Bankruptcies on the rise
With petrol prices on the rise and increased cost of living averages across the eastern states, experts predict a swell in the number of bankruptcies in urban regions of Australia from a historically low base. Following a recent study, ITSA (Insolvency and Trustee Services Australia) reported that the number of bankruptcy incidents rose by an average of 15.27% in NSW, Queensland and the Northern Territory, compared to the same period in 2004. Aside from living cost inflations, economists relate the rise in bankruptcy claims to an unprecedented increase in the number of people who are choosing to live beyond their means by borrowing against their real estate holdings. Despite the recent break in housing affordability, with average capital returns down nearly 50% in the last 6 years, a troubling trend for the economy is beginning to emerge.

Refinancing wisely
While borrowing against the equity in your home and refinancing can be smart decisions, knowing when and why to refinance are critical factors in making your decision. Leveraging your real estate for available cash can be beneficial, or a risky proposition, depending on how you choose to use the funds you receive. Another factor in refinancing wisely is the type of mortgage loan you choose to employ. Understanding the principles behind each type of mortgage, can help you make an educated decision on how to protect yourself while utilising home equity resources. Working with a reputable mortgage broker and avoiding the “too good to be true” claims from less scrupulous lenders can also play a large part in protecting your financial interests when seeking to refinance.