Reserve Cuts Interest Rate By 0.25% First Cut In 7 Years!

Reserve Cuts Interest Rate By 0.25% First Cut In 7 Years!

What a great start to spring!

Not only has the Reserve cut official interest rates for the first time in almost 7 years, but
· lenders are already gearing up to reduce their home loan rates by 0.25% or more and
· most economists are tipping another cut in the near future.

But you know what, I was thinking about how the cuts will be a welcome relief to most borrowers when it suddenly hit me that for a lot of you, you’ll never have had a reduction before and probably don’t know what happens now.

So first off, expect a letter from your lender in the next week or two. It will be just like the letters that you’ve been getting over the last couple of years but ‘hooray’ this one will be about rates going down.

But unlike when rates go up, most lenders do not actually reduce your repayments when interest rates come down.

So what to do?

Well if you can afford to keep paying at the old rate then you should do nothing.

Continuing to pay your loan off at the higher rate will reduce both how long it takes to pay off your loan and the amount of interest that you have to pay.

On a $300,000 loan over 30 years a reduction in interest rate of 0.25% is about $55 a month (depending on the exact interest rate you have).

Now let’s say you’ve had that loan for 5 years and your interest rate is now 8.75%. If you keep making the extra payment of $55 a month then you will take 1 year and 10 months off the loan term AND $AVE $38,125 in interest. Now that’s worth thinking about!

But I also know that with the way everything else is costing more these days, that for some of you any reductions in repayments will be a welcome relief.

So once you get your notification letter, contact your lender and request that they reduce your payments in line with the reduced interest rate.

So there you go. That’s what happens when rates go down. AND the best part is that this time you have a real choice about what to do.

Work Life Balance

It may seem strange to write to do a business tip in a blog about home loans and buying real estate.

But here's my thinking.

When we buy a home it's not just about shelter. A piece of canvas strung between two trees will give us shelter. it's more about taking care of those that we love and providing a safe haven for our family to grow up in and our friends to visit.

You could say, it's really all about lifestyle.

Now more and more I hear people complain that their work life balance is too heavily geared to work or business. The other common complaint is about being time poor......

So what I thought I would do is add posts about simple things you can do that will help you tip the scales back the other way and at the same time be more productive, make more money and not work any harder or longer.

So let me know what you think.

Today's post is about working out your time value.

Time Value:

Question: What is your time worth? Most employees and business owners (regardless of size) don’t know the answer to this question.

If you don’t know you cannot value your time and no one else will value your time either. In fact it is impossible to be as successful as you could be if you don’t know what your time is worth.
What’s more you will not earn it because you haven’t told your mind that this is what it has to achieve.

Let’s work it out.
Say you want to earn $100K a year.
You have 4 weeks holiday a year and with public holidays and sick days you lose another two weeks.
So you work 46 weeks a year.
Say you work 5 days a week and an average 8 hour day less an hour for lunch and coffee breaks. So that’s now 7 hours a day.
So you work 46 x 5 x 7 = 1610 hours per year

Divide $100K by 1610 = $62.11 per hour or $434.55 per day. This is how much your time is worth in this example.

But hang on a second let’s just think about all the things that you do in a day. Are all of those activities high impact or high income producing activities? No way but here is where it gets really interesting:

Say you managed 2 hours per day on high impact and income producing activities. (Don't kid yourself even CEO's of fortune 500 companies find it hard to actually do 1 hour a day on high impact/income generating activity).

But for our example let's say you do manage 2 hours a day.

OK that being the case, you now only work 46 x 5 x 2= 460 hours per year. Which means that your hourly time value is now $217.39.

If you increase just 1 hour per week on the high impact / income producing activities you would earn an extra $10k per year that’s a 10% increase for 1 hour per week!

If you managed 1 extra hour per day on high impact / income producing activity that would equal an extra $50K per year or a 50% increase.

So how can you get an extra hour a day without working harder or longer? You can’t get it with time management. You cannot increase the minutes per day, BUT you can get it with event management and time blocking.

More on event management and time blocking later in the week.

