Mortgage Broker in Rockingham Warns: “Don’t Take On Too Much Debt”
Announcement posted by Smartline Rockingham 08 Sep 2014
Broker for home loans in Baldivis, Rockingham and Kwinana reveals why low interest rates can provide false sense of security for some borrowers.
Rockingham, WA, 8 September 2014 - Record low home loan interest rates have allowed many Australians to become homeowners, many to refinance and many to purchase their first investment properties. But a mortgage broker from Rockingham recently cautioned homeowners that record low interest rates shouldn’t be an invitation to overspend.
On the heels of an RBA warning against overextending one’s financial wherewithal, Justin Smith of Smartline Rockingham recently warned his blog readers to “be careful not to overextend.”
The RBA has kept interest rates low to stimulate buying, but many Australians are tempted to spend more money than they have in an attempt to take advantage of the low interest rates. Mr Smith warns readers of the many reasons that a borrower may find themselves unable to make loan repayments if they are not careful to fully analyse their financial situations and anticipate future ebbs and flows of their income.
How Borrowers Get in Trouble
There are many reasons that homeowners suddenly find themselves unable to make their mortgage payments. Those who don’t have insurance and suddenly become ill can find themselves with no income to offset their expenses. Those who lose their jobs often have to work for less money, resulting in less net income even though their expenses remain the same.
When a young family buys a home, the addition of two children to the family can increase expenses, making it more difficult to make home loan payments. Another problem occurs when a fixed rate expires and the loan defaults to the current variable rate. Those who buy investment properties are often running them on a margin that is too slim for more than a week or two of vacancy.
Lenders’ Standards Help but Aren’t Always Enough
Lenders build a 2% interest boost into their determination of how much a borrower is able to pay back. However, they can’t anticipate everything that happens.
Words of Caution
Mr Smith has a wealth of experience as a mortgage broker in Rockingham and has gleaned plenty of knowledge during his tenure. He has seen the pitfalls of borrowing too much money and recommends that borrowers always make their errors on the conservative side.
According to Mr Smith, “When people see record low interest rates, they are tempted to borrow just for the sake of borrowing at such a great price. They don’t realise that the rates won’t be low forever and they often don’t anticipate life changes that can affect their income and expenses.”
Mr Smith continued, “While lenders are great at assessing risk and projecting the ability of a borrower to meet their obligations, they aren’t perfect. We always encourage any client to know their current financial situation fully and to maintain a few months’ income as a cushion in case of unforeseen circumstances.”
Mr Smith concluded, “It is crucial to know exactly what you have and to anticipate future changes.”
Smartline Rockingham, formerly known as The Mortgage Gallery Rockingham, brokers home loans primarily in the Rockingham, Baldivis and Kwinana areas. For more information or to ask about home loan pre-approval, call 1300 958 730 or visit their website: http://www.mortgagebrokersrockingham.com.au/.
On the heels of an RBA warning against overextending one’s financial wherewithal, Justin Smith of Smartline Rockingham recently warned his blog readers to “be careful not to overextend.”
The RBA has kept interest rates low to stimulate buying, but many Australians are tempted to spend more money than they have in an attempt to take advantage of the low interest rates. Mr Smith warns readers of the many reasons that a borrower may find themselves unable to make loan repayments if they are not careful to fully analyse their financial situations and anticipate future ebbs and flows of their income.
How Borrowers Get in Trouble
There are many reasons that homeowners suddenly find themselves unable to make their mortgage payments. Those who don’t have insurance and suddenly become ill can find themselves with no income to offset their expenses. Those who lose their jobs often have to work for less money, resulting in less net income even though their expenses remain the same.
When a young family buys a home, the addition of two children to the family can increase expenses, making it more difficult to make home loan payments. Another problem occurs when a fixed rate expires and the loan defaults to the current variable rate. Those who buy investment properties are often running them on a margin that is too slim for more than a week or two of vacancy.
Lenders’ Standards Help but Aren’t Always Enough
Lenders build a 2% interest boost into their determination of how much a borrower is able to pay back. However, they can’t anticipate everything that happens.
Words of Caution
Mr Smith has a wealth of experience as a mortgage broker in Rockingham and has gleaned plenty of knowledge during his tenure. He has seen the pitfalls of borrowing too much money and recommends that borrowers always make their errors on the conservative side.
According to Mr Smith, “When people see record low interest rates, they are tempted to borrow just for the sake of borrowing at such a great price. They don’t realise that the rates won’t be low forever and they often don’t anticipate life changes that can affect their income and expenses.”
Mr Smith continued, “While lenders are great at assessing risk and projecting the ability of a borrower to meet their obligations, they aren’t perfect. We always encourage any client to know their current financial situation fully and to maintain a few months’ income as a cushion in case of unforeseen circumstances.”
Mr Smith concluded, “It is crucial to know exactly what you have and to anticipate future changes.”
Smartline Rockingham, formerly known as The Mortgage Gallery Rockingham, brokers home loans primarily in the Rockingham, Baldivis and Kwinana areas. For more information or to ask about home loan pre-approval, call 1300 958 730 or visit their website: http://www.mortgagebrokersrockingham.com.au/.