For many, a home loan is a purchase that’s already been made, a regular expense that will stick with them for up to 30 years (depending on the home loan conditions set out at the time of agreement). But don’t expect to simply set and forget your home loan.

Your circumstances may change, and the home loan that you once thought was the perfect deal might not be so anymore. By simply running a few checks, you can figure out whether or not your home loan is still the right fit for you.

Bonus Features To Your Home Loan – Are They A Trap?

Find out all of the home loan features that your current home loan may have. These features may seem confusing to the untrained eye, but there are benefits and disadvantages to a home loan containing them.

For example, some home loans may come with redraw facilities, which can be a handy home loan feature if you’ve made extra repayments in the past and need to access that cash for an unexpected expense. Other home loans may instead have an offset account, which is a bank account linked to the loan in which any cash in the account is offset daily against the home loan principal.

These features may sound good but can attract additional fees. Compare the benefits of the feature with what you are actually paying overall to see if it’s worth the cost.

Interest Vs Comparison Rates: Do You Understand The Difference?

Interest can seem like the silent assassin to many a home loan, but it’s important to not be lured into a new agreement by a rate that seems (at first glance) to be lower than it actually is. You should consider two rates when re-evaluating the interest payable on your loan – interest rate and comparison rate.

Interest rate is the annual interest cost for borrowing money but does not take into account any fees. The comparison rate incorporates the annual interest rate, as well as most upfront and ongoing fees. It’s a good idea to use comparison rates as your base for looking at alternative home loans, as they provide a clearer picture of how much money you may actually end up paying.

Ask To Reduce Your Home Loan Interest Rate

It might seem that a lower interest rate on the market is the perfect opportunity to switch home loans – but wait! You can also contact your current lender and inform them that you are considering making a switch and (if you have a good credit rating and more than 20% equity in your home) you may be able to negotiate with the lender from a better position, about your interest rate

Want advice on how you could improve your home loan, or about the repayments to your home loan? You can come and speak with us, as we are here to help you with your financial planning.

Known as an employee share purchase plan, share options or equity scheme, employee share schemes are used to attract, retain and motivate employees. Schemes can vary depending on the company (and the terms of the scheme can differ depending on the company) so it is important to consider carefully what the pros and cons are before becoming involved in an employee share scheme

Employee share schemes are designed so that you can receive or buy shares in the company that you work for. Often those shares are available to you at a discounted rate from what is currently the market price. Employee share schemes are a great way to reward or remunerate employees for their work. They also incentivise employees to stay with your company for longer and share in its success

There are different ways of paying for shares, such as:

  • salary sacrifice
  •  over a set period (say, 6 months)
  • dividends
  • received on shares
  • a loan from your employer
  • full payment up front

You may be able to receive shares as a performance bonus or as remuneration instead of a higher salary. In a large company, this may come as “ordinary shares” which give an equity investment, but in a smaller company you may only receive dividends.

Each share scheme is different, so look at the terms and conditions of the offer. Check:

  • when you can buy or sell the shares
  • if you will receive dividend payments
  • what happens to your shares if you leave the company
  • the tax benefits

Ethical investing is gaining traction, with more and more investors selecting where their money will go based on their personal principles. This style of socially conscious investment holds companies accountable for their negative impacts and is driving many investors to select their investments dependent on their mutual shared values.

Ethical investing can align with moral, social, political, religious and environmental values, and takes them into account prior to making investment decisions. The primary objective of ethical investments is to create a positive impact by investing in companies that take environmental, social governance (ESG) and ethical issues into consideration and make an effort to address or prevent the business from contributing to the issues.

Rather than only receive a financial return on their investment, investors also receive a social conscious return that has an overall impact on them and the planet. 

There are two ways that ethical investing can be done. 

Personal Screening

An investor chooses to invest in industries/sectors/companies whose values align with their own values. As an example, they may look towards companies who are environmentally and socially conscious, who treat their workers fairly, have high governance standards and carry out environmentally sustainable practices.

Negative Screening

This is when an investor avoids industries whose values directly differ from their value – those involved in fossil fuels, gambling, military ammunition and tobacco are automatically crossed out from ethical investors’ choices. Treatment of workers can also determine to an ethical investor whether or not a company is worth investing in.

Ethical investing, while praiseworthy, needs to consider the soundness of their investments as well as their values. To examine whether the investment is sound and has the potential to reap significant returns, a review of a company’s history and finances is necessary. It is also important to confirm the firm’s commitment to its declared ethical practices and measures.

If something unexpected or untoward happens to you or your loved ones, life insurance is financial protection that you don’t want to skimp on. It’s crucial to find the right insurance to suit your needs, as the cost of life insurance can become a costly amount in your budget.

Different life insurance products are designed to protect you and your loved ones from various events that can occur. Some of the products that may be covered under life insurance (depending on the provider) include:

  • Life Cover pays out a lump sum if you die.
  • Total and permanent disability (TPD) insurance pays a lump sum to help you with rehabilitation and living costs.
  • Trauma insurance covers you if you’re diagnosed with a major illness.
  • Income protection insurance pays some of your income if you can’t work due to illness or injury.

Before making a purchase, you should read the life insurance provider’s product disclosure statement (which legally must be provided to you before purchase). Check the product disclosure statement for:

  • What’s covered and excluded under the policy
  • What information you will need to give to an insurer
  • Information on premiums and how they change over time
  • Waiting periods before you make a claim
  • How to make a claim
  • How to make a complaint about the claims process or decision

As it is a significant financial decision, shop around before making the final decision to ensure that you are getting the product that best suits your needs.

You should also check whether or not you already have life insurance through your super to make sure that you are not paying for your insurance twice. If you’re not sure about whether or not your super provider already covers your life insurance, it’s best to speak with them directly to be certain.

It is also important to know that only licensed financial advisers can give you advice about what life insurance you should hold.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

 

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

 

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

 

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

 

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.


If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts.

Before you sign up, keep in mind:

It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
Keeping track of your payments can be tricky if you’ve signed up for multiple services.
It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later.
Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
Always budget for bills, loan payments and BNPL payments, and
Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.