Open banking is here and it’s charging full steam ahead. So just how are lenders and fintechs using your shared data in this brave, new, data-fuelled world? A new report has shed some interesting insights.
With all that’s gone on over the past two years, one of the nation’s biggest banking overhauls in recent memory has slipped under the radar.
It’s called ‘open banking’, and it aims to allow you to easily and securely share your banking data with your bank’s competitors to make it more convenient for you to switch banks when you think you’ve found a better deal on a financial product.
For example, instead of spending hours and hours gathering documentation (such as bank statements, expenses, earnings and identification documents) to refinance your home loan, you could simply request that your current bank sends the info across for you.
But, like most things, it comes with a trade-off: you’ve got to share your banking data with the prospective lender, fintech or allied professional to make it happen.
Australian open banking provider Frollo has just published the second edition of its yearly industry report, The State of Open Banking 2021, which surveyed 131 professionals representing banks and lenders, fintechs, technology providers, and brokers across the country.
The report shows open banking data availability has accelerated dramatically.
In the first 10 months of 2021, 70 banks started sharing consumer data and 14 businesses became accredited data recipients – including three of the four big banks.
This is an increase from just five data holders and five data recipients in 2020.
And more financial institutions are getting ready to jump on board.
The industry survey shows 62% of respondents plan to use open banking data within the next 12 months, and 38% within the next 6 months.
So what are they using the open banking data for?
Well, the most popular uses can be grouped into three categories:
– Lending: income and expense verification is highly valued by 59% of survey respondents.
– Money management: multi-bank aggregation and personal finance management were highly valued by 50% of respondents.
– Verification: customer onboarding (49%), identity verification (38%), account verification (34%) and balance checks (30%) were all highly valued.
Now, it’s important to note that open banking isn’t the only way you can make life easier on yourself when it comes to switching up financial products.
That’s what we’re here for!
We’re an open book – always happy to check whether you can apply for a better deal on your home loan somewhere else.
And as you know, we pride ourselves on taking on the vast majority of the legwork, whether we’re harnessing the power of open banking or not.
So if you’d like to explore your options, get in touch today – we’d love to help you out!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
When you pay a supplier or service provider, are you certain you’re paying the right account? You’ve got to be super careful these days, as scammers are compromising inboxes and requesting payments to a new account. Here’s how to protect your business and its customers.
It’s Scams Awareness Week 2021, and over the past year scams have hit Australian businesses hard, resulting in $128 million in losses.
And as alarming as that is, one-third of people who are scammed never tell anyone, so the true numbers are probably much higher.
Perhaps the most dangerous scam this year is “spoofing”, which involves scammers compromising a business’s email correspondence by imitating either your, or your customer’s, email account or website.
The scammers then email you, or your customers, requesting that payments be made to a new account for all future invoices.
The unsuspecting business or customer then makes the payment - in this example $10,000 - not realising they’ve paid the scammers. This not only costs the victim money, but disrupts business cash flow and operations too.
While spoofing is on the rise, there are some simple steps you can take to make sure your business and its customers are sending money to the correct account.
“If you have staff, talk to them about this scam to make them aware of how it works and what to look for if they are targeted,” warns small business ombudsman Bruce Billson.
Small businesses are also being encouraged to register for PayID, use BPAY, or implement e-invoicing when paying or receiving payment for invoices to help beat scammers.
That’s because these payment services will show who you’re paying before you pay, ensuring money is going to the intended account.
“PayID for example is a unique feature that will help prevent scams for individuals and businesses,” explains Australian Banking Association CEO Anna Bligh.
“Unlike paying to a BSB and account number, PayID gives the user the ability to confirm the name of the account holder before you transfer your funds.”
And the good news is that PayID is easy to register for and use.
So far, there are more than 8 million PayID’s registered across Australia, many of which are for businesses.
“As banking becomes more digitalised, no longer do customers prefer to sign a cheque or pay with cash. As a result, we all need to be more cautious about scammers and utilise services that ensure our money is being sent to the right business or individual,” Ms Bligh said.
Other steps to protect your business from scammers are to use services such as two-step authentication where possible, and double-check the authenticity of webpage links before you click.
“These are easy and simple steps to protect yourself from these very costly and abhorrent scams,” says Alexi Boyd, Chief Executive Officer at the Council of Small Business Organisations Australia.
And last but not least, if you ever have any doubts about whether you’re making a payment to the right account, or if you receive a request to change payment account information, simply pick up the phone and speak to your contact at that organisation.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Mortgage holders are facing a sooner-than-expected cash rate rise after the Reserve Bank of Australia (RBA) revised its outlook due to the economy bouncing back strongly from the Delta outbreak. So just how soon can we expect a rate rise?
As widely predicted, the RBA on Tuesday kept the official cash rate at the record low level of 0.1% for the 12th consecutive month.
But it was the wording in the RBA’s monthly statement that really caught the attention of pundits.
For the first time in a very long time, the key phrase “will not be met before 2024” was not included when referring to scenarios that needed to occur to trigger an official cash rate rise.
And in a later webinar speech, RBA Governor Philip Lowe said it’s now “plausible that a lift in the cash rate could be appropriate in 2023”.
For months, economists from financial institutions around the country have called on the RBA to revise their targets, with some predicting the cash rate rise could happen as early as November 2022, including Commonwealth Bank and AMP.
That’s right – possibly less than a year away.
Now, we understand this will be a nervy period for some mortgage holders, especially the younger ones.
After all, more than one million homeowners have never experienced an official cash rate rise (the last rise was back in November 2010).
So rest assured we’ve got your back – we’re here for you if you have any questions or concerns about what rising interest rates could mean for your mortgage.
The RBA’s statement sums it all up pretty neatly, but here’s the CliffsNotes version: as vaccination rates increase and restrictions are eased, the Australian economy is expected to recover relatively quickly from the interruption caused by the Delta outbreak.
“The Delta outbreak caused hours worked in Australia to fall sharply, but a bounce-back is now underway,” explains the RBA.
Now, the RBA says it will not increase the cash rate until actual inflation is sustainably within the 2-to-3% target range.
However, inflation has already picked up to 2.1%.
The RBA insists it’s in no rush though, saying it expects any further pick-up in underlying inflation to be gradual.
“This will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently. This is likely to take some time,” the RBA statement says.
“The Board is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2.5% at the end of 2023 and for only a gradual increase in wages growth.”
Well, the most obvious impact of a cash rate rise is that interest rates will go up, which means your home loan repayments might increase each month.
And that could have a flow-on effect for other parts of the economy, such as housing values, explains CoreLogic’s research director Tim Lawless.
“We are already seeing the rate of house price appreciation ease due to affordability pressures, rising stock levels and, as of November 1st, tighter credit conditions,” says Mr Lawless.
“Once interest rates start to lift, there is a strong chance that housing prices will head in the opposite direction soon after.”
Well, that depends on your current financial situation.
If you’re a prospective first home buyer suffering from FOMO, or someone looking to upgrade over the next two years, don’t be disheartened by increasing property prices: now’s the time to start planning ahead.
Planning ahead involves understanding your borrowing capacity, your property goals, and your current expenditures – this can help you determine what changes you can make before you pull the trigger on a purchase.
On the other hand, if you’re a current mortgage holder, now could be a good time to reassess whether you should lock in a fixed interest rate.
Indeed, many lenders have recently increased the interest rates on their 2-, 3-, 4- and 5-year fixed-rate home loans to head off the cash rate rise, and this latest statement from the RBA could trigger more rate hikes.
So if you’ve been on the fence about fixing your rate, it’s definitely worth getting in touch with us sooner rather than later.
We can run you through a number of different options, including fixing your interest rate for two, three, four or five years, or just fixing a part of your mortgage (but not all of it).
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
More than half of Australian house hunters spend the same amount of time inspecting a property as they do watching an episode on Netflix, according to new research.
We get it. You see a house you like and you immediately want to buy it, warts and all.
But take a breath, as FOMO can be costly – with a third of recent purchasers admitting to “buyers regret”.
Not doing your due diligence on a property can also have implications when applying for finance if the lender’s valuation doesn’t come in at what you expected.
And it turns out that a lot of house hunters are leaping before they look right now.
A recent survey of 1,000 property owners by lender ME revealed that 55% of house hunters spent less than 60 minutes checking out the property they eventually purchased, despite it being one of the biggest purchases of their lifetime.
That’s about the length of a standard 55 minute Netflix episode.
Turns out we haven’t just become better at bingeing during COVID-19.
COVID-19 has also reduced the time buyers have to check out properties.
But it’s not always the purchaser’s fault.
About two-thirds (65%) of recent buyers said “real estate restrictions impacted their ability to inspect and purchase their property”.
And surprisingly, almost half (45%) of buyers restricted by lockdowns admitted to doorknocking vendors to ask for an inspection on the sly, as well as looking at photos and/or videos of the property.
The lack of inspection time led to around 61% of Australian home buyers discovering issues with their property after moving in.
Around 40% of this group said they missed picking up the issues because they “lacked the skill or experience in inspecting the property”, while 33% simply “fell in love with the property and overlooked them”, and 18% were “impatient and concerned by rising prices”.
Overall, the top post-purchase problems included construction quality (32%), paintwork (28%), gardens and fences (23%), fittings and chattels (21%) and neighbours (17%).
Among owners who identified issues:
– 34% experienced a degree of “buyers regret” following the purchase.
– 58% would have paid less for the property had they discovered the problems earlier.
– 84% spent money fixing, replacing or improving the issues identified, or have plans to do so.
The moral of the story? Emotions are always involved when purchasing a home, which can cloud your judgement.
“Give weight to any niggling hunches that give you cause for concern and get a professional property inspector to do the looking for you,” says ME General Manager John Powell.
“It is also important to know your borrowing capacity in advance so you can buy your home with full confidence knowing you’ve got solid financial backing.”
As mentioned above, it’s important to know your borrowing capacity before you start house hunting so you don’t stretch yourself beyond your limits.
So if you’d like to find out what you can borrow – get in touch today. We’d be more than happy to sit down with you, take a breath, and help you work it all out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Are the days of ultra-low fixed interest rates over? It’s looking increasingly so, with two major banks increasing their fixed rates this week. So if you’ve been thinking about fixing your mortgage lately, it could be time to consider doing so.
Do you know how when one tectonic plate shifts, others around it soon follow?
Well, in the past week, the Commonwealth Bank (CBA) and then Westpac hiked the interest rates on their 2-, 3-, 4- and 5-year fixed-rate home loans by 0.1% (for owner-occupiers paying principal and interest).
Meanwhile, ING also lifted its fixed rates on 2- to 5-year terms by 0.05% to 0.2%.
For mortgage-holders, it’s a clear ol’ rumbling sign that the days of super-low fixed interest rates are coming to an end.
The Reserve Bank of Australia (RBA) has repeatedly insisted the official cash rate isn’t likely to rise until 2024 at the earliest.
