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Don’t Pay A ‘Lazy Tax’ on Your Home Loan

You’ve no doubt heard the news that 3 of the ‘big 4’ banks have increased their variable home loan rates.  Westpac was the first to increase their rates, despite the RBA keeping rates on hold at 1.5% since August 2016.  Westpac announced on 30th August that their variable home loan rates will increase by 0.14% effective 19th September due to the increase of costs to source funding on the wholesale markets.

The major banks have been making the usual noises about absorbing these higher funding costs in the hope that they would ease over time, and the need to pass on these costs to customers.

ANZ and Commonwealth Bank followed suit on 6th September by announcing that their variable home loan rates will also increase.  ANZ will increase its variable home loan interest rates by 0.16% effective 27th September in both owner occupier and investment mortgages.  However, ANZ will exclude customers in drought declared areas of regional Australia.  CBA will increase its rates by 0.15% from 4th October.

The headline rates for Westpac, ANZ, and CBA are as follows:

WBC

Standard variable Owner occupier Principal and Interest rate to increase to 5.38% p.a.

Standard variable Owner occupier Interest only rate to increase to 5.97% p.a.

Standard variable Residential Investment Principal & Interest rate to increase to 5.93% p.a.

Standard variable Residential Investment Interest only rate to increase to 6.44% p.a.

ANZ

Standard variable Owner occupier Principal and Interest rate to increase to 5.36% p.a.

Standard variable Owner occupier Interest only rate to increase to 5.91% p.a.

Standard variable Residential Investment Principal & Interest rate to increase to 5.96% p.a.

Standard variable Residential Investment Interest only rate to increase to 6.42% p.a.

CBA

Standard variable Owner occupier Principal and Interest rate to increase to 5.37% p.a.

Standard variable Owner occupier Interest only rate to increase to 5.92% p.a.

Standard variable Residential Investment Principal & Interest rate to increase to 5.95% p.a.

Standard variable Residential Investment Interest only rate to increase to 6.39% p.a.

NAB is yet to increase their rates, but many industry experts suggest that it is only a matter of time.

If you, or your friends or family have a home loan via one of the major banks, it would be well and truly worth the time spent to review your arrangements to ensure that the loan offers a competitive rate with low fees.

Banks traditionally rely on “inertia” in the event of raising home loan rates.  It is estimated that approximately 80% of home loan customers won’t do anything and will continue to pay the higher repayments.  This is simply a ‘Lazy Tax.’  For example, the ANZ rate increases will add about $40 a month to a $400,000 home loan.

Just to provide an indication of the rates available via some of our lenders, here are some comparisons for you to consider:

Standard variable Owner occupier Principal and Interest rate 3.68% p.a.

Standard variable Owner occupier Interest only rate 3.99% p.a.

Standard variable Residential Investment Principal & Interest rate 3.97% p.a.

Standard variable Residential Investment Interest only rate 4.29% p.a.

These reduced rates could save you THOUSANDS of dollars over the life of your home loan.

Please contact us today for a confidential, cost and obligation free discussion about your home loan.  We would also be happy for you to refer your family or friends so we can also assist them to locate a cost-effective home loan which suits their needs.

Please note that this article provides general advice, it has not taken into consideration your personal or financial circumstances. If you would like more tailored advice relating to mortgage broking or other financial services, please contact us today.

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What To Know: Interest Only Loans

Interest only loans have been a popular choice for property investors for tax purposes, and first home buyers and other borrowers looking to minimise the repayments on their debt.  Many purchasers use Interest only loans to ease the financial burden of servicing their loan.

Due to the growth of the property market in recent years, the average loan size has increased, and Interest only loans can be a short-term option to reduce the repayments and improve affordability.  This type of loan is a popular choice for property investors to lower the repayments, while hopefully the value of the property increases in value over the longer term.  Many lenders offer Interest only options on their products for up to 5 years.

On a loan of $300,000, the monthly repayment on an interest loan would be approximately $500 less per month than an equivalent Principal and Interest product at the same rate.  There can be significant savings on repayments for an Interest only loan in the shorter term, but there are also some longer-term issues:

  • As the name suggests, you are only paying back the interest on the debt. You are not making any progress on your mortgage!  At the end of the Interest only term based on the example above, you still owe $300,000.  If you selected a Principal and Interest loan (at the same rate), you would have reduced your loan by nearly $30,000.
  • Property investors and homeowners expect that the property will increase in value over time. With an Interest only loan, you will have equity in the property without paying any principal.  However, if your property doesn’t substantially increase in value over the Interest only term, you will not have gained any equity in the property.
  • At the end of the Interest only period, the loan repayments will ‘rollover’ to an increased Principal and Interest repayment. Many borrowers may be unprepared for the additional financial commitment, and will experience ‘Mortgage Stress’.  If the borrower’s circumstances have changed since the loan was established, and they cannot extend the Interest only period, it may be difficult to refinance to another Interest only loan.  The only option may be to sell the property.

