bad credit loan

Bad Credit – What is it?

Bad Credit - What is it and how to get home loan help if you have it!

bad credit loan

 

What Is Bad Credit?

When it comes to impaired credit, there are many kinds; the main ones include:

  • Bad Credit History – Negative marks like bankruptcy, defaults, court writs, judgments and an excessive amount of credit enquiries could lead to mistrust in your loan application.
  • Mortgage Arrears – If you’ve missed payments on a home loan, it could call into question your stability. The more missed payments you have in the last six months, the more apprehensive lenders are going to be. In essence, major banks and 2nd tier banks/lenders are not liable to refinance a loan, even if you missed one repayment.
  • Unpaid Taxes or Bills – Having unpaid bills or even tax bills may not appear on your credit file but may be seen on any provided documents you give. 
  • Lender Credit History – your previous credit history with the lender you’re applying with will also be looked at. If you’ve had trouble with a lender previously, even if it’s years ago, they’re going to remember it.
  • Too Many Commitments – If you’ve got an excessive number of debts for your income or the total amount of assets is less than the total number of liabilities, major banks and other lenders may consider you beyond help.
  • Financial Business Problems – If your company is in dire financial straits, such as liquidation or receivership, it can hurt your chances of getting a loan.

A Look at Non-Conforming Lenders

When it comes to getting loans from a non-conforming lender, they are considered much more flexible than traditional banks. The offered interest rates are generally reflective of the risk the lender takes. If your loan is considered highly risky, the interest rate will generally be higher.

Non-conforming lenders will take a look at each individual home loan application, listening to your story as to what happened and why you’re looking for debt relief or finance.  Many of these lenders will often quickly approve the loans to meet creditors’ deadlines.

  • If you’re asking for 80 percent or less of the home’s property value, you could attain a lower interest rate
  • People who need to borrow more than 80 percent or who have really bad credit can expect a higher interest rate

Who Would Qualify as a Non-Conforming Lender

There are a multitude of non-conforming lenders who can assist borrowers in being approved for a home loan even if they have negative marks on their credit report. Some non-conforming lenders include:

  • Liberty Financial
  • Bluestone Mortgages
  • Resimac
  • Pepper Home Loans
  • Adelaide Bank
  • La Trobe Financial

Over the years we have forged excellent working relationships with the Lender noted above and some other niche non-conforming lenders with an appetite for bad credit loans.

With non-conforming loans the devil is in the detail and you should always consult with a specialist mortgage broker who understands the lenders credit policy and can package and present your loan application in the best possible light to the lender.  The team at Sherlock are experts when it comes to bad credit loans with over 10 years experience in the field. Feel free to contact us today to discuss your bad credit lending options.

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Simply fill out our no obligation Free Quote form and we will tailor a comprehensive loan proposal suited to your specific bad credit lending needs.  This does not constitute an application and your credit file will not be affected by requesting a quote.

Bad Credit Home Loans

Who can secure a Bad Credit Loan?

Who Can Secure A Bad Credit Loan?

People with a black mark on the credit report, due to job loss, divorce, business failure, injury, or a multitude of other reasons  – can still secure finance and attain a bad credit home loan. Traditional Lenders, like the major banks, are generally extremely wary of borrowers who have defaults or who constantly have credit issues. This is where non-conforming lenders step in with a more flexible set of loan qualifying criteria. Some of this criteria includes:

Small Paid Default

  • If your default is under $500 and was paid over six months ago, a bad credit loan lender can assist you in borrowing up to 90 percent with a bad credit loan; sometimes 95 percent LVR for a home’s property value.

2 or More Small Paid Defaults

  • If your paid defaults are under $1000 from financial institutions (banks) and you have less than $500 from the non-financial institutions (phone company), you could receive 85 to 90 percent of the home’s property value.

Moderate Paid Defaults

  • If you have $3,000 in paid defaults, you can attain up to 80 percent of a home’s property value using a prime lender, 90 percent using a specialist lender who provides a bad credit loan or the complete property value amount so long as your parents provide a security guarantee.

Large Paid Defaults

The largest paid defaults, ranging from $3,000 to $50,000, are usually looked at on a case-by-case basis and using a good explanation that can be backed by evidence. Loans of up to 90 percent of the property value can be given with a specialist lender’s help.