But it seems the banks don’t believe them. The banks think it’ll happen sooner.
CBA, for example, is currently predicting the RBA will increase the official cash rate in May 2023, while Westpac is predicting a rate hike in March 2023 – both well before the RBA’s 2024 timeline.
Given that’s about 18 months away, the major banks are now adjusting the fixed rates on fixed terms of 2-years and longer, in order to head off the expected rise in their funding costs.
“Lenders are scrambling to lift fixed rates before they start to feel the margin squeeze,” explains Canstar finance expert Steve Mickenbecker.
“Borrowers shouldn’t be so complacent as they must expect rises inside two years, and the closer they get to that point, the less attractive the fixed rates alternative will be.
“They may want to consider fixing their interest rate for three years or longer, while the going is still good.”
Interestingly, a number of the banks – including CBA and ING – simultaneously slashed interest rates on some of their variable-rate home loans this week.
And CBA even cut their 1-year fixed rate by 0.1% (for owner-occupiers paying principal and interest).
So why did they do this when (longer-term) fixed rates are going up?
Well, aggressively competing for customers on variable-rate mortgages (and 1-year fixed) makes sense for lenders when a cash rate hike is predicted to be at least 18 months away.
They can always increase their variable rates when needed, but they can’t do the same for borrowers locked in on longer-term fixed-rate mortgages.
As mentioned above, when the big banks make a move, it’s not uncommon for other lenders to follow suit – as seen with ING this week.
So if you’ve been on the fence about fixing your rate, it’s definitely worth getting in touch with us sooner rather than later.
We can run you through a number of different options, including fixing your interest rate for two, three, four or five years, or just fixing a part of your mortgage (but not all of it).
If you’d like to know more about this – or any other topics raised in this article – then please get in touch today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Almost 33,000 Australians bought their first home four years sooner thanks to two federal government schemes that give first home buyers a leg up into the property market. Could you, or someone you know, be eligible?
We love a feel-good news story around here.
And hearing that so many first home buyers got a leg up into the property market much sooner than they ever dreamed makes us feel pretty warm and fuzzy.
This week the federal government released figures on the popular First Home Loan Deposit Scheme (FHLDS) and New Home Guarantee (NHG) initiatives.
The data showed that the two initiatives supported 1-in-10 first-time homeowners during the 2020-21 financial year.
And on average, the schemes allowed those first home buyers to bring forward their home purchases by four (FHLDS) to 4.5 years (NHG).
The FHLDS allows eligible first home buyers with only a 5% deposit (rather than the typical 20% deposit) to purchase a property without forking out for lenders mortgage insurance (LMI).
This is because the federal government guarantees (to a participating lender) up to 15% of the value of the property purchased.
Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.
The NHG scheme is very similar but is only for new builds – such as house and land purchases or a land purchase with a contract to build.
Another key difference is that the NHG property price caps are higher (see here) to account for the extra expenses associated with building a new home.
Mostly younger buyers!
According to the latest stats, 58% of all buyers under the schemes are aged under 30-years-old.
NSW (11,000 residents) and Queensland (9,000 residents) make up nearly two-thirds of the scheme’s recipients.
And it turns out that most first home buyers who secured a spot in one of the schemes used a mortgage broker (56%).
But for the NHG scheme specifically, brokers originated the vast majority of government guarantees (72%).
We’ve got good news. And a bit of not-so-good news.
The good news is that for the NHG, only 2,443 of the 10,000 spots had been secured as of October 6 – so there’s still the opportunity for eager first home buyers wanting a new build.
The not-so-good news is that spots in the FHLDS are almost full for the latest round released on July 1.
Figures show that 7,784 of the 10,000 spots have already been secured, and word is that participating lenders have waiting lists for many of the remaining spots.
That said, if you’re a single parent there’s a third, similar scheme called the Family Home Guarantee (FHG), which allows eligible single parents with dependants to build or purchase a home with a deposit of just 2% without paying LMI.
Only 1,023 of 10,000 spots have been secured in the FHG, for which you don’t need to be a first home buyer.
Last but not least, it’s worth noting that the FHLDS is an annual scheme with new spots expected to be available from July 2022 – and previously the federal government made a surprise announcement to release 10,000 additional spots in January.
So if any of the above schemes are of interest to you, get in touch with us today and we can run you through everything you need to know about them so that you’re ready to apply when the time comes.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
While many SME owners worry about their access to finance, a surge of new lenders and products is rapidly expanding the options available. And brokers have an important role to play for businesses, says the Productivity Commission.
Changes to lending markets over the past decade mean there’s now a wide range of business finance options that don’t require property as security, according to a new report by the Productivity Commission.
However, a lack of awareness of these new finance options is one of the biggest hurdles preventing SME owners from accessing them.
This is where a broker with up-to-date market knowledge can play an important role for your business, explains the Productivity Commission.
“SMEs may not be aware of all their lending options and may not feel confident about new options. Brokers can help match them with appropriate lending options,” the Productivity Commission says.
“These options include borrowing against alternative collateral – such as vehicles, machinery and intangible assets (for example, invoices and other expected receipts) – and unsecured lending.”
Changes to prudential rules have made lending to SMEs less attractive for the major banks, but at the same time, created opportunities for new and established non-bank lenders, says the Productivity Commission.
This has resulted in a broader range of lending options beyond traditional property-secured loans for SMEs, especially with the emergence of fintechs and more accessible borrower data.
“Combining new data sources with innovative analytical tools (such as artificial intelligence and machine learning) has given many lenders the information and confidence to lend to SMEs without the security of property,” adds the report.
However, while most SMEs are aware of banks as a source of finance, awareness of the newer options is more limited.
As brokers, we’re constantly upskilling and learning to make sure we stay abreast of the finance options and players in the SME finance space.
“Brokers are expected to have current market knowledge and participate in ongoing training to stay informed about new lenders and products,” explains the report.
“For example, aggregators and industry associations hold various educational events – including conferences, workshops and webinars – to improve brokers’ understanding of SME lending options.”
And it’s for this reason that the Productivity Commission highlights the key role brokers can play for busy SME owners.
“By connecting borrowers to lenders, brokers can play an important education role, particularly for those SME customers that do not have the time or inclination to undertake detailed market research,” says the report.
So if you’re in need of finance for your SME business, but don’t know where to start, get in touch today.
We’d love to run you through the growing number of finance options available for SMEs like yours.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Some borrowers will soon find it harder to get a mortgage after the banking regulator announced tougher serviceability tests for home loans. So who will they impact most?
The Australian Prudential Regulation Authority (APRA) will increase the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications from 2.5% to 3% from the end of October.
This means that banks will have to test whether new borrowers would still be able to afford their mortgage repayments if home loan interest rates rose to be 3% above their current rate.
APRA estimates the 50 basis points increase in the buffer will reduce maximum borrowing capacity for the typical borrower by around 5%.
“The buffer provides an important contingency for rises in interest rates over the life of the loan, as well as for any unforeseen changes in a borrower’s income or expenses,” APRA Chair Wayne Byres wrote in a letter to the banks.
This move doesn’t come out of the blue. Federal treasurer Josh Frydenberg flagged tougher lending standards a week prior following a meeting with the Council of Financial Regulators.
And it’s due to a combination of factors.
Firstly, interest rates are at record-low levels, and secondly, the cost of the typical Australian home has increased more than 18% over the past year – the fastest annual pace of growth since the late 1980s.
That combination has made financial regulators a little worried that some homebuyers are starting to stretch themselves too thin and borrow more debt than they can safely afford.
Mr Byres adds that 22% of loans approved in the June quarter were more than six times the borrowers’ annual income. That’s up from 16% a year prior.
As such, APRA did consider limiting high debt-to-income borrowing but believed it would be more operationally complex to deploy consistently.
“And it may lead to higher interest rates for some borrowers as lenders effectively seek to ration credit to this cohort,” APRA adds, but it doesn’t rule out limiting high debt-to-income borrowing in the future.
The increase in the interest rate buffer will apply to all new borrowers.
However, the impact is likely to be greater for investors than owner-occupiers, according to APRA.
“This is because, on average, investors tend to borrow at higher levels of leverage and may have other existing debts (to which the buffer would also be applied),” APRA adds.
“On the other hand, first home buyers tend to be under-represented as a share of borrowers borrowing a high multiple of their income as they tend to be more constrained by the size of their deposit.”
If you’re worried about how this latest announcement from APRA could impact your upcoming application for a home loan, then get in touch today.
We can apply APRA’s new loan serviceability tests to your personal circumstances to help you determine your borrowing capacity and focus your house hunting.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The federal treasurer has given the strongest indication yet that a home loan crackdown is coming, stating that “carefully targeted and timely adjustments” may be necessary to avoid troubled waters. So what could a potential lending crackdown look like?
Lending standards and fast-rising property prices have been hot topics of late.
Interest rates are at record-low levels, and the typical Australian home has seen its value increase more than 18% over the past year - the fastest annual pace of growth since the late 1980s.
It’s a recipe that’s making financial regulators a touch worried that some homebuyers are starting to stretch themselves too thin and borrow more debt than they can safely afford.
So federal treasurer Josh Frydenberg recently met with the Council of Financial Regulators - which includes APRA, ASIC, the Australian Treasury and the RBA - to discuss the state of the housing market.
“We must be mindful of the balance between credit and income growth to prevent the build-up of future risks in the financial system,” Mr Frydenberg said in a statement.
"Carefully targeted and timely adjustments are sometimes necessary. There are a range of tools available to APRA to deliver this outcome."
Here’s an interesting stat for you: almost 22% of Australians have a mortgage debt that’s more than six times higher than their annual income, according to the latest data from APRA.
That’s up from 16% just one year ago.
The fact APRA mentions that particular stat gives us a pretty good clue as to what one possible lending crackdown measure could be.
“Most analysts expect that this time, APRA will target debt-to-income ratios, probably by limiting the proportion of loans that can be made above six times an applicant's household income,” explains the ABC.
It’s also worth noting that Mr Frydenberg and APRA are not the only ones to publicly indicate that change could be on the horizon - the RBA expressed similar concerns about the increase in housing prices and housing debt just days ago, too.
“Even though the banks have strong balance sheets and lending standards are being maintained, there is a risk that in this environment, households will become increasingly indebted,” RBA assistant governor Michele Bullock wrote.
“A high level of debt could pose risks to the economy in the event of a shock to household incomes or a sharp decline in housing prices. Whether or not there is need to consider macro-prudential tools to address these risks is something we are continually assessing.”
It’s worth reiterating that we still have very limited information available about what financial regulators have in mind for any potential lending crackdowns.
What we can do, however, is help you assess your potential debt-to-income ratio on any property purchase you currently have in mind. And we can also help you determine your borrowing capacity in the current lending landscape.
