Wealth Alliance Pty Ltd in Melbourne, Victoria, Australia | Mortgage brokers

Wealth Alliance Pty Ltd

Locality: Melbourne, Victoria, Australia

Phone: +61 450 848 995

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23.01.2022 RBA’s August 2016 Interest Rate Cut On 2 August 2016, the Reserve Bank of Australia (RBA) has decided to cut the official cash rate by 25 basis points to an unprecedented 1.5 per cent. RBA noted that the global economy continues to grow at a slower pace than average. Although the Australian economy is continuing to growth at a moderate pace, the Board of RBA feels that monetary easing is needed to boost the prospect for sustainable economic growth with inflation returning to... target over time. RBA also notes that supervisory measures have strengthened lending standards in the housing market. Recent data shows that dwelling prices have been rising only moderately over the course of this year which suggests that the risk of lower interest rate to the housing market has diminished. The decision by RBA to cut the cash rate to boost economic growth prospect has been undermined by the reluctance of the major lenders to pass the full rate cut to their customers. CBA has announced that it is only passing 13 basis points of interest rate cut to their customers, ANZ is passing 12 basis points of interest rate cut while Westpac and NAB will pass on 14 basis points and 10 basis points respectively. Since the global financial crisis in 2008, the RBA has cut the official cash rates 18 times. With the official cash rate now at record low and limited room for further rate cut, the big question is how far will monetary easing do the heavy lifting to boost the economy growth as it is undermined by the reluctance of our policy maker to introduce unpopular but necessary fiscal policy and by the lenders to pass on full rate cut. www.wealthalliance.com.au

22.01.2022 CBA Interest Rate Announcement Commonwealth Bank of Australia (CBA) has today announced an increase in its variable home loan rates by 0.15%. CBAs announcement shadows the recent announcement by Westpac on 14 October 2015 where it increased its variable home loan and residential investment loan rates by 0.20%. These changes will take effect from 20 November 2015. Both banks attributed the rate increase to the new regulatory requirements introduced by APRA in July 2015. This... move by the 2 major Australia banks will likely further slow the rapid growth on housing prices especially in Sydney and Melbourne. It is expected that these moves will soon be followed by other lenders. The Reserve Bank of Australia has now more pressure to cut the cash rate further during its November meeting. In addition to this, there could be more pain on the way for home loan customers. Many lenders have tightened their lending policies. CBA, Macquarie and ING Direct are some of the lenders that have updated their servicing calculators recently. These latest changes have significant adverse impact on the maximum borrowing capacity of loan applicants. In some cases, we have seen a reduction in borrowing capacity in excess of $70,000 compared to the same calculation one month ago. If you are planning to purchase a property and need to secure a loan. We strongly recommend that you seek appropriate advice on your current maximum borrowing capacity. www.wealthalliance.com.au

21.01.2022 Credit File A lot of Australian consumers know very little on how the credit reporting works. Given the importance of credit file on loan application, it is important to know what goes into your credit file and how it affects your credit assessment. Your credit file demonstrates how well you have conducted your previous and current credit obligations. Your credit file includes: Consumer credit section that contains any loan enquiries made in the past 5 years, details of any... debts including serious credit infringements and debts that are overdue by 60 days or more, credit account information (the account open and closure date), credit limit, and monthly repayment history. Commercial credit section that contains any loan enquiries made relating to commercial credit, any credit overdue, enquiries made by third parties, and notes regarding matters under investigation or previous investigation. Public record information that contains information with regards to bankruptcy, any court judgement, insolvency, debt agreement etc. Your credit file may be updated on a monthly basis. Credit repayment history will be maintained for 2 years while credit enquiry, overdue account listed as a payment default and clear-outs, court judgement, writs and summons will be maintained for 5 years. Credit infringements and overdue accounts listed as a serious credit issue will stay for 7 years. The following situations may negatively affect your credit file: Overdue debt. This includes overdue payments on your credit cards, mortgages, and utilities. Overdue debt can be listed on your consumer credit report when it is overdue by 60 days or more. Applying for credit from multiple credit provider may affect your credit assessment. Lenders usually take a negative view on high number of credit enquiries made in short time frame. Fail to pay minimum repayment amount on credit card. As your credit file contains information on repayment history, failure to pay the minimum repayment on your credit card (depending on the frequency) may affect your credit assessment. Certain lenders may also have an unfavourable view on someone who only makes the minimum repayment month after month on their credit cards and keeps accumulating the credit card balances. Want to know more about your credit file? It is good idea to check your credit file regularly. Your credit file is held by private credit reporting agencies such as Veda and Dun & Bradstreet. You are able to request for 1 free credit file every 12 months. www.wealthalliance.com.au