Unpaid Defaults

If there are any unpaid default a loans, a non-conforming lender will only permit up to 90 percent of the property value. Most lenders demand that defaults are paid before loan approval.

Court Writs/Judgements

Should you have any court writs or judgments against you, you can potentially get a non-conforming lender to provide you a bad credit loan with up to 90 percent of the home’s property value.

Part IX Agreement

  • The Part IX Debt Agreement is an alternative to filing for bankruptcy. This kind of agreement is generally more flexible and has an array of options like:
  1. Agreement with creditors to pay less than the debt’s full amount
  2. Agreed upon system of payments set an affordable level
  3. Transference of some property you own to a creditor  to meet some or all debt payment
  4. Organizing of temporary suspension on debt payments

It is possible to attain a home loan after you’ve completed the Part IX agreement. Here’s what you can expect:

  • The borrowing of up to 90 percent of the home’s property value
  • Requirement of at least 16 percent of the home’s purchase price for the deposit
  • Larger deposits can qualify you for the standard bank interest rates

Special Note: If still paying on the Part IX Agreement, you cannot attain a home loan.

Bankruptcy and Loans

A lender will look at bankruptcy issues based on your particular situation and the size of the deposit you’re willing to put up.

Discharged Bankruptcy – If your bankruptcy was discharged, you can borrow up to 90 percent of home’s purchase price. However, you must have between 14 and 16 percent of the purchase price yourself to ensure the deposit, stamp duty and Lenders Risk Fee will be covered. You can be discharged for as little as one day to qualify.

Undischarged Bankruptcy – If you’re currently in bankruptcy, you are not allowed to attain a home loan, as this is illegal.

bad credit loan

“Thank you so much for helping me get my refinances done. I can finally move ahead now that I no longer am burdened by defaults. I also admire the efficiency and professionalism with which you got the job done. Rest assured that I will recommend your services to all my family, friends and colleagues.”

– Bill Jackson, VIC

bad credit loan

“Adam and I would like to thank you for assisting us in securing a new home. Even though our circumstances were very complex, you were able to guide us to the best possible product for our situation. Nothing was too hard for you to respond to and we are grateful that you never kept us waiting for an update.”

– Sarah Walker, ACT

bad credit loan

“Dear Melanie, Thank you so very much for all of your help in securing my mortgage and your expert advice. I sincerely appreciate all you have done for me – when I thought I had exhausted all my options you proved me wrong and for that I am grateful”.

– Jodie Oconnell, VIC

retirement planning

Retirement Planning in Your 40s

Use These Strategies and Avoid Common Money Mistakes in Your 40s

Your 40s can be a challenging financial time. However, you can take steps to avoid the common money mistakes that create challenges with your personal finances.

Follow these strategies:

  1. Plan with liquidity in mind. How much of your portfolio is accessible in liquid assets? Liquid assets refer to cash or investments that can be easily turned into cash.
  • During an emergency, you may need fast access to cash. In your 40s, emergencies can include a family member’s unexpected trip to a doctor that isn’t covered by insurance. They can also include an unexpected breakdown at home or at work. How will you pay for these items?
  • You want to avoid being in a financial situation that forces you to sell your belongings or get loans because you need cash. Evaluate your portfolio and ensure you have enough cash to handle a variety of emergencies.
  1. Balance your payments. It’s important to have a balance of payments, so you’re not spending too much in one area. Trying to pay off the entire mortgage too soon is a common money mistake. It’s tempting to put extra payments toward the house, but other areas may need to be examined.
  • Are you trying to pay off your mortgage while a pile of credit card bills sits on your desk? Although it’s a good feeling to own your home, paying off the mortgage shouldn’t be the only goal.
  • Extra mortgage payments can wait in many instances, so you can focus on higher interest debt such as credit cards, and other types of loans. In addition, it’s important to be contributing toward your retirement during your 40s so you give your money time to grow. Also, consider your children’s university fees.
  1. Focus on retirement. In your 40s, it’s easy to expect that you can continue to work for several more decades before retirement. However, your retirement savings need to be a priority.
  • Retirement savings work best as a long-term goal. Your 40s are an ideal time to build your investments.
  • You may want to avoid the common money mistake of taking out cash from your retirement savings. In addition to penalties and fees, you’re reducing the portfolio’s ability to grow.
  • If you take money out of your retirement funds, you may also face large penalties during tax time.
  1. Consider your job security. During your 40s, it’s easy to become complacent about your job.
  • It’s important to pay attention to your company’s culture and consider job security. Are you watching older workers being pushed out for the younger generation? Are older workers in the same field struggling to find replacement jobs?
  • Job security can affect every aspect of your financial life. It’s also important to consider your income. Do you expect it to rise, or is it at a stable level? In your 40s, you may expect income to continue to rise, but experts share that this may not always be the case. It’s wiser to avoid the money mistake of spending too much because of hopes for a raise.

