Take control of your mortgage ladies
Have sleepless nights worrying about your mortgage payments? So who needs to be in charge of your mortgage? You or your husband?
Marcela Garza Barba talks to Emma Lockwood, Managing Director of Lockwood Finance, about mortgage troubles. Lockwood gives her advice on why women should take over the reins.
- Owner of Emma Lockwood Finance.
- Lecturer for the Housing Industry Association.
- Certificate IV in Finance Broking.
When it comes to mortgage payments who's the most responsible one, the husband or the wife?
Probably the wife! Women are predominantly the handlers of the household finances,
especially when it comes to paying bills and family financial planning. In my experience, women are more conservative and less likely to engage in risky financial decisions and therefore like to have greater control over the finances in their relationship.
Nowadays couples have to deal with lots of daily expenses. What is your advice on making repayments. Should they be paid weekly, fortnightly or monthly?
This comes down to individual preference. If you get paid monthly then you may feel it makes sense to have monthly repayments. However, most people pay their mortgage by direct debit so it's not something they actively need to think of doing every week or month.
When is it wise to refinance your mortgage and therefore get a better deal?
Since the abolishment of early repayment fees it's easier and cheaper than ever to refinance. It's wise to do so when you feel that your lender has become uncompetitive and not offering you the features or interest rate you need on your home loan.
Sometimes it can be as simple as calling your existing lender and asking for a better deal. Otherwise a broker will help you review your current loan and identify which lenders are offering a better overall package. It's a good idea to review your home loan every year, especially now that we are seeing lenders move away from following RBA interest rate decisions.
However, in general you should never refinance during a fixed term as the break costs can be enormous.
Can you explain the main ways to make my loan application strong?
Firstly, make sure you have a clear credit history as this is the first thing a lender checks. Anyone can obtain a copy of their credit file and by doing this you will be able to see if there are any credit issues that need to be addressed.
Next step is to reduce your existing debts. If you have credit cards then try to pay a couple off and then cancel them or at least reduce their limits. Existing debt will decrease the maximum amount you can borrow to buy a home so try to eliminate as
much of it as possible.
And lastly, save, save, save! The more savings you have in the bank (or in shares), the better. Lenders like to see a strong savings history over at least a three month period and the more deposit you have, the happier they are to offer you finance.
Emma's top tips: Organising daily expenses vs home loan
1. Create a budget – yes, it's tedious but it's the only way to ensure you have enough money coming in to cover your mortgage repayments and your daily expenses. Otherwise you may find yourself relying on credit cards to manage the shortfalls.
2. Track your spending – often it is the everyday little things like coffee or lunches that end up draining your finances. By keeping a diary or using a smartphone app you can monitor this spending and see exactly how much these 'leaks' are costing you.
3. Review your expenses regularly – spend some time shopping around for a better deal on your insurances, phone & internet plans.
4. Keep your credit card spending to a minimum – better still operate without a credit card altogether and use a debit card.
5. Set up several bank accounts – having your pay split into different accounts can help stop you from dipping into money that is meant for paying bills and the mortgage. I recommend having a 'spending', 'expenses' and 'savings' account.