7 of the best financial resolutions for 2020

7 of the best financial resolutions for 2020

Finance may not be sexy, but this classic season for goal-making and self-reflection is actually quite suited to financial resolutions. Access to annual financial statements can show you how you managed your money in 2019, and give you an idea of what you can achieve in 2020.

If you’re not sure where to start, we’ve picked 7 of the best financial resolutions for you:

1. Make a realistic 2020 budget

As the saying goes, a goal without a plan is just a wish. If you’re serious about improving your financial situation in 2020, you need to have a realistic plan that you can stick to. In finance, the best plan is to start by preparing an honest budget.

Write down a list of your current debts and bills, and do a thorough expense audit of your annual bank statement to find out where your money is really going.

Did you spend an unexpected $500 this year on UberEats? Maybe you subscribed to free trials of Prime Video, Disney+, Netflix, Stan and FoxtelGo, and didn’t notice that they all switched over to paying accounts?

Whatever you have done with your money this year, be honest with yourself, because if you cheat, you’re only cheating yourself.

Find out how to set your own 2020 budget here.

2. Cut down on stuff you don’t need

When you’re making your 2020 budget, think about what you can afford to live without.

Cutting down on your expenses is almost a similar process to decluttering your home. As Japanese Author and tidying consultant Marie Kondo says, “Small changes transform our lives.”

This same logic applies when reviewing your spending habits. Reducing unnecessary expenses can significantly impact the amount you can save, and help you pay off debts.

Starting small is the key to success. Getting rid of just one digital subscription for example, could save you over $100/year, and show you the benefit of sacrificing one small luxury to grow your savings.

Four ways to cut down on your expenses in 2020

3. Check your savings rate is above the inflation rate

A quick tip that you can implement quickly in 2020 is checking that your current savings account is offering you an interest rate above the inflation rate.

The inflation rate is currently sitting at 1.7 per cent. So, if your savings account is offering you an interest rate less than that, you are basically “parking” your money, rather than earning real interest on it.

For example, if you have $100 in your savings account now, and your savings interest rate is 1.5 per cent per annum, you will technically have $101.50 in your account at the end of the year.

However, if the inflation rate is 1.7 per cent, at the end of that year you will need $101.70 to buy goods or services originally worth $100. So, in terms of “real purchasing power” at the end of the year, you have lost 20 cents. Technically, the bank is not taking away any money from you, you are just not earning as much as you could have previously.

0.02 per cent, or 20 cents for every $100 may not sound like a lot, but if you have $100,000 in your savings account, this 20 cents turns into $2,000.

Learn more about how the inflation rate can impact savings rates.

4. Get a lower interest rate on your home loan

After three RBA cash rate cuts in 2019, interest rates for both owner occupier and investment home loans have reached record lows.

This prompted many Australians to start looking at the rates offered by their current lenders. Some customers found they could save thousands by switching from a big four to a smaller lender with a lower rate, yet many are still reluctant to switch. Whether this is a case of consumer inertia, or customer loyalty, is hard to tell.

However, just because you don’t want to switch doesn’t mean you can’t get a lower rate. If you’re a loyal customer, you can always negotiate a lower rate on your home loan by trying one of these four negotiation tactics:

  1. Shop around and find the lowest rates on offer, to see if you can save
  2. Ask for the same rate as a new customer, if you’re a reliable debtor
  3. Ask your bank for a discharge form, to show you’re considering switching
  4. Speak to a mortgage broker, to get professional financial advice

Learn more about how you can convince your bank to lower your home loan rate.

5. Consolidate your debts

Consolidating your debt can make managing your repayments a lot less confusing. It can also help you reduce the total interest you pay on your debts, to save you money overall.

Two popular methods of consolidating debt are personal loans and balance transfer credit cards. Depending upon your financial situation, either could help you reduce your debt in 2020.

