It’s amazing how 87% of people have insured their possessions* yet only a small percentage have safeguarded themselves or their families with life insurance. Maybe people think life insurance is only about covering yourself against death. In fact, there’s more to it than that and it’s cheaper than you think.
Life insurance is about helping to protect your family against financial hardship should the worst happen to you, the major breadwinner. And, the worst could be the result of a serious illness or accident, not just death. With this in mind, can you afford not to have some sort of protection? There are four (4) ways to protect our loved ones.
(*Insurance Council of Australia, Consumer and Business Insurance Tracking Study, December 2004)
Income Protection : Helps you meet your financial commitments by providing you with a monthly income payment if you are sick or injured and can’t work. You can insure up to 75% of your regular income and super contributions up to 15%. Plus, Income Protection premiums are generally tax deductible.
Life Cover : A cost-effective way to protect your family and assets in the event of your death. This cover also offers a range of benefits and a cash lump sum to help your loved ones through their difficult time, and will help provide them with financial independence.
Total & Permanent Disability (TPD) Cover : Pays you a lump sum if you suffer from total & permanent disability, such as multiple sclerosis or loss of a limb. One has the option of obtaining cover separately to supplement cover by inside superannuation which in most cases is not enough.
Trauma Cover : Provides you with a lump sum if you are diagnosed with certain medical conditions, regardless of whether you are able to work or not (conditions such as heart attacks and cancer). Trauma cover not only helps take care of your medical and rehabilitation costs but it can also help you fund lifestyle changes.
In the next few weeks, we shall be discussing more of these insurance solutions in detail.
Best regards
Jack Wei
Financial Genius
www.financialgenius.net.au
Tuesday, August 18, 2009
Saturday, August 8, 2009
Interest Rate is on the move again !
Yes, interest rate is on the move again.
We have received many announcements over last week from lenders adjusting home loan fix interest rates up again. Rather than looking at the rates now, I did some analysis and did a chart over last 12 months on variable rates and fix rates trend.
I also plot another chart on Reserve Bank’s cash rate (which influence variable rate) and Treasury bond (which influence fix rate markets).
To keep things simple I only used interest rates from 5 major lenders and focus on basic variable rate, 2, 3 & 5yrs fix rate products without any special promo discounts.
This is what the chart looks like.
From the chart below it looks like fix rate have reached the bottom of this cycle during early this year (Feb09).
Not long ago a few lenders was offering 4.99% and 5.19% for 3year fix rate. It all sounds too good to be true now.
To fix or not to fix your home loan is always a hot topic in the media and questions we get asked all the time.
Here are some of the reason to fix the rate:
- You believed economy will recover and hence RBA will start to increase interest rate.
- Certainty, ie you can’t sleep at night if you don’t fix it.
- You can’t afford any more increases with your current income.
- Lock in now while it uss still historical low.
Here are some of the reasons not to fix the rate:
- Variable rate is a lot lower now, you are paying a premium to go to fix rate
- You might want to sell your property soon and you don’t want to pay penalty to get out
- You don’t mind taking the risk
- You may need to refinance the loan
There are many other questions people should be asking when looking into fix rate loans.
- Are there any rate lock option available? If yes how much is it
- Can I have an offset account link to fix rate?
- Any limitation to pay down the fix rate loan ?
- What percentage should I fix eg 100%, 80%, 50% ?
- Can I draw my extra repayments out from the fix loan ?
- How many years should I fix, 1, 3, 5, or 15 years ?
I hope above information helps you with your decision making.
Feel free to give me a call and discuss anything you aren’t sure.
We have received many announcements over last week from lenders adjusting home loan fix interest rates up again. Rather than looking at the rates now, I did some analysis and did a chart over last 12 months on variable rates and fix rates trend.
I also plot another chart on Reserve Bank’s cash rate (which influence variable rate) and Treasury bond (which influence fix rate markets).
To keep things simple I only used interest rates from 5 major lenders and focus on basic variable rate, 2, 3 & 5yrs fix rate products without any special promo discounts.
This is what the chart looks like.
From the chart below it looks like fix rate have reached the bottom of this cycle during early this year (Feb09).
Not long ago a few lenders was offering 4.99% and 5.19% for 3year fix rate. It all sounds too good to be true now.
To fix or not to fix your home loan is always a hot topic in the media and questions we get asked all the time.
Here are some of the reason to fix the rate:
- You believed economy will recover and hence RBA will start to increase interest rate.
- Certainty, ie you can’t sleep at night if you don’t fix it.
- You can’t afford any more increases with your current income.
- Lock in now while it uss still historical low.
Here are some of the reasons not to fix the rate:
- Variable rate is a lot lower now, you are paying a premium to go to fix rate
- You might want to sell your property soon and you don’t want to pay penalty to get out
- You don’t mind taking the risk
- You may need to refinance the loan
There are many other questions people should be asking when looking into fix rate loans.
- Are there any rate lock option available? If yes how much is it
- Can I have an offset account link to fix rate?
- Any limitation to pay down the fix rate loan ?
- What percentage should I fix eg 100%, 80%, 50% ?
- Can I draw my extra repayments out from the fix loan ?
- How many years should I fix, 1, 3, 5, or 15 years ?
