent deposit with five per cent becoming more common especially to bring more bidders to an auction or to accommodate a buyer like yourself who may be interested in trading up to a new property using bridging finance.

There are also options outside of using a cash deposit that we can discuss with you like using a deposit bond (basically an insurance bond issued by a reputable insurance company), a bank guarantee (increasingly rare these days), as well as a few other options that we can discuss with you.

Servicing requirements

This is just mortgage jargon for ‘can you afford the loan’. Lenders have a myriad of metrics that they assess your capacity to meet repayments when interest rates rise. With bridging finance there are a few extra variables to consider which can stress your ability to ‘afford’ the end debt loan amount once you have sold your current property. These variables relate to lenders applying a discount of usually about 15% of the current valuation of your home to ensure that in a forced event you could actually sell and settle your property which would in this worst case result in a sale proceed being reduced and thus the ultimate loan you require increasing. Furthermore, the lender will add up to twelve months of interest on the bridging loan amount (in addition to the sale price discount) to ensure that the larger loan at the end of an extended period could be closed out and still be affordable. The lender of course will only charge you for interest that you used which is why it pays to minimise a bridging loan time frame. We can help you navigate the ins and outs of how lenders assess this risk and apply it to your personal scenario.

Complexity

Not all lenders in the Australian mortgage market are prepared to offer bridging finance and pretty much each lender who does has a different process and assessment policy on how they interpret your structure before they will approve you – lucky for you we are experts at navigating this on your behalf. Many lenders make it a requirement that you are an existing borrower of their institution before they are happy to extend a bridging finance product to you. Because the funding and legal documentation required to be in place for bridging finance is only usually for a short period of time (under six months usually and often just a few weeks) the interest rate charged on the bridging loan component is often not discounted and will likely be at a much higher amount than what your ‘end debt’ loan will be one you have sold your current home. While this might be fine to achieve the property purchase you want, the cost and stress of bridging finance could add up to be a very expensive solution without the right advice.

Please feel free to contact us on 1300 706 540 and ask for Clint or one of the team to help you out. We a sure you will love speaking to an experienced person and not a call centre!

10 Ways To Get Your Finance Approved First Time

Posted on 25/08/202222/04/2024 by Clinton Waters

Whether you’re refinancing or looking to purchase your first or third home, financing can be daunting. Even for the experienced, getting your finance approved can be a stressful process and with the effects COVID-19 creating extra scrutiny being prepared matters more than ever. To have your financed approved first time is the dream, one that can be made a reality with a little groundwork. With these ten tips, you’ll be well on your way to making that dream come true:

1. Assess your goals

Knowing how much to borrow from a lender is one of the most important pieces of knowledge you will require for this process. The goals you have in mind for the property you wish to purchase will have an impact on this. Know what you’re looking for in terms of a lifestyle and financial perspective. Marrying those together will help you buy for tomorrow.

Buying for tomorrow is distinctly important. Ask yourself; ‘Will this property be suitable for me in a year or two’? While the price-point may seem agreeable today, and it suits your current lifestyle, are either of those likely to change? It is much more expensive to trade up to something more appropriate further down the line than it is to get it right the first time.

Further, determine your own borrowing limit. Banks and Lenders maximum lending rates are stress-tested relative to interest rates. If or when interest rates increase, you could experience a great deal of mortgage stress by borrowing at the Lenders maximum rate. By using loan repayment calculator, you can look at what rates to expect to pay today, and at higher interest rates. This will allow you to know what loan size you need before speaking to Lenders.

2. Do you research

Knowing is half the battle, and with mortgages, it’s no different. Understanding what products are available, their features and the lingo will leave you informed before making a decision. While some features can seem alluring, such as offsets, you have to ask yourself: ‘does this benefit me’? ‘Is this offset worth higher rates, or extra fees’? Quite often the most basic mortgage products can be just as affordable and effective as more complex products.

Secondly, know the difference in the policies of lending institutions. Policy is one of the largest differences between lenders. By knowing what can and cannot be done, you can approach securing finance with a greater degree of confidence.

3. Speak to an experienced mortgage broker

There is a discernible difference between speaking with an experienced mortgage broker and direct with a lender. Lenders will only have one product and set of policies to offer. An experienced mortgage broker will have access to the broader market. With this access to the broader market, brokers will be able to identify a solution tailor-made to your scenario and needs. Experience matters.