A balance transfer credit card allows you to transfer existing debt to a new credit card, and they often come with interest-free periods of up to twelve or even eighteen months. These cards can revert to a higher rate when the interest-free period is over, so if you want to consolidate your debt, be sure that you can repay it within that time frame.

A debt consolidation personal loan, on the other hand, does not have an interest-free period. These types of loans will often have a lower interest rate than what a balance transfer card will revert to after the interest-free period is up, yet provide a level of certainty if you need a few years to pay off your debts.

6. Resolve to improve your credit score

Your credit rating takes into account your entire credit history, positive and negative, and is used by lenders to determine whether you are a reliable debtor.

Here’s how you can improve it in 2020:

  • Check your credit score: Showing you are committed to your financial situation, and regularly checking your credit score can, in fact, improve it.
  • Pay off your debts: Increasing your credit card repayments or reducing your credit limit can do wonders for your credit score.
  • Pay your bills on time: Making regular bill payments on time can make a positive impact upon your credit score, as you’re conscientiously working toward repaying your debts.
  • Don’t apply for multiple loans: Applying for multiple loans at once can harm your credit rating, but multiple comparisons will not, so it’s important to compare loans first.
  • Determine eligibility before you apply: Being rejected from a loan can also leave a mark, so before you apply, try to determine whether you will be approved.
  • Check your credit data is correct: Credit providers can provide incorrect information, such as listing the same debt twice, so it’s important to check and contact them if it’s incorrect.

7. Make sure you always start small

A general rule for setting resolutions is to ‘think big, act small.’ If you have major goal you want to achieve, cut it down into smaller, more realistic goals.

Say you want to buy a house, for example. You might first consider aiming to save $10,000, or to pay off your existing credit card debt.

This final resolution is the most important resolution of all, because if you aim too high, too quickly, you may feel overwhelmed and end up giving up altogether.

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What are the NAB term deposit interest rates for businesses?

If you’re looking to lock in a return on your business savings, one option is a business term deposit with NAB. The big four bank provides competitive interest rates while giving you the flexibility to choose the term. NAB offers business term deposit interest rates for investments of between $5,000 to $499,999.

NAB doesn’t charge any monthly account or application fees. The interest is calculated daily and for the 90-day term and six months term, you will get paid when the deposit matures. For the 12 months term, you can either choose to get paid monthly, quarterly, half-yearly or annually. 

If you wish to withdraw your funds before the deposit matures, you need to give NAB 31 days notice. However, they do make exceptions if you’re experiencing hardship and need the funds immediately. Either way, you may have to bear the prepayment cost, which you can learn more about in the Terms and Conditions.

How do I get a pre-approved home loan with Aussie?

Getting Aussie home loan pre-approval means receiving conditional support from Aussie Home Loans to borrow the money you need to buy a home. 

It’s an indication of the approximate amount Aussie may offer you, subject to some terms and conditions. Keep in mind, having a pre-approved home loan does not guarantee an actual approval of your loan when it comes time to buy.

Aussie home loan pre-approval often involves speaking to one of the lender’s brokers. You can make an appointment online. You’ll often have to submit your personal details and other information about your assets, income, liabilities and expenses.  It’s worth remembering that a pre-approved loan is usually valid for a few months.

How do I get a Suncorp home loan pre-approval?

Getting home loan pre-approval helps you work out a budget to help you search for a suitable property and make an offer with confidence. Once you put in an application, you should get your pre-approval outcome within two business days. To help get a fast turnaround time of your pre-approval application, ensure all the information and documentation that Suncorp requires. This includes proof of identification, recent payslips, bank account and credit card statements.

You can submit the home loan pre-approval application online. You’ll be asked for information about your income, expenses, assets, and debts. It should take you about 10 minutes to fill out the application, and you can do it free of charge. A Suncorp lending specialist will review your application and contact you within 24 hours or the next working day. Suncorp will not run a credit check until you have heard from this lending specialist.