So if you’d like to find out more, get in touch today. We’d be more than happy to run you through it all in more detail according to your personal circumstances.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
With house prices going gangbusters in the first half of 2021, is it still a good time to buy property? The majority of investors think so, according to the latest annual survey. And investors have their sights set on one city in particular.
The 2021 PIPA Property Investor Sentiment Survey, which gathered insights from 800 property investors across the country in August, found more than 76% of investors believed property prices in their state or territory would increase over the next 12 months.
That’s up strongly from 41% this time last year, when COVID-19 had some investors a touch nervous.
“When we think back to last year, which was a time of much fear and uncertainty, it’s clear that property investors and the market, in general, has weathered that turbulent period better than anyone dared to hope,” said PIPA Chairman Peter Koulizos.
Here are the top five trends the PIPA survey identified.
This year’s survey found that nearly 62% of investors believe that now is a good time to invest in residential property, which is a tad down from 67% in 2020.
PIPA says that dip in confidence may be due to the high property price growth this year as well as significant lockdowns taking place at the time of the survey.
This year’s survey produced the biggest ever margin when it came to the location investors believe offers the best potential over the next year.
“A staggering 58% believe the sunshine state [Queensland] offers the best property investment prospects over the next year - up from 36% last year,” Mr Koulizos says.
New South Wales came a distant second at 16% (down from 21%), and Victoria was third at 10% (significantly down from 27%).
Brisbane also beat its capital city counterparts, with 54% of investors believing it has the rosiest outlook.
Mr Koulizos says the boost could be to do with Brisbane being named host of the 2032 Olympic Games, and significant upcoming infrastructure spending.
“All of these factors, as well as the affordability of property in southeast Queensland and strong interstate migration, are some of the reasons why investors are so optimistic about market conditions there,” he adds.
While investors still believe metropolitan markets offer the best investment prospects at nearly 50% (down from 61% in 2020), regional and coastal markets are closing the gap.
A quarter of property investors now favour regional markets (up from 22%), while 21% of survey respondents have their eye on coastal areas (up strongly from 12% last year).
The lingering impacts of the global health emergency - as well as robust price growth over the past year no doubt - mean fewer investors (59%) are looking to sell a property this year compared to last year (71%).
“Part of the reason for the uplift in property prices over the past year has been the continued low levels of supply in most locations around the nation,” Mr Koulizos notes.
“With a decrease in the number of investors indicating they intend to sell over the short-term, it seems unlikely that this boom market cycle is going to change anytime soon.”
Just 17% of respondents secured their last investment loan directly via a bank, while 4% used a non-bank lender.
The vast majority (72%) of respondents secured their loan through a broker, a slight increase on last year’s figure of 71%.
And 72% of respondents said they’d use a broker to finance their next investment loan.
It just goes to show that it doesn’t matter how far you are on your property journey - whether you’re a first home buyer, refinancer or savvy property investor - we can help you every step of the way.
So if you’re looking to add to your property portfolio, looking for a change of scene, or keen to crack into the market, get in touch today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The average Australian homeowner is paying more than $37,000 in extra interest over the life of their home loan due to the loyalty tax, and it’s got three-quarters of borrowers feeling “ripped off” and “angry”.
What’s the loyalty tax?
It’s this sneaky lender trick where borrowers with older mortgages are typically charged a higher interest rate than borrowers with new loans, and it was confirmed in a study by the Reserve Bank of Australia (RBA) last year.
You see, the banks don’t think you’re paying attention, and as such, they only offer their lowest rates going to new customers in a bid to win them over.
For example, RBA June 2021 figures show the average difference in home loan interest rates between new and existing owner-occupier borrowers was 0.46%.
On an average loan size of about $400,000, that 0.46% difference on a 30-year loan means a borrower would pay an additional $37,462 in interest over the life of the loan.
That’s $1,249 per year, per household.
Athena Home Loans research estimates this costs Australian households a total of $9.1 billion per year.
It should come as no surprise then that 91% of borrowers want new and existing customers to receive the same rate, according to a survey of 1,000 homeowners undertaken by CoreData and commissioned by Athena.
The vast majority of those surveyed say they also feel “ripped off” (82%), “angry” (74%), and “outraged” (72%) at the opaque pricing practice.
“We know transparency is at the heart of trust. There is enormous opportunity for those lenders with clear pricing and a simple value proposition,” says CoreData Global CEO Andrew Inwood.
Now, the ACCC published a report in December 2020 with several recommendations to prevent this unfair practice, but nothing much has come of it since.
Meanwhile, more than half (56%) of those surveyed in the CoreData report say they feel trapped in their current deal, while one-in-three people (36%) asked their lender for a drop in their interest rate but were rejected.
But with competition among lenders quite fierce right now, it’s important to know the power is in your hands.
“Rates are at an all-time low at the moment, so it’s at a crucial time when Australians need the money in their pockets, not the banks,” explains Athena CEO and Co-Founder Nathan Walsh.
Adds the RBA: “Well-informed borrowers have been able to negotiate a larger discount with their existing lender, without the need to refinance their loan.”
We like to reward loyalty around here. We'll always have your back.
So, if you haven’t refinanced recently, get in touch today and we’ll work with you to help save you thousands of dollars in interest repayments.
That might involve renegotiating with your current lender, or looking around for another lender who will give you a fairer rate.
Either way, we’ll make sure your lender isn’t taking advantage of your loyalty.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
With interest rates at record low levels, the number of homeowners refinancing skyrocketed to an all-time high in July. Today we’ll run you through why so many people are refinancing, and why you should consider doing so too.
We’re currently seeing more people refinance their home loans than ever before, and the latest ABS figures out this week prove we’re not imagining things.
Refinanced home loans reached an all-time high of $17.2 billion in July, which is a 6% increase on June.
It’s also more than double the value that was refinanced exactly two years prior in July 2019.
For starters, the RBA cash rate is at an all-time low of 0.1% following six rate cuts in three years.
As such, competition amongst lenders is fierce, with many offering record-low home loan rates in a bid to win over as many customers as possible.
In fact, RateCity reports the number of variable rates under 2% on its database has jumped from 28 to 46 in just two months.
Borrowers are also opting to lock in their interest rate too, says the ABS, following reports that lenders have started increasing the rates on 3-5 year fixed-rate loans.
“Borrowers are seeking out lower interest rates, particularly for fixed-rate loans, and cashback deals across a large number of major and non-major lenders,” says ABS head of Finance and Wealth, Katherine Keenan.
COVID-19 is likely increasing the number of homeowners refinancing, too.
With many households and businesses around the country doing it tough right now, one simple way to reduce your monthly mortgage repayments is by refinancing.
Now, fixed-rate loans and cashback deals might look super appealing at first glance, but they might not always be the best fit for your situation.
And that’s why it helps to have someone like us in your corner.
We can help you go through the fine print, fees and limitations that might exist within these loan options.
We can also help you determine whether a fixed, variable or split loan is better suited to your needs.
The other thing we’re great at is negotiating with your lender.
Your current lender won’t automatically give you their lowest rate going. You’ve got to ask them for it.
And you’ve also got to make it clear that if they don’t reduce your interest rate, you’re willing to find another lender who will.
This can be both intimidating, not to mention time-consuming and frustrating if they don’t want to play ball.
But lucky for you, we can do the leg-work for you.
So if you haven’t refinanced in the past few years, get in touch with us today and we could help you save thousands of dollars in interest repayments on your mortgage.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Remember that classic TV ad: ‘nine out of 10 dentists recommend using [toothpaste brand]?’ Well, it turns out we’ve earned a similar level of trust when it comes to helping first home buyers sink their teeth into the property market.
That’s because nine out of 10 first home buyers (FHBs) recently said they trust a mortgage broker to help them buy their first property.
And, unlike dentists, we’re actually allowed to show our faces!
The Genworth First Home Buyer Report 2021 surveyed 2,077 prospective FHBs, and 1,008 recent FHBs – and we’re pretty chuffed with the results.
Here’s what one respondent said:
“Go and see a professional broker in-person early on in the process. That way they know your situation and are able to best guide you through and help you out,” the 32-year-old recent FHB from WA said.
And he wasn’t alone.
Almost nine in 10 FHBs believe mortgage brokers help cut through the complexity in the home buying process.
The report also found a similar proportion of FHBs believe mortgage brokers provide reliable, trusted advice and information.
And finally, close to 90% of respondents said mortgage brokers provide valuable support during the home buying process.
So in a nutshell:
Trusted = tick.
Jargon busters = tick.
Reliable advice and information = tick.
Valuable support = tick.
You might have noticed the property market has picked-up over the past 12 months, to say the least.
It’s left a lot of prospective first home buyers frustrated that the suburbs they were once focusing on have moved out of their price range.
While this may be the case for a lot of people, it’s not always the case.
There are a number of federal government schemes available to FHBs, including the First Home Loan Deposit Scheme - which can allow you to buy your first home with a deposit of just 5% without paying for Lenders Mortgage Insurance.
There’s also a range of state and territory government schemes designed to give FHBs a leg up into the property market, including first home buyer grants and stamp duty concessions.
For more information, give us a call today – we’d love to discuss your situation and help you make the leap from renter to first home buyer, and get you smiling as proudly as your dentist does!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
More small and medium-sized businesses struggling to stay afloat due to the economic impacts of COVID will have access to cheaper funding after the federal government expanded the eligibility criteria for the SME Recovery Loan Scheme.
The government is removing requirements for SMEs to have received JobKeeper during the March quarter of 2021, or to have been a flood-affected business, in order to be eligible for the SME Recovery Loan Scheme.
Ok, basically the federal government will guarantee 80% of each loan in the scheme, and because of this, lenders can offer the loans “more cheaply and more freely” compared to ordinary business loans.
The first iteration of the scheme kicked off back in March 2020 under a slightly different name - the SME Guarantee Scheme (and back then the government was only guaranteeing 50% of the loan).
Under today’s version of the scheme, SMEs dealing with the economic impacts of COVID with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years.
Other key features of the SME Recovery Loan Scheme include:
- Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
- Loans can be used for a broad range of business purposes, including to support investment.
- Loans may be used to refinance the pre-existing debt of an eligible borrower, including debts from the SME Guarantee Scheme.
- Loans can be either unsecured or secured (excluding residential property).
So far, 74,000 loans totalling around $6.2 billion have been written under the scheme - so it’s already helped a lot of other businesses around the country.
NAB and Westpac, both participating lenders in the scheme, immediately welcomed the changes, with NAB stating “SME Recovery Loans are a good option for businesses who need additional capital at this time”.
It’s important to note, however, that the loans will only be available through participating lenders until 31 December 2021.
So if you’re interested in finding out whether the SME Recovery Loan Scheme could help your business, get in touch today and we can help you apply through one of the participating lenders.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
With many people around the country doing it tough right now, this week we’ll look at a way you can take some pressure off your monthly finances through debt consolidation.