20.01.2022 APRAs stance on Bank Capital Requirement The Australian Prudential Regulation Authority (APRA) has released the results of a study comparing the capital position of the Australian major banks against a group of international banking peers. The study was conducted by APRA in response to Recommendation 1 of the Financial System Inquiry (FSI). The FSI suggested that for banks to be regarded as unquestionably strong they should have capital ratios that position them in the top... quartile of internationally-active banks. APRA believe that the Australian major banks would need to increase their capital ratios by at least 200 basis points or 2 percent relative to their position in June 2014, to be comfortably positioned in the fourth quartile. The results of the study will inform interested parties on APRAs stance on capital adequacy requirements. Although, at this point no decision has been made by APRA on the total magnitude of any strengthening of capital requirements nor when that strengthening would need to be completed by. It is certain that capital requirements strengthening is required and any changes is likely to be phased in over time and take into account the international initiatives. APRA also confirm that the FSI recommendation on capital requirement will apply to all Authorised Deposit-taking Institutions, and not only limited to the major banks. Higher levels of capital adequacy ratio will make the bank safer but it will push the capital cost up. Various bankers have argued that pushing up the capital levels will ultimately result in higher interest rates for borrowers. However this view was rejected by APRA chairman Wayne Byres, he believed that the fierce competition in home lending would make it very difficult for banks to completely pass on any additional capital requirements cost to their customers. www.wealthalliance.com.au

18.01.2022 RBA’s May 2016 Interest Rate Cut The Reserve Bank of Australia (RBA) has decided to lower the official cash rate by 25 basis points to a historic low rate of 1.75%. The RBA’s decision to cut cash rate by 25 basis points came as no surprise following the unexpectedly sharp fall in inflation data announced last week. RBA governor Glenn Stevens confirmed that the unexpectedly weak inflation data as the primary reason behind the move.... In reaching today's decision, the RBA also took careful consideration of the housing market where indications show that strengthening lending standards have removed the steam from the overheating housing market. RBA also note that the global economy is continuing to grow at a slower pace than expected. The combination of deflationary pressures globally, soft demand domestically and very weak wage growth mean that inflation could remain well below target for an extended period. NAB, CBA and Westpac has announced that they will fully pass on the rate cut of 25 basis points to their home loan customers. Meanwhile ANZ will only partially pass on the rate cut and will reduce its rate by 19 basis points to its home loan customers, attributing its decision on higher funding costs. www.wealthalliance.com.au

17.01.2022 Changes on Investment Property Loans The Reserve Bank of Australia has been working with other regulators such as APRA and ASIC to assess and contain any risks that may arise from the housing market. RBA is particularly concern about: increasing housing price that is driven by low interest rate environment the impact of further weakening of labour market on the housing market... increasing investment property lending that has led to continued housing price growth Over the past few weeks APRA has approached many lenders and demanded that they restrain their investment property lending. Consequently many lenders have altered their lending policy. Some of the changes are: Many lenders have reduced the maximum loan available on investment property lending. Most lenders have reduced the maximum loan on investment property to 80% - 90% of the property for a local applicant (lower lending ratios apply for non-residents). Some lenders have indicated that going forward the interest rate on their investment property loans will be more expensive than that of owner-occupied home loan. ASIC is also investigating the provision of interest-only loans, the conduct of the lenders and how they are complying with consumer protection laws including their responsibility lending obligation. ASIC needs to ensure that lenders are not putting consumer into unsuitable loans that could see them end up with unsustainable level of debt. While the investigation is far from over, there could potentially be more restrictions being introduced to interest-only loan being offered specially to the owner-occupied loans. To curb overseas investment on the property market, both federal and state governments have introduced some measures. From 1st December 2015, there will be application fee for foreign buyers to get FIRB (Foreign Investment Review Board) approval. Victoria government has also planned to introduce additional stamp duty surcharge of 3% for foreign buyers from 1st July 2015. If you are planning to purchase an investment property and need to secure finance, talk to us now for appropriate advice on your borrowing needs. www.wealthalliance.com.au

