At times, life can become overwhelming, and one may suddenly realize the burden of multiple credit cards, a couple of car loans, and, when combined with a Banora Point home loan, there’s hardly any disposable income left by the month’s end. This is where the concept of debt consolidation comes into play. But how does it operate? The simplest way to illustrate is through an example (names altered for privacy).

Meet Jack and Jill, residents of Banora Point, content with their home and both employed. With their children having moved out, they now aim to focus on retirement. Fortunately, a friend recommended our services to them, although they could have easily found us through a simple internet search for “Mortgage Broker Banora Point.”

refinance home loan help
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Serving Tweed Heads & Norther Rivers

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16+ Years Of Experience

High cost debts

Upon approaching Davies Home Loans, they were managing a home loan of $2,560 per month, a supplementary loan tied to their home from a previous debt consolidation, costing $660 monthly, a car loan with monthly payments of $654, a personal loan demanding $630 per month, and three credit cards collectively requiring $460 per month. This amounted to seven debts with a cumulative monthly payment of $4,964. Complicating matters, some credit cards were consistently reaching their limits, leading to monthly exceedances exacerbated by added interest. This posed a challenge as loan statements for debt consolidation typically require a clean record with no late payments over the past 3-6 months.

Their primary predicament stemmed from the reluctance of the Big 4 banks to consolidate more than four debts. Attempting to merge only four debts proved unviable, as the residual debt payments rendered them ineligible for borrowing with these banks. Furthermore, the recurring over-limit occurrences on the credit cards introduced additional complications.

Our Banora Point Mortgage Broker provided Jack and Jill with strategic guidance on improving their financial standing to make them more attractive to lenders. They heeded the advice and executed the necessary changes effectively. After six months of concerted efforts, we successfully presented their refined financial profile to a lender, enabling the consolidation of five debts and unlocking sufficient equity to settle the remaining obligations independently. Despite the need to incorporate Lenders Mortgage Insurance (LMI) amounting to $6,657 into the loan, their home’s substantial equity made this feasible. The revised home loan, inclusive of the capitalized LMI, now requires monthly repayments of $2,521. This translates to a remarkable saving of $2,443 each month. In just three months, they recouped the refinancing cost, including LMI, and every subsequent month contributes to significant savings, paving the way for the realization of their future plans.

In broader terms, their annual savings on loan repayments now amount to $29,316, marking a substantial positive impact on their financial outlook. Davies Home Loans Mortgage Broker Banora Point is delighted to have played a role in this transformative journey and eagerly anticipates assisting others facing similar financial challenges.

 

BUYING YOUR FIRST HOME?

What to know when buying first home

When first getting into the property market it’s important to know what you’re getting yourself into. A mortgage is a long term debt which if not properly accounted for can cause potential financial strain. To make sure you get the most out of your loan it’s important to follow these steps:

Assess the current rates & market prices

The first step is to look into how much you might need to borrow in the area you’re looking to buy. It’s also wise to look at the current property market as interest rates can rise and fall over time which could impact your ability to afford repayments.

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Check your borrowing power

While you might have a deposit saved, you need to check how much you are eligible to borrow based on your income, expenses, and credit history. This is important to ensure you are able to afford the cost of the loan and can make your repayments.

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Apply for your First home buyers grant

The first home owners grant could play a crucial role in determining how much you have to spend when looking for your first home. Having that extra money in your pocket can help when applying for your loan.

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Decide whether you want a fixed rate or variable interest rate loan

When deciding between a fixed interest rate and a variable rate there are definitely some benefits to each. It’s important to know the differences and decide on a rate that will work for you.

first home loan specialists

At Davies Home Loans we understand the needs of first home buyers and can answer any of those questions that arise when first getting into the property market. Our specialist mortgage brokers are experienced in helping young professionals get into their first home and will guide you through the whole loans process. 

Get in touch or give us a call to learn how we can make your property dreams come true!