Here’s a quick experiment.
Go pick up three balls and try to juggle them. Most people, besides those who ran away to join a circus, will likely drop at least one of them within a few tosses.
Now put two of the balls aside and throw the remaining ball up and down (with one or both hands).
Much easier to manage, right?
Well, it’s not too dissimilar to the concept of debt consolidation.
If you have more than one loan - be that a credit card, car loan and/or a personal loan - you can help reduce the stress of juggling multiple debts, payment dates and interest rates by rolling them into one easy-to-manage loan.
One common debt consolidation method is to take out a new personal loan and use the funds to pay off your other existing debts.
Now, if the interest rate on the new personal loan is lower than the rate on your existing debts (for example, a credit card with a 17.99% interest rate) this can help you pay less interest each month - not to mention avoid the nasty late payment fees that come with those kinds of cards.
And by rolling all your debts into one, you can get a clearer timeline of when you can be debt-free.
Debt consolidation can also make it easier for you to manage your household budget, as you only need to factor in repayments for one debt per month instead of many.
Another method people use for debt consolidation is rolling it into a refinanced home loan, because mortgages offer comparatively low-interest rates.
So if you’re really struggling with multiple debts right now - such as a car loan or a number of credit cards - consolidating your debts into your home loan will, in most cases, reduce your overall monthly repayments.
However, here’s a big word of warning.
While this option can reduce your monthly repayments now, debt consolidation through your mortgage can turn a short-term debt (like a personal loan) into a much longer-term debt.
As such, unless you aim to make a lot of extra repayments as soon as possible, you could end up paying significantly more interest than you would have otherwise.
One way to address this issue is to create a loan split for the debt consolidation, giving you the ability to pay off all the short term debts within a few years, rather than, for example, over a 25-year home loan period.
So if you’re in need of breathing space now, debt consolidation is an option to consider - especially with mortgage rates so low at present due to the RBA’s official cash rate being at record low levels.
If you’d like to explore your debt consolidation or refinancing options, then get in touch with us today and we can help you look at ways to take some financial pressure off your shoulders.
It’s also worth noting that lenders are providing mortgage holders impacted by COVID with a range of hardship support measures, including loan deferrals on a month-by-month basis.
Whatever your circumstances, we’re here to support you however we can through these times.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
What measures do you have in place to help protect your family home or business? If life insurance through your superannuation account is one of them, then it’s a good time to give it a quick review - especially if you work in a high-risk environment.
We’ve all switched off mentally during those sombre daytime life insurance ads on TV.
But stay with us, because there’s a good reason we’re writing this article today: new superannuation laws have passed parliament and will come into effect on November 1.
And if you have a super account, there’s a better than even chance you have a life insurance policy attached to it that could be impacted - especially if you work in a hazardous or high-risk industry such as construction, truck driving and mining.
So, the federal government recently passed the Your Future Your Super legislation.
The measure, which will tie workers to a single super fund from November 1, has been praised for its potential to put an end to people having numerous super accounts that are eaten away by multiple sets of fees.
But concerns have also been raised that workers in hazardous industries, such as construction, truck driving and mining, will be left without suitable life insurance and/or total and permanent disability insurance due to policy exclusions for high-risk occupations.
Now, some super funds that were created for specific industries automatically sign their members up for insurance tailored to their specific professions.
But others don’t.
“Quite often, members only discover they have been paying for a product that is effectively useless when they become disabled and make a claim,” Maurice Blackburn principal Hayriye Uluca explained to Sydney Morning Herald (SMH).
This means if you originally signed up to a fund that is tied to an insurer that uses occupation exclusions, you might end up paying for insurance that’s essentially worthless if you start work in a high-risk industry.
The Federal Treasury says it’ll be conducting a review into it all.
But you can quickly and easily conduct your own review to see if you’re properly covered by suitable insurance.
Here’s a straightforward MoneySmart guide on consolidating your super through MyGov. And here’s another guide on things to be mindful of when choosing a super fund.
“The best thing to do is talk to your fund, ask them specifically. Tell them the type of work you do, your occupation and what it involves, and ask them if their policy covers it,” SuperConsumers director Xavier O’Halloran told SMH.
And while you’re at it, don’t forget to review the amount you’re insured for to determine whether your cover is enough to help you - or your loved ones - make loan repayments and protect important assets like your business or family home if need be.
If you're not sure if your insurance cover is sufficient, call us today and we can put you in touch with a financial planner who can review your situation and provide feedback on your coverage.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You’d have to go all the way back to the 2004 Athens Olympics to find a time when house price growth was faster than it has recently been. But latest data suggests the golden run has started to slow down.
It’s no secret that house prices have reached record-breaking highs this past year.
In fact, home values grew by 16.1% over the past 12 months - the fastest pace of growth since 2004, according to CoreLogic’s latest Hedonic Home Value Index.
To put that into a little context, the rate of growth over the past year has been so steep that houses in some cities are out-earning some of Australia’s top-paid professionals, including surgeons, anaesthetists and CEOs.
But there are signs that the growth rate is starting to taper.
Australian housing values increased 1.6% in July, a result CoreLogic's research director Tim Lawless describes as “strong, but losing steam”.
“The monthly growth rate has been trending lower since March this year when the national index rose 2.8%,” Mr Lawless explains.
And in a further sign of a property market slowdown, the value of new housing loan commitments fell 1.6% in June, the first fall in monthly lending figures this year, according to the latest Australian Bureau of Statistics data.
With dwelling values rising more in a month than incomes are rising in a year, housing is simply moving out of reach for members of the community, Mr Lawless explains.
Additionally, much of the federal government’s earlier COVID-19 related fiscal support, including JobKeeper and HomeBuilder, have now expired.
“It is likely recent COVID outbreaks and associated lockdowns have contributed to some of the loss of momentum as well, particularly from a transactional perspective in Sydney which is enduring an extended period of restrictions,” CoreLogic’s latest Hedonic Home Value Index report adds.
That said, it should be noted that housing values are continuing to rise substantially faster than average.
Over the past 10 years, the average pace of monthly dwelling value appreciation has been just 0.4%, says CoreLogic.
It’s likely the rate of growth will continue to taper through the second half of 2021 as affordability constraints become more pressing and housing supply gradually lifts, says CoreLogic.
“Other potential headwinds are apparent, including the possibility of tighter credit policies,” adds the CoreLogic report.
On the flip side, demand remains strong and is being aided by record-low mortgage rates and the prospect that interest rates will remain low for an extended period of time.
“A lift in the cash rate is likely to be at least 18 months away,” CoreLogic adds.
“The recent spate of lockdowns is likely to see Australia’s economy once again contract through the September quarter, a factor that is likely to keep rates on hold for a while longer.”
With house prices having just experienced their fastest pace of growth since 2004, it’s as important as ever to purchase your new home with a finance option that’s right for you.
So if you’re a keen homebuyer who wants to explore what options are available to you - including your borrowing capacity - get in touch today. We’d love to run through it with you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Australia is a tale of two economies right now, depending on the state or sector your business is based in. Today we’ll run you through three cash flow tips for your business, whether it’s growing or struggling.
Covid-19 has really brought a two-speed economy to the fore in Australia.
For some businesses, the stop-start-stop nature of the pandemic has crippled cash flow and made planning ahead all but impossible.
Meanwhile other businesses, such as those in the digital space, are experiencing fast growth.
Your cash flow strategy this financial year will likely depend on how the pandemic is impacting it.
So below SME lender ScotPac has identified three cash flow management strategies for businesses that are growing, and for those that are struggling.
1. Find a flexible source of funding: strong cash flow is important for fast-growth businesses, which often have lots of cash tied up with debtors, ScotPac senior executive Craig Michie says.
“It’s important to find a source of funding that grows as your business grows. With invoice finance, as your debtors grow, so does the line of credit you can access,” he says.
“Another consequence of fast growth can be a demand on the business to put in place more capital assets, such as vehicles and equipment. In these situations, asset finance can help a business get the assets they need to support their rapid growth.”
2. Negotiate with suppliers: sometimes businesses can grow too fast for their suppliers to keep up with their demand for product.
If you don’t have the cash flow to pay your supplier for more product up front, you can attempt to renegotiate terms with them, or seek alternative finance options.
“One option for fast-growth businesses to have up their sleeves is to use trade finance. This ensures they can pay suppliers upfront so they can meet their increased demand for product,” Mr Michie says.
3. Cashflow forecasting is vital: cash flow is often described as the “lifeblood” of businesses.
Knowing what cash is likely to be coming in, and what’s likely to be going out, is therefore vital for not only keeping your businesses alive, but ensuring it will thrive.
“It’s not unusual for a small business to spend months winning big new clients, then realise they had not accounted for the cashflow implications of winning new business,” Mr Michie says.
“Putting in place a 13-week rolling cash flow forecast – which really would only take an hour with your accountant to set up, helps fast-growth businesses avoid cash flow issues.”
1. Get in touch with funders and the tax office: with a number of recent state lockdowns, and ongoing uncertainty in NSW, many businesses are doing it tough.
Mr Michie says it’s crucial for businesses struggling through adverse trading conditions to talk to their financiers asap.
“Do this early in the piece to get the best outcome. Talk to your funder about whether it’s possible to restructure or to put in place moratoriums,” he says.
He adds that SMEs shouldn’t put off talking to the Australian Tax Office either.
“Too many businesses make the mistake of thinking a problem ignored is a problem solved – getting on the front foot with tax obligations is vital.”
2. Look at your balance sheet: to help secure working capital for your business, Mr Michie suggests looking to the assets on your balance sheet.
“Balance sheet assets can be a hidden resource for many SMEs – your debtor’s ledger, unencumbered plant and equipment and even inventory can be used to bring working capital back into the business.”
3. Again, cash flow forecasting is vital: Mr Michie says that having a running 13-week cashflow forecast lets business owners spot any cashflow gaps on the horizon, with enough time to do something about it.
He suggests that this could include reassessing your cost base, negotiating with creditors to change terms or defer payments, or chasing up aged receivables.
If you’d like to discuss how any of the above cash flow tips or finance options could help your business, get in touch today.
The sooner we can run through your options with you, the better placed your business can be in the 2021 financial year and beyond.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Drive or walk around your local suburb mid-morning on a Saturday and chances are you’ll pass a few freshly banged up ‘Auction’ signs. But is Saturday actually the best day to auction your home? New data suggests perhaps not.
We all love a good auction story.
You’ve probably got a mate or two whose favourite dinner party story is the time they crushed all their competitors’ hopes and dreams with a final $10,000 sledgehammer bid.
But for every tenacious bidder, there’s usually an equally pleased vendor.
So what day of the week can sellers generally attract the most bidders to their auction?
Auctions held on Tuesdays at 5pm attract the most active bidders - at 5.9 bidders per auction - according to national data collected by Ray White from 23,100 auctions over the past 12 months.