16.01.2022 Loan Structure mistakes on Investment Property Poorly structured loan on your investment property reduces your flexibility, increase risk and create taxation problem. Often you may not experience the negative consequences until sometime after the loan is established. Some mortgages brokers and bankers are often focused too much in getting your business and overlook the importance of properly structuring your loan. Some common loan structure mistakes include: Incorrect name...Continue reading

15.01.2022 Without mortgage brokers, finding a home loan will be harder and could become more expensive. Sign our online petition at www.brokerbehindyou.com.au and keep competition alive.

15.01.2022 Understanding what lenders want will improve your chances of getting a loan. When you apply for a loan, the lender will assess your application against lending principles to determine the strength of the proposed deal. Generally, these principles are known as the five Cs of lending. Five Cs of lending are summarised as follow: 1. Character... The applicants previous conduct and credit history are assessed to determine the likelihood that he/she will meet the repayment obligation for the loan applied. To do this, the lender will obtain your credit file. Your credit file demonstrates how well you have conducted your previous and current credit obligations. Credit file holds information about your credit history including credit account, repayment history, credit provider, overdue accounts, court judgement etc. Some lenders will use the information contained within your credit report to do credit scoring as part of the loan application assessment. Each lender has their own criteria depending on the level of acceptable risk for a given product. 2. Capacity Lenders need to determine whether you can comfortably repay your loan. Your income and employment history are good indicators. The amount of income, type and stability are all considered. Lenders usually look at several types of evidence to confirm this such as your payslips, tax returns, financial statements, dividend or distribution statements, lease agreements, etc. 3. Capital Capital refers to the applicants financial strength. Lenders will usually look at the applicants assets in comparison to their liabilities. Someone who has earned significant income over the years but owns minimal net asset value may be perceived as someone with no ability to save. Lenders will also look at the amount of capital the applicant intends to contribute to the purchase of the property. 4. Collateral Collateral refers to the security against the loan applied. Lenders, will engage the service of a registered valuer to assess the market value of the collateral. This is to ensure that the loan balance can be covered through the sale of the collateral if required. 5. Conditions Lender will look at any conditions that may affect your ability to meet the loan commitments. This may include economic conditions, interest rate movements, employment conditions etc.

13.01.2022 For more information contact us on 0450848995 or email at [email protected]

11.01.2022 Do I have to take up building insurance before settlement? Many people are often unsure as to when they need to take up building insurance after purchasing a property. Once you have signed the contract of sale and your offer is accepted by the vendor, there is usually a 60 to 90 days period before settlement day when the property officially belongs to you. What if something happens to the property during that time? Although the purchasers interest is partially covered by mo...st contracts of sale, we recommend that purchasers take out their own building insurance cover to protect their interest. If the property is strata titled, the owners corporation would generally have the building insurance cover in place. Talk to your solicitor to find out when you will become responsible for insuring the property as each state has its own laws and regulations. In Queensland for example, generally you will become responsible for the property from 5 pm the next business day after the contract date. In Victoria, the vendor carries the risk of loss or damage to the property until settlement date and is obliged to deliver the property to you in the same state and condition as on the day of sale. However, the vendor is not obliged to take out building insurance. Section 34 of Victorias Sale of Land Act 1962 gives the purchaser the right to revoke the contract of sale within 14 days under a dwelling-house contract of sale, where the dwelling-house is so destroyed or damaged as to be unfit for occupation. However, this right to revoke the contract cannot be exercised if the vendor chooses to reinstate the dwelling-house where the dwelling-house is only partially or not significantly damaged. Hence it is prudent for you, as a purchaser waiting on property settlement, to take out the relevant building insurance cover once you have signed the contract of sale and your offer is accepted by the vendor. Having your own building insurance cover will allow you to have more options should the dwelling-house is damaged or partially destroyed prior to the scheduled settlement date. Please note that the above information is of general nature only, you should speak to qualified legal adviser before taking any action based on information provided. www.wealthalliance.com.au

