bad credit

6 Things Every Credit Card Owner Should Know

6 Credit Card Rules to Always Follow

Credit cards make purchases and paying your bills easier. Using a credit card is also a good way to boost your credit score. However, failing to properly manage your credit cards can lead to a lot of unnecessary expenses.

If you’re tempted to buy things you can’t really afford just because you can charge them on your cards, it will benefit you to leave them at home when you go shopping. When you have an emergency, rely on an emergency fund to avoid charging unplanned expenses on your cards.

Selecting a credit card that’s right for you is also important. This can be difficult, since the cards you qualify for are limited by your credit score. Compare credit card limits, rates, and other fees to figure out which card will work the best for your circumstances.

Follow these tips to avoid spending a lot on fees and interest while boosting your credit score:

 

  1. Pay your bill on time, and pay more than the minimum. Not only will you avoid late fees with this strategy, but you’ll also pay off your balance quicker, thus saving money on interest, too. 
  • For example, if you have a $500 balance on a card with a 15% Interest Rate, you would end up paying $595 over two years if you make the minimum payments of $20/month.
  • However, if you make payments of $50/month instead of the $20 minimum payment, you would end up spending a total of $528 to pay off your balance in a little less than a year.
  • Be consistent with your payments. Missing a payment or paying less than the minimum may negatively impact your credit score resulting in bad credit.
  1. Keep your balance as low as possible. Ideally, your balance should be less than 30% of your available credit limit.
  • Avoid maxing out your credit card or making large purchases unless you plan on making a significantly larger payment to cover these expenses.
  • Consider applying for a credit limit increase if you cannot pay off enough on your card to stay around the 30% mark.
  1. Read the fine print on rewards cards. Credit card providers typically charge higher rates and fees to compensate for the cash back and other rewards. 
  • The best strategy for using a credit card with rewards is to make enough purchases to qualify for the rewards, but then pay off your balance in full every month to avoid paying interest.
  1. Keep it simple. Owning too many credit cards can make managing your accounts difficult. You’ll be more likely to miss a payment.
  1. Be careful with balance transfers. This can sound like a good option if you qualify for a credit card with lower fees and rate. However, some credit card companies will charge you a transfer fee, which is usually a percentage of the debt you are transferring. Paying 3% of the amount you’re transferring to get a slightly lower rate might not save you money.
  1. Avoid cash advances on your credit cards. A cash advance can be a tempting option because this cash is very easy to get, but you’ll have to pay a fee and will have to make larger monthly payments to compensate for this charge. Cash advances often have a higher rate of interest as well.

These tips will help you stay on the right track with your credit cards. Keep in mind that you can easily avoid fees and spend less on interest by being responsible and planning your expenses and payments in advance.

Shop around for a better credit card every two years or so. You will qualify for better products as your credit score improves from following these strategies.

If you are looking to consolidate debt, or discuss any of your finance options, one of our expert lending specialists is here to help you.  Call or email us today!

bad credit, credit score, credit card

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…
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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

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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…

Fine Tune Your Commercial Real Estate Crystal Ball

Don’t you wish you had a crystal ball that showed you what is to come in the future? A simple wave over the crystal ball, the mutter of a magic word, and your entire future is there, revealed in front of you. Now that you know what is to come, you can prepare and move accordingly so you can be ready for what the now identified future holds.

Unfortunately, this crystal ball does not literally exist, but in commercial real estate there are many tools that you can use that act like a crystal ball. They can show you the future in an indirect way so you, too, may pla
n and move accordingly in order to take advantage of the market place.

Fining tuning your commercial real estate crystal ball is really a matter of paying attention, doing some basic research, and being on top and aware of all elements in your comfort zone, or concentrated area of focus and influence. It does take vision and an element of creativity to really fine tune your crystal ball, and, for some, it is the best aspect of commercial real estate! Being able to predict, envision, and then create something that at one time did not even exist, not even in an idea, and then search out the resources to create and put the plan in motion is a commercial real estate insider’s dream.  When done effectively, it can be very satisfying and lucrative!

