Beware the cost of lost opportunity

Occasionally we are presented with opportunities that we know or believe would make a difference in our lives – and sometimes they are wrapped in less than ideal circumstances. For example we want to start investing but due to circumstances we acknowledge there’s going to be an additional cost to get started and we must weigh up the ‘cost of opportunity’ that we might miss. The usual example is where we don’t quite have enough deposit for a property purchase. Our alternative may be to consider lenders mortgage insurance. Obviously this can be expensive but it could be a small cost for the opportunity presented. I can think of a recent example where clients were saving for their 20% deposit o

Standard Variable Rate

Standard Variable Rate: An interest rate, which is applied to a loan. These may have features such as redraw facility, construction, split loans options and mortgage offset. The standard variable rate is the basis for most of the discounted loans – for example 1% off the standard variable rate with XYZ package. Banks often jostle for and advertise that they have “the lowest Standard Variable Rate Home Loan”, which makes me laugh because no one is paying standard variable rates anymore and the discount you can achieve varies from lender to lender – so lender A may have a standard variable rate which is 20 pts higher but may offer a 1% discount and bank B is 20 pts cheaper but only offers a 0.

Fixed rate...to fix or not to fix?

Fixed Rate: An interest rate set for an agreed term. Eg. for 2, 3, or 5 years. Fixed rates are akin to a contract – you agree to pay the lender that interest rate and repayment for a set period of time. Treat them as seriously as a contract, but enter into it happily if it suits you well. They are convenient in that you know exactly what your repayments will be over the time but there is a payoff; most people believe that in the majority of cases the bank wins (I know I have certainly been glad of a fixed rate at times, so I’m in two minds about this); and you will lose some flexibility - so it’s important to consider your short and medium term goals in relation to fixing. Generally, if you

Buying with Friends or Family!

In our area we are blessed to be surrounded by plenty of land, open space, and a lot of it is acre lots and over. And we desire it, we desire the acreage lifestyle and look for ways to make it affordable. I’m all for that. I enjoy it myself. Not always affordable by ourselves though so we look at alternatives to afford the dream and the idea of grabbing another couple and building two homes on one block comes to mind. There are also other reasons we might consider buying with friends or family, singles starting out or families helping ageing parents. Whatever the reason we need to approach it with understanding & I especially emphasis having a solid exit strategy in place. Ever been on a com

Line of Credit loan

Line of Credit Loan: This is a flexible loan that allows you to have funds transferred to your cheque account when required (it often even has a cheque facility built in). Consider this like a giant credit card; you pay it off simply by putting money into the loan and leaving it there – generally there are no set repayments - for this reason its generally not suitable for people buying their own home as usually you want to pay these off as soon as possible and it can be difficult to make progress in repaying lines of credit. That’s not to say it can’t be done – it can, but it takes more discipline and understanding. Often there’s a higher interest rate for a line of credit as well. This type

What is special about a ‘portable loan’?

Most lenders offer portability with their home loans, but what does that actually mean? If your loan is portable it means you can change the security for the loan without having to go through the whole credit process again - providing you meet certain conditions, the 3 main things being: you don't need to increase your loan amount, secondly that the loan you need is not more than 80% of the value of your new security and thirdly that the sale and purchase settle on the same day - or your purchase can settle within a few days AFTER your sale in a lot of cases. (On this final point, an issue can come up where your loan is now a higher percentage of the value of your property, to explain – lets

What's your best rate?

That old pearler. The thing is, that’s what everyone wants to know, I get it, but the answer is – “I don’t know, who are you & what do you want to do?” And that doesn’t seem to go down so well. There is no longer a one size fit all approach to lender, not in terms of home loans or in terms of lenders. No one lender is going to be able to look after everyone and no one loan is going to be offered to everyone. Policy determines more about which loan you end up with than interest rate, as a starting point anyway. Self employed people are the perfect example, if you have a growing business where the year before last was rubbish and the last year was fantastic, you’re probably not going to qualif

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Jarrett Group Pty Ltd atf Jarrett Group Discretionary Trust trading as Two Red Shoes hold Australian Credit Licence No: 428614 and are members of an external dispute resolution scheme. Details of our complaint resolution process can be found here or please see our credit guide. All information contained on this site is general information only, and does not take into account your particular financial situation or needs. You should consider your personal objectives, financial situation along with the recommendations of your trusted advisors.

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