11.01.2022 Lenders to improve Interest Only Loan Standard The Australian Securities and Investments Commission (ASIC) has completed its review into interest-only home loans. ASIC has looked at interest-only home loans issued by 11 lenders, including the big four banks and found that the demand for interest-only loans had grown by around 80% since 2012. The review found that interest-only loans are more popular with investors and those on higher income. ASIC also found that lenders have... been falling short of their responsible lending obligations in the provision of interest-only loans. Lenders are often failing to consider whether an interest-only loan will meet a consumers needs, particularly in the medium to long-term. ASICs review of more than 140 consumer loans identified that: In more than 40% of cases reviewed, the affordability calculations assumed the borrower had longer to repay the principal on the loan than they actually did. In more than 30% of cases reviewed, there was no evidence the lender had considered whether the interest-only loan met the borrowers requirements. In more than 20% of cases reviewed, lenders had not considered the borrowers actual living expenses when approving the loan, but relied instead on expenditure benchmarks. ASIC believes that these practices can expose borrowers to not being able to afford their loan repayments in the future. The review makes a number of recommendations that lenders and brokers should review to ensure they are complying with responsible lending obligations. Following ASICs review, all 11 lenders have changed their practices in line with ASICs recommendations or have committed to implementing necessary changes in the coming months. Earlier this week, Westpac has tightened their credit policies for interest-only loans. Westpac is requiring new interest-only borrowers to be tested against their ability to make principal and interest, and fees payments over the "residual" period of the loan after the interest-only period had ended. ASIC plans to revisit the issue in the second half of 2016. If you have any questions on home or investment loans, please contact us on 0450 848 995 or 0450 848 996. www.wealthalliance.com.au

10.01.2022 Lending Update (August 2015) Reserve Bank of Australia (RBA) has left the official cash rate on hold on Tuesday 4 August 2015, a move that was widely predicted by economists. RBA believes that the economy has continued to grow although the growth rate was somewhat below the longer-term averages. The RBA also believes that the domestic inflationary pressures have been contained and is likely to remain the case, given the very slow growth in labour costs. This decision by RBA ...Continue reading

09.01.2022 Mortgage Broker Myths In this article I want to address some misconceptions about mortgage brokers. Myth 1. Mortgage Broker charges you for their time.... Fact: Most mortgage brokers do not charge you for their time. Mortgage brokers receive commission from the lenders they place the business with. Myth 2. Due to commission arrangement, if I get my loan through a Mortgage Broker I will pay higher interest rate. Fact: Loan product offered through a Mortgage Broker has the same interest rate and fees as what is offered by lender. The commission arrangement does not affect the interest rate or fees on your loan. Mortgage Brokers account more than 50% of market share of the mortgage market in Australia. Myth 3. Mortgage Broker will always recommend loan product that pays higher interest rate. Fact: Most mortgage brokers operate as a small business that rely heavily on word of mouth and client referrals to generate new sales. Mortgage brokers are generally unbiased over the loan product as most brokers value long term ongoing relationship and repeating business from their clients. Myth 4. It is better to go direct to the lender for a better deal. Fact: Mortgage brokers in general have access to the same rates and product offered be a lender. In addition, most mortgage brokers generally have a large range of lenders to choose from. This coupled with strong relationship with the lenders business development manager can assist in getting you a better deal. Myth 5. I can do what a mortgage broker does. Fact: While it is possible to do many things that a mortgage broker does, it will cost you a considerable amount of time and resources. You may be able to use online comparison sites to find suitable loan, however this comparison sites lack of important details. Hence, you may need to go directly to each lender to find more details about loan product offered. Mortgage Brokers can provide you very detailed comparison between different lenders in a short amount of time, hence saving you time. http://www.wealthalliance.com.au/arti/mortgage-broker-myths