As of 2015, Interest only home loans represented approximately 40% of the residential loans in Australia.  From March 2017, the lending regulator, Australian Prudential Regulation Authority (APRA) introduced restrictions on new Interest only loan business.  APRA has limited Interest only lending to less than 30% of new loans written.  The restrictions were imposed In order to limit riskier forms of lending practices, which allow borrowers to pay for escalating property prices, while not reducing their debt.

The restrictions introduced by APRA have led to rate increases on Interest only loans, and tougher requirements for customers applying for Interest only loans.  Interest only loan applicants may be subject to increased scrutiny such as more thorough income verification and higher loan servicing standards.

There have been several headlines recently in relation to the issues with Interest only home loans ‘rolling over’ to Principal and Interest loans after the interest-only period expires.  The Reserve Bank of Australia has estimated that over the next 3 years, approximately $360 billion of Interest only loans will convert to Principal and Interest Loans.  This will increase the repayments by approximately 1/3 or $7,000 p.a. on average for a $400,000 loan.

The rollover to Principal and Interest repayments may leave many borrowers struggling to meet higher repayments.  The most vulnerable will be homeowners with a high Loan to Valuation Ratio (LVR) who will find it harder to refinance or sell the property to extinguish the debt.

If you need assistance with your home loan or lending needs, please contact one of our lending specialists to determine the costs and benefits, and to discuss your options.

Please note that the above has been provided as general advice. It has not taken into account your personal or financial circumstances. If you would like more tailored advice, please contact us today, one of our friendly advisers would love to speak with you.

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Fixed Rate vs Variable Rate Home Loans

In the April meeting, the Reserve Bank of Australia (RBA) kept the cash rate on hold for the 20th consecutive month, at the record low of 1.5%.  The cash rate was reduced from 1.75% to 1.5% in August 2016, and there has not been an increase in the cash rate since November 2010.

Most of the ‘experts’ predict that rates won’t rise until next year due to slow wages growth, and general economic conditions.  Although some of the banks have increased their rates outside of the RBA cycles, many borrowers have taken advantage of the competitive home loan market to access lower rates and save on their mortgage repayments.

Given that we are currently in a record low-interest rate environment, and logic would dictate that rates are most likely to go up, does it make sense to fix your home loan?  Well, as with most financial decisions, there are pros and cons to consider with fixed rate vs variable rate mortgages.

Some of the key features of fixed rate and variable rate loans are shown below:

Fixed rate loans

  • Fixed rate loans can provide peace of mind and avoid the risk of rising interest rates. If interest rates increase above your fixed rate, you will enjoy the savings as your repayments are locked in.
  • At the end of the fixed rate period, the loan may revert to a much higher variable interest rate.
  • If interest rates fall, you will miss out on any savings, as your fixed rate is locked in until the end of the term selected.
  • Fixed rate loans are typically higher than variable rate loans, and charge break costs if you repay the loan early, wish to switch providers, or change to a variable rate before the expiry of the fixed rate term. The break costs are to compensate the lender for the loss of projected earnings on the loan and can be several thousands of dollars.
  • Fixed rate loans may limit the amount of additional payments you can make above the minimum repayment amount. A penalty may be charged for exceeding the maximum repayments allowed each year, or in the fixed rate term.
  • Fixed rate loans offer less flexibility, and do not provide full offset accounts. Some providers offer partial offset accounts, and depending on the provider, you may not have the ability to redraw.

Variable rate loans

  • Variable rate loans typically allow greater flexibility. You may be able to make unlimited repayments without penalty, and redraw the funds as required.
  • Variable rate loans can offer more comprehensive features such as a full offset account(s). An offset account will allow you to reduce interest costs by linking a savings/transaction account.  The balance held in the account will offset your home-loan and allow you to have access to that money as required.
  • If interest rates fall, your lender may reduce the rate so you can take advantage of reduced repayments.
  • If interest rates rise, your repayments will increase to the rate set by your lender.
  • Variable rate loans usually allow you repay the loan before the end of the loan contract without break costs or penalties. A standard discharge fee would apply.
  • If interest rates start to rise unexpectedly, you can convert the loan to a fixed rate. An additional application fee would apply.

