Its all about the Coffee!
Thursday, November 30, 2006
One of the wonders of the Sutherland Shire is without a doubt the 'Grind Experience'
Richard Calabro founded the hole in the wall under Rydges hotel 5 years ago in January 2002 where he started the smallest business in the world. Not only was it an impossible 12 square meter shop, it was only opened on the weekends , but Richard knew, that with his skilled techniques and personality, eventually word would spread about the coffee at GRIND. And that’s what happened. In a short time people were coming from all over the Sutherland shire to have one of Richard’s coffees on the weekend.
Richard always thought differently to all the other café operators where everyone else is serving bacon and eggs and burgers, he kept to his Italian roots by strictly serving Italian style coffee and complimenting this with a beautiful biscotti or a cake slice. He has kept this his business model up to this day. ‘The only thing we have added on is take-home packs of coffee either whole or ground. The secret to my business is to keep it as simple as possible. Don’t worry about what everyone else is doing and do the best you can with what you’ve got’
Richard’s plan was to not only create a good espresso bar, but to also create a venue for the people. You will see all walks of life go into the shop. From Uni students, Bohos, business men, coffee freaks to ma and pa kettle!
Now 5 years has passed and Richard and his wife Greer are now taking the plunge into a new venture. They have decided to open a new venue where the shop can be opened Monday to Friday for all their loyal customers who come down every weekend and sip and enjoy a Grind brew. They will still have their original Grind opened on Public holidays and the new venue will be opened during the weekdays. After all ‘I’d rather be at GRIND’…
posted by Daniel Serratore @ 9:45 pm,
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Need a Loan...What comes first?
Monday, November 27, 2006
The first thing you need is the right help!
- You can take advantage of a sort-term special from a certain lender. E.g. St George offers a $0 application fee from time to time, and at the time of writing, Adelaide Bank has a six week special on their 3 year Fixed rate.
- Some lenders will lend you more than others. With one scenario we had recently, one major lender would lend $30 000 more than another major lender (both were banks!)
- Certain lenders offer special discounts and offers to certain groups of people. E.g. One major lender will waive mortgage duty for medical staff who have graduated within the past two years, another will give discounts on interest rates for AMEX customers etc.
- If you have a sizable deal, a Broker is in a good position to negotiate your deal with several lenders, to bring down the rate and/or fees
- They will help you work out the best lending structure for your situation by first determining your present and future objectives
- They will support you through the loan process. This includes filling out and submitting the application
- They will be able to supply you with resources to make your borrowing/buying experience easier
- A good broker will be there to answer any questions as long as you have the loan.
- Ask for referrals from your friends and family. This is generally the best way as someone you trust has already experienced the service.
- Ensure the broker is a member of the MIAA (Mortgage Industry Association of Australia)
- Ask the broker what lending institutions he/she represents. Ensure they cover a good selection of the major banks.
- A good broker will never push you into using a particular lender or to fill out an application. They will provide you with all the information you need so you can make an informed choice.
posted by Daniel Serratore @ 9:58 am,
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When a Credit default isn’t that Bad
Saturday, November 25, 2006
I was alerted to an alarming statistic recently, that one in three people have a default on their credit file. This can be a concern for borrowers as the credit file is something any prospective lender will look at before giving them the thumbs up.
The good news is that it's getting easier to get a loan, even with an impairment.
What is a credit default?
If you have not paid a bill or debt in the past, or let it lapse for a long period of time before it was paid, there's a good chance the company who you owed the money to placed a default note on your credit file.
If you have applied for credit during the past seven years (credit card, home loan, store card etc), there is a very good chance you have a credit file.
How do you Check your Credit File?
Call Baycorp on 1300 305 087 and order one. There are a few options, either a free copy which you will receive in 21 days or you can pay for a copy which will be received within a few working days. Baycorp also have a subscription option, where they send you an email every time your credit file receives an enquiry.
Different Levels of Defaults
From a lenders perspective, the seriousness of a default on your credit report depends on:
1. The amount the debt was for
2. What the debt was for (many banks are now ignoring paid Telco defaults)
3. Whether the debt has been paid for
4. How long it took to pay the debt back
5. The explanation for the debt
6. Your conduct since the default
The Good News
There are many lenders that specialise in lending to the credit impaired, these are generally called ‘Non-Conforming’ lenders.
They will look at your situation, and if your fall within their guidelines, price a loan according to the level of risk they determine the deal is.
Non Conforming Loan advantages
Will accept certain levels of credit default
Obtaining the loan will help you repair your credit history (if the repayments are made on time)
They will often enable you to buy the property when the banks say no.
