BeFound - 2012 KickStart promo event!

This could be the cheapest and quickest way to find staff right now!!

Until the end of February 2012 we are going to help Australian businesses and Job Seekers by reducing our placement fees by 90%.  No, that’s not a typo - for a limited time we will be reducing our placement fees to just $50 + GST!  That’s less than a quarter of the cost of placing a job advert on-line!

All other terms and conditions remain the same:

§       Still no up front costs

§       No subscription fees

§       No on-going fees

§       Just a one off placement fee of $50 + GST!!

So how does it work:

§       Offer valid for profile requests made between 10 January 2012 and 28 February 2012 and the placement must be confirmed by close of business on Monday 12 March 2012 

§       Offer open to existing and new employers registered on BeFound.com.au 

§       To be eligible for the reduced fee employers MUST include the code ‘2012KickStart’ on the uploaded position description.  If this code is not included our standard fees will apply 

§       Offer valid for permanent or casual, part-time or full-time engagements only 

§       Offer not valid for labour-hire contracting agreements (standard T&Cs apply for all contract engagements)

Don’t delay – jump onto BeFound.com.au now and start building your team ready for the year ahead - remember to quote the discount code - 2012KickStart - when requesting any profiles.

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Think before refinancing -2-

If you are thinking of refinancing to get a better deal which allows you to pay off your loan quicker you need to do your homework.

I was in the bank just the other day and the teller was asking me about my account, loans etc.  When I told her what my home loan interest rate was she hastily said “…we can do better than that. Come and sit down…..”

As it turns out they could not beat the rate, but it got me thinking.  What if they could beat the interest rate by as little as 0.06% - would it be worth the switch?  On a $300,000 loan over 30 years that is a potential saving of around $4300.  Looking good so far.

• My current loan costs me $375 per year
• New loan would cost me $395 per year New loan is going to cost me an additional $600 in account keeping fee over the term of the loan

There are also charges associated with the new loan:

• Establishment fee - $600
• Valuation fee - $450These are added up front which would actually make the total loan amount $301,050

I also took my original loan out before Exit fees were banned and would have to pay $1000 for early redemption of my current loan, but the new lender will cover the cost of the early redemption. Fantastic!

So, let’s add it all up and see where we get to:

• Total interest saving (based on new balance of $301,050) - $2,900 saved
• $600 extra cost of annual account keeping feeOverall saving of $2,300 in interest over the 30 year term - $75 per year saved.

Looking at the number like this would suggest that I should switch, however – if you are trying to pay your loan of quickly you may not actually save anything!  This is where you need to get a bit smarter about your calculations.

As the charges are added up front, you would only actually start saving if you were to stay with this new lender for at least 14 years.  Any less than that and the charges would out-weigh the savings on interest.

The best thing to do if you are offered a slightly better deal like the one detailed above is go back to your current lender and see if they can match or beat it.  Chances are that they will at least match it or come very close to it in order to keep your business.  Any reduction from your current lender will put you ahead so it’s worth asking the question.

This example is based an initial loan of $300,000 over 30 years at a rate of 7.5%. The savings are estimates and are not exact and are designed to be nothing more than thought provoking. The scenarios are generic and do not take individual circumstances into account. You should seek independent financial advice before making any significant changes to your financial products. .

Think before refinancing -1-

There's no such thing as free money

There are 3 main reasons for refinancing:

1. To free up equity – essentially borrowing more against the value of your house to give you a cash lump sum
2. To improve your cash flow – reducing your minimum repayments to free up cash on an on-going basis
3. To get a better deal which allows you to pay off your loan quicker

As a rule most lenders will push reasons 1 and 2 promoting the quick and ‘easy’ short term gain of extra cash. However, short-term gain equals long term pain as both these options do not actually help you pay off your loan any quicker – in fact quite the opposite. The idea of freeing up equity and/or reducing your repayments is all about keeping you in debt for longer. 

Remember that lenders, brokers and planners all benefit from your debt and it is in their interest to keep you in debt and tied to them for as long as possible.

If you are thinking of refinancing ask yourself “why?”. If you want to free up some equity or reduce your monthly payments to improve your cash flow – think twice before you sign on the dotted line.

I’m not saying “don’t do it” – just be aware that by doing so you are potentially entering into another 25 to 30 years of debt. You can afford the repayments now, but what happens when you retire and you still have another 5-10 years left on your home loan? Will your Superannuation support you and your home loan? Not likely – what happens when you are 70, retired and cannot afford the repayments on your home loan?

Make sure that you are going into it any refinance deal with your eyes wide open and don’t let anyone convince you that freeing up equity is giving you free cash – nothing is free, but the time really hits it may be too late.
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Fund fees and charges yourself

Don’t borrow more to pay charges!

Try to cover any fees and charges from your pocket rather than letting the balance of your loan increase as charges are added.

As charges are added and your loan amount increase you are essentially borrowing the money to pay the fees which means that you will be charged interest on those fees. The lenders essentially double dip, by 1) charging you fees and 2) charging you interest on those fees.

To combat paying this additional interest try to fund the fees yourself, by making additional payments which match the fees/charges.

If you have an annual account keeping fee of $300 added to/taken away from your balance on the anniversary of your loan, try to pay an extra $300 off your loan during the same month. 