With their exposure to the greater market, an experienced broker is invaluable. Their exposure equips them with the knowledge of lender products and policies. An experienced broker will talk you through policies and help you secure a product based on your needs. There are many brokers out there, some more experienced than others. As before, research matters, so research brokers. Look at their websites and reviews on Google. Even better still, ask for personal referral. They could prove a prime opportunity for a personal introduction to a quality broker.

4. Supporting information and documents

When it comes time to provide documentation and information, it pays to get it right the first time. Lenders will comb through your supporting documents seeking out inconsistencies between them and your customer fact find answers. Providing everything needed and answering the fact find honestly can and will avert many issues that may arise.

Banks and lenders have an obligation to report on the conduct of savings and mortgage accounts. There are many tools that lenders use to automatically read documents to determine your conduct as a customer. By keeping accounts paid up and to date, as well as not overdrawing, you will ensure your account is in good conduct. Conduct is very important factor in securing finance.

5. The Importance of savings

The importance of saving cannot be overstated. One of the first questions a bank or broker will ask is: ‘how much is your deposit’? This is because, as a very general rule, the larger your deposit, the easier it is to secure finance approval.

When looking at savings, lenders and banks are looking for what is termed ‘genuine savings’. Genuine savings are identified as funds that have stood in good stead for at least 3 months. Sudden windfalls will usually not all that favourable when securing finance. Genuine savings can also be recognised as shares or equity in other properties the customer owns or even rent currently paid.

Ideally, your deposit should be at least 20% of the value of the property you wish to acquire. This will allow you to avoid paying mortgage insurance. Mortgage insurance is a one-off fee, and in the name sounds fine, but it is of no benefit to the customer. This one-off fee, paid by the customer, only protects the lender and offers no insurance to your situation. While only a one-off fee, it can get quite expensive. The higher the loan amount, the more expensive the fee, relative to the Loan to Value Ratio (LVR). An LVR of 80% (loan is 80% of the price, deposit 20%) means no mortgage insurance is paid. An 82% LVR leaves mortgage insurance at a more reasonable level. Once in excess of 90%, the mortgage insurance premium becomes extremely costly. Talking to a broker about your current LVR and where you’d like it to be is an important step before making a finance application.

6. Don’t be late

More than ever, Lenders are looking for good conduct on your accounts. So it is imperative to avoid overdrawing your savings. The same goes for missing payments on mortgage loans or credit cards. When accounts are provided to lenders for assessment, their systems will usually automatically scan for tell-tale signs of poor conduct, such as late fees. This can affect your chances of securing finance.

Lenders will typically look back through the accounts provided across a period of six months. During the lead up to applying for a mortgage, it’d be best to keep all accounts ‘squeaky clean’. There can be issues that arise around credit defaults that may be listed, such as late payments on bills and utilities. Ideally, the defaults of this nature should be avoided. While it isn’t entirely detrimental, it can create unnecessary hurdles.

7. Do you really need it?

The advent of the ‘Pay-now, buy-later’ systems such as AfterPay and Zip Pay has created new hurdles in the process of securing finance. These systems, while technically not treated as credit, can still adversely impact the approval process. Lenders treat these systems as a form of conduct and affordability. They view this as conduct as by using this system, the customer has demonstrated they lacked the funds at the point of purchase. Ideally, it’ll be best to avoid have an AfterPay system, or equivalent, attached to your accounts.

8. It’s not all about the rate

While your gut reaction may be to ask ‘What’s the cheapest rate in the market’, you shouldn’t get hung up on the rate entirely. It’s an important question, but not all mortgage and loan accounts are structured the same. The rate you pay is influenced by several factors. How large the loan is, your LVR and credit history, features of the loan, funding models and more play into determining the rate you pay.

A more worthwhile question to ask is ‘can you identify the best products based on my scenario’? A good lender will ask you a series of detailed questions to determine your situation. From there they will be able to take you through and compare products that are ideal to your scenario. Products better suited to your scenario will ensure a greater chance of success in having your finance approved.

9. Be realistic

Due to increased compliance requirements, and the disruption caused by COVID-19 to bank processing systems, patience will be required. Pre-approval and overall approval of loans will likely take some time depending on which lender you use. It is important to be realistic about how long this may take. Pre-COVID, this process still took some time, with processing times between lenders varying from a few days to many weeks.