Once you get Suncorp home loan pre-approval, it’s valid for 90 days. If you don’t find a property you wish to buy in this time you may be able to apply for an extension, speak to your Suncorp lending specialist about this.

Why should I get an ING home loan pre-approval?

When you apply for an ING home loan pre-approval, you might be required to provide proof of employment and income, savings, as well as details on any on-going debts. The lender could also make a credit enquiry against your name. If you’re pre-approved, you will know how much money ING is willing to lend you. 

Please note, however, that a pre-approval is nothing more than an idea of your ability to borrow funds and is not the final approval. You should receive the home loan approval  only after finalising the property and submitting a formal loan application to the lender, ING. Additionally, a pre-approval does not stay valid indefinitely, since your financial circumstances and the home loan market could change overnight.

 

 

Can I get a NAB first home loan?

The First Home Loan Deposit Scheme of NAB helps first home buyers purchase a property sooner by reducing the upfront costs required. This scheme is offered based on a Government-backed initiative, with10,000 available places announced in October 2020.

Suppose your application for the NAB first home buyer loan is successful. In that case, you’ll only need to pay a low deposit, between 5 and 20 per cent of the property value and won’t be asked to pay lender's mortgage insurance (LMI). You’ll also receive a limited guarantee from the Australian government to purchase the property.

If you’re applying for the NAB first home buyer home loan as an individual, you need to have earned less than $125,000 in the last financial year. Couples applying for the NAB first home loan need to have earned less than $200,000 to be eligible. To be considered a couple, you need to be married or in a de facto relationship. A parent and child, siblings or friends are not considered a couple when applying for a NAB first home loan.

The NAB First Home Loan Deposit Scheme is currently offered only to purchase a brand new property, rather than an established property.

Does UBank offer home loan pre-approvals?

If you’re applying for a home loan with UBank, you can first get an approval in principle. You’ll need to provide information about your job and earnings, your household expenses, the assets you own and the debts you owe. 

UBank will assign a home loan specialist to discuss these details over a phone call, which can take about 30 minutes. 

The bank will then confirm if you’ve received in-principle approval for your home loan. Depending on how you submit your documents, this could take a few days or a few weeks. If successful, the approval will be valid for 60 days. 

Does the family tax benefit count as income?

The family tax benefits are one of several government support payments that are not considered taxable income. Other such payments include child care subsidies, economic support payments, rent assistance, and carer allowances. If you file a tax return, you typically don’t need to mention such income on the return. However, some home loan lenders may accept family tax benefits as an income source when reviewing your home loan application. You’ll still need to meet other lending requirements, such as having a sufficiently high credit score and enough savings for a deposit before the loan will be approved.

Aussies receiving family tax benefits usually have an adjusted taxable income of no more than $55,626 a year. Alternatively, one spouse can be receiving income support payments from the government to be eligible. Most importantly, they need to have children dependent on them for care at least 35 per cent of the time. Children between the ages of 16 and 19 should be either full-time secondary students or have a somewhat comparable study load unless the government exempts them from these study requirements. 

Does Westpac offer loan maternity leave options?

Having a baby or planning for one can bring about a lot of changes in your life, including to the hip pocket. You may need to re-do the budget to make sure you can afford the upcoming expenses, especially if one partner is taking parental leave to look after the little one. 

Some families find it difficult to meet their home loan repayment obligations during this period. Flexible options, such as the Westpac home loan maternity leave offerings, have been put together to help reduce the pressure of repayments during parental leave.

Westpac offers a couple of choices, depending on your circumstances:

  • Parental Leave Mortgage Repayment Reduction: You could get your home loan repayments reduced for up to 12 months for home loans with a term longer than a year. 
  • Mortgage Repayment Pause: You can pause repayments while on maternity leave, provided you’ve made additional repayments earlier.

When applying for a home loan while pregnant, Westpac has said it will recognise paid maternity leave and back-to-work salaries. All you need is a letter from your employer verifying your return-to-work date and the nature of your employment. Your partner’s income, government entitlements, savings and investments will may help your application.