Unfortunately, no one has a crystal ball and it can be difficult to predict when rates may rise.  Another option may be to split your loan.

Split loans

A split loan facility allows you fix part of your loan and leave part of the loan on a variable rate.  By splitting your loan, you have protection against increasing interest rates on the fixed portion, and you will have the flexibility of making extra repayments, and the features available on the variable portion.

There are many issues to consider before making any changes to your home loan.  Before you decide on what option would suit your needs, take the time to understand the pros and cons of fixing your home loan.   One of our friendly mortgage brokers might be able to save you thousands over the life of your home loan/s.

Please note that the above is given as general advice. It has not taken your personal circumstances into account. If you would like more tailored advice, or to learn more, please contact one of our lending specialists to determine the costs and benefits, and to discuss your options.

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Are You Experiencing Credit Card Stress?

By now, you would have received your credit card statement following the spending spree of Christmas, and the impulse purchases made during the Boxing Day/New Year’s sales. Maybe you overindulged in online shopping over the holiday period.

Credit cards offer a quick and convenient way to purchase goods and services; however, it may be more difficult to keep track of your spending when compared to using cash. If you have substantially increased your credit card balance, or reached your limit, you may be struggling to keep your repayments up to date within the interest-free period.

When paying via credit card we often believe that we will repay the balance within the interest-free days, but that may not always be the case! When you exceed the interest-free period, the purchase interest rate can be around 20% per annum or higher (22%+ p.a.) for a store card.

What are your options to get your credit card debt under control? Here are some alternatives to consider:

BALANCE TRANSFER CREDIT CARD

Most providers offer a balance transfer facility to attract new business. The debt from the existing card can be transferred to a new credit card which offers a reduced interest rate (as low as 0%), for a fixed period. The balance transfer rate can apply for 6 – 24 months depending on the provider; however, any additional spending will incur the standard interest rate of the new card. The key to this strategy is to be disciplined by not clocking up more debt, and to take advantage of the ‘honeymoon’ period to focus on repayments, and ensure that you clear your credit card balance on time. Once the balance transfer period has ended, the rate will default to the provider’s purchase interest rate, which may be higher than the rate on your old card! It is important to check if there are any balance transfer fees, and what other terms/conditions and charges will apply after the introductory period has ended.

LOAN CONSOLIDATION – PERSONAL LOAN

Obtaining a personal loan to consolidate the debt on your credit card(s) may be an option. Many providers offer the ability to consolidate several credit cards, with a lower fixed or variable interest rate, over a loan term of several years. Consolidating your debt should make it easier to manage your repayments, and you may be able to clear the debt earlier by paying more than the minimum amount.

REFINANCE/CONSOLIDATION – HOME LOAN

If you have sufficient equity in your home, you could consider refinancing your mortgage to consolidate your credit card debt. We are currently in a record low-interest rate environment, with some providers offering rates of >4% p.a. With or without credit card debt, if you haven’t reviewed your home loan for a few years, you may be paying too much on your current mortgage!
Consolidating credit card or personal loans into your home loan will allow you to clear these debts sooner if you have the ability to pay above the minimum home loan repayment.

There may be many issues to consider before consolidating debt, or deciding to refinance your home loan. Please contact one of our lending specialists to determine the costs and benefits, and to discuss your options.

Please note that the above has been provided as general advice. It has not taken into account your personal or financial circumstances. If you would like more tailored advice, please contact us today, one of our friendly advisers would love to speak with you.

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What Is Loyalty To Your Bank Or Building Society Costing You?

In this age of disruption, many traditional products and services are facing competition from more innovative and cost-effective providers.  The big four have traditionally dominated the Australian mortgage market through their direct home loan products. However, in recent years, their market share has been slowly eroding due to competition from second tier and online providers.   Due to increasing competition, there are thousands of lending products available, including lesser-known providers who can offer equivalent or superior loan products at a much-reduced rate.

Many lenders (some backed by a big four bank) are now offering online lending platforms with comprehensive features such as redraw facilities, credit cards, offset accounts and the ability to ‘split’ the loan between fixed and variable rates.  The lower costs to manage these products are often passed back to the consumer via reduced interest rates and lower ongoing fees.

