Archive for January, 2011

One of the principles that we try to instill in people that are trying to buy their first home is the need to get a clear understanding of not only where they are currently but, if they are not in a position to buy their first home at the moment, that we try and make sure that they understand what they need to do to improve their position.

It was especially satisfying that we had a client settle the purchase of their first home last week after initially being declined back in June 2009.

Some people would have given up but this was not the case with this particular client and he took on the challenge of saving hard over the next 18 months and finally made it this time around.

It just proves what you can do if you commit to a goal and make it happen. Well done guys.

One of the best ways to save money on a home loan is to make use of an offset account.

In simple terms, an offset account is a bank account that is attached to a home loan. However, instead of earning interest on your funds which may then be subject to tax, the funds are taken into account when calculating the interest that is due on the home loan. For example, if you have a $240,000 mortgage and have funds in your offset account of $12,000, then interest will only be calculated on the balance of $228,000.

There are two different types of offset accounts – the 100% offset account and the partial offset account – but the more popular one these days is the 100% account. The main difference between the two is that the money that you have in a 100% offset account “earns” interest at the same rate as the home loan whereas with a partial offset account, the interest being earned on the offset funds is less than the interest rate on your home loan.

The big advantages of an Offset Account are that the interest that is earned on a 100% offset account is generally higher than you would normally get in any form of savings account and also that the money in the offset account will either reduce the amount of interest being charged each month (in the case of an Interest Only loan) or will reduce the term of the loan (where the loan is operating on a Principal and Interest basis).

There are some disadvantages however with an offset account in that you may pay a slightly higher interest rate or a monthly fee to have the offset account. Some lenders will also require you to keep a minimum balance in the offset account to gain a benefit.

An Offset Account is ideal for someone who keeps a large amount of savings over any period of time. It is easier to keep track of funds in an offset account than funds that have been paid off the home loan as extra repayments and which are then redrawn from time to time.

We have just received an email from Suncorp concerning the Queensland floods that we have been asked to pass on to our clients – regardless of whether they are insured with Suncorp or not.

The first part of the email is acknowledgement that Suncorp is the insurer for many people in Queensland and that “Suncorp clients are covered for flood”. This will be reassuring for anyone who may be affected but it does appear that our clients have escaped without flood damage. If this is not the case, then please let us know.

Where there may be an opportunity for many of our self employed clients is that the cleanup, replacement and repair work will take many months, maybe years to complete and Suncorp are looking for registered trades people and business’s to assist in replacement and repair. They are encouraging Gold Coast tradesman and business’s to register with Suncorp Insurance if their business can provide the services required and anyone that is interested can register by submitting the Suncorp Registration Form.

Had a great day at the Gold Coast Community Christmas Lunch – to find out more, click this link - GC Christmas Lunch. Apologies for the poor copy.