Changes in home statistics + Costello speech

An interesting article was published in the AGE showing some of the changes that are occuring in Australian households and their homes. See it at :
Wealth builds on the home frontThe Age - Melbourne,Victoria,AustraliaThe RBA recently pointed out that around 3 per cent of household income is now spent on interest payments on investor housing loans, compared to 1 per cent ...

On the same link you can also see what the treasurer had to say to the Australia-Israel Chamber of Commerce.

What's happening after the reserve bank left interest rates on hold?

Interesting article from the Real Estate Institue
Housing market keeps boomingAdvertiser Adelaide - Adelaide,South Australia,AustraliaTHE HOUSING market will remain strong following the announcement that interest rates remain unchanged, the Real Estate Institute of South Australia says. ...

Latest on real estate news

Interesting article summarising current rental and purchase market
Are real estate ads 'house' porn?ABC Regional Online - AustraliaCan the same be said for those glossy real estate mags and newspapers - are they 'housing porn' by exposing your mind only to the fantasy of purchasing? ...

Free DIY Video

Just came across a really helpful website with lots of tips and plans. Some things you have to pay for (and no I'm not an affiliate or paid for this tip) but there are lots of free tips and some amazing free tips on video. go to http://www.mitre10.com.au/DIY-Central/ Mitre 10 is an Australian hadware store. has anyone come across other great sites like this?

News on some latest trends in Real Estate

If your a home owner or investor then here are two articles that should be of interest to you.
Landlords rely on managersAdvertiser Adelaide - Adelaide,South Australia,AustraliaTIME-POOR real estate investors are using property managers in greater numbers than ever before. Census figures show that last year, 50.5 per cent of all ...
Fewer Aussie homes owned outrightyourMortgage.com.au - AustraliaGraham Joyce, president Real Estate Institute of Australia (REIA), said: "Some effort has been made by some state governments to address affordability ...

Home loan news

Hi came across some interesting news articles today. Just click on the link if they interest you or are relevant to your situation.
Drive a bargainSydney Morning Herald - Sydney,New South Wales,Australia... leasing or drawing down on your home loan - there are plenty of products to choose from. A recent Cannex survey of personal loans examined 520 loans......
Warning over predator lenders who target poorSydney Morning Herald - Sydney,New South Wales,AustraliaLAWYERS and accountants are among a mini-industry of predatory lenders who are providing deliberately unaffordable home loans for vulnerable borrowers. ...
Tame your debt nowSydney Morning Herald - Sydney,New South Wales,AustraliaOrrock says personal loans may be more costly than home loans but they have the advantage of instilling discipline in borrowers. ...

Home Loans in the News

Two news stories today of interest to anyone in Australia that has or is looking at getting a home loame.

Rudd flags low-tax plan for first-home buyersThe Age - Melbourne,Victoria,AustraliaTo make renting more affordable, Labor suggests encouraging more private investment in rental properties and providing capital funding or low-interest loans ...

Mortgage industry calls for end to MCRInvestorDaily.com - Sydney,New South Wales,AustraliaBy Kate Kachor The MFAA has called for mandatory comparison rates (MCR) for home loans to be abolished. The mortgage and finance industry's peak body has ...

Considering commercial property for investment

Came across this interesting article on considering commercial property as part of an property investment portfolio. Click on the link http://www.news.com.au/adelaidenow/story/0,22606,22000040-5006367,00.html to read about what is happening in South Australia and could also be happening near you.

‘How much can I borrow?’ and ‘How much can I afford?’ are both related and necessary considerations before you begin to look at properties. There is nothing more frustrating and stressful than finding the perfect property, making an offer that is accepted by the vendor and then finding that you just cannot get the necessary finance. And if your lender is slow and the cooling off period has expired, you could in fact be risking thousands of dollars by not having a formal pre-approval.

Knowing in advance how much you can borrow not only greatly reduces this stress but also increases your negotiation power. There is no more powerful statement than being able to genuinely say ‘love the house but I can only afford….’

WOW....just finished a post and I had an amazing email come.

