Weekly wrap - Saturday 20th November
What’s trending in lending?
The lead up to Christmas is absolutely bananas in our world and in the lending space, which has been really exciting. There is definitely a lot happening!
Don’t dig yourself into Christmas debt!
Be really mindful in the lead up to Christmas with your spending: while it is tempting to use all the ‘buy now, pay later’ offers, such as Afterpay or Pay in 4, all those little things start to pop up, making their way into credit files. If you're looking to purchase, refinance or to do anything in the new year, remember these now are reported on your credit file. We know it's convenient. We know it's easy. But it's really not favorable for the banks when it comes to actually using those services. Banks look at 30 to 90 days, so just a word of warning to be mindful of that.
Keep an eye on your interest rate.
We use a term called ‘loyalty tax’. We meet a lot of customers that are really loyal to their banks, and we love that mindset. We love that people are like that. But the reality is that it's costing you money. We met fabulous clients this week; they have a couple of existing investment properties, investment loans, and have been super loyal to their little bank for 20 years. We asked them what their interest rates were and they're paying around 4.5%pa to 4.8%pa, which is horrendous.
Their bank dropped their rate in September. From 5.5%pa to 4.6%pa - 4.7%pa. It's still rubbish! We were able to get them a rate in the low twos, around 2.09%pa - 2.29%pa, on a $540,000 loan. It's about two and a half percent difference and a saving of $13,000 a year! That's their holiday for the year as a family.
They had a line of credit facility as well, and we managed to look at getting a credit back for them, for being overcharged some interest on that. The outcome is huge.
We still see way too many home loans that are paying too much in interest. Your loyalty is costing you money - money that's going into the banks and they won't do anything unless we ask.
And remember rates are moving around a little bit at the moment, so now is probably a better time than ever to not miss this opportunity to take advantage of some of the low rates while they're still in play.
Beware of timeframes!
Anyone that's turned the TV on this week probably has heard how one of the major banks didn’t meet a timeframe for a lovely young couple in Brisbane. The couple missed out on settlement by a day, and had their $75,000 deposit taken by their vendor. The property was resold for a higher amount. In the Queensland market, it was within their right for the seller to do that, unfortunately.
It's not as easy as: "Oh, we'll just sign for 30 days and if we need a couple extra days, it can happen”. Or: “It'll be an inconvenience, we'll make it work." It just doesn't always work out the way we want it to. The news story is an example of a sign of the market at the moment, that it is a little bit heated. And if an opportunity arises for someone to be able to resell that property at a much higher position, they're able to. And you might end up not only missing out on the house, but having what would be a lifetime savings for a young couple taken on the same day. It does happen.
So when we're harping on about timeframes, that's exactly why, because we understand how the Queensland legislation works, and we want to make sure that you're protected, organised, and that everything goes through smoothly.
Some of the stress is controllable and avoidable. We have the information, we know right now there are banks that if you signed a contract today, you wouldn't be able to settle until maybe the middle of January. We've got banks that can pick up a file within two days. We've got others at the moment that would take 18 business days. All these things are super relevant when you're signing a contract and you're under pressure to meet a certain timeline.
If you call us first, we can help guide you through that. Let's set you up for the win and let's make sure the terms on your contract are presented upfront in a timeframe that's going to work.
And just a side note on that: this is just Queensland. If you are interstate, including New South Wales or Victoria, and you're buying property up here, it is different. You’ll have a grace period. Pay for a good solicitor who can give you advice around this, making sure you understand how the legislation works here and not assuming that it's the same as the other States. So bearing that in mind, having the proper professionals in place to help give you the right guidance is super important.