This is significantly higher than the average of 3.2 bidders per auction, which also happens to be the average number of bidders at auctions held on Saturdays at 11am (the most popular auction time).
That said, results do tend to vary in each capital city.
“Looking at all auctions held over the year, Tuesday at 5pm is the best time to sell. However in Adelaide and Melbourne, it may also pay to look at Friday night,” explains Ray White Chief Economist Nerida Conisbee.
“In Sydney, it is Sunday morning and in Brisbane it is Monday night. Perth is the only market where a standard midday Saturday auction would yield the most active bidders.”
A large number of bidders, however, doesn’t always translate to higher clearance rates.
When it comes to clearance rates, it turns out Friday is the day to beat, according to Ray White Group’s national auction day clearance rates.
Friday 1pm boasts the highest clearance rate at 91.2%, while Saturday 8am comes in at a close second with 90.5%.
“Most auctions in Australia are held on Saturdays between 10am and 1pm,” explains Ms Conisbee.
“[However] holding an auction at a time that is less standard can work to your advantage if selling - there is simply less competition from other properties going to auction at these times,” she adds.
If you’re in the process of selling your current home to upgrade, or downsize, to another property, get in touch with us today to discuss your finance options.
Every family is different - just like every home loan is different. Our job is to find the right match for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
After 18 straight RBA cash rate cuts it can be easy to dismiss the notion that interest rates might rise again. But if the cash rate returned to mid-2019 levels, how much extra would an average new mortgage holder expect to pay each month? Let’s take a look.
They say what goes up, must come down.
But does what goes down, have to come up? Well, the big banks think so - and sooner than many expect.
While the RBA held the official cash rate at 0.10% this month - and reaffirmed its position that it does not expect to lift the cash rate until 2024 - there is growing speculation the next cash rate hike could come as early as late 2022.
In June, Commonwealth Bank and Westpac predicted a rate hike around late 2022 to early 2023. In fact, they expect the official cash rate to hit 1.25% in the third quarter of 2023 and 2024, respectively.
Meanwhile, NAB this week hiked its 2-,3- and 4-year fixed rates by up to 0.10% for owner-occupiers paying principal and interest.
Banks can increase fixed rates as a way of heading off potential RBA rate hikes. Generally, the shorter the term of the fixed-rate that’s increased (ie. if 2-year fixed rates are increased), the sooner a bank may believe the next rate hike will be.
So if the big banks' economists are onto something here, how much extra money should you be factoring into your monthly mortgage repayments if the official cash rate rises to 1.25% by 2023/24?
The first thing to note is that the last time the RBA’s cash rate target was at 1.25% was June 2019 - so not that long ago (but boy, was it a different world back then!).
Modelling from Canstar, published on Domain, shows the average variable mortgage rate would lift from 3.21% to 4.36%, based on the current margin between the two rates.
Now, if you took out a $500,000 loan tomorrow, and the cash rate hit 1.25% in 2024, that modelling estimates your monthly repayments would increase $300 to $2464 per month.
ABC News modelling covers a similar scenario, with repayments up $324 per month.
That’s despite reducing your remaining loan balance to $468,770 after three years of repayments, and assuming the banks only add on the cash rate increase - and not any extra.
And then there’s of course the possibility that further RBA cash rate increases could soon follow.
If, for example, the average variable loan rate increased to 7.04% in 2031, where it was just a decade ago in 2011, Canstar estimates that same borrower who took out a $500,000 loan would pay $900 more in monthly repayments than they do now - even after a full decade’s worth of repayments.
It’s hard to imagine that interest rates could rise from the comfort of the current record low cash rate.
In fact, you have to go back as far as November 2010 to when the RBA last increased the cash rate (to 4.75%). We’ve had a run of 18 straight cuts since then.
But the big banks' economists aren’t basing their modelling, predictions and fixed-term rate increases on nothing - and it pays to pay attention.
So if you’re worried about what rate increases could mean for your household budget in the coming years, get in touch with us today and we can run you through a number of options.
That might include fixing your interest rate for two, three, four or five years, or just fixing part of your mortgage (but not all of it).
Every household is different - it’s our job to help you find the right mortgage option for you!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Small business owners wanting to buy a vehicle, asset or important piece of equipment and immediately write off the cost only have a few days to act this financial year.
Ah, deadlines: love ‘em or hate ‘em, they sure do get you moving.
And with June 30 just days away, time is running out for your business to take advantage of the federal government’s temporary full expensing scheme this financial year.
Temporary full expensing is basically an expanded version of the popular instant asset write-off scheme.
It allows businesses that are keen to invest in their future to immediately write off the full value of any eligible depreciable asset purchased, at any cost.
This helps with your cash flow as it allows you to reinvest the funds back into your business sooner.
There is a small catch though: the asset must be installed and ready to use by June 30 in order to be eligible for this financial year.
But rest assured that even if you do order the asset, and then miss the June 30 deadline because it doesn’t arrive in time, you can still write it off next financial year because the scheme is set to run until 30 June 2023.
To be eligible for temporary full expensing, the depreciating asset you purchase for your business must be:
– new or second-hand (if it’s a second-hand asset, your aggregated turnover must be below $50 million);
– first held by you at or after 7.30pm AEDT on 6 October 2020;
– first used, or installed ready for use, by you for a taxable purpose (such as a business purpose) by 30 June 2023; and
– used principally in Australia.
Being able to immediately write off assets is all well and good, but if you don’t have access to the funds to purchase them, the scheme won’t be of much use to you this financial year.
So if you’d like help obtaining finance to make the most of temporary full expensing ahead of the impending EOFY deadline, get in touch with us today!
We can present you with financing options that are well suited to your business’s needs now, and into the future.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
First home buyers can now purchase more expensive properties under the federal government’s hugely popular 5% deposit, no LMI scheme.
Single parents with dependent children are also welcoming the higher property price caps, which will apply to the federal government’s new Family Home Guarantee scheme, too.
The First Home Loan Deposit Scheme (FHLDS) allows eligible first home buyers with only a 5% deposit to purchase a property without forking out for lender’s mortgage insurance (LMI), which can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.
The new Family Home Guarantee scheme, meanwhile, allows eligible single parents to build or purchase a home with a deposit of just 2% without paying LMI, regardless of whether or not they’re a first home buyer.
These schemes will run alongside a third home loan deposit scheme called the New Home Guarantee scheme, which allows eligible first home buyers to build or purchase a new build with a 5% deposit.
That scheme has even higher property price caps (see here), to account for the extra expenses associated with building a new home.
All three schemes have 10,000 spots available each from July 1, and spots are expected to fill up fast, so you’ll want to get in touch with us soon if you’re interested in applying.
So how much money can you spend and remain eligible for the FHLDS and Family Home Guarantee scheme?
Here’s a quick summary:
– NSW: $800,000 (Sydney, Newcastle/Lake Macquarie, Illawarra) and $600,000 (rest of state).
– VIC: $700,000 (Melbourne and Geelong) and $500,000 (rest of state).
– QLD: $600,000 (Brisbane, Gold Coast, Sunshine Coast) and $450,000 (rest of state).
– WA: $500,000 (Perth) and $400,000 (rest of state).
– SA: $500,000 (Adelaide) and $350,000 (rest of state).
– TAS: $500,000 (Hobart) and $400,000 (rest of state).
– ACT: $500,000.
– NT: $500,000.
If you’re interested in knowing how much the property price caps have increased, you can check it out here.
With all three schemes, allocations are generally granted on a “first come, first served” basis.
And it’s worth re-iterating that spots are limited and generally fill up fast.
So if you’re a first home buyer or single parent looking to crack into the property market sooner rather than later, get in touch today and we can explain the schemes to you in more detail.
And when July 1 rolls around, we can help you apply for finance through a participating lender.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Most of Australia may be a seller’s market right now, but there are still a few dozen suburbs around the country where there’s more housing stock available than in previous years. Today we’ll check out which 33 suburbs are still offering plenty of options for buyers.
One key factor that’s resulted in the current “seller’s market” across the majority of Australia is the low level of housing stock available for sale.
In the three months to May, CoreLogic estimates that around 164,000 dwelling transactions took place across Australia, while just 136,000 new properties were added to the market.
And as we all know, when demand outstrips supply, that naturally results in strong price increases.
Rest assured some suburbs still have plenty of supply. CoreLogic has crunched the numbers and identified 33 suburbs across the country with listing volumes higher than the five-year average in May.
Some of them are famously trendy too, such as Fortitude Valley in Brisbane (pictured), Randwick in Sydney, and South Yarra in Melbourne.
Better yet, all 33 suburbs below have experienced less dwelling value growth over the past 12 months than their local region:
NSW: Macquarie Park (44 listings higher than 5-year May average), Lidcombe (33), Rockdale (30), Randwick (29), Westmead (25).
Victoria: Melbourne (140 listings higher than 5-year May average), South Yarra (73), Hawthorn (60), Carnegie (56), Port Melbourne (53).
Queensland: Fortitude Valley (15 listings higher than 5-year May average), Bowen Hills (10), Mulambin (8), South Townsville (7), Park Avenue (7).
WA: Nickol (10 listings higher than 5-year May average), Nedlands (9), Crawley (8), Baynton (6), Inglewood (5).
SA: Para Hills West (5 listings higher than 5-year May average), Bowden (4), Kilburn (4), Bedford Park (4), Everard Park (4).
ACT: Phillip (14 listings higher than 5-year May average), Latham (3), Dickson (3), Richardson (2), Higgins (2).
Tasmania: Hobart (4 listings higher than 5-year May average).
NT: The Gap (2 listings higher than 5-year May average), Wanguri (1).
Sure, understanding market trends and identifying outliers can help give you an advantage, but if you’ve got your heart set on somewhere else, they’re not the be-all and end-all.
Everyone has different preferences, purchasing power, circumstances and dreams, all of which will influence their “top suburb” in this hot market.
So if you’ve been researching a suburb and have an eye on your next property, get in touch today. We’d love to help you arrange finance for it.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
While most Australians dream of owning their own home, the majority of hopeful homeowners admit they don’t fully understand how home loans or mortgage rates work. That’s why we make it our mission to enlighten you during your home buying journey.
They say knowledge is power.
But this week we stumbled across some interesting stats from UBank's Know Your Numbers survey.
It found that 84% of Australians who are yet to buy a property admit they don't know enough about how home loans, mortgage rates and deposits work, while 3 in 10 admitted to knowing nothing at all and having no idea where to start.
But if you start by jumping at the first seemingly attractive rate you see advertised, well, that can lead to big problems down the track.
“Entering the property market with little to no knowledge of some essential financial terms and concepts could see Australians falling into common traps or getting themselves into situations they cannot manage,” explains UBank CEO, Philippa Watson.
Now, the purpose of this article isn’t to shame anyone who hasn’t already done their homework. Far from it.