If you’re in your 40s, be aware of these common money mistakes and protect your financial future. This is a perfect time to strengthen your financial foundation at home and at work.

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Investment Property

Your Next Investment Property – 5 Pitfalls to Avoid

Your Next Investment Property - 5 Pitfalls To Avoid

Finding a bargain investment property on paper is only half of the process of property investment. The other half of real estate investing is going down to the property to examine the real estate investment property physically for defects either in terms of the construction and legal title and other liens that can be on the property. You do not want to spend lots of legal costs later to undo the bad lemon you bought into. This article will highlight five possible things to consider when searching for your next investment property.

  1. Unless you find a property that is really run down and you want to tear it down to its foundations, you want to look out for properties that might have potential electrical and plumbing problems. The reason why this is critical is that, wiring and plumbing is usually hidden behind walls and other furniture fixtures and repairing them can be a very costly affair since you have to hack into the walls and run the piping and wiring if the problem is very serious. If you are new to property investing try to bring an electrician along with you when you are doing the property inspection.
  1. Foundation problems are usually harder to spot. When walking around the property, look for cracks appearing at the side of the house and the foundation that goes into the ground. Look for large unusual holes found at the side of the property and cracks on the exterior paint of the building. You might want to bring builder/carpenter and a contractor along to figure out how much it would cost to fix the property if you suspect the repairs involved will be substantial. You can also bring them along to give a “grim estimate” to the house owner and bring down the cost of the property.
  1. Roofing problems can be a persistent nightmare to you and your potential tenant if you are purchasing the real estate for tenancy purposes. When inspecting the house, look around the ceiling near the windows and around the edges of the walls to look for new paint or yellow spots or cracks with water in them. Most sellers would be smart enough to eliminate the water bubbles after a heavy rain when trying to sell the property, but it is always important to figure out if there is a major leaking roof which might cost you are lot to repair it. Use this defect to negotiate the price of the property.
  1. Another reason why the investment property in question might be a bargain might be because there are legal problems associated with it. Common ones include, multiple owners that cannot agree whether to sell or not. Litigation here would be futile and you should avoid such a property once you learn about it.
  1. Bankruptcy of your seller or one of the part owners of the property, depending on the legal proceedings of your state, may affect your ability to transfer title quickly. Most states make it a requirement that the receiver of the bankrupt has to agree so pay careful attention to the bankruptcy legislation of your state. That being said, sometimes you can snag a bargain quickly so do your homework before purchasing such an investment property.

In conclusion, these five pointers can be used as a starting point for you to evaluate your property investment. Spend some time to think rationally about the properties that you have seen and see if they have any of the above flaws and consider if you want to continue purchasing them and whether the costs that you may incur in fixing them will justify the discount of the property to the market value.

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Bad Credit home loans

Selling Your Home? Five Things that could Decrease the Value

If you are thinking of selling your home somewhere down the road, there are a couple of things that the experts suggest that you NOT do because it could actually decrease the value of your home and make it less appealing to potential home buyers.

I wanted to share some of them with you.

  1. Bold Paint Colours – When buyers view your home, bold colours may stick out like a sore thumb and they may look at it as an extra expense to have the walls repainted. If you decide to use a bolder colour, it’s recommended that you use it on an accent wall with lighter shades.