Non Conforming Loan disadvantages
They are often priced 1-4% over standard rates, depending on level of impairment
The entry and exit fees can be harsh
So if the banks say "no", dont despair! There may still be hope through a 'Non Conforming' lender.
posted by Daniel Serratore @ 4:46 pm,
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Low Doc and No Doc Loans
Friday, November 24, 2006
They are products targeted at the self employed who:
Have been trading under two years, and don’t have the financials required to support a ‘full documentation’ loan
Have been trading longer than two years but don’t have, or don't wish to supply the financials to support their income
ABN’s are generally required to qualify for Low & No doc loan
Low Doc
Process: Low doc borrowers fill out a normal home loan application, including their income. The only difference is that they do not need to supply documents that verify the income, rather they sign a form to say they can meet the proposed repayments
Deposit Required: Most lenders require an 20% deposit, although some major lenders are now accepting a 15% deposit.
Interest Rates: Some lenders are much better than others. They have certainly come back a long way from a few years ago. There are lenders that offer a 0.7% discount off the Standard Variable Rate, potentially even more for a large deal.
Mortgage Insurance: Given the added risk of Low doc loans, some lenders will charge the customer mortgage insurance for loans over 60% of the value of the property (up to a maximum 80%). There are some lenders that will not charge between 60-80% however their rates are generally a little higher.
There are some non-conforming lenders that will lend up to 95% low-doc, however the rates and fees reflect the higher risk to the lenders.
No Doc
Process: No Doc loans are again a normal application, however the borrowers are not required to include their income, or of course, provide proof of income.
Deposit Required: Most lenders require a minimum 30% deposit
Interest Rates: There are a few leaders in this market. The better rates are approximately 0.5% discount on the Standard Variable Rate.
Mortgage Insurance: No mortgage insurance is generally charged, loans are a maximum of 70% of the value of the property.
Low and No doc loans, although not quite as competitive as a standard ‘Full doc’ product, have come a long way of late and are now a serious option for many buyers – particularly those who struggle supplying proof of income!
posted by Daniel Serratore @ 9:01 am,
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Explaining the Jargen...
Thursday, November 23, 2006
This is to cover administration and preparation of the loan, and often valuation. Fees generally range from $0 up to over $700. Some loans are application fee free.
Fixed rate loans have a interest rate that is locked in for fixed period of generally 1-10 years. Regardless of whether the variable rates go up or down, your rate will not during the fixed period.
Fixed loans restrict your ability to pay extra onto the loan. Some lenders allow up to an extra $20 000 per year. If you refinance or sell the property during the fixed rate period, the break fees can be fairly harsh.
Repayments where only interest charges are made. Interest only periods generally range from 1 to 10 years, then the loan is converted to principle and interest.
Lenders Mortgage Insurance (LMI):
LMI protects the banks in the instance that the borrower defaults and the property is sold for less then the remaining debt. It is normally only paid by the customer when the loan is over 80% loan to value ratio
A Line of Credit works similar to a credit card. An amount is approved that is secured by a property. This amount can then be drawn down by the customer as they please.
Some lenders allow the repayments to add onto the loan (capitalise), while some require a minimum repayment. There is generally no ‘term’ with a line of credit, the bank will review it from time to time.
This feature gives you the ability to access the money that you have paid over and beyond the minimum repayments. The money is transferred back into your bank account – normally via internet banking. Depending of the lender, redraw:
- Can cost between $0 to $50 per transaction
- May be restricted to a minimum amount that you can redraw. E.g. Min $1000
- Can be immediate or take up to one week
LVR is the amount your are borrowing, compared with the price of the property, represented as a percentage.
LVR is worked our by dividing the purchase price by the loan amount
E.g. Purchase price = $400 000
Loan amount = $320 000
LVR = 80%
Mortgage Duty is the fee paid to the Government for the registration of the mortgage
An offset account is a bank account that is linked to your home loan.
Each dollar that is in your bank account is offsetting against the amount in your home loan. Interest is calculated daily, therefore each day you have money in your offset account, it is reducing the home loan balance…and also interest.
E.g.
Loan: $200 000
Offset account balance: $5000
Interest charged on only $195 000
Repayments where both the principle loan amount and interest charges are made.
This is the period that starts once the contracts have been exchanged. It is generally a six week period, although is negotiable between vendor and purchaser.
On settlement day the title of the property is moved over into the buyers name and the keys are made available for the purchaser
Stamp Duty is the fee paid to the Government for the transfer of the title of the property from one name to another
The standard variable rate is just that – a variable rate before any discounts are applied.
Most lenders charge an exit fee if a loan is repaid within four years. The amount is usually a sliding scale which reduces as time goes on.