Same day approvals or ‘instant pre approvals’ should be taken with a grain of salt. These systems typically are computer generated and subject to the vetting of support documents. Quite regularly, there will be a disconnect between the questions you answer the assessment the lender applies to you. Applying for finance well before bidding for properties will be important.

10. Be realistic with your borrowing capacity

Your own assessment of repayments based on current interest rates is not what lenders look at. In their assessment, they look at interest rate increases in the future. They consider if the loan you are acquiring will still be suitable when interest rates rise in the future. They will also consider that some income is inconsistent, such as commissions or overtime. Subsequently, lenders will shade a component of this payment to around 60% to 80%. Rental income may also not be accepted in fullness, and may only be accepted at around 70%.

The living expenses banks apply to you may differ from your estimates. Banks apply a Living Expense Ratio lower than your actual expense ratio. Therefore, it is important to have a realistic assessment of your expense before doing a Customer Fact Find or finance application. Lenders will digitally assess savings accounts statements to apply a sense check to compare your estimate to theirs. This is another important consideration when applying for financial approval.

Finally, have contingencies in place for lenders and your income. Consider which lenders would be second or third choice if your ideal one doesn’t work out. Consider what will happen if your income is disrupted or reduced in a meaningful way. It isn’t wise to put every spare cent available to mortgage repayments. Nor is it wise to secure finance approval and not have emergency buffer funds available. It is also highly recommended to look into insuring the asset you are in the process of acquiring. Information and advice should be gathered from a licensed financial planner regarding this. They can provide valuable advice around income and risk insurance regarding life, trauma and Total Permanent Disability (TPD).

Securing approval for finance from a lender has many moving parts. With the right guidance and research, you’ll be ready to secure the approval tailored to your scenario. With that, you’ll be well on your way to refinancing and securing a better rate or securing an approval to allow you to bid competitively at that next action.

Good luck in your ventures, and if you have any further questions, do not hesitate to reach out to our team of experts, we’ll always be happy to assist you with securing the best structure possible!

The team at Axton Finance

Ph: 1300 706 540

Alternatively see our availability and book an obligation free Zoom meeting here.

Finance Tips For Aussie Expats

Posted on 12/08/202222/04/2024 by Clinton Waters

So you are an Australian citizen or an Australian permanent resident (PR Visa holder) living and working overseas and looking at buying or refinancing a property back here in Australia?

We look after lots of time poor Aussies needing help with tailored expat and non resident lending needs from our panel of over 30 major banks and lenders.

The following key questions provides a high-level summary of the available policies generally applied by the major Australian banks and lenders who offer mortgages to Australian expats and non resident with permanent residency status.

What is the maximum LVR that an Australian Expat can get?

The Maximum loan to valuation (LVR) ratio is generally 70% or 80% of a property’s value (some lenders may allow higher up to 90 or even 95% but there are caveats to this which are usually higher rates and mortgage insurance being applied).

How much foreign income can I use?

Your overseas income is usually shaded by 20% for currency risk purposes before converting to Australian dollars ($AUD). The resultant figure is then hypothetically ‘taxed’ at Australian tax rates to determine what net income (after tax income is available to support your loan). This is applied because Australian lenders are generally not resourced to deal with understanding every countries different tax systems.

What if I earn tax-free income in the UAE?

If you earn tax-free income in the United Arab Emirates (UAE) or similar tax jurisdictions – you may be in luck then. In many circumstances, we have a handful of lenders who will not apply hypothetical Australian tax rates to your expat tax free income in places like Dubai and Abu Dhabi. This will usually result in you being able to secure a larger loan size than what most Australian banks would otherwise approve.

Can I use bonus income as an expat?

This depends heavily on which lender is being proposed and how often the bonus income is paid. It can be difficult to use for servicing purposes when it comes to expat and non-resident lending.

How much income do I need to secure an expat loan approval?

Because of the rules above that most lenders apply, your taxable income generally needs to exceed $250,000 AUD PA equivalent. Shading due to currency risk and different tax assessment rules can significantly reduce your borrowing capacity as an expat. If your income is less than this it is often very difficult for us to meet current expat lending rules even for modest loan sizes.

What currency do I need to earn to be eligible for an Australian expat home loan?

