Anyloan Australia :: Articles

Why the best mortgage may be a simple mortgage

Why the best mortgage may be a simple mortgage

Mortgage loans come in many different forms, each with a range of options … but are they just bells and whistles? Will they all actually benefit you? In this article we look at why having a no-frills mortgage might be better - and know if or when to take on extra options.

Mortgages come with a wide variety of options, what do you do?  It's simple.  Keep the mortgage very simple.  It will be easy to manage, set goals  (Im not kidding)   Often a complex mortgage will slow you down.

Rule #1

Start with the simplest mortgage and slowly add features to the mortgage.

There are many mortgage features to look at including:

  • Offset accounts
  • Splitting accounts
  • Fixed or variable
  • Interest only
  • Portability
  • No fees, some fee?
  • And many more

We always recommend that you contact a mortgage broker when looking at taking out a home loan so you can find out what options are available in your situation.

Before making any home loan recommendations, a mortgage broker will or should ask you to talk about yourself and lifestyle.

A mortgage should be tailored to the client, not the other way around. So, before suggesting what options may or not be appropriate to you, he or she will need to know:

  • whether you are employed or self employed, and details of your legal entity, if you are in a business.
  • how much money comes into the household each month
  • if you need to hold cash for periods prior to paying some bills
  • what level of profitability or take-home salary do you have
  • whether you are married, single or somewhere in-between
  • your financial position, including any pension funds, superannuation funds, investment property or other investments you may have
  • your financial goals over next 5 to 10 years
  • your personality traits ... are you a risk-taker, do you like to know all the details or are you a big picture thinker, etc

Only with that extent of information can the mortgage broker suggest a loan that might be suitable to you.

Given that the standard variable loan works just fine for 90% of the population, why would you need other options in your mortgage?

Well, there are some circumstances where you may need to avail yourself of some of the following.

A Split Loan   (multiple accounts)

Partners in an investment may want to split the loans up for each partner.

Each partner is then free to pay off their own portion of the loan at a pace that suits them.

That would make it much easier to apportion interest to each party and to keep track and account of who owes what on the mortgage than with a single mortgage loan account.

To achieve the same result with a single account mortgag, there would be a whole lot more accounting work required.

100% Offset Account 

If you have a business and need to set aside some funds over periods of time (e.g. for taxation, etc), you may want to set up one or more offset accounts to "park" these funds temporarily.

This would enable you to keep (and account for) the money separate to your personal mortgage commitment, whilst enjoying a period of reduced interest because the additional funds are sitting in the offset account.

It makes accounting for the business money easy - and gives the you control over the various funds.

When looking at offset accounts, you should be aware of the tax implications. Your mortgage broker can explain these.

You should also be aware of any limits on the number or value of deposits and withdrawals.

If the offset account has a withdrawal limit of $5000 per day, for example, it could prove more trouble than it's worth if you want to move larger amounts in and out of your mortgage balance.

Split loan mortgage accounts and offset accounts are just 2 of many options you may be presented with when applying for a mortgage.

If you need a mortgage that carries a low risk - and you don't want to bear the cost of add-ons that you don't need, your best bet is to talk to a mortgage broker.

The mortgage broker will ascertain your needs and then move forward.

But always remember, a simple mortgage is a good mortgage.


