Avoiding the loyalty tax in 2022

As of the middle of this year, the average interest rate for new home loans was 3.51%. The average interest rate for established home loans was 3.99%.

This sums up what the loyalty tax is all about. Basically, lenders reserve their most competitive offers for new customers.

Taking out a new home loan

If you’re taking out a home loan, the loyalty tax works in your favour. It means you’ll have a better shot at securing a competitive offer – and an even better shot if you speak to us first.

It also means that your new home loan definitely isn’t something you want to set and forget. Instead, we suggest you:

  • Track what the RBA does with cash rates each month
  • Monitor whether your bank passes these changes on to you
  • Speak to us as soon as your circumstances change
  • Ask us about repricing or refinancing your loan

If you already have a home loan

Refinancing seems to be on everyone’s radar, and while there are certainly advantages to refinancing, it’s something you want to do with a trusted professional in your corner.

When deciding whether refinancing is in your best interests, we’ll help you determine:

  • Strategy: Does the loan you’re switching to support your overarching property strategy?
  • Fees: Will the exit fees, valuation costs, and application fees be outweighed by the gains you make from switching?
  • Protecting your credit score: Will this application negatively impact your credit history?

To reprice or refinance?

Did you know that getting a better deal on your existing home loan doesn’t always mean switching lenders?

Sometimes, it’s simply a matter of us negotiating a better offer with your existing bank – otherwise known as repricing.

Speak to us

There are so many variables to consider, and lots of moving parts, which is why we work with our clients for the life of their loans to make sure they don’t fall victim to the loyalty tax.

Get in touch to understand your options.

Know your money mindset

We absolutely love that personal finance is something that’s discussed more openly. However, we know that for a lot of people, this is not an appealing topic of conversation! There are all kinds of attitudes to money, and all kinds of emotions surrounding it — from confidence, gratitude and optimism, to fear, shame and panic.

Whatever your money mindset, it’s worth taking a look at where you sit on the spectrum – it’s the first step in taking charge of your finances. It could be a matter of reading the right book or speaking with a finance professional who you really click with.

 

What do we mean by money mindset?

Your money mindset is about your approach to earning, spending, saving and investing. Usually, your money mindset is a subconscious set of beliefs, which could stem from your childhood or previous experiences with money. Understanding your money mindset can help you improve your financial habits. After all, knowledge is power, right?

There are two main attitudes towards money: optimism and abundance, and scarcity and pessimism.

 

Optimism and abundance

People who feel optimistic about money have confidence they’ll have enough and find it easy to save and plan for the future. They probably have goals (that they believe they can achieve) while still appreciating what they already have.

They feel positive about money and generally spend within their means, save for the future and manage their debts well.

 

Scarcity and pessimism

People with an attitude of scarcity and pessimism generally have negative views about money, which can bring on feelings of anxiety, shame or fear.

They feel undeserving of wealth, or jealous of others with abundant wealth. They prefer to spend their money rather than save for the future, because they never know when they’re going to lose.

They can feel unmotivated to take action and often avoid planning for their future, which can lead to inaction and missed opportunities.

 

How to improve your money mindset

If your money mindset is preventing you from reaching your financial goals, the good news is it’s completely possible to change any limiting beliefs.

Start with small steps like setting some financial goals and devoting time to improving your financial literacy. Avoid comparing yourself to others, and remember to celebrate even the little wins.

 

And don’t beat yourself up about it. Money isn’t usually something we’re taught about at school. It’s also not something we generally discuss with friends or even family, so it’s no surprise that – for a lot of people – it remains a mystery!

If you have property-related finance goals, get in touch for some straight-talking guidance on how to make it happen.

Ways to teach your children about money

If you’re thinking about gifting some cold, hard cash to the little ones in your life, then have a think about how you can help them develop a good relationship with money, because as we all know: old habits die hard. Here we share five ideas for how to teach children about money.

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