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9 New Year money resolutions - Jan 10, 2010

1. Cut up the credit card – It is probably the hardest thing to do as most of us view the credit card as our "security blanket". But it's really the devil and the quicker that you take decisive action the better.
2. Government co-contribution – Want some free money? If you earn less than $31,920 then put an extra $1,000 into super and the Government will match it. It phases out when your income reaches $61,920.
3. Start saving for rainy days – Got caught out in the GFC? Don't let it happen again and open savings accounts for education, holidays, Christmas and emergencies. Put a regular amount from every pay into each account. Remain disciplined and don't access these funds!
4. Start studying – With the economy recovering I am predicting that there are going to be some great opportunities in the job market later in the year. The best investment you could make is in yourself and acquire more skills.
5. Control/reduce debt – We were blessed with a some large interest rate cuts but they are on the rise ... and fast. Just how much they will rise by is anyone's guess but I suggest you prepare for them to rise by 2%. There will be pain so try & pay off your debt ASAP.
6. Spending diet – Most people get put off with having to write up a budget but they are really important. "Cut out the fat" out of your spending. Eating out, socialising, technology, clothing and transport are the main areas to focus on.
7. Get fit – Enter into a few fun runs and challenge yourself to get fit. Behind the scenes you will be reducing your binging on junk food and alcohol which always put a dent into savings.
8. Don't incur late fees – Get into the habit of paying bills on time. Don't be lazy and get slugged with late fees by being inefficient. $30 here and $50 there adds up over 12 months.
9. Monitor your resolutions – The worst part about setting New Year's Resolutions is not following through with them. A note in your diary to review your goals every three months can set you back on track if you have been slack.

12 tips on easing the financial pain at Christmas - Dec 3, 2009

1. Lower your credit card limit;
2. Pay with cash only;
3. Put bigger items on lay-by;
4. Use a debit card instead;
5. Take your card out of your purse and stop the impulse purchase;
6. Put a "Do I really want to pay for this in January?" note on your card;
7. Cut up your credit card altogether.
8. Set budgets;
9. Establish Kris Kringles for family and friends;
10. Put limits on presents
11. Make your own presents.
12. Buy presents in the post-xmas sales

11 ways to reduce your mobile phone bill - Oct 25, 2009

1. Use the home phone – sometimes mobiles are way too convenient … don't get lazy if the phone is only a room or two away. If you are out, wait til you get home to make the call. Some home phones are now wireless.
2. Don't talk forever – stop being a chatterbox & keep your calls short. If you know you are going to have a long call then use a landline.
3. Use off-peak services – call school friends in cheaper times … some carriers even have these calls free but don't run over the time limit!!
4. Link the family phones – talk within the family for free
5. Stop unnecessary SMS – Teenagers are terrible in having SMS conversations that go on forever with not much actual information being exchanged. Cheaper to pick up the phone instead!
6. Talk to your mobile provider – ask if there is a more suitable plan for you. Also consider bundling your phone and internet services. Invariably you end up with a better deal.
7. Pre-paid rather than plans – ideal for the kids to stop them from racking up high bills & helps give them learn to budget
8. Use your PIN – use this function to stop teenagers using your phone when they run out of credit ... just don't tell them what it is!
9. Don't take your mobile everywhere – It's not Amex... it's ok to leave home without it ... really!
10. Talk over the internet – use email, chatrooms or Skype
11. Don't use mobile overseas – use overseas carriers and pay their local rates instead. Or buy a phone card if you want to call family & friends back at home.

7 pitfalls associated with running a small business from home - Sep 18, 2009

1. Capital Gains Tax (CGT) – if you own your own home, then there is a possibility that your place could be subject to CGT. Make sure you consult a tax adviser with your own particular circumstances. Sometimes it may be cheaper to pay for separate office space rather than incur a bug tax bill in the future.
2. Protect your privacy – your privacy is affected with people coming to your house. Have a separate entrance to your office so that customers and employees are not waltzing through your place all the time.
3. Keeping good records – the ATO's motto is no receipt then no deduction. You may want to purchase an accounting software program (such as MYOB or QuickBooks). Make sure you register for GST if your turnover is greater than $75,000 per annum.
4. Stopping the "after hours" contact - many small business people will say that this is one of the most frustrating things about a home-based business. Clients will call you on weekends and after hours because they know you are at home. Have a separate business line and answering machine to avoid this.
5. Tax deductibility of home office – the ATO have been cracking down on home office deductions in recent times. You need to maintain accurate records of how you have calculated your claims. Get the measuring tape out and work out the percentage of your office compared to the whole house and apply it to your rent or interest paid. It is not good enough to come up with an estimate.
6. Remaining disciplined – productive businesses are good businesses. Don't get side-tracked and slack by watching TV or doing housework all day. Have regular start & finish times as well as set times for lunch and tea breaks.
7. Keeping up appearances – if your place looks like a pig sty & is unprofessional then perhaps it is not best to work from home. The last thing you want is your customers having an unpleasant experience.