08.01.2022 What will the Reserve Bank Australia (RBA) do with the cash rates? The expectation of cash rates decreasing to 1.75% at the RBA board meeting later today has gathered momentum over the past few weeks. Few weeks ago the big 4 banks announced that they are raising their standard variable rates by about 0.15% to 0.20%. The banks attributed the rate increases to the new regulatory requirements introduced by APRA. The announcements by big 4 banks were followed by the smaller lend...ers. So far, Macquarie, ME bank, Bank of Melbourne, Bankwest, Suncorp and AMP have followed the big 4 banks move and announced that they are increasing their standard variable rates as well. The RBA Rate Indicator shows market expectations of a change in the official Cash Rate at about 44% on 2 November 2015. The RBA Rate indicator calculates a percentage probability of an RBA interest rate change based on the market determined prices in the ASX 30 Day Interbank Cash Rate Futures. The inflation rate was measured at 1.5% through the year to the September quarter 2015, meaning that RBA can afford to cut the rates without worrying about the price increase. Domestic economic condition remains weak, so perhaps another rate cut is what is needed to stimulate the economic condition. www.wealthalliance.com.au

08.01.2022 RBAs August 2016 Interest Rate Cut On 2 August 2016, the Reserve Bank of Australia (RBA) has decided to cut the official cash rate by 25 basis points to an unprecedented 1.5 per cent. RBA noted that the global economy continues to grow at a slower pace than average. Although the Australian economy is continuing to growth at a moderate pace, the Board of RBA feels that monetary easing is needed to boost the prospect for sustainable economic growth with inflation returning to... target over time. RBA also notes that supervisory measures have strengthened lending standards in the housing market. Recent data shows that dwelling prices have been rising only moderately over the course of this year which suggests that the risk of lower interest rate to the housing market has diminished. The decision by RBA to cut the cash rate to boost economic growth prospect has been undermined by the reluctance of the major lenders to pass the full rate cut to their customers. CBA has announced that it is only passing 13 basis points of interest rate cut to their customers, ANZ is passing 12 basis points of interest rate cut while Westpac and NAB will pass on 14 basis points and 10 basis points respectively. Since the global financial crisis in 2008, the RBA has cut the official cash rates 18 times. With the official cash rate now at record low and limited room for further rate cut, the big question is how far will monetary easing do the heavy lifting to boost the economy growth as it is undermined by the reluctance of our policy maker to introduce unpopular but necessary fiscal policy and by the lenders to pass on full rate cut. www.wealthalliance.com.au

07.01.2022 Has your bank passed on the interest rate cut? Following the Reserve Bank of Australias decision to cut the official cash rate by 25 basis point on 3 February 2015, the majority of the banks and lending institutions we monitored have announced that they will pass on the full rate cut to their respective customers. For $300,000 mortgage, 25 basis points interest rate reduction will reduce loan repayment by approximately $45 per month. ... The following banks and lending institutions have announced their rate cuts: CBA 25 basis point (effective date: 20/2/2015) Westpac 28 basis point (effective date: 20/2/2015) ANZ 25 basis point (effective date: 12/2/2015) NAB 25 basis point (effective date: 20/2/2015) AMP 25 basis point (effective date: 20/2/2015) Bank of Melbourne 25 basis point (effective date: 20/2/2015) Bankwest 25 basis point (effective date: 24/2/2015) Citibank 25 basis point (effective date: 20/2/2015) Suncorp 25 basis point (effective date: 27/2/2015) Bank of Queensland 25 basis point (effective date: 24/2/2015) ING Direct 25 basis point (effective date: 20/2/2015) ME Bank 25 basis point (effective date: 20/2/2015)

07.01.2022 RBAs May 2016 Interest Rate Cut The Reserve Bank of Australia (RBA) has decided to lower the official cash rate by 25 basis points to a historic low rate of 1.75%. The RBAs decision to cut cash rate by 25 basis points came as no surprise following the unexpectedly sharp fall in inflation data announced last week. RBA governor Glenn Stevens confirmed that the unexpectedly weak inflation data as the primary reason behind the move.... In reaching todays decision, the RBA also took careful consideration of the housing market where indications show that strengthening lending standards have removed the steam from the overheating housing market. RBA also note that the global economy is continuing to grow at a slower pace than expected. The combination of deflationary pressures globally, soft demand domestically and very weak wage growth mean that inflation could remain well below target for an extended period. NAB, CBA and Westpac has announced that they will fully pass on the rate cut of 25 basis points to their home loan customers. Meanwhile ANZ will only partially pass on the rate cut and will reduce its rate by 19 basis points to its home loan customers, attributing its decision on higher funding costs. www.wealthalliance.com.au

