In this episode
Lisa Peirano from Teachers Mutual Bank.
Lisa Peirano from Teachers Mutual Bank shares tips around home lending and busts some myths on how much of deposit you really need. With the current home buying market quite daunting to look at and experience, there is a lot of support available for first time home buyers.
This episode was sponsored by Teachers Mutual Bank.
About Lisa Peirano
Lisa is an expert in home lending and banking solutions and has 20 years’ experience working in banking and finance. She has been with Teachers Mutual Bank Limited for 2 years as a mobile banker specialising in Home Lending and assisting members with Home lending solutions.
Transcript
Fiona Bartholomaeus
Welcome, you're listening to Ed Talks WA.
My name is Fiona Bartholomaeus and I'm your host for this episode.
This episode of Ed Talks WA is proudly sponsored by Teachers Mutual Bank.
When it comes to buying a home, there is a lot of information to take in.
With the industry changing and the options for financial products growing and becoming more difficult to understand, it's important that you know what options are open to you and what guarantees you're entitled to.
Lisa Peirano is a mobile banker at Teachers Mutual Bank and she joins us to chat about finances around one of the biggest purchases of our lives.
Thanks so much for joining me.
Lisa Peirano
That's all right, thanks for having me.
Fiona Bartholomaeus
So you specialize in home lending. What can you tell us about what you're currently seeing?
Lisa Peirano
Yeah, sure. So probably the biggest thing that I'm seeing at the moment is a lot of rate competitiveness.
So a lot of banks have some great offers out there at the moment, but because rates are not great at the moment, a lot of people are also shopping around. Because of that, it also means that some people, when they do shop around, they are looking at what rates we can get and they're very rate conscious.
So even if we can't offer the most competitive rate or the lowest rate, sometimes I'm finding buyers will go maybe elsewhere or they may come with us. It can depend on what rate is available and some people, I guess, with the cost of living at the moment and how much is going up, they are very conscious of that because, yeah, every cent counts.
Fiona Bartholomaeus
Yeah, I can imagine the cost of living does have a fair amount of impact when it comes to doing such a big purchase of buying a home and things like that.
Lisa Peirano
Definitely. It's probably one of the biggest things that I'm seeing at the moment is people that are conscious of that. We do encourage people to review their home loans regularly and to make sure that they are not just on the best rate, but also on the best product for them.
Teachers Mutual Bank does offer things such as, I guess, repayment freezes for people who are looking to extend their family or grow their family.
We do find that people who are looking to do, or who are looking to extend their families, do feel that cost of living pinch just that little bit more as well.
Fiona Bartholomaeus
And we're seeing record home prices at the moment and dire commentary around all of that. Can you give us some good news? Are you seeing people, teachers particularly, being able to buy their first homes?
Lisa Peirano
Yeah, definitely.
So there's a bunch of different incentives at the moment to help people to get into their first home. So even though it seems very out of reach for a lot of people because home prices are absolutely skyrocketing, and in Perth in particular at the moment, they are astronomically high. I am seeing that a lot of first home buyers, in particular teachers, can still purchase their own homes. So we do still see that that is happening.
Fiona Bartholomaeus
So it sounds like there is still plenty of hope, even if you don't have a six-figure salary or large deposit.
Lisa Peirano
That's correct.
So one of the incentives that we do have on offer is what we call the First Home Buyer Guarantee.
So the First Home Buyer Guarantee is offered by a government department called Housing Australia. And what that means for first home buyers is that they only need deposit of approximately 5%.
So by having a smaller deposit, it means that they don't need to save quite as much and they can get into their home sooner.
Fiona Bartholomaeus
So how important is it having all of these extra supports like the first home buyers guarantee and grants and things like that?
Lisa Peirano
Yeah, for me, very important.
I think without having some of those there and without having those grants in place or those incentives in place, it makes it so much harder for people to get into their first homes.
One of the, I guess, common misconceptions is that you need to have a 20% deposit. By having those schemes in place and having those guarantees there, it means that it cuts back on how much you actually need to save and puts owning a home in, I guess, a closer reach.
Fiona Bartholomaeus
What about when it comes to credit cards? Do they help or hinder when you're getting a home loan?
Lisa Peirano
A bit of both. So if you get a credit card and you look after and you maintain it and you pay it on time, 100% it can help.
