Lewis von Stieglitz, Cheif Executive Officer of the Warwick Credit Union talks about bad credit ratings.
Lewis von Stieglitz, Cheif Executive Officer of the Warwick Credit Union talks about bad credit ratings. Contributed

'Affordability' key for loans

LENDING growth across banks might still be slow, but Warwick people are being encouraged to think about taking out a loan while interest rates are low.

Warwick Credit Union CEO Lewis von Stieglitz said with rates significantly lower than they were, now was a "good time to buy".

"At the moment there's a lot of people who are looking for money to renovate houses and for buying established houses," he said.

"It's not so much for building houses. We're also getting a bit more demand for loans for things like motor vehicles and tools of trade."

His biggest tip for people considering a loan was to first work out what they can afford.

"Look at that and maybe add on two per cent rate increase to account for that," he said.

"They need to do a budget break-down and look at their income and what their expenses are so they know what they can afford.

"The worst thing is when people commit to buying a home or vehicle they can't afford and they either don't get a loan, or they top it up with a personal loan and can't afford the repayments.

"If anyone has any doubt we're always happy for people to have a chat."

Daniel Spry of Daniel Spry Financial Solutions said while it was good to shop around, a decision shouldn't be made on interest rates alone.

He agreed with Mr von Stieglitz that affordability was the key decider.

"That's what people need to do and the banks will make sure you can service your loan," he said.

"If you fix your interest rate for a home loan, it's only for a certain period of time and the end of a fixed term might (signal an interest rate rise)."

Mr Spry said it was generally younger people who wanted to see "marble floors" instead of starting with something more affordable.

"The bottom line is people need to aim for something they can afford," he said.

"It doesn't need to be the best house on the block and people can always upgrade later on."


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