Any change that has been made to your home loan contract.
posted by Daniel Serratore @ 6:43 pm,
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Make the Most of Your Offset Account
How to make the most of your Offset Account.
What is an offset account?
An offset account is a bank account that is linked to your home loan.
Each dollar that is in your bank account is offsetting against the amount in your home loan. Interest is calculated daily (according to the loan balance), therefore each day you have money in your offset account, it is reducing the home loan balance…and also interest.
Eg. Home Loan = $300 000
Bank Account = $10 000
$300 000 minus $10 000 = $290 000
Therefore Interest is charged on $290 000 today.
Making the most of it
Most Home Loan packages with offset accounts include a credit card with no annual fee.
If you are diligent with credit card repayments, the credit card can enable you to retain more money in your offset account...hence reducing the interest charged to your home loan.
1. Use the credit card for the usual expenses
2. Keep your income in the offset account to reduce interest on your home loan
3. When the interest free period on the credit card is coming up, repay it using the money in your offset account. This can be done automatically and is referred to as a 'credit card sweep'.
Please note: This strategy requires budgeting to ensure expenses on the credit card remain less than the balance in your offset account.
How much are you saving?
This is the calculation to find out how much you are saving:
> Balance in offset account multiplied by current interest rate.
E.g. $5000 x 7% = $350 Saving per year (if $5000 was in the offset account every day)
Are you saving anything?
posted by Daniel Serratore @ 5:58 pm,
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Ask the Guru!
Wednesday, November 22, 2006
Feel free to ask us any questions about to your loan, your property, your finances or anything else related. If we can't answer it, we have access to professionals who can!
Click Here to ask a question
posted by Daniel Serratore @ 11:00 pm,
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Car Loans - Your Options
Personal Car Loan
For those who don't have their own business and don't receive a car allowance.
Ø 1 – 7 year term available
Ø Deposit is sometimes needed, but not generally
Ø The financer owns the goods until you make the final
Hire Purchase
Ø A hire purchase is generally a 1 – 5 year term.
Ø You can have a balloon payment remaining at the end, generally up to 40%, depending on the deal. This means that you don’t have to make repayments on the balloon amount, and the at the end of the term you can either pay the balloon out or refinance it.
Ø Deposit are not generally needed
Ø If you are a business, the interest component can be tax deductible, as is depreciation if used 100% for business purposes
Ø The financer owns the goods until you pay the last repayment.
Chattel Mortgage
Very similar to a Hire Purchase, a Chattel mortgage gives you the ability to claim the GST upfront
Ø With a Chattel Mortgage, a business can claim the GST component in the first BAS after purchase. This means you will get 10% of the purchase price refunded with your next BAS after the purchase.
Ø The goods are not shown of the company balance sheet, as an asset or liability as with Hire Purchase.
Ø You own the goods from purchase, however the finance company has a mortgage over it until you make the last repayment
Finance Lease
With a Finance Lease, the finance company buys the goods on your behalf and you make repayments over a 1-5 year term.
Ø There must be a balloon payment due at the end of the term – it is usually the agreed value of the equipment at that time.
Ø At the end of the term the finance company will sell off the goods and you need to pay any shortfall if they sell for less than the agreed balloon. You can make a reasonable offer to purchase the goods
Ø The rental repayments are tax deductible if used 100% for business purposes
Ø The goods are owned by finance company.
Novated Lease
A novated lease is for individuals that receive a car allowance from their employment. Repayments are over a 1-5 year term.
Ø The loan agreement is between the employee and the finance company, and the repayments are made from the employees salary package. If the employee changes employers, the lease remains in the employees name
Ø There must be a 25% – 65% balloon remaining at the end of the term. This can be paid out or refinanced
Ø No deposit required – must be 100% financed.
Ø If the goods are used for business purposes only, the repayments are 100% tax deductible.
Ø The goods are owned by the finance company until the final repayment is made.
posted by Daniel Serratore @ 10:07 pm,
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Doctor, Physios, Dentists, Vets...
Saturday, November 04, 2006
Twelve months ago I stumbled upon a unique loan product in the marketplace that seems to still be under wraps.
For medical staff that have started full-time employment and are a first home buyer, there is a lender that is willing to waive mortgage insurance up to 95%!
Who is eligible? Doctors, Dentists, Veterinarians, Chiropractors, Optomotrists, Surgeons, Medical Specialists, Physiotherapists, Osteopaths, Radiologists, Psychiatrists
What does this mean?People who qualify can buy a property with only 5% deposit - without having to pay any Mortgage Insurance!