Rather, we want to reassure you that when you come to us for a finance solution, we’ll be sure to explain any financial terms or products you don’t fully have your head around yet.
And that’s one of the key differences between us and the big banks.
We’re not just satisfied with matching you up with a home loan, we want you to be confident that it’s the right one for you, and for you to understand the reasons why.
There’s no denying the world of finance is full of jargon and seemingly complicated language.
To help get you started, below are some of the most common financial terms people ask us about.
Loan to Value Ratio (LVR): LVR is the percentage of the property’s value (as assessed by the lender) that your loan equates to.
For example, if the property you want to purchase is valued at $500,000, and you need to borrow $400,000 to pay for it, the loan is worth 80% of the property value, making your LVR 80%.
Lenders Mortgage Insurance (LMI): LMI is insurance that protects the bank or lender in case you can’t pay your residential mortgage.
It’s usually paid by borrowers who have an LVR higher than 80% – that is, borrowers with a deposit of less than 20%.
Offset account: an offset account is just like a regular transaction account, except it’s linked to your home loan. The money held in the account is counted as if it’s been paid off your home loan, which reduces the balance of the loan and in turn, reduces the interest you need to pay.
And because the offset account acts like a regular transaction account, the money you’ve put in there is still accessible whenever you need it.
Refinancing: refinancing is the process of switching your home loan to take advantage of another, more suitable home loan for your present circumstances, such as one with a lower interest rate that might save you money.
If you’re keen to buy your first home but find all the terminology a bit daunting, then please reach out to us today.
We’re always happy to sit down and demystify the home buying process, so that when you do take the leap into ownership, you can be confident that you’re armed with all the knowledge you need.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Keen to buy a vehicle, asset or another vital piece of equipment for your business and immediately write off the cost? Well, you better get cracking, as we’re officially entering end-of-financial-year territory.
How time flies. It feels like only yesterday that we were gearing up for the year, and now, it’s all systems go to beat the EOFY deadline.
Why the hurry?
Well, businesses keen to invest in their future can immediately write off the full value of any eligible depreciable asset purchased, at any cost, under the federal government’s temporary full expensing scheme.
But there’s a small catch: the asset must be installed and ready to use by June 30 in order to be eligible for this financial year.
Ok, so temporary full expensing is basically an expanded version of the popular instant asset write-off scheme.
It allows businesses, both big and small, to immediately write off any eligible depreciable asset until 30 June 2023 (which was recently extended from 30 June 2022 in the federal budget).
This can help improve your cash flow by allowing you to reinvest the funds back into your business sooner.
Businesses can also immediately deduct the business portion of the cost of improvements to eligible depreciating assets.
To be eligible for temporary full expensing, the depreciating asset must be:
- new or second-hand (if it’s a second-hand asset, your aggregated turnover must be below $50 million);
- first held by you at or after 7.30pm AEDT on 6 October 2020;
- first used, or installed ready for use, by you for a taxable purpose (such as a business purpose) by 30 June 2023, and;
- the asset must be used principally in Australia.
When purchasing an asset with the intention of using this scheme, it’s crucial to select a finance option that’s suitable for your business.
And that’s where we can help out. We can present you with financing options that are well suited to your business’s needs now, and into the future.
So if you’d like help obtaining finance that’s gentle on your cash flow, and helps you achieve your long-term goals, please get in touch asap so we can help you beat the EOFY deadline.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Small businesses in dispute with the ATO over their tax debt will get “a fairer go” under new rules proposed in the federal budget. Meanwhile, one-year extensions have been granted for the full asset write-off and loss carry-back schemes. Let’s break it all down.
There’s a lot to digest in this year’s pandemic-recovery federal budget.
So today we’ve chosen to focus on just a few key budget announcements we feel may help SMEs manage finance and debt in the years to come.
Great news for small businesses keen to invest in their future: they can continue to write off the full value of assets purchased until 30 June 2023.
The popular scheme, called ‘temporary full expensing’, is an expanded version of the popular instant asset write-off scheme.
It allows businesses, both big and small, to immediately write off any eligible depreciable asset, at any cost, until 30 June 2023.
This can help improve your cash flow by allowing you to reinvest the funds back into your business sooner.
To complement this, the federal government’s ‘loss carry back’ provision has also been extended to 30 June 2023.
“This is a tax initiative that effectively allows a small business to carry back tax losses from 2022/23 income year to offset previously taxed profits as far back as 2018/19, to support business recovery,” explains Small Business Ombudsman Bruce Billson.
Small businesses will soon be able to apply to the Administrative Appeals Tribunal (AAT) to pause or modify ATO debt recovery actions where the debt is being disputed.
“Small businesses disputing an ATO debt in the AAT will get a fairer go by stopping the ATO from relentlessly pushing on with debt recovery actions against a small business, while the case is being heard,” Mr Billson explains.
Currently, small businesses are only able to pause or modify ATO debt recovery actions through the court system, which can be expensive and time-consuming.
“Under the proposed changes, small businesses can save thousands of dollars in legal fees, not to mention up to two months waiting for a ruling,” adds Mr Billson.
The AAT will be able to pause or modify ATO debt recovery actions, such as garnishee notices, interest charges and other penalties until the dispute is resolved.
“It means that rather than spending time and money fighting in court, small business owners can get on with what they do best – running and growing their business,” says Mr Billson.
While it’s all well and good to have the AAT pause ATO debt recovery instead of the courts, the fact remains that many small businesses will still need to pay their ATO debt back.
So if the ATO is seeking a tax debt from your business, get in touch to discuss finance options for repaying them sooner, and giving you some breathing space.
And if we backtrack to the beginning of this article, being able to immediately write off assets is all well and good, but if you don’t have access to the funds to purchase them, the ‘temporary full expensing scheme’ won’t be of much use to you.
So if you’d like help obtaining finance to make the most of temporary full expensing for your business - whether it’s this financial year or next - reach out to us today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Single parents saving for a property and first home buyers are the big winners from this year’s federal budget. Today we’ll break down the three schemes that will help them crack the property market sooner.
In recent months there have been signs that first home buyers are beginning to shy away from the property market, as investors return in big numbers to take advantage of optimistic property market price outlooks.
So this year’s federal budget focussed on giving first home buyers and single parents a big leg up into the property market through three key schemes, which we’ve broken down for you below.
Single parents hunting for a home will only need to save a 2% deposit to crack into the property market if they secure a place in the federal government’s new Family Home Guarantee scheme.
The scheme allows eligible single parents with dependants to borrow with a deposit under 20% without having to fork out for lenders mortgage insurance (LMI), as the government will guarantee up to 18% of the loan.
An initial 10,000 places will be available under the scheme, which will start on 1 July 2021 and run for four years.
Here’s a quick example of how it works.
Mary is a single parent with two young sons, Johnny and James. Mary has found the perfect home for $460,000 but has struggled to save enough for the usual $92,000 deposit (20%) while paying rent.
However, with the Family Home Guarantee, and on the success of her application with a lender, Mary could move into her dream home sooner, with just a $9,200 deposit (2%).
Those hoping to build their first home with just a 5% deposit could soon do so thanks to an extension of the First Home Loan Deposit Scheme (FHLDS) for new builds.
The federal government has announced another 10,000 spots in the scheme will be available for new builds from July 1.
Those 10,000 spots are in addition to 10,000 places already allocated for existing home purchases under the scheme, which also become available from July 1.
So that’s 20,000 spots in total across new and existing builds!
The FHLDS allows eligible first home buyers to break into the property market sooner, as you only need a 5% deposit to purchase a property without paying for LMI.
This can save you anywhere between $4,000 and $40,000, depending on the property price and the deposit amount you’ve saved.
You can find out more about the FHLDS and eligibility requirements by getting in touch with us, or on the NHFIC website.
The First Home Super Saver scheme will allow you to put up to $50,000 in voluntary superannuation contributions towards a first home deposit from 1 July 2022. Previously only $30,000 could be released for the purposes of buying a first home.
The increase will fast-track homeownership for first home buyers and the government says it recognises that deposits required for home purchases have increased over the years due to house price growth.
Here’s a quick example of how the scheme works.
Sue is an occupational therapist who earns $80,000 per year and wants to buy a new home.
Using salary sacrifice, she directs $12,500 of pre-tax income into her superannuation account each year.
After concessional contributions tax, her balance increases by $10,625. After four years, Sue is able to withdraw $45,226 of contributions and the deemed earnings on those contributions.
Withdrawal tax is applied at a concessional rate of 4.5%, which is Sue’s marginal tax rate minus a 30% tax offset. Sue now has $43,191 she can put towards buying her first home.
Sue’s partner, Rob, makes the same income and also salary sacrifices $12,500 annually to his superannuation fund over the same four years.
Combined, Sue and Rob have $86,382 to put towards their first home, which is $20,838 more than if they were to save in a standard savings account.
While the two LMI-related schemes will be available from July 1, it’s important to get ready to apply for them now.
In recent years the 10,000 spots in the FHLDS have been snatched up within a few months, and we’ve had more than a few hopeful applicants reach out to us when it’s too late.
So to help avoid disappointment, get in touch with us today and we can help you get everything in order prior to the schemes kicking off in the new financial year.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Property prices climbed at a breathtaking pace in early 2021, which has been good news for homeowners and heartbreaking for house hunters. However, there are seven key signs that the pace of capital gains has peaked, says CoreLogic.
Now, it’s important to note that CoreLogic is not suggesting that housing values are about to dip.
Far from it.
Rather, CoreLogic believes the housing market is “moving through a peak rate of growth and the pace of capital gains will gradually taper over coming months”.
“Overall, we are expecting housing values to continue to rise throughout 2021 and most likely throughout 2022, just not at the unsustainable pace of growth that has been evident over recent months,” explains CoreLogic’s Head of Research Tim Lawless.
Below are the seven signs they’ve identified.
CoreLogic’s rolling four-week change in dwelling values shows Sydney’s rate of growth has dropped from 3.5% (in the four weeks leading up to 21 March) to 2.3% (in the four weeks to 21 April).
Meanwhile, Melbourne dropped from 2.5% to 1.5%, Brisbane from 2% to 1.8%, and Perth from 1.5% to 0.9%.
The only mainland state capital to record an increase was Adelaide, up 1.7% from 1.2%.
Historically, there’s been a strong positive correlation between auction clearance rates and the pace of appreciation in housing values, says Mr Lawless.
Recently, however, there has been a slight softening in auction clearance results.
The weighted average clearance rate moved through a recent high of 83.1% in the last week of March, before dropping to 78.6% in the week ending 18 April.
There has been a considerable rise in new listings as vendors look to capitalise on the market’s strong selling conditions.
In the four weeks to 18 April as many as 26,470 capital city properties were added to the market, says CoreLogic.
“That’s the largest number of new listings for this time of the year since 2016 and 17% above the five-year average,” adds Mr Lawless.