 

  1. Over-Renovated Kitchens – It’s one of the most important rooms in your home. There is a point where it can be overly done and doesn’t fit with the rest of your home.  It’s suggested that you don’t go overboard—renovate so it matches the style and design of the rest of your home.

 

  1. Landscaping – It’s the first impression that makes them want to walk in the door. Get rid of overgrown shrubs and plant new ones.  If you have weeds growing in your lawn, apply a good weed killer.  Fertilise the grass to make it look greener.  Get rid of junk and toys in both the back and front yards.

 

  1. Unfinished Projects – You may be doing them yourself or have hired a contractor who has not yet finished an improvement project. Make sure it’s complete before listing your home for sale. Buyers may view it as costing them money or may not be able to imagine the finished project.

 

  1. Wasted Space – Do you have a spare bedroom that has turned into a storage area? Or a family room or office that is now an exercise area?  Potential buyers want to visualise how every square metre can be used—especially if home prices in your area are somewhat tied to the size of your home.

commercial real estate

Commercial Real Estate Investment Strategies

Commercial Real Estate Investment Strategies: Do-it-yourself Market Research Pays

One of the strategies commercial real estate investors like to employ is hiring consultants or market research companies to analyse a specific market a commercial real estate investor wants to pursue.

To a beginning investor, the overall strategy seems logical and well-intended.  Who better to know a market than the analysts who spend their days and nights collecting, analysing and reporting on such data?

I’ll tell you:  YOU—the commercial real estate investor.

There is no substitute for doing your own research.  There is no substitute for keeping your own counsel.  There is no substitute for doing your own homework.

Why?

Because it’s YOUR MONEY that will ultimately be spent.  It’s YOUR bank account that will ultimately reflect the success or failure of a commercial real estate endeavour.

Too many well meaning beginning real estate investors think they don’t have what it takes to do the homework required on a market.  Too many well meaning investors yield to their analysis people who supposedly know more about the subject than they do.

This is a costly strategic mistake.

I have nothing against market research people or consultants.  I have no axe to grind with them.  They are extremely competent, thorough people who provide a valuable service.

My issue is with HOW they are used by the commercial real estate investor.

The challenge is when an investor trusts their judgment–more than his or her own.  Many times an investor will be in awe of their command of the information, specifically statistics.

The reason I say this is because I have seen many a real estate investor unwittingly fall victim to this process.  It’s very easy to find yourself yielding to a “professionals” opinion based upon research which you have paid handsomely for.

Don’t.  It is a mistake that will cost you later on.

So what is the proper way to use these market research professionals?  There are three common ways which these professionals are valuable to the commercial real estate investor:

  1. One is as a way to flush out new ideas and do homework and research “heavy lifting” which needs doing that the investor doesn’t have time to accomplish on his or her own.  The investor knows exactly the information he is after.
  1. The second strategy is as a way to confirm the findings which the investor already believes are accurate. In other words, the investor is looking for a second opinion before he commits more resources to the project.
  1. The third strategy is very interesting: Some investor will use professional resources to poke holes in their strategy.  To find the fatal flaw.  To find “the fly in the ointment”.  The investor will never admit this to the professionals, yet he wants to know all the reasons the deal won’t work.

You’ll notice one thing in common with these three strategies:  The investor will always do his own research.  It’s a critical aspect of success—one that should never be delegated.

 

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Looking to invest?

Get Your Free Loan Quote Now!

Are you seeking commercial real estate finance for your new or next investment?

At Sherlock Holmes we are specialist commercial lending advisors and can assist in sourcing flexible loan options tailored to your individual needs. Contact us today for a free quote.

commercial loans australia

Become a Mortgage Broker & Achieve Financial Freedom

The role of a Mortgage Broker, or Finance Broker is one of many careers in the finance industry that are available today, where intelligent, savvy, capable individuals have an opportunity to succeed. If you’re willing to study, work hard, and be a person of integrity, it may be a career that fits you.

In this post I want to highlight 3 benefits that I’ve experienced in my over 10 years in this industry. Others lists may vary, but I think you’ll agree that these 3 are among the top reasons to consider if you want to become a mortgage broker.