You should already be doing many things that assist you in predicting and planning for the future, which is extremely important in commercial real estate. If you can see an opportunity coming before it actually presents itself, then you are able to prepare for that opportunity before anyone else, and reap the benefits. These things may include driving the streets of your community to see what land and buildings are for sale, what centres are vacant for leasing, attending planning and zoning meetings, reading the local newspaper for economic and real estate changes or trends, as well as researching other cities and how their market may affect yours in any way, shape or form.

As a real estate insider, it is pertinent that you are up to par, and even an expert in your comfort zone. These things listed above are how you are constantly informed and a step ahead of other real estate people, as well as your own market.

Besides doing these things religiously, and always analysing the data that you collect, there are a few other specific tools that will allow you to see into your commercial real estate future and identify opportunities that others will miss.

The first is a city’s or town’s future land use plan or map that shows the future zoning and use for all the land within a city or town’s limits. Some cities may not have one if they are too small and not looking for growth. However, most cities do have master use plans that are used to dictate the entire future of a city’s economic make-up.  The reports that go along with these offer a wealth of demographic information as well which provides great insight into the future development of an area.  For example, here is the link to the Melbourne Growth Plan documents http://www.planmelbourne.vic.gov.au/Plan-Melbourne . In addition, check out the actual planning websites for your specific state, city or region. Here is Victoria’s http://planningschemes.dpcd.vic.gov.au .

These maps and report are used to plan for growth so that all elements of a city or town are controlled. Zoning and use may change for operating properties; others may remain the same. There is the possibility of raw land to be annexed into the city, having a specific use, offering huge opportunities to the commercial real estate investor. There may be a need to tear down or renovate old properties, and develop them for a different use.

The possibilities of what a future land use map holds is gold in the eyes of an investor, and extremely important to all those working in commercial real estate. Refer to this map, and actually visit the locations of where there is change to identify opportunities. As every area is different, you will be amazed as to what opportunities will unveil themselves when you bring to it a little vision, creativity, and insider information regarding the zoning and use of a property.

Another tool to see into the future is the economic forecast for your area. By looking at both the past and future per capita income, population growth rates, housing costs and other such data that can be found via the Bureau of Statistics, you can see the overall economic environment of your city or town and how it is performing.

Perhaps a continuing decrease in population means people are moving out of the area, telling you not to invest in new home or unit development in that area. Or, the growth has been so extreme that the area is in desperate need of commercial property in order to support the influx of people. You can definitely plan on how you are going to move in the market with this information by your side.

The final tool I urge you to utilise when predicting your commercial real estate future is already approved infrastructural changes within your city. This will require you to attend city and town meetings regarding zoning, planning, development, etc. There could be discussion of a new development a year or more before it actually occurs, and once you hear about it, you can start putting your own ideas into place.

As I am sure you already know, large, influential, infrastructural changes can greatly increase the land values of properties that surround them. For example, a large shopping centre being developed will increase the value of all the land surrounding it, as well as possibly call for a greater demand of residential units, and an increase in the rental prices that can be charged according to the new market.

Let’s say that you hear two years in advance about a shopping centre that will begin development after it is approved. You are then going to get a jump on all competition, look at the site, the land surrounding it, and the opportunities it may offer. Can you purchase the now extremely cheap land adjacent to this site, or perhaps the poor performing units nearby in anticipation of this new development so that you may benefit from the price increase this major infrastructural change is going to cause?

Absolutely!

These things happen all the time, and I urge you to be a visionary and look to the future. After all, this is where a majority of commercial real estate profits are made- by creating something that either wasn’t there, or improving upon what is there.