Finance Articles
Credit Cards: Identity Theft and Credit Protection
Credit card fraud and identity theft have become widespread not only on the Internet but offline as well. Learn how to avoid these risks and protect your identity as well as your finances or credit line. - read more
Simple Tips On Getting Your Loan
So, you want to get a loan? Here are some simple tips that might help you make more informed decisions about the type of loan you buy, and from whom. - read more
Five Worst Credit Card Mistakes
Credit cards can be an excellent way to manage your finances ... they can even be an investment tool. However your credit card can quickly become your enemy if not used correctly. Here are five of the worst mistakes most credit card holders make. If you can avoid these mistakes, you will benefit greatly. - read more
Why did my Credit Score drop - and how can I fix it?
Your Credit Rating (or Credit Score) plays a very important role in determining your eligibility to get a loan. Here we look at the reasons why your credit score may drop and some handy tips to avoid this problem. - read more
Business Loans: Managing interest rate risks
"I want the protection in the current low interest rate environment but I don't want to be locked in for too long a period" - a commonly heard requirement from business borrowers. - read more
How Credit Card Balance Transfers Can Damage Your Credit Rating
Since the banks and finance providers have been castigated for the way they seemingly indiscriminately awarded credit to people who could ill afford it, the chances of being accepted for loans and credit cards have decreased. Concurrently, there is a greater focus on individual's being aware of how credit works and what their financial behaviors means in terms of a credit score and history. - read more
Choosing the Right Bank
Financial institutions are located all around the world. If you are looking to open a bank account, whether that bank account is a transactional account or a savings account, you have a number of banking options. - read more
When should I use a personal loan?
Unsecured personal loans can really help in a pinch. If your savings are low and your car breaks down, for example, such a loan can patch up your life. Or maybe you're buying a big-ticket item and you need backup money to cover a short-term hole in your bank account. - read more
5 Credit Killers
A good credit score speaks volumes about your financial habits. It's the evidence most creditors need to evaluate your credit worthiness. - read more
Utilising A Chattel Mortgage for Business Finance
A Chattel Mortgage loan is a simple yet effective finance option designed for business plant and equipment purchases. Here are six rules to consider when arranging finance for your business that will ensure that you retain full control over the loan process and save money in the process. - read more

Finance News

Personal Loans to help Australians in need: FSO
Oct 29 :: As Australia prepares to clean up following devastating fires and floods, Financial Services Online CEO, Andrew Clark, has announced a package of personal finance solutions designed to help affected... read more

Small business loans to help Aussie businesses through tough times
Nov 27 :: Financial Services Online has today announced a new credit facility for Australian business customers who are seeking loans for amounts of up to $10,000 with minimum security requirements, irrespective... read more

Police issue warning about bank scam
Nov 20 :: Melbourne police are warning people about a scam in which fraudsters pose as bankers and ask for money.They say they cold call customers and tell them they have been overcharged in fees... read more

ANZ nets solid profit despite wealth management
Oct 26 :: ANZ banking group has reported a solid full-year result with net profit attributable to shareholders up 6 per cent to nearly $5.7 billion - but with its wealth management division still struggling... read more

Millions lack access to basic financial services
Jun 01 :: Nearly 3 million Australians do not have access to basic financial products such as a credit card, car insurance or even a bank account, according to a private study. The annual report by... read more

Reserve Bank leaves interest rates steady
Apr 04 :: The board of the Reserve Bank of Australia has left interest rates unchanged at 4.25 per cent at its monthly meeting today, as widely expected.The decision leaves the official cash rate... read more

Big banks not too profitable: RBA
Feb 25 :: The governor of the Reserve Bank says the Australian banking sector is not too profitable.Appearing before the House of Representatives Standing Committee on Economics, RBA governor Glenn... read more

Commonwealth Bank changes ads following ASIC concern
Jan 16 :: The Commonwealth Bank of Australia has agreed to change some of its advertised loan comparison rates after concerns were raised by the Australian Securities and Investments Commission (ASIC).ASIC... read more

Inflation fall strengthens case for rate cuts
Dec 06 :: A leading unofficial measure of inflation eased last month due to falling food and fuel prices, strengthening the case for interest rate cuts next year.The TD Securities-Melbourne Institute... read more

Reserve Bank cuts domestic growth outlook
Nov 07 :: The Reserve Bank of Australia (RBA) has cut its forecast for economic growth and inflation in its latest quarterly report card.Europe's ongoing sovereign debt crisis and the stalemate over... read more


Need Help Finding a Loan?
Find out now if you qualify and compare rates, offers and options from multiple lenders - without a credit check!
Loan Amount:
Postcode:
All finance quotes are provided free (via our secure server) and without obligation.
We respect your privacy.

Knowledgebase
Debt Consolidation:
Debt consolidation usually involves negotiating a new loan to pay other existing loans in order to get more favourable interest rates and terms.


Quick Links: | Compare Loans | Bad Credit Loans | Finance For Self-employed | Low Rates | Free Loan Assessment