05.01.2022 RBAs May Interest Rate Cut Reserve Bank of Australia (RBA) has announced that it has decided to lower the official cash rate by further 25 basis points to 2.00%, effective from 6 May 2015. Concerns about sharply declining commodity price and resurgent Australian dollar pushed the RBA to further reduce the cash rate. Although RBA has concern about the effect of another rate cut on Sydney house price, the trend on other cities has been varied. On its official statement the RB...A has stated that they are working with the other regulators to assess and contain any risks that may arise from the housing market. The RBA believes that current inflation outlook provided opportunity for further monetary easing. The RBAs decision to cut cash rate by another 25 basis points came as no surprise. Majority of economists surveyed by Bloomberg have predicted that the bank will cut the cash rate. The RBA chief Glen Steven has hinted on his address to the American Australian Association luncheon on 21 April 2014 that further reduction on interest rate has to be on the table. The rate reduction should significantly help the government budget announcement next week. Treasurer Joe Hockey has hinted that the RBA moves are totally in sync with what the government will hand down in the budget next week. Many lenders monitored by us failed to pass on the full interest rate cut to their customers. Out of 4 major banks, only ANZ passed on the full interest cut to its customers. NAB and CBA only passed on 20 basis points of interest rate cut to their customers while Westpac passed on 22 basis points of interest cut. www.wealthalliance.com.au

05.01.2022 Reserve Bank of Australia cut official cash rate to 2.25% Reserve Bank of Australia (RBA) has announced that it has decided to lower the official cash rate by 25 basis points to 2.25%, effective from 4 February 2015. Weaker domestic economic growth at a level below the expected trend coupled with higher unemployment rate pushed the RBA to further reduce the cash rate to stimulate the economy. The 2.25% cash rate is the lowest since 1959.... The fall of energy prices is expected to subdue the pressure on inflation. While the fall of energy prices may offer significant support to customer spending, the RBA believes that it will at the same time reduce the terms of trade hence reducing income growth. The RBA cutting the official cash rate came as a surprise as there are only 2 of 30 economists interviewed by finder.com.au who are expecting a rate cut by RBA. Whether or not the lenders will pass on further rate cuts to the customers still remains to be seen. If the lenders pass on the full rate cut, a 25 basis points reduction in interest rate will translate to approximately $45 savings in monthly P&I home loan repayment based on a loan size of $300,000.

02.01.2022 Wishing all a very happy and prosperous Chinese New Year!!

02.01.2022 Federal Budget 2015 The Treasurer Joe Hockey has delivered his second federal budget yesterday. Small business, families and jobs were the focus of this years budget. The federal budget announcements are proposals which need to successfully pass through Parliament before becoming law. Below is a summary of the key announcements. There were no changes to personal tax rates however there were some changes on Fringe Benefit Tax and the method in calculating the work related c...ar expenses deduction. The obligation to make HECS repayment will be extended to Australian workers who are working overseas. Government will spend $3.5 billion over 5 years on child care assistance. From 1 July 2017 family earning $65,000 or less will receive a subsidy of up to 85% of their child care fees. Double dipping on paid parental leave will be removed from 1 July 2016. The means test used to determine age pension eligibility will be altered. However, everyone affected by the scaling back will be eligible for the Commonwealth Health Senior Card or the Health Care card. Customer buying digital goods and services from overseas will have to pay GST. Farmer will get immediate deduction on capital expenditure on fencing and water facilities. Farmer also can depreciate over 3 years all capital expenditure on fodder storage assets. From 1 July 2015, companies with annual turnover of less than $2 million will have their tax rate cut by 1.5%. From 12 May 2015 to 30 June 2017, small business can claim immediate tax deduction for each and every item purchased up to $20,000. A 5% tax discount of up to $1,000 per annum for unincorporated business with annual turnover of less than $2 million. Initial announcement on anti-avoidance law for multinationals and foreign companies that make profits in Australia. Customers buying digital goods and services from overseas will have to pay GST. The market response of the federal budget so far has been moderately positive. This budget in addition to recent rate cut by reserve bank of Australia hopefully are enough to boost customer confidence and stimulate economic growth. www.wealthalliance.com.au