As you can see, you may not have a crystal ball that does all the work for you, but I promise that if you use these tools and follow these guidelines, you will be preparing yourself for great opportunities that others, quite simply, will overlook. It will take some effort and constant dedication. However, the results that you yield will be worth it. Actually, it is much easier to be the first mover, rather than suffering the increased land prices and changes after a development is already in place or even underway.

Realise your power to predict the future and plan your goals accordingly! You will be successful with these tools, so implement them today.

Author: Melanie Burns

To discuss this article or anything else to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

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Don’t you wish you had a crystal ball that showed you what is to come in the future? A simple wave over the crystal ball, the mutter of a magic word, and your entire future is there, revealed in front of you. Now that you know what is to come, you can prepare and move…

Commercial Real Estate Misconceptions: You Mean Location, Location, Location Was a Lie?

Commercial real estate is a wonderful, exciting business that can offer a wealth of opportunity for those who look for it! Many people are often hesitant to enter the market of commercial real estate for many different reasons. In fact, there are some major misconceptions about commercial real estate which I am going to address here.Many people who hear about commercial real estate, but aren’t necessarily in the business, often use the expression “location, location, location!” Many people associate this expression as the truth, that the three most important attributes about a property are “location, location, location!”

I am here to tell you – this is absolutely not the case! Now, I am not going to say location is not important, but what if you have a beautiful location for a Bushland retreat, complete with hills, a perfect location for a hotel, and beautiful mountain views? What you want to do to the property is improve it as a weekend getaway for romantic couples with a beautiful hotel, resort, luxury type housing, and perhaps some individual cottages overlooking the bushland. Sounds great, right?

The perfect location- you can’t beat it! But, you learn that the zoning for this property is residential. The use is only one single family residence per acre, and no commercial property allowed. What happened to your “location, location, location?” It flew out the window!

The most important aspect of a property is the use. What is it intended for by designation of the council? It does not matter where the property is, if you cannot get the zoning that is in the realm of your intended use.

It is possible to get properties rezoned, especially as cities and towns change and grow. Be sure to consult with the council to determine if these changes are even possible, because you do not want to buy a property that you cannot rezone, and be left with an unprofitable property on your hands.

Most people believe that commercial real estate is complicated and you need a special education or know how to succeed in the business. Many think that commercial real estate is filled with international finance, heavy and complicated math, complicated tax rules, and forms and applications that are just too complicated to understand correctly.

I am happy to tell you this misconception is the worst, because it puts a road block in front of many people’s aspirations to become a commercial real estate insider. Let me put this misconception to rest. There is math involved, and most of it is not at all complicated: simple ratios, adding, subtracting and multiplying. What is even better is you don’t have to do the math. There are others who can do that for you. The same is true with property management, inspecting the property, and doing the end of year taxes. In fact, commercial real estate is less complicated than residential real estate because you can focus your energies on a single deal that will be worth perhaps 10, 20, even 50 residential deals!

Let me put it into perspective for you. If you owned a business (many of you may), would you create strategies, keep the books, manage the many locations, sell on the front floor, and take out the trash after the day was over? I think not! Commercial real estate is made up of many people whom are there to help you with whatever you need. You must position yourself as a real estate insider, which is a leader in the business.

Another misconception is commercial real estate is management intensive, that you must manage every property you own. Let me tell you when you end up owning 10 or more properties, this is almost impossible to do! You do not have to actually manage your properties yourself, so you can concentrate on creating more deals. Hire a company or agent or set a team in place to take care of this “day-to-day” business.

As you can see, what is passed around in dialogue about commercial real estate is not always true. Before you take everything to heart, be sure to get your facts straight. In fact, many people in this profession speak about commercial real estate as a business in which only the savvy and sophisticated can succeed. They often act this way because they want to keep people out of the market by differentiating themselves. If you were in this position, you would too!

Author: Melanie Burns

To discuss this article or anything else to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

 

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Commercial real estate is a wonderful, exciting business that can offer a wealth of opportunity for those who look for it! Many people are often hesitant to enter the market of commercial real estate for many different reasons. In fact, there are some major misconceptions about commercial real estate which I am going to address here.Many…

Demystifying mortgages – 12 myths about lending every first home buyer should know.