So having a credit card can create a credit file for you and can create a credit score, but it's not essential.
So if someone is young, for instance, in their early 20s and they've been saving, they've been working and saving and they've got enough now for home loan deposit, but they've never had a credit facility like a credit card, it really doesn't matter. We're going to be looking at their home loan application based on their merits, based on their income and their ability to repay that debt, we're not going to be looking at whether or not they've had debt in the past.
Whereas if someone does have a credit card, it's not going to hinder them with getting a home loan either, as long as they do repay it regularly and pay it on time.
One of the other things that we look at as well is repayment capacity, so a credit card can affect that. In some situations, people also choose to get rid of them when they're applying for a home loan to increase their borrowing capacity.
Fiona Bartholomaeus
So for people listening that already do have a home loan, what are the most important things to know about refinancing? For example, is it ever a good idea to refinance to unlock money for a car or for a holiday?
Lisa Peirano
Yeah, certainly.
So one of the things that we do look at if people are wanting to refinance is the term in which it's being repaid.
So if you've got equity available in your home, for instance, yes you can use equity to obtain a lower interest rate for items such as a holiday or a car, or even debt consolidation if you've got other consumer debts like credit cards or personal loans.
However, we may not put it over the same loan term as what you've got your home on because the chances are if you do get finance to purchase a car, for instance, you're not going to have that car in 30 years' time. You're probably going to only have it for around 5 to 10 years, possibly a little bit longer. So we may not look at putting over the same loan term, but certainly you can use equity in your home to help get a lower interest rate.
Fiona Bartholomaeus
It sounds like there's so much to think about and so much information when it comes to home loans.
If people do want advice or more information, is there a place they can go to get that?
Lisa Peirano
Yeah, certainly.
So there is definitely a lot and all of the solutions that we do talk about with our members are tailored to their individual situation and circumstances. So what might work for one person certainly doesn't work for another.
They're more than welcome to reach out to either their bank if they're not currently banking with Teachers Mutual or if they're new to banking altogether and having a home loan, they're welcome to reach out to Teachers Mutual Bank and talk to one of our specialists in that area.
Fiona Bartholomaeus
And like we've both said, you work for Teachers Mutual Bank, but there are also brokers who can help with lending.
What's the difference and why would someone go to a broker?
Lisa Peirano
Yeah, of course. So a broker has access to a bunch of different banks, whereas as a mobile banker for Teachers Mutual Bank, I only have access to Teachers Mutual Bank.
Sometimes people might choose to go to a broker because it will give them a broad range of different lenders and different interest rates, different products that are available. Whereas what I talk about would be specific to Teachers Mutual Bank.
Fiona Bartholomaeus
Is there anything else that's important to know when it comes to home loans?
Lisa Peirano
The main thing that I would suggest to most people when they are looking to buy a home loan would be to make sure that they are doing what's good for them.
So for some people, they might be able to afford a million dollar loan, but it doesn't mean they to have to borrow it. They might then choose to only borrow say $800,000 so that they can still continue to save so that that way they've still got a buffer available for them. So just because you can borrow it doesn't mean you have to.
The other thing some people choose to do is fix their home loan in, they're really budget conscious.
So they do want to be able to make sure that they can budget each month to know what their home loan repayments are.
Other people choose to go variable because they want to pay extra.
So it's about making sure your home loan is set up to work well for you based on your individual circumstances.
Fiona Bartholomaeus
Well, Lisa, thank you so much for joining us on the podcast and having a chat about home lending and all the information around it.
Lisa Peirano
Not a problem at all. Thanks for having me.
Fiona Bartholomaeus
This podcast was recorded on Whadjuk Noongar land. We acknowledge the traditional custodians and pay respects to their elders past, present and emerging.
Thank you to our guest, Lisa Peirano and Teachers Mutual Bank for sponsoring the episode.
Notes
Learn more about Teachers Mutual Bank on their website.
Membership eligibility applies to join the Bank. All applications for credit are subject to our responsible lending criteria. Fees and charges apply. You can find our Consumer Lending terms and conditions and Credit Card terms and conditions available online or from any of our offices. Any advice offered is general financial advice only, and it doesn’t take into account your objectives, financial situation or needs. Teachers Mutual Bank is a division of Teachers Mutual Bank Limited ABN 30 087 650 459 AFSL/Australian Credit Licence 238981.