I hope above information helps you with your decision making.
Feel free to give me a call and discuss anything you aren’t sure.
Regards
Jack Wei
Financial Genius
Jack Wei
Financial Genius
How A Small Change In Credit Policy Can Impact So Much to Borrowers !
As some of you may know from Apr09 many lenders (eg ANZ, St George, CBA, Westpac...etc) have cut back their home loan lending ratio from 95%-100% range down to 90% range.
To a lot of home buyers that did not save up a lot of deposit, this is actually quite a dramatic impact to the property price they can purchase.
To make it simple I have done a chart below, assuming there is no transaction cost involve (eg stamp duty, mortgage insurance, legal fees, app fees...etc) and borrower can service the loan.
As you can see a small drop of 5% in lending ratio (from 95% to 90%) for a $30k deposit borrower, it means $300k difference in borrowing capacity !
A home buyer might be looking at $500k property now can only buy $300k property.
Deposit LVR Property Price
$30,000 80% $150,000
$30,000 85% $200,000
$30,000 90% $300,000
$30,000 95% $600,000
To a lot of home buyers that did not save up a lot of deposit, this is actually quite a dramatic impact to the property price they can purchase.
To make it simple I have done a chart below, assuming there is no transaction cost involve (eg stamp duty, mortgage insurance, legal fees, app fees...etc) and borrower can service the loan.
As you can see a small drop of 5% in lending ratio (from 95% to 90%) for a $30k deposit borrower, it means $300k difference in borrowing capacity !
A home buyer might be looking at $500k property now can only buy $300k property.
Deposit LVR Property Price
$30,000 80% $150,000
$30,000 85% $200,000
$30,000 90% $300,000
$30,000 95% $600,000
Few weeks after this change, most lenders tighten up their Genuine Savings policies. Most lenders want evidence that you have save up at least 5% of deposit yourself and it’s in your bank account for more than 3 months. For some lenders it can not be a gift from family, or sale proceed of your car...etc. Access to finance is definitely getting harder even though interest rate have dropped a lot over last 12 months.
Most people probably didn’t realise a small change in lending ratio can have a bigger impact than change in interest rate !
Feel free to give me a call if you want to find out how to increase your borrowing capacity.
Most people probably didn’t realise a small change in lending ratio can have a bigger impact than change in interest rate !
Feel free to give me a call if you want to find out how to increase your borrowing capacity.
Regards
Jack Wei
Financial Genius
http://www.financialgenius.net.au/
http://www.financialgenius.net.au/
Wednesday, August 5, 2009
First Home Owners Grant Eligibility Criteria
FHOGS is available to people buying or building their first home and who meet the following eligibility criteria:
- Each applicant is a natural person and not a company or trust.
- At least one applicant is a permanent resident or Australian citizen.
- Each applicant must be at least 18 years of age.
- All applicants and/or their spouse/de facto have not owned a residential property, jointly, separately or with some other person, in any State or Territory of Australia before 1 July 2000.
-All applicants and/or their spouse/de facto have not owned on or after 1 July 2000 a residential property and occupied that property jointly, separately or with some other person in any State or Territory of Australia for a continuous period of at least six months.
- Each applicant has entered into a contract for the purchase of a home or signed a contract to build a home on or after 1 July 2000. In the case of an owner-builder, laying of the foundations commenced on or after 1 July 2000.
- This is the first time an applicant and/or their spouse/de facto will receive a grant under the First Home Owner Grant Act 2000 in any State or Territory (unless subsequently repaid).
- At least one applicant will occupy the home as their principal place of residence for a continuous period of at least six months, commencing within 12 months of settlement or construction of the home.
I had a client this week who had purchased a property jointly with another party few years back and sold it few months ago. That property was used as an investment property for him. I asked him to ring Office of State Revenue to check if he can get the FHOG, fortunately they say yes to him.
So it's good to double check if you aren't sure !
Regards
Jack Wei
Financial Genius
www.financialgenius.net.au
- Each applicant is a natural person and not a company or trust.
- At least one applicant is a permanent resident or Australian citizen.
- Each applicant must be at least 18 years of age.
- All applicants and/or their spouse/de facto have not owned a residential property, jointly, separately or with some other person, in any State or Territory of Australia before 1 July 2000.
-All applicants and/or their spouse/de facto have not owned on or after 1 July 2000 a residential property and occupied that property jointly, separately or with some other person in any State or Territory of Australia for a continuous period of at least six months.
- Each applicant has entered into a contract for the purchase of a home or signed a contract to build a home on or after 1 July 2000. In the case of an owner-builder, laying of the foundations commenced on or after 1 July 2000.
- This is the first time an applicant and/or their spouse/de facto will receive a grant under the First Home Owner Grant Act 2000 in any State or Territory (unless subsequently repaid).
- At least one applicant will occupy the home as their principal place of residence for a continuous period of at least six months, commencing within 12 months of settlement or construction of the home.
I had a client this week who had purchased a property jointly with another party few years back and sold it few months ago. That property was used as an investment property for him. I asked him to ring Office of State Revenue to check if he can get the FHOG, fortunately they say yes to him.
So it's good to double check if you aren't sure !
Regards
Jack Wei
Financial Genius
www.financialgenius.net.au
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