Thanks to HomeBuilder, there has been a significant lift in housing construction activity that will add to overall supply levels in the coming months.
Approvals for new dwelling construction are at record highs, points out CoreLogic, and dwelling commencements over the December quarter were almost 20% higher than a year earlier and 5.5% above the decade average.
Due to current tight border restrictions, it’s much harder to get into Australia than usual.
That’s led to a decline in population growth, which can also have an impact on housing demand (although it’s more likely to have a bigger impact on rental markets, as the majority of migrants rent before buying).
“Population growth, which is an important component of housing demand, has turned negative for the first time since 1916 due to closed borders and stalled overseas migration,” adds Mr Lawless.
You might have heard that applications for the HomeBuilder grant, which started off at $25,000 before being reduced to $15,000, have now closed.
On top of that, JobKeeper has also finished, and JobSeeker has been dialled back.
“Australia is moving into a new phase of the economic recovery where there is substantially less fiscal support which could result in a reduction of housing market activity,” says Mr Lawless.
Last but not least: the higher prices rise, the higher the entry barrier for home buyers.
And the higher the entry barrier, the fewer active house hunters there are, which means less demand to drive up prices.
“For those looking to enter the market, growth in housing values is substantially outpacing incomes, which means a growing deposit hurdle for first home buyers,” explains Mr Lawless.
As you can see, there’s a case to be made that the rate of property price growth has peaked.
But Mr Lawless warns there are still a variety of factors that are likely to keep upward pressure on housing values for some time, including the record-low official cash rate, which the RBA says won’t lift “until 2024 at the earliest”.
So while prices are expected to continue to increase - and it might feel like you’re running on the spot - please know that potential solutions do exist for keen homebuyers.
For example, the federal government’s First Home Loan Deposit Scheme is due to accept another 10,000 applications in early July, allowing eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI).
For more information, give us a call - we’d love to help you out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Businesses across the country are purchasing new equipment and vehicles in record numbers, as companies big and small embrace the strongest market conditions seen in years, according to NAB data.
And with the end of the financial year approaching quickly, we’re expecting demand for equipment and vehicles to remain strong, with businesses looking to invest in their future by taking advantage of the federal government’s temporary full expensing rules (more on that below).
NAB believes the demand for new equipment is the result of a bumpy 2020, when businesses were forced to ‘pivot’ and innovate their way through the pandemic.
And now Australian businesses are investing to build on the opportunities they uncovered.
“With business confidence at an all-time high and businesses building on things they’ve learnt through the pandemic, I’m not surprised that equipment sales are so high,” says NAB Executive Regional and Agribusiness Julie Rynski.
The top equipment purchases Australian businesses have made according to NAB include:
- tractors up 146% year-on-year (YOY)
- irrigation equipment up 217% (YOY)
- earthmoving/construction equipment up 133% (YOY)
- forklifts up 216% (YOY)
- coffee machines up 155% (YOY)
Temporary full expensing is more or less an expanded version of the federal government’s popular instant asset write-off scheme.
It allows businesses, both big and small, to immediately write off any eligible depreciable asset, at any cost, up until 30 June 2022.
This can help improve your business’s cash flow by allowing you to reinvest the funds back into your business sooner.
But it’s important to note that the asset must be installed, or ready for use, by 30 June in order to be eligible for this financial year.
Full details on business and asset eligibility can be found on the ATO’s website.
Being able to immediately write off assets is all well and good, but if you don’t have access to the funds to purchase them, the scheme won’t be of much use to you.
So if you’d like help obtaining finance to make the most of temporary full expensing for your business, get in touch with us today.
We can present you with financing options for the scheme that are well suited to your business’s needs now, and into the future.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
House prices could jump 17% in 2021 and mortgage rates are set to rise much sooner than expected, ANZ Bank has tipped.
How much earlier than expected?
Well, the Reserve Bank has repeatedly said the official cash rate isn’t likely to increase for a few years, but ANZ senior economist Felicity Emmett believes fixed-mortgage rates have already reached their lowest point, or close to it.
In recent times, more than 30% of new loans have been at fixed rates, says Ms Emmett, with two to three-year fixed-term interest rates available below 2%.
But that’s unlikely to be the case for much longer, she believes.
“In the second half of the year these sub-2%, three-year fixed rates that we’re seeing advertised at the moment are less likely to be around,” says Ms Emmett.
“Cheaper funding is not available forever and that will feed through into variable mortgage rates too.”
Shane Oliver, Chief Economist at AMP Capital, also believes fixed mortgage rates “have already started to bottom out”.
“It’s likely that the 30-year tailwind for the property market of falling interest rates has now run its course and longer dated fixed rates (4+ years) are starting to rise,” adds Mr Oliver.
That’s right. ANZ economists expect house prices to rise by a “sharp” 17% across the capital cities in 2021.
They’re tipping Sydney and Perth to perform best with 19% growth, followed by Hobart (18%), Melbourne and Brisbane (16%), and Adelaide (13%).
ANZ's forecast is much more bullish than those of Commonwealth Bank and Westpac, which in February predicted price increases of 8% and 10% respectively.
Ms Emmet says low housing stock levels are combining with FOMO (fear of missing out) to help drive up the market.
“Buyers are taking advantage of historically low interest rates, particularly fixed rates, as well as various government support programs,” Ms Emmet said.
After the relative hibernation of last year, there’s certainly a lot going on in the world of property and finance right now.
So, if you’d like to chat to us about financing a new home you’ve got your eye on, or refinancing your existing loan, get in touch today and we’ll help sort out that FOMO for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Floods, fire and pandemic - it’s been an incredibly tough 15 months for many Australian businesses. And with government support about to end, looking after your mental health will be just as important as taking care of your business’s financial health.
With the federal government’s COVID-19 JobKeeper wage subsidy scheme expiring on 28 March, experts are tipping as many as a quarter of a million jobs could be lost.
When you also consider that rental eviction moratoriums are coming to an end in several states, and flooding is taking place across large parts of Australia’s east, then there is a lot of pressure on small businesses owners across the country right now.
Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson says it’s important for small business owners to consider their mental health and reach out if they’re not coping.
“Help is available to small business owners who need it. NewAccess for Small Business Owners offers free one-on-one telehealth sessions with specially trained mental health coaches providing evidence-based advice on strategies for managing stress,” he says.
Developed by BeyondBlue, NewAccess is a confidential mental health program where coaches with a small business background work with business owners to tackle challenges.
Businesses can access up to six sessions, with the initial 60-minute assessment designed to talk through your challenges, develop a problem statement and create a personalised needs-based plan.
Subsequent half-hour sessions involve the business coach stepping you through your plan, providing practical tools for managing stress, and reviewing progress.
“Being able to talk to someone who understands the mental load of running a small business will make a real difference,” Mr Billson says.
“Small business owners who look after their mental health, can also help their business.”
No doctor’s referral or mental health treatment plan is required and the free service is available via phone or video call from 8am to 8pm.
NewAccess has been incorporated into the ASBFEO’s My Business Health tool, which provides assistance in three key areas.
The section on how to keep your business afloat looks at government support, managing outgoings and cashflow.
How to manage your business explores COVID-19, staffing, workplace health and safety, resolving disputes and insolvency challenges. Where to access support includes a 5-minute wellbeing checkup, links to support services and natural disaster recovery.
If it’s your business’s finances that are causing you stress, please know that there are lender support services to help you navigate financial challenges.
For example, Australian banks offer a range of financial support options to help farmers and small businesses affected by natural disasters, such as the NSW floods, which can include:
- a deferral of scheduled loan repayments
- waiving fees and charges, including break costs on early access to term deposits
- debt consolidation to help make repayments more manageable
- restructuring existing loans, without the usual establishment fees
- deferring interest payments on a case-by-case basis
- offering additional finance to help cover cash flow shortages.
If you’d like to talk through how some of these options may help your business, please don’t hesitate to get in touch with us or your lender today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Thinking of building, buying a new home or renovating? The HomeBuilder scheme ends on March 31, which means you’ve got less than two weeks to take advantage of the $15,000 grant.
The Australian government scheme, which was initially due to end in December but was extended to 31 March, has led to a big spike in new home sales in recent months.
And experts are tipping HomeBuilder applications will continue to rise before the impending cut-off date.
“We expect a surge in sales in March,” says Housing Industry Association (HIA) Economist Angela Lillicrap.
“Record low-interest rates and rising house prices are sustaining market confidence into 2021. This strong level of consumer confidence combined with the demographic shift to regional areas is driving ongoing demand for new detached homes.”
The current iteration of the HomeBuilder program provides eligible applicants with a $15,000 tax-free grant for building contracts (new builds and substantial renovations) signed between 1 January and 31 March 2021, inclusive.
Applications for the grant can be submitted to the relevant State Revenue Office by 14 April 2021, and construction must commence within six months of the building contract being signed.
There are a number of property price caps worth noting, too.
For new builds, the property value cannot exceed $950,000 in NSW, $850,000 in Victoria, or $750,000 in all other states and territories.
For renovations, the reno contract must exceed $150,000 and the value of the property cannot exceed $1.5 million (pre-renovation).
Two weeks might feel like you’re cutting it a bit fine, right?
But rest assured there are a range of build and property types (including ready-to-go ones) that can be eligible for the grant if construction commencement deadlines are met, including:
- off-the-plan apartments
- house and land packages
- new home purchases
- new home builds (on vacant land)
- substantial renovations.
With the HomeBuilder deadline now literally days away, it goes without saying that time is ticking.
So get in touch today for more information on how you can take advantage of this $15,000 grant before it ends.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Who would take the reins of your family business if you had to take a step back from it? Turns out just one-in-six businesses have a proper plan in place. But rest assured you can develop your own succession plan fairly painlessly, with the help of a new guide.
So ... it turns out the Murdochs aren’t alone when it comes to succession headaches.
Latest family business data from KPMG shows that just 17% of Australian family businesses have a documented succession plan to safeguard the longevity of their business.
That means a whopping 83% of businesses intend to wing it and do it on the fly.
Fortunately, the newly released ‘Introductory Guide to Family Business Succession Planning’ provides a step-by-step guide to passing the family business on to the next generation.
“Succession planning can be challenging,” Family Business Australia (FBA) CEO Greg Griffith says.
“But with the right approach, supported by quality information and advice, you can achieve rewarding outcomes.”
Australian Small Business and Family Enterprise Ombudsman Kate Carnell says there has never been a more important time to initiate a succession plan, given the highest proportion of business owners are aged between 45 and 59 years.
“Australia’s most successful family business stories - and there are many - are a result of well-executed succession planning,” Ms Carnell says.
“More than 60% of employing small business owners are approaching retirement age. This generational shift presents a number of challenges for the sector and the economy more broadly as some business owners may find it difficult to attract a buyer.”
Mr Griffith adds the easy-to-read guide offers tips on how to handle the kinds of tense conversations that can occur between family members throughout the transition phase.