The larger banks often take existing clients for granted, and rely on the mentality that customers will remain loyal to the bank they have been with since they started their first savings account.  Unfortunately, banks do not always reward customers for their devotion!  Homebuyers and existing mortgage customers may not consider the benefits of shopping around or switching their existing home loan to an alternative lender.  This misplaced loyalty may cost thousands of dollars in interest payments and fees over the life of a home loan.

If you review your other bills such as phone, electricity and insurance to save money, it makes sense that you review what is most likely your largest expense!  The savings realised over the life of a home loan could amount to thousands of dollars.

As an example, in a recent client comparison to refinance a variable principal and interest home loan of approx. $300,000 from a major bank, a reduction of 0.52% in the interest rate saved $150 per month ($1,800 p.a.), with a potential saving of nearly $60,000 in interest payments and fees over the 30-year term of the loan.

There are many issues to consider before refinancing your home loan.  Please contact one of our lending specialists to determine the costs and benefits, and to discuss your options. One of our friendly mortgage brokers might be able to save you thousands over the life of your home loan/s.

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How To Protect The People In Your Business

Business owners are usually aware of the need to protect assets such as the business premises, plant & equipment, vehicles and stock via general insurance.  However, few owners consider the risks to the future of the business by not appropriately covering its most important asset – the people within the business!

Business owners should also contemplate the financial loss if personnel responsible for the equity, credit or ongoing revenue exit the business unexpectedly due to sickness, accident or death.

Business risk protection strategies for key personnel within a business include:

Buy/sell protection; Also known as partnership protection.  Allows shareholders in a business to insure for the value of their equity to cover death, total & permanent disability or serious medical conditions such as heart attack, cancer stroke etc.  If a partner suffers from an insurable event and exits the business, the proceeds of a claim will be paid to the disabled owner, or their family in the event of death.  The cover will ensure that the departing owner or family receive fair value for their share.  In addition to the insurance, a legally binding buy/sell agreement should be completed by the shareholders.  The buy/sell agreement or ‘business will’ provides the legal mechanism by which the shares of the deceased/disabled owner can be acquired by the surviving shareholder.  Buy/sell cover is a vital part of your business succession planning, as it ensures that the ongoing ownership and control of the business remains in the hands of the original shareholders.

Business Loan cover; In order to obtain a loan or credit facilities from a bank, business owners will need to provide guarantees, and may use business &/or personal assets to secure the debt.  The debts are usually ‘at call’ and the bank can request payment in the event of the death or incapacity of the guarantor.  By obtaining adequate cover, their guarantees/securities are protected, and the surviving business owner(s) &/or family will not have to sell off assets to clear the debt.

Revenue protection cover; Also known as key person cover. The loss of a key person due to disability or death may create costs to locate, recruit and train a replacement, and result in a loss of revenue until the new staff member is operating at the capacity of the disabled or deceased employee.  This cover will offset the replacement costs and the expected reduction of revenue until the business can recover from the loss of the key person.

Business overheads cover; Provides the replacement of the fixed operating costs of a business if the owner is unable to work due to sickness or injury. Overheads which are covered include loan repayments, rent, utilities and salary costs.

Please note that this has been prepared as general advice. It has not taken into account your personal or business circumstances, insurance needs or current coverage. If you would like to learn more about business insurance, contact one of our Risk Advisers today.

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When Was The Last Time You Reviewed Your Mortgage?

Your home loan is most likely your largest financial commitment over the period of your working life. Given the ever-increasing variety and complexity of products, it makes sense to review your mortgage every couple of years. Considering the suitability your mortgage regularly will ensure that your home loan keeps up to date with your changing needs and priorities.

Examining your home loan regularly is a sensible practice which could potentially save you a significant amount of money through reduced interest rates and loan fees, or by obtaining an improved loan product which offers the benefits of offset accounts and greater flexibility.

Refinancing your home loan to consolidate personal loans and credit card debt, may also free up your cash flow by accessing a lower interest rate. If you are looking to renovate your home, or borrowing to invest, you could also consider unlocking some of the equity in your home by refinancing.

If your existing home loan has not been reviewed for some time, your current interest rate may be much higher than the competitive rates offered by other providers. If your loan was previously at a fixed rate, it may have defaulted to a much higher variable rate on the expiry of the fixed rate period.

In the event that your financial situation has improved, or if your credit score has increased since you had applied for your home loan, you may be eligible for more favourable terms, or improved features with another loan.