ABOVE AVERAGE INCOME POTENTIAL

The average upfront commission a loan officer will make is 0.66% on every home loan they settle. That’s a rate that has been pretty much standardised throughout the industry, however some lenders pay higher, some slightly lower. In addition there are commissions to be earned from other types of finance such as commercial loans, car loans, asset loan etc, However for the purposes of this report we will focus on residential mortgages. Let’s do the math to see what 0.66% means in real dollars:

 $500,000 loan X 0.66% = $3300

That’s $3300 earned on one loan. For many people, that is one month’s income.

Let’s carry it out over a year, and say you settled 3 loans per month (at the above loan amount) for 12 months (which is an extremely low estimate), and you’ve made $118,800 (on the low end) in one year. But like I said, that’s a low estimate. Most mortgage brokers settle anywhere from 4 to 8 loans per month, with some of the “superstars” doing many many more.

But that is not the most unique and financially lucrative aspect to mortgage broking in my opinion.

Most lenders also pay a trailing commission on each loan you settle.  And the average trailing commission across the industry is 0.22%. And this trailing income, naturally, compounds every month that you settle new business. Now if we take that and extrapolate it across the 3 loans per month we have just settled the following magic highlighted in this chart below occurs:

commercial loans australia

What you are looking at here is the compounding trailing income you would be paid every month for the loans you have settled.  That’s passive income, in your bank account for the life of the loan.  Now bear in mind, you are paid this on the balance of the loans, so as they reduce, are paid out and/or refinanced elsewhere, this will cease, however if you are consistently settling new loan business it should account for any run-off.

As mentioned before, this is an extremely conservative example of the potential income that could be generated based on monthly loan settlements totalling $1..5million.  Most brokers would generally settle on the low end a minimum of $2million per month and on the high end $15-$20million per month.  You do the sums!

FLEXIBLE SCHEDULE / LIFESTYLE

I hesitate to list this one because its’ one of those things that “depends.” It depends on you. You can work from an office, you can work from home, you can work from pretty much anywhere.  How hard you work, and subsequently how much money you make, is entirely up to you and how you manage and market your services.

I’ve found the flexibility of having both a satellite office in the Melbourne CBD as well as a home office in regional Victoria affords me the perfect balance for the kind of life that I want to live. I’m able to be at home with my family, but can work at something that is adequate for providing the income we need. Because of technology, I’m able to use the very same tools I’d have were I in the CBD office all the time (which I am not), and do it from the comfort of my home when required.

DOING SOMETHING THAT MATTERS

Most people want to own a home… it’s part of the dream that we have as adults. The Mortgage Broker has the opportunity to help people accomplish that dream by providing them with options that fit their situation. The work I do really matters because it enables people to get into one of the greatest investments of their lifetime, when it’s done wisely and well.

I love knowing that the work I’m doing is truly benefiting people.

How do you know if you want to become a mortgage broker and that the mortgage industry is for you? From my experience I’d suggest you check it out if:

  • Integrity matters to you
  • You want to help people with important matters
  • You are organised and willing to work hard
  • You don’t mind rules and regulations (there are a few of them)
  • You enjoy learning and challenging yourself
  • You are a people person

If you think you have what it takes to become a mortgage broker, contact us today to see how we can assist you in doing so. We currently have 2 vacancies available.

Don’t forget to Like us on Facebook for regular news, updates and offers!

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Low Doc Loans – What Lenders Look For

low doc home loans, low doc loans, low doc loan

Low Doc Loans are an ideal lending solution for people who are self-employed and struggling to secure traditional finance. If you are in the market for a Low Doc Loan, there are several key criteria that lenders look at when assessing your application for approval.

Below is a brief list of these key criteria.

Deposit

As a general rule a minimum 20 per cent deposit is required to secure a low doc loan for residential purposes.  However at Sherlock we have options for low doc loans up to 85% even 90%  – meaning the minimum required would reduce to a 15% or 10% deposit.

Self-employed history

Your ABN is a key component that lenders look at in determining how long you have been in self-employment. Normally a minimum 12-month ABN is required, however the longer you have been self-employed the more agreeable the lender will be.

Assets

If you can show that you hold significant equity in assets that you hold, lenders tend to view your low doc loan application more favourably.

