Roozendaal added that finances for a home construction project, most especially for residential investments like apartments, is hard to get and the removal of the stamp duty fee gives borrowers a chance to buy early and to increase their chances of securing a home. A 25 per cent stamp duty discount will apply to homes under construction or newly-completed worth up to $600,000.

Stamp duty will be abolished  for the next two years for over 65’s who sell their home to move to a newly built dwelling up to $600,000.   This was done to encourage the said age group to move to smaller homes. 

During its two-year run, the removal of the stamp duty will cost the NSW government around $184 million. Also, the stamp duty discounts will be mixed with a cap on council taxes to speed up the process in applying for projects for developing properties.

Meanwhile, the New South Wales government also reported that their state budget is back in surplus a year early than projected. During the half-year review of the NSW Treasury on December 2009, they have predicted that the state budget will regain surplus in 2010-11. However, the current state budget reflects a $101 million surplus during the current financial year.

Despite the fact that this budget surplus might be affected by the worsening debt crisis in Europe, the NSW government has projected an even larger surplus of $773 million during the 2010-2011 financial year. Majority of this budget surplus came from the drop in tax revenue from the global financial crisis.

 The tax revenue cut was originally projected at $10 billion over the next four years but its current rate is about 50 percent lower. Also, a lower than expected unemployment rate gave a boost to payroll tax collection. For the coming financial year, the NSW government is seeing an unemployment rate of only 5.5 percent.

Due to these factors, the New South Wales government will push through with a payroll tax cut on the 1^st of July, 2010. Another payroll tax cut is imminent on the first day of the year 2011 and this would bring down the payroll tax to 5.45 percent.

Here are some tips to manage mortgage stress. 

Budget – You can help battle mortgage stress by creating a budget based on your goals and current financial standing. Determine the expenses that you need and those that you do not need. You must also provide some room on your budget for miscellaneous expenses but this should not be a big percentage.

Additional Repayments – If you can plan ahead, you should make additional repayments so that you will have some buffer against difficulties that you might have  along the way. You may also save money into an offset account so that you won’t have to worry about allotting your salary to repayments.

Life Insurance - here will be incidents beyond your control such as injury or illness, you must also consider applying for a life insurance, mortgage protection insurance or income protection insurance so that you will be covered despite those unfortunate situations.

But if you feel that you will eventually have mortgage stress, you must consult a mortgage broker as soon as possible. After a consultation with the broker, he will present your case to your lender. Lenders would want you to keep your property for it would be financially better for them if it stayed that way.

If you are already under mortgage stress, you may apply for a hardship variation that can prolong the term of your loan, give you a holiday in repayments or both. You may also consider consolidating your debt or to undergo refinancing with your home loan. You can also switch to an interest only home loan to buy yourself time with repayments.

Applying for financial assistance is also a viable option for state governments do assist borrowers that cannot pay due to temporary shortcomings. But in cases of severe mortgage stress, you may access your superannuation which can aid you in repaying your home loan. However, this move entails much consideration for you might end up losing your superannuation and your house.

If none of the options above works, it is time to consider selling your home or downsizing your property. You may also return to renting to buy yourself time to save for another property. You will be better off if you will sell your property as soon as possible.

However, it is noteworthy to point out that not all options can be played out. The option that you have will not only depend on your financial status but it will also depend on the home loan that you are currently in. You must also be ready with additional fees especially for refinancing.

As the name suggests, an interest only home loan requires a borrower to repay just the loan’s interest and not the principal loan amount. The interest repayment can either be fixed or variable and it is only offered for a short period of time of one to five years. However, time will come that you will have to pay the principal loan amount.

Property investors go for this loan so that they can use their money for their other investments while paying the interest of other properties at the same time. This way, potential cash flow issues will be minimized.

No matter what the changes are in the interest rate of the interest only home loan. Its value is still lower than a loan that has a principal and interest amount. With this set-up, investors can pocket a large chunk of their income that can be used to upgrade their current property or purchase new ones.

The interest rate of an interest only home loan depends on whether it is a fixed or variable loan. This decision will depend on how market conditions shake up or whether you want a stable repayment amount.

Investors who own more than one property usually take a fixed rate interest only home loan so that they can delegate their finances very well. As a repercussion for the stable repayment, they will end up paying a higher rate if the cash rate decreases. On the other hand, the variable rate interest only loan depends on the movement of the official cash rate of the RBA but it has more useful features.

