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Remove the temptation to withdraw from your home loan




DESPITE the Reserve Bank of Australia keeping the cash on hold this month borrowers are being urged to steer clear of dipping into the loans as buffers build up.

Prior to the Global Financial Crisis it wasnt uncommon for home loan customers to pull money out of their mortgages and use their redraw facility as an ATM to fund expenses including new cars or holidays.

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RATE bait is catching out home loan customers

In many cases borrowers are paying interest rates below the four per cent mark, so for those making more than the minimum repayments on their loans their redraw accounts are building up quickly.

But AMP financial planner Mark Borg warns that using your fattened redraw facility for lifestyle expenses is a dangerous move and one that should be avoided at all costs.

Using your redraw to top up your lifestyle is really just destroying your wealth, for example buying a new TV, going on a holiday, buying a new car or clothes or spending it to get a good bottle of wine,’ he says.

You are not building up any wealth when you pull money out of your redraw account and you are failing to maximise the advantages that a low-interest rate environment affords you.

A better way to address this problem is to use an offset account, because when you use funds here your mortgage is still going down but if you want to dip in and dip out you are quarantining the amount you are doing this from.

The RBA kept the cash rate on hold at 1.75 per cent and another rate cut is tipped for August.

Data from financial comparison website shows on a $300,000 30-year home loan the average standard variable rate is 4.83 per cent and monthly repayments are $1579.

On the same loan size that is fixed for three years the average rate is 4.29 per cent and monthly repayments are $1483.

ING Directs executive director of customers John Arnott says of their home loan customer base, 40 per cent are ahead of their repayments and only 10 per cent redraw from their loans.

The average amount in a redraw account is $30,000.

There are no fees at many banks to access your money (in a redraw account),’ Arnott says.

Our existing more customers are attempted to get ahead while they last, so its an exciting time to be a homeowner but it shouldnt detract from the great saving discipline that weve seen from Australian consumers in the last five years.

The RBA board is expected to keep the cash rate on hold at 1.75 per cent this month.

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The practical oslo 29 by boutique homes is a family winner




RIGHT from the start, the Oslo 29 display home makes a strong design statement.

Boutique Homes managing director Aidan Hooper said the clean architectural lines of the Oslos facade helped set this home apart.

The facade features a pared-back monochrome palette and a select few contrasting materials, including glass, white render and grey brick. This is all adds up to strong kerb appeal.

Inside, the home has been designed with the needs of todays family in mind.

A space dubbed an e-zone (entertainment zone) has been incorporated into the open-plan kitchen, dining and living space.

The e-zone takes the form of a long built-in bench desk set into a recessed alcove on one wall.

Mr Hooper said this spot allowed parents to keep an eye on their children using computers, while they got on with preparing the evening meal.

Many people have told us they really like the convenience of the e-zone as it is near a lot of the main activity in the kitchen, he said.

Some weeks can be hectic with the demands of combining work and home responsibilities, and this is where good kitchen design can help out.

In this home, a good-sized walk-in pantry is a welcome bonus, helping to reduce clutter and mess in the kitchen.

In the kitchen itself, there is no shortage of storage or bench space; a boon for the creative cook. There are actually three separate benches: an island bench, plus a benchtop with a stunning black glass splashback (as displayed), and another benchtop off to one side, with a glass splashback providing views through to the garden.

Another practical feature of the home is the integrated outdoor living area, which extends seamlessly off the main living space via sliding doors and adds additional space in which to relax or entertain.

The interior of the house has clean lines throughout. Boutique Homes interior designers have used minimalist modern furniture, lighting and the occasional contrasting feature wall (as displayed) to demonstrate how well this home can accommodate the latest trends in interior design.

The Oslo offers a separate home theatre (great for quiet time or when the kids have friends over); a main bedroom with ensuite and walk-in robe; and three bedrooms zoned off a rear hallway, where youll also find the large family bathroom.

AT A GLANCE

Bedrooms: Four

Bathrooms: Two

Size: 267.17sq m including porch, alfresco area and garage (as displayed)

Price: From $228,500; as displayed, $359,897

Address: 50 Bandicoot Loop, Tarneit

Open: 11am-5pm Sat and Sun; noon-5pm weekdays

boutiquehomes.com.au