Most lenders require that your income is earned in primary currencies like;

United States Dollars (USD)
Pound Sterling (GBP)
European Euros (EURO)
Singapore Dollars (SGD)
Hong Kong Dollars (HKD)
Japanese Yen (JPY)

A smaller list of lenders still accepts other countries depending on individual lender policies and includes but are not limited to;

Indian Rupee (INR)
Indonesian Rupiah (IDR)
Vietnamese Dong (VND)
Chinese Yuan (CNY) / Renminbi (RMB)
Emirati Dirhams (AED)

What if my payslips and other supporting information are in a foreign language?

If your support documents are not in English they must be translated into by an accredited translator (most Australian lenders accept NAATI as a standard translation service).

What if I don’t have Australian Citizenship or PR Visa status – can you help me?

Unfortunately if you do not hold Australian citizenship, PR residency or New Zealand citizenship we are currently unable to assist you based on our available lending policies.

I am a self-employed expat – can I secure loan approval?

Being self-employed has many benefits but borrowing money as a self-employed expat can greatly reduce the number of lenders who may be able to support your plans. While not impossible we may be able to assist you especially if your tax returns are up to date and are published in English.

I want to know more about expat mortgages – how do we meet?

Want to get some tailored mortgage advice from someone who knows what they are talking about then feel free to book a time here for a quick 15 minute chat or jump onto the chat box on our website now (it will confirm if one of our brokers are online for a chat).

Book your 15 minute online chat here!

Of course, you can also call us in the office on 1300 706 540 for a chat during normal business hours. If we miss your call leave a message and one of our team will usually get back to you within one or two business hours.

Rates On The Move

Posted on 14/02/202202/05/2023 by Clinton Waters

Why You Need To Review Your Life Insurance

Posted on 16/03/202102/05/2023 by Clinton Waters

If you crash your car, in all likelihood you will have insurance, and be reimbursed for the damage.

What if YOU experience a similar trauma? Are you insured and can you be certain that what you have in place will get you back ‘on the road’, more importantly, will your family be protected from a financial crash.

At AXTON, and as part of our best interest duty to clients, we believe it is important to highlight the metrics around your lending in relation to your income and lifestyle. Particularly because we facilitate lending towards accommodation that is often reliant on your income, accommodation that houses you and your family.

Simply put, we insure our cars and home contents, assets that lose value every day, but not enough of us sit down and truly think about our personal insurance position. As an individual, you and your partner, are your family’s biggest asset. You produce a yield, in the form of income, that is critical for your accommodation and living expenses – yet seldom do we consider adequate insurance for this invaluable asset.

In light of the above information we recommend that you have an initial conversation with our financial advice partner, Joel Schultz at Columbus Wealth Advisory. Like us, advisers like Joel do not charge a fee for insurance advice, nor do they charge to meet for a simple discussion. They are paid by the recommended insurance provider. Further more because of Columbus’s own ‘Best Interest Duty’, they will only issue advice that is proven to be in your best interests ie. provide the best value for money (cost effective) and provide the best available features for your circumstance.

Call Joel and his team today for an obligation free discussion on 03 9935 9202 to ensure you financials assets are adequately protected.

Moving house doesn’t have to be so heavy

Posted on 05/11/202016/09/2024 by Clinton Waters

We of course help clients everyday arrange competitive home loans for new homes and renovations and of course one of the outcomes is having to move all of your stuff from one place to the other. Now we have all been there and moved ourselves and our friends many times over and I am pretty sure no one enjoys the joy of getting a four seat couch down a staircase! I for one will never forget dropping my mates grandmothers old piano on the front garden when I was in my late twenties (sorry Simon!!).

Now while you could look up ‘removalist’ online and take your chances an Australian company has come up with a great but simple idea. Muval is a platform that connects removal companies with people and businesses looking to move items locally or interstate. It removes the hassle of calling around for multiple quotes from different companies and removes the uncertainty and dread that is often associated with the moving process.

Given how time poor we all are and how much most of us loath moving why not lookup Muval and give them a go for your next home move – we recommend their services to our clients so give it a go next time for your move.

COVID19 – Advice and guidance for finance hardship applications

Posted on 06/04/202022/04/2024 by Clinton Waters

Over the past 2 weeks we have fielded numerous enquiries from our clients with questions and concerns about how to approach lenders for hardship support relating to COVID19 and the impact this may have on their mortgages, rates, credit histories etc.

To ensure our clients get the most accurate advice, AXTON Finance have been in regular contact with the banks and lending institutions we work with and with whom all of our clients have mortgages.

