10 October 2012 ~ 1 Comment

6 steps to smarter borrowing

Step 1 Work out if you can afford to borrow

  • Before you take out a home loan, use a budget planner to see exactly where you spend your money and how much you can afford in repayments.
  • Allow for interest rate rises and anything that might affect your future income (such as changing jobs).

Step 2 Get the best deal

  • Allow us to compare interest rates, product features, fees and charges. Even a small difference in the interest rate can make a big difference to your payments over time.
  • We will explain to you the circumstances where fees will apply. Remember, your circumstances may change for reasons beyond your control and you may need to refinance or sell your house in the first few years of the loan in extreme unforseen events.

Step 3 Know who and what you’re dealing with

  • Anyone who wants to engage in credit activities must be licensed with ASIC or be an authorised representative of someone who is licensed. If they aren’t, they are operating illegally. Licensing can be verified by calling ASIC’s Infoline on 1300 300 630.
  • Anyone engaging in credit activities (for example by providing credit or assistance to you) must give you either a credit guide (with information such as their licence number, fees and details of your right to complain) or a written notice with details of your right to complain about their activities.
  • Ask us exactly what loans we offer and make sure you’re comfortable with any fee or commission to be paid.
  • Always check the terms and conditions of any loan contract before you go ahead. Ask the credit provider for clarification if there’s anything you’re not sure about. Consider getting independent legal or financial advice before signing.

Step 4 Maintain your repayments

  • Avoid incurring penalty fees by keeping your repayments up to date.
  • If your circumstances change and you find that your current loan is not meeting your needs, call us immediately to work out whether you may be better off changing to another loan.

Step 5 Get help if you can’t pay your debts

  • Act quickly if you’re having trouble making repayments. It may be difficult to face the problem, but ignoring it will only make things worse.
  • If you can’t make the full repayment, pay what you can. Contact us without delay.
  • If you are experiencing financial difficulties, you have the right to apply for a hardship variation. If the credit provider refuses a variation, you can complain to its independent dispute resolution scheme for a variation on the grounds of hardship (see step 6 below).
  • There are places you can go for help such as financial counselling and legal assistance. We can put you in touch with the right people.

Step 6 Complain if things go wrong

  • Try to resolve your problem with us first.
  • If you aren’t satisfied, take your complaint to your provider’s independent dispute resolution scheme, the Credit Ombudsman Service Ltd (COSL) at www.cosl.com.au or by calling 1300 780 808.
  • If you think that a credit provider has acted unlawfully or in a misleading way, you can complain to ASIC online at www.asic.gov.au or call ASIC’s Infoline on 1300 300 630.

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