For your convenience (and to save some trees) we’ve decided to make the move from a paper newsletter to this e-newsletter.

We’ll continue to strive to keep you up to date with all the breaking news in the local finance sector, along with tips and ideas to get the most out of your property investments.

Thanks to everyone for the feedback we’ve received so far and please don’t hesitate to email us anytime with comments, suggestions or just to say hello. We’d love to hear what you think!

To fix or not to fix? That is the question

As soon as market interest rates begin to rise, everybody wants to fix the interest rate on their existing mortgage, but is that really the best step for you?

Fixed rate mortgages have been around for a very long time, and these days there is a wide range of lenders offering those products. This often means greater and perhaps even more confusing choices for the consumer.

So, to try and make sense of this interesting question, let’s take a look at some of the basic pro’s and cons of fixed rate mortgages.

Certainly there are some strong positives. Firstly if interest rates in the general market place rise, your repayment doesn’t change compared to a variable rate loan. This means you can budget for the monthly payment with some certainty as you know what the interest rate will be for the period you fix. So a general rate increase means you are not likely to have to scramble to find extra money to meet a higher commitment.

On the other hand, a disadvantage with fixed rate loans is that if interest rates do come down during the time you’ve fixed, the possible reduction in repayments doesn’t get passed on to you either.

Also with some fixed rate loans the problem is that they allow you little if any flexibility. While not always the case, there may be restrictions on making extra bulk repayments, or having interest offset arrangements and re-draw facilities and the like. So, the choice of which product to go with needs to be made very carefully, matching your individual and specific needs with the product.

Finally be wary of whether there is any cost of breaking a fixed mortgage arrangement and, if so, what that cost is. Lenders may have a set amount that they need to earn from the fixed rate loan. So, if for example you needed to sell your property, and move for your job or some other reason and don’t complete the full fixed term then there may be an additional interest penalty, called a break cost, to pay on early discharge of the mortgage.

There may be a good compromise in the right circumstances called a split loan. This type of loan may allow you to enjoy the best of both worlds by having some of the loan at a fixed interest rate and the balance at a variable rate.

What’s the right choice for you?

The choice of loan is often dependant on your individual circumstances and is a choice for you. However, the great part about having a mortgage broker, is that it’s our job to give you advice on a range of products and facilities for you to consider; so if we can help in any way, give us a call.

Will your home be covered when you're away on holiday?

woman If you’re heading off on that long trip around the country or that much-awaited extended overseas jaunt, here’s something else to consider before packing the bags.

You see, most house and contents policies usually will notcover you if there is no-one living and sleeping in the home for anywhere between thirty and sixty consecutive days while you’re away.

So, what should you do to make sure you’ll be covered while you're away?

Check your policy and find out how long your home can be unoccupied before your cover lapses. If you can’t find the details ring your insurer’s help line and they’ll happily provide the information.

Now if you're planning to be away beyond the time allowed in the policy you can write to your insurer and tell them about your plans. The insurer will have to agree in writing to continue your cover.

The easiest way though may be to ask someone you trust to spend an occasional night at your place. Policies usually talk about the property being unoccupied for a number of consecutive days. But please remember, someone collecting the local paper and mail or checking on the house is not enough, the person actually needs to sleep the night in the home to keep you covered.

Christmas Budget Blues

creditcard While it might be too late for this Christmas, it’s certainly the right time to think about saving for a happier, debt free Christmas in 2007.

The most recent statistic from the Reserve Bank says that Australians now owe just over 37 Billion dollars on credit cards. That represents around $1,850.00 for every man, woman and child in the country.

Twelve months earlier the same number was 31.8 Billion dollars, that’s roughly an increase of $100 million dollars a week, every week for the last year.

The real spike occurs though around the Christmas period where the number for December 2005 jumped in excess of a billion dollars in just that month. The question is, how long can those kinds of debt levels remain manageable?

So here’s the plan, lead the way and avoid the Christmas debt trap by using another idea that’s got a long and successful track record.

Your financial services organisation probably has a Christmas Club Account. While for some this may seem an old-fashioned concept, this type of account for all the billions of reasons set out above might just be making a come-back.

The beauty of this type of account is that while you can add to it regularly, the money you deposit is locked away until the end of November or thereabouts and so the temptation to take it out earlier is diminished. Interest is usually added at the end of the year as well in time for the Christmas shopping to begin in earnest. The interest rate that applies is usually higher than that applying to a standard savings account.

As an additional service, organisations like some credit unions can have your nominated savings amount deducted directly from your pay deposited with them. If you have any extra left over, you can add to the balance via internet banking with most organisations as well.

Check the Product Disclosure Statement before opening an account to see all of its features.

So, $50 a week means $2,400 plus interest after 48 weeks. This way, the credit card might just be able to stay in the wallet.

Merry Christmas, and an even merrier January when there’s no credit card bill to pay!