In our earlier communications we noted that a hardship repayment holiday is not ‘interest free’ and that such a holiday may extend the term of the loan or the interest you pay over the life of the loan. As such, it is important to understand what this means for your long term, and that if you have some capacity to make repayments towards your loans, then it may serve you well to do so.

The encouraging fact to note is that all lenders have in place support for borrowers to receive repayment assistance.

The most important action anyone can take under these trying circumstances is to proactively communicate with your lender, and to do so before any repayments are delayed or missed.

Banks and lenders approach and support to hardship is evolving, and as we write this, most lenders are treating the conversion of a principle loan repayment to interest only as ‘credit critical’ (this means such a change to your loan contract will only be permitted through a full assessment via a loan application). There is some political push from the government towards the banks and lenders to simplify this process, however as it stands a full assessment is usually required.

What is useful to understand, however, is that in applying for and obtaining hardship assistance means whilst it is not necessary for you to make a repayment during the hardship period, you may be permitted to.

The upside here is that in remaining under a P&I agreement, you will be incurring interest at a lower rate (Interest only terms tend to be priced higher for risk). So you may effectively be getting interest only terms at a lower rate without actually needing to go through a full loan assessment (providing you meet the hardship criteria).

There is some inconsistency between lenders as to how they treat the repayment. Some lenders advise these payments will be available for the borrowers during and after the hardship period if they needed to redraw. Others have advised these are not. So it is very important to ask your lender what availability you will have to cash paid into your loan during or after a hardship period. They may even take the view that if you can make a repayment, you may not qualify for hardship…

New loan application, current applications…

Most lenders are quickly updating credit policies to accommodate risk associated with COVID19 and request additional information and explanation around job type/industry to identify is this may impact ability to repay in the near future. Some lenders are asking applicants to provide disclosures and confirmstaions along the following lines:

The COVID-19 crisis is causing significant social and economic disruption. Applicant(s) to advise how they foresee this affecting their current financial position (including income) and how they will financially navigate that affect. This approval is subject to the Lender understanding and acceptance of this affect.

To Summarise:

Be proactive with your communication, ask for assistance before you miss a repayment;
Understand the impact and accessibility to any payment made during a repayment holiday;
If there was no loan conduct issues prior to COVID19, any hardship or repayment holidays granted as a result of COVID19 impacts will not effect your credit history;

Impact on Credit History

Borrowers who are granted a six-month deferral on loan repayments will not have their credit rating affected as a result of the holiday, so long as they were up to date with repayments prior to the economic impact of COVID-19.

“If a customer is granted a deferral on their mortgage and other credit products because of COVID-19, banks will report customers as not having missed a repayment, provided they were all up to date when granted relief,” explained ABA CEO Anna Bligh.

As always should you have any questions we are here to help – while we may be working remotely during this time please call the office on 1300 706 540 and one of our team will be able to help you.

Take care out there!

James Hardiman I General Manager

AXTON Finance

Photo by Branimir Balogović on Unsplash

COVID19 – AXTON Support Page

Posted on 23/03/202022/04/2024 by Clinton Waters

Firstly our small team at AXTON Finance hope that you, your friends and your family are looking after yourselves during this time. Please listen to government advice on how you can play your part to keep yourself and others safe during this pandemic.

Australian banks and lenders pitch in

On Friday 20th March The Australian Banking Association (The ABA) announced a unified response to assist Australians during this crises.

Below is a summary of COVID19 links available from each lender in the Australian market place.

This page is being updated as more information comes to hand.

Key points to consider – our brief summary

– The term ‘repayment holiday’ SHOULD NOT be interpreted as interest being waived. It is only repayments (interest) being deferred. You still have to pay the capitalised interest added to the loan balance in the future.

– Qualification requirements are likely to apply (eg unemployment, significantly reduced hours, at risk industry etc)

– Our opinion is that the deferred repayment should be used where genuine hardship is being experienced or is expected. In the long term adding (capitalising) interest for six months or more can add a significant amount of interest to your total loan cost.

– Most lenders are offering up to six months relief in repayments. Some are offering up to three months with a checkin at that point for a further three months.

– Credit reporting agencies and lenders have already outlined that the hardship arrangements are typically not reported as defaults, and therefore do not impact a borrower’s credit score, with APRA also stating on Monday 23rd March 2020 that banks need not treat repayment holidays as arrears.

– The very cheap fixed options we are starting to see should be considered carefully. Often you cannot make extra repayment on a fixed rate, there is often no redraw and expensive break costs can also apply should you pay the loan out early.

