THE new year marks the introduction of several important initiatives that home owners and first home buyers should be aware of.
First up is the arrival of home loan fact sheets introduced as part of the federal government's banking reform legislation.
Lenders are now required to provide a fact sheet for each mortgage you may be considering. The beauty of this initiative is that borrowers can make a side by side comparison of each loan's headline interest rate, and also each loan's 'comparison' interest rate - which includes many of a loan's fees and charges, as well as the total cost of the mortgage over the full term.
Figures from financial comparison website RateCity show that by moving from the average of the major bank's standard variable rate of 7.30 percent to one of the cheapest comparison rates available on the market, at 6.35 percent, a borrower with a $400,000 home loan could potentially save around $240 in monthly repayments and more than $72,000 over 25 years.
Research by ING DIRECT has found that around one in two Australians have set financial goals for themselves for 2012, and cutting personal debt was nominated by about 25% of these people. As our mortgage is typically a major household debt, the new home loan fact sheets offer a useful first step in securing a loan that minimises borrowing costs and makes it easier to become mortgage-free sooner.
Be aware, you will have to ask for one of these fact sheets. They may not always be handed out automatically, but they're definitely worth enquiring about. For more on what's involved take a look at www.bankingreforms.gov.au.
The coming 12 months will also see important changes that affect first home buyers including cut backs to stamp duty concessions and other support schemes.
These changes vary between states. In NSW for instance, New Year's Day marked the end of stamp duty concessions for first home buyers purchasing an established home. Stamp duty relief will only be available for first home buyers who build a new dwelling or buy a newly constructed home.
In Queensland, the state government's $10,000 grant for first home buyers constructing a new home will expire on 31 January 2012. And in Victoria, stamp duty concessions for first home buyers will gradually be halved over the next four years.
In South Australia the current $8,000 first home bonus grant will be scaled back to $4,000 from 1 July 2012 and scrapped altogether after 30 June 2013.
Any reduction in concessions and other financial support is unlikely to be welcomed by first home buyers. However the rate cuts we saw in late 2011 will provide some relief for first home buyers as well as existing home owners.
If you find yourself struggling with your mortgage in 2012, a new website is available that offers valuable information.
The 'Doing it Tough' site, launched by Australia's banks, is designed to help people facing a hard time meeting repayments on their mortgage and other household debt.
The site, located at www.doingittough.info, features links to the hardship section of each bank's website plus details of your rights and possible courses of action if you can't make a loan repayment. There's no magic cure to debt difficulties but this site will let you know just where you stand.
Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine. For more information, visit www.paulsmoney.com.au
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