An interest only home loan has some risks involved. If market prices are on the downfall, it is possible that the value of the property will decrease from the original value. Therefore, its equity might not satisfy the repayments of the principal amount of the loan.

Therefore, you have to be keen in buying a property with an increasing value to cover future loan expenses. By the end of the interest only home loan term, the entire loan value is paid and the deal goes back to a principal loan with interest.

With an interest only home loan, investors can avail huge tax cuts due to negative gearing. It also gives them the chance to invest on more properties despite limited funds. The stable repayment can help you budget your money better and the low repayment lets investors keep more of their profit.

To lessen the problems that an interest only home loan may bring, you must not get a deal with monthly repayments. You must use your excess income and you can reduce the loan interest if you will have your income paid to your loan account or place tax refunds into your loan account for redraw.

To remove your negative financial marks or bad credit rating that you have incurred in the past, you must strive to apply for a non-conforming loan. Your application for this type of loan can be approved as long as you can satisfy the repayments.

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This type of loan can help you raise your credit rating or balance the bad moves that had huge effects on your current financial status. You may also go for a credit-impaired loan if you have transferred jobs, no stable income or if you are building a business.

You may also avail of a credit impaired loan if your income is irregular or if your tax debts are high. If you have sent a lot of inquiries to the Credit Reference Association of Australia, this makes you eligible for a credit-impaired loan as well.

A credit impaired loan comes in three types: the fixed, the variable and the split loan. It also has useful features like the redraw funds, line of credit and the offset. However, a credit impaired loan would still be classified as a risky loan despite having so much proof that you won’t have problems with the repayment. Therefore, it usually has a high interest rate.

Though it is a non-conforming loan, you must still prove to lenders that you can satisfy the repayments of the loan regularly. For this, you must give a proof of income to strengthen your claim that you will not miss repayments.

If you would like to improve your negative credit record, a credit-impaired loan is best for you. And because its rates have dropped over the years, repayments are easier to satisfy. With this loan, you will learn how to conduct well-calculated financial decisions in the future.

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Borrowers hire mortgage brokers mainly because of their experience. Because they have been in the industry for years, mortgage brokers knows the benefits and risks of various home loan deals like the palm of his hand.

Also, brokers know people from your desired lending company so he already knows who to talk to and what it takes for your home loan application to be processed. He has a lot of connections that he can use to speed up the processing of your home loan or even get you a favourable deal that is not offered to all potential lenders.

In return, you can start paying off your approved home loan as soon as possible. However, a mortgage broker’s contribution does not come for free. There might be times when the fee for the mortgage broker is given separately while there might be times when his fee is tagged with the loan.

Also, a broker can make the process about learning home loans easier. He knows every detail upon recall for he has been doing this for so long. Treat him as a walking home loan encyclopaedia who can give you instant answers.

However, mortgage brokers do not come for free. You could end up paying the same amount as that of the initial charge for a standard home loan once his fee has been accounted for. However, this is a one-time fee that would benefit you in the long run.

Dealing with a mortgage broker is a great step in maximizing your loan deal because of his experience and knowledge. But before hiring one, make sure that they can present the documents that would make them a qualified mortgage broker.

This deal attracts a lot of borrowers for a honeymoon home loan offers a lower interest rate for around six to twelve months. After the said time period, the interest rate goes back to the standard variable rate that the lender offers. This set-up gives borrowers, especially start-up families, to save up finances.

The length and interest rate of the introductory rate depends on your lending partner. Therefore, it would be better for you to shop around and compare the deals that different lenders offer.

Obviously, honeymoon loans provide useful savings for not only can you save on interest payments but these payment cuts offer more repayment discounts in the long run. This set-up makes a honeymoon rate a very tempting deal.

However, this deal entails a number of restrictions as well. Because of the low rates, many lenders will limit its available features which result in little to no flexibility over the home loan term.

Also, many honeymoon deals have steeper early repayment fees during the first four or five years of the term. It can also entail higher ongoing or establishment fees. There are even situations wherein lenders set a limit to the amount that can be repaid every month.

On the other hand, a honeymoon deal can be of a disadvantage if you have a fixed deal and the standard variable rate decreases during the fixed period. Also, failure to satisfy repayments will trigger the banks to charge penalties if you discharge your deal within three or four years.