8 rules to protect yourself from credit card scams - Aug 3, 2009

1. Keep your card safe at all times;
2. Do not keep your PIN with your card;
3. Never tell anyone your PIN;
4. Don't use a public computer to do your internet banking;
5. Don't use software that auto-completes online forms on your computer;
6. Make sure your passwords are difficult;
7. Never give your credit card details – especially your security code at the back of the card – to anyone or any website that you do not know nor trust; and
8. Regularly update the virus software on your computer.

If you think your credit card or bank account is being used by somebody else you should report it to your bank as soon as possible. You can also contact SCAMwatch on 1300 795 995.

6 ways to help look after you parent's finances - Jun 17, 2009

1. Maintain their independence - Invariably there comes a point in time when "senior moments" become more regular and your parents will need your help but don't take control of their finances until the time that you really have to. The key is to let your parents know that you are not being pushy but you just want to ensure that they are financially ok.
2. Will - A will is something that everyone should have, regardless of age. The best way to avoid an edgy discussion is to say that you don't want to know what's in the will, so long as they have one, that it has been recently updated and be aware of where it is located. If there isn't one then suggest that they see a lawyer and get it prepared. As they say "where there is a will there is a way".
3. Regular reviews - When your parents are of retirement age or older, it is a good idea to have a regular update of their financial situation. You may want to coincide it with a key date such as a birthday or Christmas. All you need to know are the basics such as where they keep their financial documents; a list of their assets (including account numbers); and the names and contact details of their key advisers.
4. Enduring power of attorney - Having a power attorney is a bit like an insurance policy. You don't need to worry about until you really need it and by then it is usually too late. For peace of mind, suggest to your parents that they should nominate someone close that they trust to take control of their finances should they become incapacitated.
5. Tax planning - The taxman invariably becomes one of the main beneficiaries when someone dies purely because of poor tax planning. Capital gains tax is a significant "sleeper" whilst a testamentary trust established on death could save thousands in tax for minor beneficiaries. By seeking quality tax advice now you can avoid quite a few hassles in the future and it may be as simple as disposing or transferring a few assets now rather than later.
6. Government entitlements - Regularly check that your parents receive the maximum government benefits that they are entitled to such as pensions, allowances and rent assistance.

9 ways to make your budget stick - May 8, 2009

1. Discipline - The secret to a good budget is DISCIPLINE. I have seen some tremendous looking budgets – with fancy graphs and tables – but unless you follow through then they are just rubbish.
2. Dangle that carrot - It is hard to save if you don't have a goal to save for. Before you prepare a budget, write down a list of goals that you want to achieve. Now close your eyes and visualize that new house or new car. The more you dream, the more it is likely to become reality.
3. Use an excel template - If you don't know how to put a budget together, Microsoft Excel has some great templates for you to use for creating a budget.
4. Arrange direct debits - If there is no money in your bank account then you are least likely to spend it. Don't tempt yourself. Arrange payments to come out of your account the day after you get paid. Create separate savings accounts for things like holidays, Christmas and education.
5. Be realistic - If you put in figures into your budget that you know you will never achieve then why put them there in the first place?
6. Pay bills monthly - Do you to get stuck with those bills such as phone, insurance and rates that arrive quarterly or annually? I find it a lot easier to pay a regular amount each month. Then you won't have to find a lump sum and throw your budget out.
7. Credit card burial - Only spend that you earn. If you want to be serious about saving then put the devil to rest and cut that card up now. Get rid of it … forever!
8. Stop impulse buying - Impulse buying stuffs up budgets. You see a fabulous pair of shoes and you are in THAT zone where you want them no matter what. Sound familiar? Get out of THAT trance by putting a note in your purse "Don't you want a house? Put it back and walk away."
9. Balance your life too! - Extreme dieting is bad just as extreme saving can be too. The goal of a budget shouldn't be to save as much money as possible and suck the life out of your lifestyle. Make sure that you have some balance in your spending otherwise you will go insane.