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Can I apply for an ANZ non-resident home loan? 

You may be eligible to apply for an ANZ non-resident home loan only if you meet the following two conditions:

  1. You hold a Temporary Skill Shortage (TSS) visa or its predecessor, the Temporary Skilled Work (subclass 457) visa.
  2. Your job is included in the Australian government’s Medium and Long Term Strategic Skills List. 

However, non-resident home loan applications may need Foreign Investment Review Board (FIRB) approval in addition to meeting ANZ’s Mortgage Credit Requirements. Also, they may not be eligible for loans that require paying for Lender’s Mortgage Insurance (LMI). As a result, you may not be able to borrow more than 80 per cent of your home’s value. However, you can apply as a co-borrower with your spouse if they are a citizen of either Australia or New Zealand, or are a permanent resident.

How can I apply for a first home buyers loan with Commonwealth Bank?

Getting a home loan requires planning and research. If you are considering a home loan with the Commonwealth Bank, you can find the information you need in the buying your first home section of the bank’s website.

You can see the steps you should take before applying for the loan and use the calculators to work out how much you can borrow, what your monthly repayments would be and the upfront costs you’d likely pay.

You can also book a time with a Commonwealth first home loan specialist by calling 13 2221.

CommBank publishes a property report that may help you understand the real estate market. The bank has also created a CommBank Property App that you can use to search for property.  The link to download this app is available on the same webpage.

If you are eligible for the First Home Loan Deposit Scheme, CommBank will help you process your application. The scheme helps first home buyers to purchase a home with a low deposit. You can read details about this scheme here and speak with a CommBank home lending specialist to understand your options.

What happens to my home loan when interest rates rise?

If you are on a variable rate home loan, every so often your rate will be subject to increases and decreases. Rate changes are determined by your lender, not the Reserve Bank of Australia, however often when the RBA changes the cash rate, a number of banks will follow suit, at least to some extent. You can use RateCity cash rate to check how the latest interest rate change affected your mortgage interest rate.

When your rate rises, you will be required to pay your bank more each month in mortgage repayments. Similarly, if your interest rate is cut, then your monthly repayments will decrease. Your lender will notify you of what your new repayments will be, although you can do the calculations yourself, and compare other home loan rates using our mortgage calculator.

There is no way of conclusively predicting when interest rates will go up or down on home loans so if you prefer a more stable approach consider opting for a fixed rate loan.

How do you qualify for a CBA home loan with casual employment?

Qualifying for a home loan without a full-time job may be challenging, but it can be done. The first step is to understand how a CBA home loan is assessed when you have casual employment.

Most lenders will assess your expenses and savings while checking your loan eligibility, checking on factors crucial to home loan approval, such as if your bills are paid on time and what your credit score presently looks like. 

Your income can be one of the most critical factors to determine your final approved home loan amount. As such, you’ll need to provide payslip copies to lenders to assist them in assessing your income during the loan tenure, regardless of your employment status, full-time, part-time, or otherwise.

Casual employees will want to be casually employed for at least 12 months to be eligible for a home loan. Alternatively, you want to have worked as a permanent casual worker (working for a fixed number of hours per week) for at least one month, or you should have been in your current job for a minimum of three months (if the hours are irregular) to be eligible for the loan.

What is the Home Loan Rate Promise?

The Home Loan Rate Promise is RateCity putting its money where its mouth is. We believe that too many Australians are paying too much for their home loans. We’re so confident we can help Aussies save money, if we can’t beat your current rate, we’ll give you a $100 gift card.*

There are two reasons it pays to check your rate with the Home Loan Rate Promise:

  • You can find out how much you could save on your home loan by switching to a loan with a lower interest rate
  • If we can’t beat your current rate, you can claim a $100 gift card with our Home Loan Rate Promise*