Finding the best honeymoon home loan requires research. By doing so, you can even find out that you can end up with a more flexible deal if you sacrifice a temporary repayments savings. To get a better picture on this, it would be better for you to consult a home loan consultant.

First, you know your credit history. There are some home loan lenders who put much weight into this. This is how they determine whether you are an able payer or not. Once you apply for a loan while having a bad credit line, you application might not be entertained.

You must also determine your budget. Home loan lenders have specific deals for various repayment capabilities. From here, you can determine the deal that suits you best or you can compare between two or more home loan lenders.

Then, you must live within your capabilities. Some home loan lenders are strict with repayment schedules and you should reduce miscellaneous expenses when you are still paying your loan term.

You should also discern whether you can pay for fixed price loan or not. There are home loan lenders who can give you better non-fixed home loans and there are some who specialize in fixed loan deals. Choosing the best home loan lender will make the repayment process a breeze.

After considering all of these factors, you can now choose your home loan lender. Most borrowers go for non-conforming lenders who do not rely on credit records but on the borrower’s merits such as job security, income and past repayment deals.

Non-conforming lenders usually charge higher for the deal is still considered to be risky. They usually stricter repayment terms as well. However, they are more flexible in terms of repayment amounts. This gives you an opportunity to establish a good credit record for a year or two.

Once you have done so, you can then shift to another home loan deal with another lender but this process require additional transfer fees.

Once your offer is accepted, you must sign a contract with the seller so that the legal process of the deal can be initiated. Also, the seller can still shop the property around to get an even higher price until a contract has been signed.

After the contract has been signed, you are also agreeing with the terms and conditions that are within the contract.
Therefore, it is very important that you go over every page of the contract. By reading the contract, you can also make sure as to what is included in the selling price.

When the contract has been finalized, it takes four to six weeks to settle the sale. This time is used to insure the property, fill up more mortgage papers, satisfy stamp duty fees and finalize transactions with your vendor. If an existing property is being sold, lawyers should work to fix dates of settlement.

If you would like to buy a home through other means, auctions can be another option. Here, you must have to fight for your desired property. You should also make sure that you can pay for the winning price including a ten percent deposit guarantee bond that you must pay during the auction itself.

Some auctions uphold that a reserve price must be met. If the highest bid for the property is lower than the reserve price, the highest bidder will have the opportunity to negotiate with the seller first. This is not a guarantee though that he will get the house.

As the Australian dollar went up by a U.S half cent to US$0.9241 and bonds weakened, there is a 56% probability of a rate hike next month. This rate is higher than the 50% at the start of the week.

The Australian Bureau of Statistics also reported that retail sales went up by 1.4% to A$20.08 billion from A$19.80 billion in October. Australia’s trade balance also narrowed as the drop in imports offset the exports downfall. This balance on goods and services narrowed to A$1.70 billion in November from October’s A$2.08 billion deficit.

Department store sales and household goods went up 1.1% and 1.7% respectively. These data are backed up by strong consumer confidence survey and retail reports. This upswing came despite consecutive interest rate increases in October and November.

This would also strengthen the claim of some policy makers that the economy is recovering and that an interest rate hike is very likely to happen.

JP Morgan economist Helen Kevans said that these are surprising developments because they were expecting a drop due to the huge discounts given after Christmas. Millan Mulraine, economic strategist at TD Securities also added that this is proof that there is stronger consumer spending that is triggered by current interest rates and government spending stimulus.

RHG raised its standard variable rate by 39 basis points to peg their interest rate at 7.88 per cent. A report by the Sydney Morning Herald states that this home loan rate is higher than the other 110 Canstar Cannex-rated lending companies. This development comes a week after a NSW Supreme Court ruling revealed that RHG was in default with a creditor’s loan repayments.

The Morning Herald also reports that an interest rate that high shows the higher cost of home loan funding for non-bank lenders since the financial crisis.

In 2007, RAMS was sold to Westpac which is also known for high interest rate hikes. However, Westpac chairman Ted Evans stated earlier this month that these hikes are important to match higher funding costs. Also, Evans stated that having various interest rates from different banks gives customers the chance to compare the rates and find what is suitable for them.

He also added in an interview by the Australian Associated Press that market competition signifies that the scope of the company’s power is not abused and that the said competition is very much alive.

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