One of the best marketing/wealth creation gurus is Jay Abraham....and a friend just sent me a link for a free seminar and some amazing materials from jay...check out what the sent and the link.

Hope you like it.

I just thought you may want to know aboutthis cool tool I found.
I like it and I thought of you when I got it.http://www.jayabrahamsecrets.com.au/?thankyou-page=430
It is cool and I knew you would want to see it too.

Hi
I was recently asked about having real estate to build wealth.....In Australia real estate investment is one strategy that is often used to create wealth. Mum's and dad's and even young people tend to like real estate because it is something that they are comfortable and familiar with.

Having gone through the process once or twice they feel comfortable with going again.

As with any investment there are risks and there are also serious potential gains. Over the next few weeks I will look at some of the issues that can help avoid some of the common traps in investing in real estate.

But should it be the only thing in my portfolio? Not really, would be the general concensus. Obviously everyone's circumstances are different so it is impossible to "GIVE ADVICE" in this forum but it is possible to talk in a general way and raise things that should be considered and that is what I will try to do.

I would also welcome your input and general questions.

One more thing for this post. Building wealth really requires a lot of serious thinking, planning and a number of strategies......this is where financial planners come in and although I am not one I do know some good ones or you can check them out through google searches and financial planning associations.

Great ezine link

Hi I was just tooling around checking out possible ezines to link with when I came across this great site from Mitre 10 at http://www.mitre10.com.au/DIY-Central/DOit-eZine/ Fantastic ideas for gardening and building projects around the home. They also have great tips for decorating and renovating along with easy to follow instructions and plans. A 5 star site. well worth checking out!

What propertys can you show me?

I hope that you are finding my blog useful.....as promised in my first post I will now look at one of the most common questions that people ask and show you how to avoid, arguments, frustration and find your dream home.

‘What properties can you show me?’ should really be ‘What do I/we really want in our new home?’ Firstly make a list of what you are looking for in your home.

Do you want a unit, town house, villa, free standing home, vacant land, rural residential? Where do you want to live and where do you NOT want to live? How many bedrooms and bathrooms, single or double garage, extra access for a boat, family room for the kids, space for a pet, pool or no pool, distances to schools, shops and public transport, style of home and building materials used, etc. List everything that is important to you and your family.

Next consider what are the essential or must have items and what are the, would be nice but not essential items.

Working out your list in advance will save you heaps of time and greatly reduce the stress and frustration of looking at properties that you like and your family or partner don’t like and/or are just not quite right. Conversely, armed with your list, you will know almost instantly, when you spot that perfect property!

You will be amazed at the number of arguments that will be avoided and how much anxiety can be reduced by this simple preparation. Also, when comparing properties it will always be against your list and this simple action will also help you to identify both over priced properties and bargain buys, potentially saving you thousands!

First Posting Where am I coming from?

Hi. This is my first blog so please bare with me as I work out what I am doing.



I work for a non bank lender and am always asked about real estate. You see no one actually wants to buy a home loan.....what they really want is the home and the loan is only the means to get the home. The first thing that I am usually told is that I'M THINKING OF BUYING A HOME! Then comes how much can I borrow?



Now this is where I'm different to lots of other lenders.....you see I agree that the home is the most important question, this what we should be spending most of our time talking about and the mechanics of getting the right loan with as little stress as possible is my job. BUT to get you the right loan solution, I should really be asking questions about the home and what your short and long term goals are.



It should be my job to make the process as easy and stress free as is possible. My goal is to find you the right loan solution based on your personal needs and wants and where you want to be in the future.


Now in lots of conversations I've found that there are lots of common questions that people of all ages have about getting the right loan. In response I have been writing newsletters based on these common questions.



Recently some of my clients have been encouraging me to write a plain english guide book. So I have decided that I might write some of my ideas here and also ask for questions that you would like to have answered. I suppose I am asking if you could be my test audience and contributors to see if my clients and I are on the right track.



My first article will be about two common questions....how much can I borrow and what properties can you show me. Did you know that asking these questions in the right way and being prepared can save you thousands of dollars?



Check back in on Monday to see how!