– It may be economical to consider refinancing to a new lender to take advantage of cheaper rates, a new interest only term or one of the current cash back rebates available before you simply defer your repayments.

Speak to your AXTON broker if you would like a mortgage review (click here for a free review) or to discuss any of the points above.

Useful COVID19 Lender Links

Bank Of Melbourne (click link on main page to COVID Information)

If in doubt or if you just want to chat about your situation please contact your mortgage broker to assist where possible.

Contact details are as follows:

Adrian Grant – [email protected] – 0415 735 819
Clint Waters – [email protected] – 0422 464 353
James Hardiman – [email protected] – 0403 775 558
Paul Kusli – [email protected] – 0439 337 789

Our office number (1300 706 540) is still actively being monitored as we run a full VOIP system and can be contacted as per normal.

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Your team @ AXTON Finance

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10 tips that can help your mortgage application

Posted on 30/10/201922/04/2024 by Clinton Waters

As you have probably heard in the media the nations lenders have clamped down on their lending criteria as a result of pressure from various government agencies like APRA and ASIC and from recommendations made during the Banking Royal Commission into banking misconduct.

It would be fair to say that many lenders have perhaps taken this a little too far which has resulted in a market place full of inconsistent applications of an incomprehensible set of rules for borrowers to deal with.

As a result of this we felt that the following information can be used as bit of a guide to help maximise your chances of securing finance approval by implementing any number of the following tips.

1. Fill out your application form in full

Lenders will often apply a score to your loan application based on the information you supply and if you skip on optional questions this can be detrimental to the strength of your application if things a little tight. For example even if you have a savings account with another bank with a small amount in – tell your proposed lender. If you have a middle name don’t forget to include it – it matters. If you have moved a couple of times try and be accurate with your living history as lenders often marry up data they can see on your credit file with the information supplied in your application.

If you are looking to refinance or buy your next property check out client fact find here – this is a fantastic form which is responsive to asking you the questions we know a lender will want to know – nothing more and nothing less! We can contact you after you have completed to run some tailored options past you.

2. Don’t submit your application to too many lenders or brokers

Lenders get very concerned when they see on your credit file that you have applied to a number of credit providers within a short period of time for about the same amount of money. The lender in question will often take the pessimistic view and think that there is something wrong with your application and has been declined by other lenders prior to it so will pick over your file with more detail trying to find out why you would apply so many times.

3. Do you have credit defaults?

This might sound scary and a reason for a lender to decline a loan but many lenders have different policies that may consider your scenario depending on the circumstances and what you have done to remedy the situation. As a general rule of thumb defaults from utility providers like power and telecommunication companies have less impact on your scenario than do defaults on financial service providers like personal loans, credit cards and home loans.

It is important to realise that with the evolution of the positive credit reporting regime lenders can now increasingly see the conduct of other institutions credit facilities. So if you are late on your credit card payment with the CBA and your home loan application is with Macquarie Bank, then there is a good chance that they can see this on your credit file down to which months you were on time and those that were not!

Treat your repayment history with a healthy level of respect and you will find your application will run pretty smoothly. A good mortgage broker or banker will be able to work with you prior to submission to identify any sort of severity and work out the best course of action and the lenders most suited the scenario you have presented.

If in doubt you can get a free copy of your credit file from mycreditfile.com.au (a service from Equifax Pty Ltd). We can take a look at it for you free of charge and provide you with some insight – feel free to contact us here.

4. To Afterpay or not…

The advent of the ‘buy now and pay later with no interest’ companies like Afterpay and Zip Pay creates an interesting situation for lenders. In simple terms these are not seen as a great look on your bank statements because the lender makes the assumption that these often relatively low cost purchases were made because you did not have the money in the first place and with retailers quick to jump on the band wagon with this offering its even available on products and services that may be considered essential. Our recommendation is generally not to have these buy now pay later arrangements if you are seeking to make a mortgage or finance application.

5. Support Docs

You will of course have to supply items like payslips, ID, mortgage statements and tax returns etc depending on your situation. This often slows down the process when the information requested is not provided in a timely manner. Many lenders simply get to your file and if information is missing they request whats needed and place your file at the back of the queue again. Sometimes information supplied can result in additional questions being asked so be prepared for this to happen and its nothing unusual albeit it can be frustrating.