6 ways to teach the kids how to save - Mar 13, 2009

1. Piggy banks rule - Piggy banks are a great way of teaching kids how to save from a young age. The smart kids will know to bring it out when visitors come by. The ones that cannot be easily opened are best as this will stop the kids – and their parents too – from raiding the funds.
2. Pocket money - Pocket money shows a child the value of money. They must do a few chores to earn the right to it. The first few weeks they will spend it at the start of the week but with time they will learn valuable budgeting tips.
3. Give an incentive to save - Why not match your kids savings dollar for dollar? Yes it might cost you a bit in the short term but I would rather that than tens of thousands of dollars of credit card debt in their twenties.
4. Don't bail them out - Your darling little girl gives you those sad eyes and says that she needs your help with a few bills. Don't fall for it. Let down your guard once and they will do it again. Kids will never learn unless you give them a lesson. It is bit like riding a bike. Yes they will fall off a few times but it is best to learn the hard way.
5. Be a role model - What a better way to show a kid how to save but to demonstrate with your own savings habits. Engage them in your own family budgeting and let them see how hard it can be to save for cars, holidays and education.
6. Talk to your bank - The major banks have been great in teaching kids how to save and they also have some kid friendly bank accounts. Make sure you also ask them for a piggy bank! The CBA, for example, have recently launched a campaign www.onemillionkids.com.au with improving the financial literacy of 1 million kids over the next five years.

5 ways to boost your super - Jan 29, 2009

1. Super co-contribution - This should really be labeled "Free Money". If you earn less than $31,920 and put in a personal super contribution (to a maximum of $1,000) then the Government will match it dollar for dollar. So in effect your $1,000 becomes $2,000 for no risk whatsoever. At an average 7% return over 30 years, this strategy could generate an additional $189,000 for you in retirement.
2. Salary sacrifice - If you are on marginal tax rates of 31.5% or above, then you should definitely consider salary sacrificing extra into super as the tax rate is only 15%. Those under the age of 50 can make an annual contribution of up to $25,000. This limit rises to $50,000 for those over age 50. Employ this strategy in the last 15 years of your career and you could boost your super by up to a million dollars!
3. Reduce your fees - I know that you don't look at your super statement but if you did then you would see that you are being charged as much as 2.5% in commission, management and administration fees each year. It may only seem like a few thousand dollars per year but that can add up to close to $100,000 over a person's work life. That is a lot of money. And maybe even the difference in retiring a few years earlier or not.
4. Property within super - So many people have told me that they don't believe in super. They tell me that property is "their super". That is all well and good. But why not have property within your own self managed super fund (SMSF)? After all you are effectively paying only 15% tax to own the property rather than up to 46.5% tax outside of super!
5. Borrowing within super - Imagine if you had $200,000 in your SMSF and it could "borrow" (via an instalment warrant) a further $200,000 to get a $400,000 investment property. Any rent that you receive goes against that borrowing together with any super contributions that you may make. There are specific restrictions with this strategy and you should see an expert before trying to do it yourself.

10 tips to recession-proof your life - Oct 22, 2008

1. Use Excel Budget Templates – Now is a time more than ever to write up a budget for the household. Excel has some great easy to use templates to get you started. Simply type “budget” in the Help menu.
2. Don’t change jobs – when things get tough for a business it is usually the last person in that is the first person out. Gen Y are now officially on notice.
3. Save for a rainy day – make no mistake there are some dark clouds in the air, so a few extra dollars saved today may become valuable tomorrow
4. Pay extra off the home loan – with the RBA providing relief on interest rates, now is a good time to maintain the same repayment levels and reduce your debt to get ahead
5. Invest in yourself – by doing some extra studies at TAFE or uni, you are gaining more skills and turning a job into a career and increasing your income-producing opportunities
6. Live within your means – don’t worry what the Jones’ have next door. Going beyond your means may spell trouble down the track if things get harder.
7. Make yourself invaluable at work – what business owner would be silly enough to get rid of an integral part of their team when they are trimming the “fat” from their own business?
8. Keep your life insurances – it may seem easy to stop your insurance cover to help with your savings plan, but people generally getting sicker during stressful times
9. Cut out the excesses – think back to when your parents were your age and what they didn’t have. Do you really need all the trimmings associated with modern day life?
10. Enter into running a marathon – sounds strange but my period of greatest savings is when I have trained for a marathon. Easiest way to stop alcohol and fatty food costs. Plus you can fit into “that dress” again!