If you have a monthly fee on your home loan account set up a recurring payment cover the fees – if the lender adds a fee of $10 on the 1st of each month, set up a recurring overpayment of $10 per month to coincide with the charge. You could try making your payment $15 per month. That way you will cover the fees and be paying off an additional $5 per month off your loan. You’re not likely to miss the additional $5 per month!

But most importantly – cover any fees/charges by making extra corresponding repayments as the fees/charges are applied to your home loan.

Do this as well as making any other overpayment.  Do not be tempted to think - "It's OK, I'm paying an extra $50 per month anyway so that covers the fees" - make an effort to pay the fees as well.

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Stop saving and start saving

Most of us have a savings account where we put money away. $20, $50, $100, $200 per month – the amount vary, but most of us try to save for the annual holiday or for Christmas or just for a rainy day. Well – if you put money away for a rainy day - it’s time to realise that it’s pouring with rain right now!

If you are saving for a specific thing such as a holiday, a new car, a new outfit – great! Keep doing so, but if you are just saving for the sake of it (because your mum told you it was good to save) try switching the regular saving into a regular additional home loan repayment.

Think about it. What are you really saving for? Your future? Financial Independence? And what better way to invest in your future that to be debt free quicker?

That extra $100 per month that normally goes into the saving account could save you over $70,000 in interest payments and could mean you are debt free 4 years sooner. Now wouldn’t that be nice?

It’s not the best option for all. Some of us like to know that there is a lump sum in the bank to fall back on in case of emergencies, but it’s certainly worth thinking about!!

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Off-set account – not right for all cases

An offset account is like a reverse savings account.  Instead of earning interest on the balance, you save the corresponding interest on your home loan.  So if you have $5,000 in your offset account, you are not going to pay interest on $5,000 which is sitting in your home loan. 

There are different type of offset account - some offer you 100% offset, but there are others that give you a lower percentage offset - so make sure you read the fine print.

Using your offset account correctly can save you hundreds, even thousands of dollars over the term of your home loan, but make sure that you do your sums first.  Don't just get an offset account because you think it's the right thing to do.  Most offset account carry a fee and you need to be sure that the saving outweighs the cost of having an offset account.


Simple examples:

• If your 100% offset account cost is $10 per month, so you need to save more than $120 in interest each year for it to be worth your while. To save $120 per year in interest you would need to maintain a balance of no less than $1,600 - not actually that hard if you use it as your only bank account.
• If your 100% offset account costs you $300 per year you'd need to maintain a balance of over $4000 for it to be worth doing.
• If you have a 50% offset account that costs you $200 per year you will to maintain a balance of over $5,550 for it to be worth doing.

So do your calculations and read the fine print before you sign up for an offset account and make sure that the offset will, in fact, save you money and not cost you money. 

If you do the calculations and work out that an offset account would work for you use your offset account to the max - make it work for you.  Use it as your only bank account and keep as much money in the account for as long as possible.  The best way to get the most from your offset account is to stop using all other transaction and savings accounts.

If you are saving for a something specific, it may be worth keeping a separate account so that your savings are not 'lost', but if you can manage your money in a single account - do so now and you could save.

Make sure all your income goes into your offset account. If you are a couple with separate transaction account, think about combining your efforts and use the offset account as a join transaction account with ALL income going into the offset account.  Have all salary, dividends, bonuses - everything paid directly into your offset account.

Keep the balance as high as possible for as long as possible. Pay bills on time – not early! 1 day before the due date is generally OK for BPay and EFT transfers, but it depends on your bank so make sure that you do not pay too late, but definitely do not pay your bills a week or 2 early.

This example is based an initial loan of $300,000 over 30 years at a rate of 7.5%. The savings are not exact and are designed to be nothing more than thought provoking. The scenarios are generic and do not take individual circumstances into account. You should seek independent financial advice before making any significant changes to your financial products.


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Don't blow your windfall - not all of it anyway!

If you come into some money – a decent lump sum – maybe a lotto win or a tax refund or a win on the Melbourne Cup…. Don’t just spend it all at once.  Use some of it to pay off a lump sum off your home loan - it can make a big difference!

What about that Medicare cheque or Health Fund refund? If you paid for the treatment months ago and you haven’t missed the money put it straight into your home loan.

Here are a couple very rough examples:

• A lump sum of $1000 during the second year of your home loan you will actually save you around $8000 in interest over the term of the loan and could reduce the term by 3-4 months.
• A lump sum of $500 during the fifth year of your home loan could save you up to $6000 in interest and reduce the term by 1-2 months
• A lump sum payment of just $100 made in the first year could save you over $800 in interest over the term of the loan

So no matter how small or how large the payment, it’s worth throwing all you can afford at your home loan. The emphasis is on “all you can afford”. Do not be temped to throw too much at your home loan. Do not leave yourself short – that has its own challenges and pitfalls, so do not over commit with lump sums.


This example is based an initial loan of $300,000 over 30 years at a rate of 7.5%. The savings are not exact and are designed to be nothing more than thought provoking. The scenarios are generic and do not take individual circumstances into account. You should seek independent financial advice before making any significant changes to your financial products.



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