6. How much do you spend?

OK I get it that a budget is boring but again an increased focus is being made on just how much borrowers are spending on living expense and there is a general reduction on the reliance of HEM (Household Expenditure Measures) standards and a more tailored approach. Having a summary ready before your finance meeting will help you have a more productive and realistic expectation of your borrowing capacity for any sort of approval. There are often many ways that you can reduce and improve your living expense without making drastic changes in the months lading up to when you are looking at securing a mortgage. Go through your statements and look at where you may save money via;

Reducing utility bills by shopping around suppliers
Reducing or eliminating credit card debt
Do your food shopping with a list and don’t buy by impulse
Take a packed lunch (this $10 per day can save you $216 per month in after tax dollars!)
Love coffee (so do we) but consider a pod machine or something similar over the 4.90 large flat white with almond milk once or twice a day
Pay yourself first (savings) – putting money away first before you pay for everything else is a simple yet powerful process to help you get ahead. Think of every time you get a pay rise how easy it is spend that new amount of hard earned cash! There are some great online tools that can help with this. One that we love is Raize.com.au and ING Bank – these two companies have variations of a system that automatically squirrels away savings by rounding up your purchases to the nearest dollar and allows a regular savings plan. Simple, effective and above all – happens without effort. (note if you click the link above to Raize you receive a $5 credit to your new account as do AXTON Finance)

7. What happens if you are having or planning for a child

Lenders are now required to ask about any expected changes to your future income that may affect your ability to meet repayments. This of course is a requirement to be answered truthfully and is strengthened by your ability to provide other information about how you may deal with such a situation. For example if you are about to go on maternity or paternity leave you could state that you have a certain amount of funds available for the estimated period of you being on reduced income to meet the commitments of your loan. A return to work letter and using a lender with a strong appetite for this sort of scenario will also help you a lot.

8. How good is your mortgage broker or banker?

Of course we may be a little biased here but having an experience broker working with you will help explain things in plain English for you and be across the lending policies of dozens of lenders and not just one (like you would get directly at a bank).

The quality of your application submission that is made by your broker or banker can really dictate how smoothly your application goes. Do some simple research like looking up your preferred broker or banker online through Google, LinkedIn and the other usual social media links. Usually you will get a pretty quick impression as to how experienced and professional they are. If in doubt trust your instincts!

9. Consider the wider market

It is often that the more competitive products and policies lie outside the big four banks. Well over 50% of all mortgage lending goes to just four of the major banks. At AXTON finance, only 20% of our lending in the last six months has gone to a majors! There are better deals to be had if you are willing to look outside of the square it can save you tens of thousands over the life of your loan.

10. Is the cheapest rate the best?

A business mentor once told me of the following three things;

Good, fast and cheap…. pick two. It is impossible to have all three.

Wise words to live by indeed.

A quick search of the internet may list some amazing rates that look too good to be true and while it is still may be worthwhile considering you should also think about;

How volatile is that rate online? Sometimes a great rate may be unsustainable for a lender to offer for a long term and you end up getting rate creep with increases outside of RBA changes. While you will be rather annoyed if this happens it would be good to understand what sort of history has been evident with the lender in question?
Does the lender’s computer say NO?. In many instances lenders try and shoe horn customers into rigid processes with offshore credit decisioning driven by computer systems. If you fall outside of this sort of lenders policy due to any complexity then you want a human with experience going into bat for you. Paying an extra 0.1% or 0.2%pa in rate can often mean the difference between submitting to a lender who may view your application as being poor versus another one that is fine with your set of circumstances. Use a quality mortgage broker who understands the rules to maximise your outcomes and reduce your stress.
Does the lender have a good application and onboarding process or is it a process with baked in systems that worked in 1991 when fax machines were cool? This can have a significant impact on turn around times – a good broker will have excellent experience of this fist hand and can guide you.
Cheap online specials often blow out credit application queues resulting in turn around times that can take weeks (even months). Currently there is one lender that is out to almost 20 business days to pick up a file – do you have that sort of time to wait?
Enquire about what sort of service the lender has with clients. A quick look up of reviews online can give you a feel about one lender over another. However read with caution as people often use the internet to complain and rarely to praise.
Ensure that you understand the product that you are seeking really does have the features you need. There is no point paying for stuff you are unlikely going to benifit from if there is a cheaper and/or simpler product available that does what you need it to?

So there you have it – ten tips on helping get your mortgage application approved!