7 ways to spend your tax refund - Oct 10, 2008

1. Pay off the credit card – use the windfall to finally get on top of your debts and start getting ahead again;
2. Deposit for a home – a bit hard to do so with a $200 refund, but if you have saved all those receipts during the year and get a nice refund it may kickstart your savings for a house;
3. Put $1,000 into super – if your income is low enough then you may get the Government to match your super contribution with another $1,500 via the super co-contribution. Free money!
4. Savings plan for the kids/grandkids – take advantage of the tax free threshold of kids where they can earn up to $1,667 per year and make the money work better for you
5. Pay extra off the mortgage – rising interest rates have meant that extra repayments off the principal now will have significant effect in years to come
6. Go on holiday – not sure if it is just me that feels this way, but it always seems sweeter having a holiday on the taxman.
7. Christmas Club savings – yes folks Christmas is coming … make sure you have enough cash saved up so that you are not hitting the credit card & getting yourself into more debt problems come January

10 great petrol saving tips - Sep 10, 2008

1. Use public transport - not only do you save money in transport costs each week, but you are not reliant on the accident gods having an impact on your arrival time
2. Walk ­ stop being lazy, do some exercise & walk rather than hopping into the car to go down the road. Acts as a disincentive of buying too much if you know that you have to carry the bags home.
3. Car pool – why drive 2 cars when one car can do the job. Makes for a quicker trip during peak times as you can use the T2 Transit lanes.
4. Drive a smaller car – get rid of the petrol guzzling V8 and opt for a more economical car. Do you really need a 4WD in suburbia? Fitting into those smaller parking spots is a bonus.
5. Off-peak driving – avoid the traffic congestation in the peak hour by planning your travel during the quieter times of the day.
6. Claim a tax deduction – if you use your car for work purposes then keep a log book and claim a bit back from the taxman at tax time. Every little bit helps.
7. Take the lead out of your foot – the quicker you speed up & slow down, the quicker you are reaching for the purse.
8. Put the window down – we are all guilty of having the air conditioner on during summer, but fresh air from the window is just as effective at times and saves you money.
9. Pump them up – flat tyres makes the engine work just that little bit harder. The guys at the service station will happily pump up your tyres for free in exchange for a smile.
10. Shop around – there are many websites that provide a daily list of cheap petrol outlets. Stay tuned for the National Fuel Watch scheme announced in the Federal Budget.

Cheap Father’s Day present ideas - Sep 1, 2008

1. Handmade card – my friends at Hallmark probably won’t be too happy with me but a hand made card will mean alot more to dad than a bought one. And its free!
2. Cook up a treat – we all know that the way to a man’s heart is through is stomach … so make a cake or some pancakes for dad this Father’s Day.
3. “Father’s Day Special” passes – make up a few passes that dad can exchange for when he wants chores done like the car washed or the dishes cleaned. Perhaps you can also have ones that have you playing footy or dolls with dad.
4. Quiet Time pass – for some strange reason, I think dad will really like this one
5. Footy Pamper Package – we know that dad loves his footy so why not pamper him during the footy. Serve him drinks, make him some pies and give him a neck massage when the footy is next on TV. He will feel like he is in a Corporate Box at home.
6. Write a poem/letter – write down the reasons why you think that dad is so special
7. Sing a song – you could even record it & put it on CD so that dad can listen to it in the car on the way to work each day
8. Collage of pics – show all the fun times that you have spent together
9. Father’s Day Awards – be creative and draw up an award like World’s Best Dad. Guaranteed to make it onto his wall at work or in the study.
10. Bacon & eggs – Dad will feel like a king when you serve him breakfast in bed. Just make sure that you don’t burn the toast.
11. Have a picnic – make up some sandwiches & take dad down to the park for a fund day for all of ye.

Golden rules for investing - Aug 10, 2008

1. Market timing – whilst it is impossible to predict the market lows, the greatest returns in sharemarket history are made when you can pick the share price at its lowest. Buy low, sell high
2. Time in the market – if you bought when the sharemarket was higher, then an important maxim is to stay in the market and don’t panic. Generally in the market, what goes down will invariably go up over time.
3. Don’t have all your eggs in one basket – the risk of losing all your money in the sharemarket actually reduces the more stocks you have via diversification. But don’t have more than say 15 stocks because the brokerage costs will start outweighing the marginal benefits.
4. Pick quality stocks – when markets fall we often see that some great stocks have been reduced too much and are actual at a discounted price. I have seen too many people lose money on speculative stocks than make money on them.
5. Dollar cost averaging – don’t buy 100% of your portfolio on the one day. Spread it out over a number of months to avoid the problems associated with market volatility.
6. Fully franked shares – companies that pay fully franked dividends are provide a better after tax yield than those that pay unfranked because you get a credit of 30% company tax already paid. It means that those earning less than $80,000 effectively get dividends tax free.
7. Borrowing – for a borrowing strategy to work, you need to get a return greater than the cost of the interest rate that you are paying. Otherwise you are falling further behind. Excellent strategy to consider in a rising market and the interest is tax deductible.