Existing loan repayment history

Lenders will often ask to look at statements on other loan facilities you currently hold to ensure you have a consistent repayment history.

Maximum loan amount/exposure

Low doc home loan lenders will limit the amount of overall lending they will advance to a low doc borrower.  As a general rule this limit is $1 million.  However at Sherlock Holmes we have access to some niche low doc loans that will advance funds in excess of this minimum.

Contact the team at Sherlock Holmes Lending Solutions to find out more about low doc loans and how the options available can be tailored to your needs.

low doc loans

The Low Down on Low Doc Home Loans & Low Doc Loans

Low Doc Loans 101

Low Doc Loans are facilities offered by lenders to specifically meet the requirements and accommodate the needs of self-employed borrowers. Generally Low Doc loans require alternative income verification which includes but is not limited to a self-certification of income by the borrower, an accountants letter, bank/trading statements and/or BAS statements. The requirements vary between lenders and generally combine 2 or more of the above low doc documentation. Often self-employed borrowers do not have current up to date full financials,
and a Low Doc loan provides a great alternative to low doc borrowers enabling them to achieve their lending requirements with minimal fuss.

Low Doc loans can be used to purchase a home for owner occupation, an investment property for residential rent and also purchase commercial property for occupation and/or lease. Similarly, there are many low Doc loan facilities available whereby borrowers can purchase and or refinance motor vehicles, plant & equipment, fund a business for expansion or growth, fund a shop fit out – the list goes on.

In many ways, depending on the overall loan product structure, often a low Doc loans can be comparatively better than a secured secured business loan – most of which are historically secured by a borrowers principal place of residence. The availability of low doc loans in the commercial asset space allows the actual
asset to provide the security for the low doc facility – thus allowing the borrowers to keep their business and personal assets separate. This is a good strategy for both asset protection purposes as well as for taxation purposes.

In many cases, low Doc loans are very similar to a fully verified home loan in respect of the features available to low doc borrowers under these facilities. Self-employed borrowers have in most cases a choice of fixed or variable rate options with low doc loans. It is extremely advisable that if you are considering a low doc loan you seek the advice and assistance of a low doc loan specialist and this is a very niche section of the lending market and one in which low doc specialist brokers are far better placed to assist you adequately with your low doc loan
requirements.

Low doc loans often feature a slightly higher interest rate but as you are not required to furnish the lenders with as much documentation as you would with a fully verified loan, the speed and ease with which these low doc loans can be processed more than compensates for the variance in interest rate. In addition, some low doc facilities are as competitive if not more so than fully verified loan products. Without any doubt, low doc loans provide and invaluable and essential
service for self-employed borrowers.

Apply for a Low Doc Loan todayclear

low doc loans

Some of our Low Doc Loan Features include:

  • Interest Rates as low as 4.75%
  • Loan to Value Ratios (LVR) as high as 90%
  • Unlimited cash out & loans from $100,000 to $2,500,000 (higher for commercial)
  • Flexible equity release options including business purposes and payment of ATO debts
  • Low Doc Construction
  • Credit Impaired Low Doc options
  • Commercial Low Doc options
  • Company & Trust Borrowers
  • Low Doc loans for vacant land
  • Minimum 12 month ABN
  • Fixed & Variable Rate options
  • Settlement usually within 3 weeks
  • Quick decisions, confidential and accurate advice
  • No Lenders Mortgage Insurance

Seven Steps to Eliminate Credit Card Debt

Here are Seven common sense guidelines to eliminate credit card debt:

1) DO make a budget listing all your fixed expenses. Rent or mortgage, car insurance, car payments, mobile phones, utilities, day care, fixed loans, etc. Then try to estimate a reasonable budget for discretionary items like food, entertainment, clothes, etc.

2) DO make a second list of all your outstanding balances and sort by balance, minimum payment, and interest charges if you have multiple credit card debts.

You may think the wisest thing to do is paying off the credit card with the highest interest rate. However, there are 2 preferred methods to follow.

First, you should reduce the number of credit cards. Pay off the smallest balance first with larger payments until the number of credit cards you have in debt is down to one. Your ultimate goal is zero, or when you can pay your monthly balance in full every month.