Myth #1
You need at least 20% deposit to get a mortgage         
In today’s market that is not necessarily true.  While it is correct that having a deposit is the ideal situation, if you are currently renting and just cannot save enough for a deposit there are many lenders that offer low deposit home loans.  Borrowers can often borrow up to 95% of the purchase price which is a tempting offer for any first time home buyer wishing to get into the property market. A low deposit home loan may often attract higher interest rates or more stringent policy restrictions but if you are confident you can afford the repayments then you can achieve the dream of owning your first home with a minimal deposit.

Myth #2
Fixing your rate is safer than a variable rate
When interest rates are high, many are tempted to fix their rate to protect against further hikes.  All is well with the world and as a borrower, you feel incredibly happy that you are not affected by the next huge rate increase.  The problem here is that if rates fall, you end up paying a higher interest rate compared to the variable rate.  Fixed rate home loans do offer some security in an uncertain market, and also allow borrowers to know exactly what their mortgage repayments will be for the next one, three or seven years. Everyone is different and has varying financial requirements so talking through your options with a mortgage broker is recommended.

Myth #3
A bad credit history means you won’t get a home loan
Let’s get one thing clear.  A bad credit history is not good.  Any missed or default payments on credit cards or mobile phones are recorded.  Even if the amount was small or years ago, it affects your credit rating.  However, not all is lost.  Lenders will consult your credit history and feed this into their own credit scoring system.  If it turns out there are issues, the lender may take a closer look and may still approve a home loan if you meet the requirements.  Similarly, non-conforming lenders provide an alternative option for borrowers who have been refused finance by traditional lenders.  Non conforming lenders are an ever expanding avenue and offer in many cases quite competitive products providing opportunities which were once deemed impossible.

Myth #4
I can still get a home loan even though no income, because I have several assets
Yes, you may have a collection of stamps from the 1920’s to be proud of, but it’s not going to convince a bank to lend you $400,000.  Assets aren’t the same as income, and it’s your regular income that lenders get excited about.  Lenders will only lend as much as people can afford to repay, and a first time home loan is a big commitment. The amount of income earning capacity you have will ultimately determine how much you are able to borrow.

Myth #5
Get the lowest rate possible
Be cautious with low interest rates.  A cheap rate is attractive, especially to first home buyers, but take note because these low rates often come with less features on the home loan, reduced flexibility and higher fees. They may only be an introductory rate and once that honeymoon period is over you could find yourself paying a much higher rate.  Often a loan with a slightly higher rate but more features will save you money over the life of the loan.

Myth #6
Credit cards are okay if I pay them off.
When it comes to credit cards it’s not all about the balance on your card, or cards, it’s the total available credit that counts. Having a large range of credit does not necessarily equate to a good credit history.  Often it’s the credit card limit, not the balance that counts.  So even if you pay off all your credit card debts, if you still have a high limit this can affect your servicing and chances of approval.

Myth #7
I can roll my personal debts into my mortgage
So you have a car loan and credit card debts, and you want to roll all of these into your home loan?  Makes sense, as the interest rate on your mortgage will be lower than your current rate.  But, first home buyers are not usually able to just throw all their debts together like this.  Usually you have to build up equity in the property and then use this equity to service the additional debt.

Myth #8
A low-deposit home loan means you don’t need any savings.
This one is most certainly not true.  First home buyers get excited and tend to think that a 95% per cent loan means that they do not have to pay much money upfront.  But, a 95 per cent home loan only covers most of the cost of the property, and not all the purchase costs such as stamp duty, legal fees, property inspection fees and lenders mortgage insurance (LMI).  You will still need some savings to cover these costs as well as the 5% deposit.