Alternatively, you may have signed for your loan on an ‘introductory’ or ‘honeymoon’ rate. These reduced rates typically revert to a higher rate at the end of the discount period, and may include termination fees, should you decide to switch lenders.
As we have been in a record low-interest rate environment for some time, rates are more likely to increase over the longer term. We have noticed in recent months that some banks are increasing interest rates outside of the Reserve Bank of Australia’s cycles. If you are concerned about interest rate increases, you may wish to ‘lock in’ a fixed rate on all, or part of your home loan.

In addition to offset accounts, which will reduce your interest payments, many providers also offer the ability to make additional payments without any penalties. A handy feature to consider on your loan is the ability to be able to withdraw extra payments that you have made. A redraw facility may be beneficial if you need to access funds for one of life’s many surprises. Having a home loan with flexibility should your circumstances change, can provide the ability to access funds as required, or repay your loan much faster.

Before deciding on refinancing, consider the following:
• Are there any penalties or break costs when refinancing your home loan?
• What are the legal and administrative fees to discharge your current loan?
• What are the establishment fees and ongoing costs with a new loan?
• Should I apply for a variable rate, or fix all, or part of my loan?

At The Investment Collective, our mortgage broking team is able to compare home loan providers and determine the costs and benefits of reviewing your home loan. If you, or someone you know, would like to discuss lending needs, or review their current home loan, please do not hesitate to contact one of our lending specialists for a free, no obligation consultation.

Please note that the above information has been prepared as general advice only. It has not taken into account your personal financial situation or financing needs. In order to get tailored advice, specific to your circumstances and financial needs, please contact either office to set up an appointment.

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How To Protect Your Future

It has often been said that the difference between success and failure is having a plan in place.  As with many things in life, the earlier you get started on your plan, the more successful the future outcome will be.  This is particularly true with regards to building and protecting your wealth.  A vital aspect of long term financial planning regularly overlooked is the importance of obtaining adequate personal risk protection cover.

Adequate risk protection cover such as Death, Total & Permanent Disability, Trauma and Income Protection provides a foundation onto which you will build the structure for your accumulation of wealth into the future.

Now that the new financial year has ticked over again, it may be the time to ensure you have sufficient protection in place as a contingency plan for anything that may happen in the future.  A wealth protection strategy will reduce the risk of you and your family not achieving your financial goals.

Starting out in life, you may have very little in savings and debts to manage.  If a family comes along, you should also consider how you will provide for your family and clear your debts if the unexpected occurs, particularly if you rely on one income.

Taking out cover while you are young and healthy will pay off in the long run.  If you purchase cover earlier in life, you will have access to lower premiums and you are less likely to have your cover restricted due to health conditions which are more prevalent as we get older.

Relying on your default cover via your superannuation to provide comprehensive protection for your specific needs is an all too common trap which should be avoided.  You may have an automatic level of cover on joining your fund, and this will rarely provide the benefits required to pay off the average mortgage, and cover future expenses for your partner and/or kids if you die, or stop working because of an accident or illness.

A long term strategy to consider is obtaining cover under Level premiums, instead of the more popular and initially cheaper option of Stepped premiums.  Stepped premiums will increase annually based on the higher probability of you claiming as you get older.  Unfortunately, many people with stepped premium protection in their later years, have to reduce or consider cancelling their cover, due to premium increases at the time when they may need it most.

A Level premium will ‘future proof’ your wealth protection as the premium will increase annually based on CPI, rather than increasing age risk factors.  When you are older, you will be able to maintain your cover as the premium has been averaged over the life of the policy.  On face value, stepped premiums appear to be the cheaper option when you are young, but Level premiums provide the longer term security to hold your valuable cover into the future.

Remember, sometimes more is lost by inaction, rather than action.  Plan for the future today so you don’t regret your inaction tomorrow.

This advice is prepared as general advice only, not taking into account your personal objectives, financial situation or needs. Please consider the appropriateness of the advice in light of your objective, financial situation and needs before following the advice. If you would like to know more and/or to hear about whether the above advice would apply to you, please contact one of our insurance advisers today.

 

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Hazards Of The Holiday Handyman

With the increasing popularity of DIY home improvements and gardening makeovers, there has also been a surge in the number of injuries due to falls from ladders, misuse of equipment and inexperience with power tools.

Long weekends and holiday periods see a rise in accidents as people seize the opportunity to complete that project that has been put aside due to other priorities.  Hospitals and medical clinics experience an increased number of emergency visits and admissions due to serious injuries from incorrect handling of machinery and lack of proper safety precautions.