On a $400 000 property this equates to a saving of $8667
If you need more info on this product please email us using the link on the main page
posted by Daniel Serratore @ 4:18 pm,
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Important questions when deciding on a loan
To ensure you choose a loan that will serve you well in the future, here are a few questions to ask yourself and discuss with your lending professional
1. Is there any chance that I will be paying off this loan within the first four years?
In other words…are you going to repay or refinance the debt? Regardless of what type of loan you are looking at, most lenders these days are charging 'exit fees', also known as 'deferred establishment fees' or DEF. The fee can range from a fixed price within a certain timeframe, to diminishing fees over time ($1500 in the first year, $1200 in second year, $1000 in third year) or even a percentage of the loan amount, which is common for the non-bank lenders. A percentage can often be the harshest fee. E.g. $300 000 loan x 1% exit fee = $3000. It is obviously best to get a loan without an exit fee. There are not many around – but there is still a few very strong products without exit fees. If you are absolutely certain that you will not be selling or refinancing within the next 4 years then an exit fee is not much of a concern – but are you certain?
2. Will I be able to make extra repayments?
Extra repayments can greatly reduce interest on your home loan, and therefore help you pay your debt off faster. An extra $20 per week on a $350 000 loan will save you 3.5 years! If you think you will be able to manage extra repayments, it is important that you find a loan that allows unlimited extra repayments. If you are looking at a fixed rate loan, try and work out how much extra you will be paying every year. Some fixed rate loans don’t allow any extra repayments, while some allow up to $15 000 per annum.
3. Fixed or Variable?
It's difficult to say what the rates are going to do in the future, but here are some pros and con’s of each.
Fixed – Pro’s:
- Repayment will not move during the loan rate (great for those who would struggle with repayments in the event of a rate rise)
- Interest saving if the rates go up
Fixed – Con’s:
- Limited to the extra you can pay into your loan each year
- ‘Break Fee’ to get out of a fixed rate loan can be quite high (this includes if you want to refinance or get a loan increase)
- May miss out on lower rates if they drop
The most important thing to consider when looking at fixing, it how long you plan to keep the property for and whether it’s likely that you will need to borrow against the property in the near future. If you feel that you will need to alter the loan at all within the fixed term, you should either consider a reduced fixed term, or reconsider fixed rates at all!
4. Future Intentions:
Are you planning on investing (property, shares etc) over the next three years?
If so it’s important that you are set up with a lending facility that will fit in with your investment needs in the future.
We recommend that you discuss your thoughts on the above questions with your finance broker.
posted by Daniel Serratore @ 4:17 pm,
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How to Really Pay Your Loans Off Faster!
You may have noticed advertised, various elaborate ways to pay off your mortgage.
Allow me to clear something up….
The most effective way to pay your home loan off FASTER is by paying over and
beyond your minimum repayments – that’s it! By paying as little as an extra $20
per week on a $300 000 loan, you will cut 3.5 years off the term. Half your monthly
repayment and pay fortnightly and you’ll save another 6.3 years.
Borrowers need to be particularly diligent when looking at setting up facilities such
as an Offset Account.An Offset is like a normal bank account that is linked with your
Home Loan. The money that sits in the Offset Account is essentially offsetting against
the balance of your home loan.
Eg: Home Loan balance: $300 000
Offset Acount balance: $5000
You pay interest on: $295 000 (interest is calculated daily and charged monthly)
To maintain an offset account you will spend between $180 and $380 per year – most
are over $300. So for it to be saving you money you want to be keeping a minimum of
$5000 per year in the account at all times ($5000 x 7% saving = $350 saving per year)
If you don’t have that kind of money sitting around, or cannot control the temptation
to spend it, there is a great alternative…. a Basic Loan.
A good basic product will have a low ongoing rate, no application or exit fees, no ongoing
fees and no redraw fees. This means you can pay any extra money you have into the
loan, and then redraw it if you need it….but only if you really need it!!Put the $300 that
an offset account would cost you into your loan and it will cut 1.2 years off your loan
straight up!
posted by Daniel Serratore @ 4:10 pm,
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The Author
Daniel Serratore
Daniel is heading up the new generation of Finance Brokers in Sydney. With his fresh approach and "can do" attitude, Daniel has developed relationships with key people within the Sydney lending market which enables him to source great deals for his clients. Daniel is big on customer service and has built his business purely by referrals from clients and other businesses. You can catch him via the email link on the top of this page
About This Blog
This blog was developed as a resource for our clients and the general public. Although the internet will provide you with many lending providers, I am still to find a resource that shares ideas, tips and general useful info to assist borrowers make the right decisions. Hence this blog was born!
Contact Us
We have included a "Ask the Guru" link in the sidebar. If you have any lending question, regardless of how silly it may seem - send it to us and we will provide you with answers! Likewise, If you have any feedback on the blog, please let us know via the 'Contact Us' link on the bottom of this page.