Nine golden rules to get the kids saving - Jul 10, 2008

1. Savings account – open up a small account for them and get them to put the birthday money into it. Teach them the benefits of interest and that “money can make money”. They can each earn up to $2,667 pa before the taxman wants to tax them at 46.5%.
2. Pocket money – it doesn’t need to be much. You just need to start getting them to learn about spending, saving and being responsible with money.
3. Help set some savings goals – motivate them to want to save for a future purpose. Sometimes it’s good to get them involved in your own savings goals (eg house, car) so they can learn first hand from you.
4. Give extra opportunities to earn money – if they really want that bike or iPod give them the chance to do extra chores around the place to save. Teaches them the value of hard work.
5. Take them shopping – most parents think that this is the worst thing to do but it can actually be a great educational tool for them to see you shop around for bargains. Get them involved and ask them to look at the prices of items.
6. Savings chart – get them to chart how much they are saving each week and help them visualize the benefits of saving.
7. Let them “fall off the bike” – kids need to get the important lesson of losing money so that they appreciate it more in the future. Better to learn at a young age than later in life.
8. Show them the household budget – show what bills are being paid and their cost and what money is coming in to pay for the bills. It helps give them a better idea of money management.
9. Simply say no – when they put on a performance at the shops when they want something tell them that have to wait, save up and shop around before they can get it. Gets them out of the habit of ‘impulse purchases’.

7 great tips to efficiently manage your super - Jun 10, 2008

1. Update your address – make sure that you notify all of your super funds when you change address or risk losing touch of your funds
2. Consolidate – don’t have a dozen super funds. They are too hard to manage and may be eaten up in fees.
3. DIY – you should have a minimum of $100,000 before you start your own self managed super fund otherwise the fees will eat up any benefits of doing it yourself.
4. Talk to a financial adviser – you wouldn’t let an amateur build your house so why do the same with your super?
5. Choose the right investment strategy – your strategy need to match your risk profile. A risky strategy, such as international shares, will only aggravate you if the market falls and you are naturally a conservative investor.
6. Allocate time to super – take the time to look after one of your biggest assets. It doesn’t need much.
7. Keep a track – check your annual statements for employer contributions, fees, insurance cover and analyse fund performance in general.

Golden rules when taking on debt - May 10, 2008

1. Don’t borrow to your limits – lending organisations have been guilty in giving too much … give yourself a bit of a buffer to cater for interest rate rises & unexpected costs;
2. Prepare
   and
   follow your budget – well done if you set a family budget but you need to enforce it as well- don’t get slack and relent to the pleas of your kids or husband!
3. Live to your means – living like a king on a pauper’s income is a sure recipe to disaster.
4. Don’t keep up with the Joneses – just because your next door neighbours has the latest & greatest electronic gizmo doesn’t mean that you must have it as well … if you can’t afford it then don’t get it. Be disciplined!
5. Cut up the credit card – it’s too easy to fall back on easy credit when you are short on funds. Learn to save up for life’s luxuries.
6. Pay off the loans with the highest interest first – no point in paying extra off the 9% home loan if you are not reducing the 24% credit card.

10 great savings tips for baby's first year - Apr 10, 2008

1. Budget, budget, budget – the quicker that you prepare and adjust to the cost of raising a child, the easier it will be for you in the long run.
2. Look out for bargains – there are a lot of good bargains out there and you have plenty of time to look during your pregnancy. Online shopping such as eBay is a good option for those initial one-off purchases.
3. Buy second hand – no point in having the best of everything if they are going to grow out of it in six months time. You are better off putting the extra money towards their education.
4. Buy generic – does your little bundle of joy really need to have the more expensive brands in his or her’s first year?
5. Borrow from family & friends – not money, but rather borrow baby gear such as prams and baby capsules that they no longer have a need for.
6. Breastfeeding – a popular choice by most mothers is to breastfeed anyway but plan on spending up to $50 per week if you intend on using formula.
7. Don’t throw them away – even allowing for their original purchase and subsequent washing of them, cloth nappies are about half the cost of disposable ones.
8. The power of compounding interest – it is alot easier to start saving for your child’s education now on $100 per month rather than have to find triple the amount in five years time.
9. You don’t have to buy everything – expect grandparents and friends to shower you with cute little outfits and fluffy toys.
10. Buy in bulk – when there are specials this is the time to bulk up and take advantage of the cost savings

