Exit fees not a big issue – Brian Rowe

Iden Money Director Brian Rowe said today that he didn’t consider exit fees to be a major issue for borrowers provided the borrower carefully weighed up the advantages and disadvantages of loan products prior to settling on one.

Most lenders continue to have exit fees, some larger than others. Under the new ASIC guidelines the fees are not outlawed but must be justified.

It has been widely reported that non banks have higher exit fees than many of the banks however in most cases this is a symptom of the system in which non banks work. Exit fees charged by non banks are mostly put in place to cover the fee paid to the broker who wrote the loan, if the loan discharges in the first 4 years. Often, this fee reduces as time goes by and the lender has earnt margin income on the loan. Once the loan has run for a pre determined period the fee is no longer charged. This may not be the case with banks, who may charge a non reducing, pre-set exit fee out to 5 years. Read More »

Tips On Interest Rates – Fixed & Variable Interest Rates

Variable Interest Rates

Variable interest rates in Australia are generally set against the Reserve Bank’s “Cash Rate.” This rate is used by the RBA to make adjustments to monetary policy so that such things as people’s spending capacity can be controlled. By controlling our ability to spend, the Reserve Bank and the Australian government can achieve desired outcomes for such things as levels of employment and inflation, thereby controlling the economy.They do this by adjusting the Cash Rate up or down, dependent on whether they want us to loosen or tighten our spending habits. Read More »