The other strategy is to pay the balance on any card exceeding 50 percent of your credit limit because balances above this level may affect your credit score.

3) DO use cash or a debit card linked to your bank account. You can’t spend what you don’t have.

4) DO look for extra income. Most likely your rent or mortgage is your biggest expense, so consider a roommate if possible. If you like your occasional privacy, consider an International student for shorter periods of time.

5) DO look for the little things that add up in your expenses. Maybe change your phone plan if you are constantly going over the monthly minutes? How about that $3.50 latte or cappuccino every work day? That’s almost $1,000 a year!

6) DON’T sign up with a new credit card with a 0% Interest Rate for the first 6 months.

You probably receive a lot of junk mail enticing you to sign up with a new credit card with a 0% Interest Rate for the first 6 months before it jumps to 18% or even higher. Then 6 months later you would transfer your huge balance to another piece of plastic. Unfortunately, the biggest risk is they are simply giving you more credit to spend, and the number of cards and liability increases.

Unless you are extremely disciplined, this doesn’t really work as you end up bigger and deeper in the hole! Reducing the number of credit cards is the goal.

7) DO consider refinancing your home (if you have one) and consolidating all your debts into one

Logically, a 4.50-5.50% home loan is a lot less than 18% on a credit card. You can’t spend what you don’t have. You will be asked to have all your cards cut up (except maybe one with a small credit limit) and you have reduced the number of credit cards. You are now paying back that debt at far lower interest rates – often we find that the overall new monthly mortgage payment incorporating the consolidated debts is lower or at least equal to what you were previously paying out across several loans (credit cards included). Plus – the temptation has now been removed as you no longer have the credit cards!

Melanie Burns

Here are Seven common sense guidelines to eliminate credit card debt: 1) DO make a budget listing all your fixed expenses. Rent or mortgage, car insurance, car payments, mobile phones, utilities, day care, fixed loans, etc. Then try to estimate a reasonable budget for discretionary items like food, entertainment, clothes, etc. 2) DO make a…

Sherlock Holmes Lending Solutions

Budget for Settlement Costs – Loan Origination Fees, LMI (Lenders Mortgage Insurance) & Stamp Duty

Once you reach an agreement on the purchase of a home, things start moving quickly. In the chaos, it is important to remember to budget for settlement costs.

Settlement costs are fees associated with miscellaneous events associated with a home purchase, things such as property inspections, stamp duty, conveyancing fees etc. Even if you are purchasing a home for the first time, you are probably aware there are closing costs that have to be paid. Rarely, however, are you aware of just how much and how fast the can accumulate. If you have not budgeted for them, they can put a kink in the settlement or even cause you to lose the home.

A couple of closing costs to keep in mind are origination fees for home loans and lenders mortgage insurance. The mortgage related costs are only a small part of the overall closing costs you can face, but deserve a closer look.

Origination fees for home loans can be a shock to first time buyers. Few realise they are going to have to pay such things. Origination fees are costs charged by a lender for services used to determine if the lender should give you a loan in the first place. For example, a lender will often charge you fees for having a valuation done on the property. Infuriatingly, the lender will also charge you fees for processing the loan and preparing the loan documents. On a $400,000 loan, the origination fees can quickly add up to thousands of dollars.

Lenders mortgage insurance, often called LMI, can also be a nasty little surprise. The magic number when considering LMI is 20 %. If you pay a deposit on the home that is less than this amount, you are almost certainly going to have to pay LMI. LMI is simply insurance that protects the lender should you default on the loan. The cost can add up to hundreds and into the thousands of dollars, so make sure you know what is expected of you.

Stamp Duty is the one, in my experience, that is consistently overlooked.  As a general rule I always tell clients to allow approx. 4% of the purchase price to cover these costs.  It is usually a little less, and varies from state to state – however I find it always better to lean towards the conservative side. Settlement costs are aggravating – budget for them up front, and you will feel less aggravation.

Author: Melanie Burns

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Once you reach an agreement on the purchase of a home, things start moving quickly. In the chaos, it is important to remember to budget for settlement costs. Settlement costs are fees associated with miscellaneous events associated with a home purchase, things such as property inspections, stamp duty, conveyancing fees etc. Even if you are…