Golden rules when selling your home - Mar 10, 2008

1. Less is more – cluttered homes don’t look inviting. Only have a minimum amount of items in each room to create an illusion that the house is bigger. Put away the 20 year old spoon collection.
2. Make the first impressions count – have the front garden neat and tidy. Buy some new plants if required. Remove any old lifeless shrubs and take any unwanted rubbish to the tip.
3. Flowers – a nice vase full of bright colourful flowers and aromatic candles creates a nice environment as they walk through the house
4. Make a cake – it may sound strange but the smell of fresh baking (and the smell of freshly brewed coffee) gives positive feelings to the prospective buyer when they walk through the house
5. Spend it in the kitchen – if you are going to spend money then update the kitchen. You can modernize a dated kitchen with changing cabinet handles and a coloured glass splashback.
6. Light it up – turn on the lights even if its beaming outside … but make sure you use lamps & soft lighting instead of bright bulbs. Also get rid of the dated light fittings
7. Hire it – compliment your rooms by hiring new modern furniture. It will look a lot better than your old tattered lounge.
8. Just right – make sure that the room temperature is comfortable. A house too cold is uninviting as is a sweltering one on a hot summer day.
9. Don’t paint the town red – a fresh lick of paint on the walls does wonders come selling time but make sure that you choose neutral colours as it creates an illusion of space. Strong colours can be confrontational.

Golden rules on mobile phone savings - Feb 10, 2008

1. Use landlines – sometimes mobiles can be too convenient … don’t get lazy if the landline is only a room or two away. If you are out, ask yourself if you can wait til you get home to make the call.
2. Don’t talk forever – stop being a chatterbox & keep your calls short. If you know you are going to have a long call then use a landline.
3. Use off-peak services – call friends in these cheaper times … some carriers even have these calls free but don’t run over the time limit!!
4. Stop unnecessary SMS – we have all been guilty in engaging in multi-message SMS conversations … some of them can cost a few dollars each. It is probably cheaper to just pick up the phone & call instead!
5. Talk to your mobile provider – I find it useful to challenge your provider every 6 months & ask them if there is a more suitable plan for you based on your actual phone usage. Invariably you end up with a better deal.
6. Pre-paid rather than plans – ideal for the kids to stop them from racking up high bills & helps give them a sense of budgeting
7. Use your PIN – if you have teenagers that can’t get enough of talking/texting & used all of their prepaid credits then use the PIN function to stop them from using your phone … just don’t tell them what it is!
8. Don’t take your mobile everywhere – it is ok to leave home from time to time without your mobile. Bringing it only tempts you to use it.
9. Talk over the internet – use email, chatrooms or online phone services such as Skype to communicate with friends
10. Don’t use mobile overseas – the costs are ridiculous when you use your phone overseas. If you need to have a mobile phone, use one of the overseas local carriers and pay their local rates instead. Buy a phone card if you want to call family & friends back at home.

Golden rules on “mortgage holidays” - Jan 10, 2008

1. Different Name, Same Product - not all banks call them “mortgage holidays” … some call them “parental leave” or “repayment pause options” … but regardless of the name, they are essentially the same in nature
2. Timeframe – banks will generally offer holidays on repayments for a maximum period of 12 months
3. Which customers can apply – most banks stipulate that you must have a loan with them for at least two years and you must not have been late with any previous payment
4. Must be ahead in repayments – to take advantage of this option, you also need to be ahead in your repayment schedule on your loan
5. Repayments required – whilst some banks do not require any repayments at all, some require a reduced payment during a mortgage holiday. Each application is on a case-by-case and bank-by-bank basis
6. Re-draws – banks will not allow for you to re-draw on your loan during the period of your “holiday”
7. Interest – unfortunately getting a holiday on your mortgage doesn’t mean that the bank will freeze the interest as well … it would be nice if they did … your loan will still accrue at the normal interest rate and subject to interest rate rises
8. No extra fees – generally banks don’t charge any extra fees for this option, but there is a chance that additional mortgage insurance may be required
9. Payments on re-commencement – once you return from your mortgage holiday, expect to pay a slightly higher amount as repayments are recalculated for the balance of the loan