According to data collected in 2013 by the Monash University Accident Research Centre, falls from ladders whilst doing roof repairs, cleaning gutters and pruning trees, accounted for most around-the-home injuries.  Head, neck, eye and limb damage caused by power tools also represented a large proportion of DIY related injuries.

The statistics show that the most common machinery related injuries were caused by chainsaws, circular saws, lawn mowers, nail guns and grinders.

Contributing factors for the accidents were removing safety measures, disregarding safety instructions, lack of protective equipment and consumption of alcohol.

Due to the popularity of TV shows like House Rules, The Block and Better Homes and Gardens, along with the widespread use of Google and YouTube tutorials, people are often more likely to try to do it themselves, whereas previously we’d get a tradesperson to do the job.

DIY has become more commonplace as people have seen it done on TV, and decide, “I can do that!”  Many will attempt to complete projects around the home to try to save money.  It can often be difficult to find a professional to do the job who is not booked out, on holidays, or can do the job cheaply.

Access to cheap off-the-shelf power tools and other equipment, without proper training, equipment or sufficient information, can also prove hazardous.

Statistics:

Up to 75% – of DIY injuries occur around the home while undertaking maintenance, gardening or vehicle repairs.

Top 3 – DIY activities that result in injury are grinding, lawn mowing and ladder use.

Homegrown – Evidence suggests that home injuries result in more lost days from work than workplace injuries.

5:1 – The ratio of men more likely to be injured undertaking DIY tasks than women. Adults aged 25-34 are in the highest risk group. Women are most often injured in gardening activities. Men are most often injured in non-gardening activities such as grinding, welding and motor vehicle maintenance.

Just remember, sometimes more is lost by inaction, rather than action.  Plan for the future today so you don’t regret your inaction tomorrow. Contact The Investment Collective to learn more about planning for your future.

 

 

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Is Your Income Protected?

With Australian household debt to income ratios at record highs, it is vital to ensure that you have adequate personal risk protection cover in place to provide security for your home loan.  It is also critically important to consider your cover needs if another family member has provided a guarantee to assist you in obtaining the loan.

Unfortunately, in the excitement of buying a home, very few prospective or existing borrowers consider the consequences of not being able to work due to sickness or accident, or the financial impact of death, particularly with loans held jointly with a spouse, or with an additional guarantor.

Loss of income in the event of disability, even for a short period, will place stress on the ability to meet mortgage and/or personal loan repayments, and day to day living expenses.  Without adequate Income Protection cover, you will erode savings, and risk falling behind in your mortgage payments.  If you default on your loan, the bank may commence legal proceedings to repossess your home or pursue a guarantor to seek payment of the liability.

In the event of the death of a borrower, the person who inherits the home, or is a surviving joint tenant will be responsible for the debt.  If the property owner was a sole borrower, the bank may request the payment of the outstanding loan amount.  If there is a shortfall in the sale price versus the loan amount, the bank may sue the beneficiary to recoup the balance of the loan.  Without adequate death cover in place, you may be putting your surviving family at risk!

Many homeowners falsely believe that they will have adequate protection via the default cover offered through their superannuation fund if they are temporarily unable to work, suffer permanent disability, or death.  Unfortunately, there is often a huge discrepancy between the amount owing on the average mortgage, and the cover held via super.

It is crucial to understand that the Death/Total and Permanent cover offered via many funds is unit based, and will decrease significantly as you get older.  The rate at which the cover reduces during your working life is typically much faster than the rate at which a mortgage is paid off!

The Income Protection cover offered by many superannuation funds may only offer a minimal benefit for a maximum period of 2 years, which in many cases will not cover mortgage payments in addition to other costs of living.  In the event of claiming on your Income Protection held via super, the benefit may be reduced based on your pre-disability earnings, and other offset provisions.

Some facts to consider in relation to covering your debts:

  • For every home destroyed by fire, 3 are forced to be sold due to death, and 48 are forced to be sold due to disablement.
  • 1 in 6 men and 1 in 4 women are expected to suffer a disability between the ages of 35 to 65 that causes a loss of 6 months or more off work.
  • 2 out of 5 Australians will suffer a critical illness such as Cancer, Heart attack or stroke before they reach 65.

Here at The Investment Collective, we have friendly advisers who specialise in risk insurance. If you would like to review your personal cover requirements contact us today.

Please note: The information provided in this article is general advice only. It has been prepared without taking into account any person’s individual objectives, financial situation or needs. Before acting on anything in this article you should consider its appropriateness to you, having regard to your objectives, financial situation and needs.

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