Myth #9
Start by paying just the minimum amount
Many first home owners pay only the minimum monthly repayment, as they adjust to the new financial commitment.  However, at the start of the loan you are really only paying interest so by paying more than the minimum, you quickly reduce the amount of interest and principle on the loan.  As interest is calculated daily, repaying twice a month instead of once per month can also save you thousands in interest.

Myth #10
Mortgage insurance protects the borrower
Lenders Mortgage Insurance (LMI) protects the lender, not the borrower.  Borrowers who can put down a 20% deposit should not need to pay LMI but borrowers with any less than this will pay LMI to the lender.  The less deposit you have, the higher the premium.

Myth #11
Offset accounts save you money
Home loan offset accounts are a great idea, but only for those borrowers who are responsible with their money and have a regular income. If you have a shoe addiction or tend to buy all your mates extra rounds at the pub, you may want to think twice about offset accounts.  Your income goes straight into your home loan account, pays your mortgage repayment and then you can use the extra funds for other expenses.  However, if you have bad spending habits you could end up spending more.  Be careful not to end up in negative equity because you didn’t monitor your spending.

Myth #12
Refinancing saves you money
Perhaps you have just bought your first home, and you are enjoying all the benefits of your own home.  Your first time mortgage is going well, but perhaps you fixed your rate six months ago and now rates are coming down, or maybe you want to switch to a different lender.  Refinancing sometimes costs money. In the way of exit fees for existing home loans, and settlement fees for the new loan.  However, the market is quite competitive currently and some lenders are giving all the power to the home owner.  Shopping around and refinancing your home loan can save you thousands over the life of you loan, but can also end up costing you more, so talk your possible choices through with a mortgage broker before making your decision.

Author: Melanie Burns

To discuss this article or anything to do with your finances, please call our office today on 0434 087 735 or email us and we will be happy to assist you.

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Myth #1 You need at least 20% deposit to get a mortgage          In today’s market that is not necessarily true.  While it is correct that having a deposit is the ideal situation, if you are currently renting and just cannot save enough for a deposit there are many lenders that offer low deposit home loans. …

Unleash your Equity!

Unless you’re thinking of selling your home, chances are, you don’t know what it’s worth any more.

If you purchased your home a while ago, you’ve probably built up some equity – either by repaying some of your loan, an increase in the value of your property, or a combination of both.

You may be able to use this increased level of equity for a variety of purposes. In today’s market, many home owners are using the equity in their homes to either renovate or fund the deposit on an investment property.

The good thing about equity is you aren’t limited to using it in the property market. If you always wanted a boat or a pool, you need a new car, or maybe you’d just like to take a holiday, you can use the equity in your home.

A loan that helps you tap into your equity can make a big difference to your future plans. To discuss your equity options, or the loan that is in your best interest, contact me today by phone 0434 087 735 or email melanie@sherlockloans.com.au

We can even provide you with a comprehensive property report to give you a better understanding as to the current value of your home or investment property – to request a report for a low fee of $60 click here enquiry@sherlockloans.com.au

Self-Employed Borrowers

As a business owner, do you often find it difficult securing a home loan just to buy a home, let alone for investment purposes?

Good news! Home loans needn’t be hard work just because you’re self-employed, even if you are unable to provide the financial documentation required to support a traditional loan application.

At Sherlock Holmes Lending Solutions we have access to a range of lenders and home loans, including special products which may make the loan process much easier for you.

And we’re not just talking about home loans. We can help you with:

  • Investment loans
  • Car Loans
  • Asset Finance
  • Commercial Loans
  • Refinancing
  • Debt consolidation

To discuss your home and investment finance options, or to find the home loan that is in your best interest, contact me today on melanie@sherlockloans.com.au

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Unless you’re thinking of selling your home, chances are, you don’t know what it’s worth any more. If you purchased your home a while ago, you’ve probably built up some equity – either by repaying some of your loan, an increase in the value of your property, or a combination of both. You may be…