01.01.2022 Should you fix your home loan rate? With current interest rate at all-time low and attractive fixed interest home loan offered by many lenders, more and more people are considering fixing their loan. Whether to fix or part fix your home loan depends on your circumstances. Here are some things to consider to help you decide. Advantages of fixing your home loan: ... Fixing your home loan guards you against interest rate hike. You know for sure what you are repaying. This makes budgeting easier. Disadvantages of fixing your home loan: Often extra repayments are limited with additional fees or not allowed if you have fixed rate home loan. Fixed rate loan normally have break fees if you change of pay off the loan within the fixed rate period. If interest rate drops you end up paying a higher rate than that of variable rate loan. You should not fix your loan if: You plan to sell your home in near future. You plan to refinance your home loan with other financial institution. You know that you have saving capacity and plan to make extra repayments on your loan. You wish to have high flexibility on your home loan. Consensus for Interest Rate for 2015: Economists remain divided on their views about interest rate for 2015. Most economists are predicting interest rate to rise in 2015 while other believes that the Reserve Bank of Australia (RBA) may cut the cash rate further in 2015. There are several reasons that could contribute to another cut in 2015: If commodity prices continue to fall in 2015, and the world and domestic economy remains weak, the RBA may cut the cash rate in 2015. One of RBAs duties is to maintain price stability. To achieve this RBA has inflation target of 2-3 percent. If low oil price continues, the inflation/CPI pressure is lessened hence it is less likely for RBA to increase the cash rate. Rising unemployment and falling household income growth may force the RBA to further cut the cash rate. Because interest rate movements have always been hard to predict, interest rate prediction should not be your main consideration to fix your loan or not. More and more lenders are now acting independently of the RBA. The last time RBA moves the rates was in July 2013. However many lenders kept reducing their rates independently of the RBA in the last 16 months as they are competing for market share. If youre happy paying the amount on a fixed rate loan, and you dont need the flexibility of making extra repayments (without additional fees) in the short term, a fixed rate loan is a reasonable option. If you would like to enquire about home loans or wish to refinance your current loan please contact us on 0450 848 995 or 0450 848 996. Alternatively you can email us on [email protected]. Wealth Alliance wishes you a Merry Christmas and Happy New Year.

01.01.2022 Offset Account Offset account is a fully transactional account that is linked to your home or investment loan account. The balance of the offset account reduces the interest payable on your loan as the interest is calculated based on the net balance of your loan (your loan balance less offset account balance). There are 2 types of offset accounts: ... 100% offset account - The fund within 100% offset account does not earn any interest. However the balance will fully offset your loan balance. Partial offset account how the partial offset account operates differ with lenders. Generally, a reduced rate of interest is charged on part of the loan balance. Majority of the offset accounts offered by lenders in Australia are 100% offset accounts. An example how a 100% offset account works can be seen as follows: For a customer with a $500,000 home loan and an offset account with constant balance of $100,000, the interest component of the loan repayment will be calculated based on the net balance of the loan which is $400,000. The customer will have the same amount of loan repayment if the loan repayment type is principal and interest. However he or she will pay off the loan faster as more of the repayment will be attributed to repaying the principal portion of the loan and as an example, will save around $199,503 of interest by having a 100% offset account assuming loan term of 30 years and interest rate of 6%. The benefits of having offset account include: Interest saving on your home / investment loan Most offset account is a fully transactional account Offset account does not earn you any interest income and hence it wont attract tax You can access the fund within the offset account at any time Unlimited deposit amounts While offset account offers a lot of benefits, it does come with some costs. Most lenders charge an annual account fee related to this facility. Fully featured home loan that offers offset facility can have higher interest rate in comparison to a basic home loan that does not have the offset facility. However, this is dependent on individual lenders offer and home loan package structure. Please also note that the offset account facility is usually not applicable on fixed rate loans. Another strategy that can be used in conjunction with an offset facility to maximise interest savings on your loan is to utilise credit card for your daily expenses and arrange automatic full repayment on your credit card from the offset account on the due date. This will maximise the daily balance on your offset account. Talk to us about offset facility. If you would like to enquire about home loans or wish to refinance your loan please contact us on 0450 848 995 or 0450 848 996. Alternatively you can email us on [email protected]. Website: www.wealthalliance.com.au