“The key to families working well together is to have really open and honest communication – which can be difficult when your boss, colleague or direct report is also a member of your family,” Mr Griffith says.
“Our succession planning guide offers practical tips to ensure an orderly transition process.”
One critical area highlighted in the guide is the importance of your successor understanding your family business’s finance situation.
“You may also want to engage people outside the family and the business. In our experience, businesses can benefit from guidance from advisors in areas such as business finance: to understand the nuances of your family and business finances,” the report states.
Now, we understand that money and finances can be a difficult subject to discuss with family members.
So if you’re thinking of passing the baton to a family member - and you’d like help bringing them up-to-speed on your business’s finance obligations, opportunities and outlook - then please get in touch today.
We’re here to help your business succeed now, and in the hands of the next generation (engage!).
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Things are starting to look better for small business owners across the country with just 5% of deferred business loans yet to resume repayments. Meanwhile, there are signs that business credit demand is improving, especially when it comes to asset finance.
The first bit of data comes from the Australian Banking Association (ABA), which shows just 11,263 business loans across the country are yet to resume repayments.
That’s a huge drop from the height of the pandemic back in June when more than 200,000 small business loans were deferred.
With automatic loan deferrals now coming to an end, the next phase of support for borrowers who are unable to make reduced repayments or restructure their loans will involve assistance from specialised hardship teams.
As part of this support, banks have developed an industry-wide, consistent approach to hardship and a new online assistant hub to guide customers in financial hardship and improve transparency.
“Customers can expect a thoughtful and compassionate approach, with clear and transparent explanations, regardless of who they bank with,” says ABA CEO Anna Bligh.
The other positive news for business confidence around the nation is that credit demand is showing signs of recovery, especially when it comes to asset finance.
Equifax’s Quarterly Business Credit Demand Index for the December 2020 quarter shows that while business loan applications were down 10.1% from the year before, the rate of decline has softened.
Applications in Victoria were up 7% in December 2020 compared to the September quarter, closely followed by Queensland and Western Australia (+5%).
Better yet, asset finance applications were actually 0.2% higher than the same period a year earlier.
“While overall business credit demand remains down, it is encouraging to see that there are signs of a turnaround,” says Equifax’s General Manager Commercial and Property Services Scott Mason.
“The lifting of extended restrictions in Victoria has allowed for a rebound in business credit applications driven by asset finance.”
If you’re starting to feel confident about your business’s outlook in 2021, and you want to explore your finance options to make the most of any upcoming opportunities, then please get in touch.
It’s worth mentioning that the federal government's 'temporary full expensing’ scheme - which allows businesses to immediately deduct the business portion of the cost of eligible new depreciating assets - is in place until 30 June 2022.
If you’d like to find out more about how it could assist with your business’s cash flow when purchasing assets, feel free to give us a call today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The first home buyer market had a bumper year in 2020 due to modest declines in property prices, reduced investor activity, and a range of government incentives. But with those advantages tailing off, how will first home buyers compete in 2021?
Another week, another big bank tipping national property prices are set to boom.
This week it was Westpac’s turn, with their senior economist tipping property prices to increase 10% in 2021 and another 10% in 2022.
This follows AMP predicting a 5-10% property price increase in 2021, and Commonwealth Bank expecting house prices will increase by 9% in 2021 and 7% in 2022.
Meanwhile, auction clearance rates are high - in the 80% plus range, according to CoreLogic.
Not at all, but it sure won’t get any easier as property prices increase throughout the year.
Furthermore, the federal government’s HomeBuilder scheme is set to finish at the end of March.
The scheme provides buyers with $15,000 grants to build or substantially renovate homes that are generally in the first home buyer price range.
With the above in mind, the REA Insights Property Outlook Report 2021 states that ‘first home buyers are set to moderate in 2021’.
“In 2021, it is unlikely first home buyers will continue to be as active as they were. Prices are moving quickly; investors are coming back and any incentives available to first home buyers are likely to be eased,” the recently released report says.
The REA adds that first home buyers tend to be more active in slower markets when they can take their time.
But with savvy property investors returning to the market, this can add pressure to first home buyers.
“Investors and first home buyers frequently target the same sorts of properties at similar price points,” explains the report.
Rest assured there are a number of strategies first home buyers can employ to crack the property market in 2021.
With competition for properties heating up, it’s important to have your ducks-in-a-row when it comes to finance before you start looking.
This can help you find properties within your price range, identify any additional costs you may not have factored in yet, and make an offer while your preferred property is still available.
It’s also worth noting that the federal government is set to release another 10,000 spots in its First Home Loan Deposit Scheme on July 1, which can help you buy your first home with a deposit of just 5% without having to pay lenders mortgage insurance (LMI).
Another consideration is shifting the focus of your property search - whether that be the location or property type.
For example, house prices are predicted to grow a lot quicker than apartment prices this year.
So if you’re not quite ready to buy just yet, and it appears that properties are rising quickly out of your price range, consider that the apartment market should move more slowly.
If you’d like to discuss more options when it comes to obtaining finance to pay for your much-anticipated first home, get in touch with us today.
As mentioned above, the more prepared you are when it comes to financing your first home, the less stressful the whole buying process will be.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Australia’s housing market is on the “cusp of a boom”, with house prices set to leap 16% over the next two years, according to the Commonwealth Bank (CBA).
The head of economics at Australia’s biggest bank, Gareth Aird, predicts national house prices will surge 9% in 2021 and a further 7% in 2022.
Apartment prices meanwhile are predicted to rise 5% in 2021 and 4% in 2022.
"The negative impact that COVID-19 had on Australian property prices turned out to be much more muted than almost any forecaster expected,” Mr Aird has written in a note to clients.
The CBA prediction is similar to that contained in an internal RBA FOI document, which projects house prices could rise by up to 30% if interest rates remain low over the next three years (which the RBA has indicated will happen).
In Sydney and Melbourne, dwelling (house and apartment) prices are predicted to grow by at least 12% in the next two years, says Mr Aird.
That would see Sydney’s median dwelling price increase by a whopping $160,000 to $1.2 million, and Melbourne’s median dwelling price increase by $110,000 to $920,000.
Meanwhile, Perth values are tipped to rise 17.7% ($99,000), Brisbane 16.6% ($102,000), and Canberra 15.5% ($132,000).
Rounding out the capital cities, Adelaide is predicted to increase 14.5% ($86,000), Hobart 15% ($87,000) and Darwin 18% ($99,000).
Well, it appears as though the "boom" may have already just begun, Mr Aird explains in a CBA podcast.
"Over the first two weeks of February, national prices are up 0.8%. So we’re looking at over 1.5% in February alone,” says Mr Aird.
"Prices are now rising in all capital cities. And they’re rising quite quickly.”
Mr Aird says a strong indicator for property prices is lending figures, and over the last four to five months lending has picked up quite significantly.
"It’s quite intuitive when you think about it. The money that people borrow ends up going into the housing market, and that then pushes up housing prices. There’s usually about a six month lead time,” he explains.
"Initially, that (lending) was with owner-occupiers, but more recently it has spilled over to investors. And that is now feeding into house prices.”
Another strong indicator is auction clearance rates, adds Mr Aird.
"They are very, very firm at the moment. Nationally we’re seeing it sit in the 80s (percent), which historically has been consistent with double-digit dwelling price growth,” he says.
Other key momentum builders are the RBA advising that the record-low official cash rate won’t increase until 2024, says Mr Aird, and strong recovery in the labour market.
"The fact that the Reserve Bank has given explicit public guidance that rates are going to stay very, very low for a number of years, that’s given borrowers a lot of confidence to go out there and take on debt,” he says.
"All of those inputs that go into our model are screaming that house price rises could be faster than at any point we’ve seen before, and our model goes back 10 years.”
If you’re one of the many prospective homebuyers who are feeling confident about the housing market right now and want to explore your financing options, get in touch today.
We’re more than happy to help you determine whether you can finance that home you have your eye on before the next housing boom takes off.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Consumer sentiment is surging, confidence in the housing market is booming, and the number of experts tipping a Melbourne Cup Day cash rate cut is increasing. Let’s look at why households and businesses are becoming increasingly optimistic.
Ahh, spring. It’s fair to say we love it around here.
Not only do we usually see an uptick in property market activity (houses always look much nicer in spring), but this year - in particular - we’re seeing consumers more upbeat about what lies ahead.
This can be seen in the latest Westpac-Melbourne Institute Index of Consumer Sentiment survey, which saw consumer sentiment increase by 11.9% to 105.0 in October (up from 93.8 in September).
"This is an extraordinary result,” says Westpac’s chief economist Bill Evans.
"The index has now lifted by 32% over the last two months to the highest level since July 2018.”
One of the biggest takeaways from the latest consumer sentiment survey is that more and more people believe now is a good time to purchase property.
"Confidence in the housing market has boomed,” explains Mr Evans.
"The ‘time to buy a dwelling’ index increased 10.6% to its highest level since September 2019.”
House price expectation sentiments also rose strongly, up 31.5% to 117.3 (from 89.2), with all states registering impressive recoveries.
While leaving the doom and gloom of a COVID winter behind and entering spring sure doesn’t hurt, it’s not the only reason for the uptick in consumer sentiment.
This latest survey came right off the back of the federal government’s October Federal Budget, which allocated a record amount of spending and support measures to businesses and households.
There’s also an increasing “expectation that the Reserve Bank (RBA) board is likely to further cut interest rates at its next meeting on November 3”, says Mr Evans.
In fact, according to financial market pricing, there’s now around a 75% chance that it will happen.
That’s because, while previous communications from the RBA indicated that the “effective lower bound” of its official cash rate was 0.25%, in recent weeks it’s changed its tune, hinting at a willingness to cut it to 0.10% on Melbourne Cup Day.
"Recently, we have detected a change in attitude (from the RBA) indicating more confidence that the plumbing of the financial system can operate effectively at an even lower set of policy rates,” says Mr Evans.
"With that in mind, and the commitment towards full employment and the target for inflation, there seems to be no reason for the board to delay its decision.”
So, how about you? Have things on the financial and property front started to look a little rosier recently?
If so, feel free to get in touch with us today. We’d love to run you through some of the financing options that may available to you in the current financial landscape.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You might have recently heard that ‘responsible lending laws’ are set to be scrapped early next year. Rest assured though that you'll still be able to borrow responsibly. Let us explain how.
The planned scrapping of the responsible lending laws is the federal government’s latest key initiative to boost economic recovery from the COVID-19 recession.
Now, the federal government (and the banks) say it will simplify the regulatory landscape and free up access to credit for home buyers and small businesses.
Consumer rights advocates, on the other hand, argue it’s all about “giving a free-kick to the banks” and will put borrowers at risk.
But, here’s the good news.
Not only can we assist you in making the most of the upcoming changes, but we can help you determine your borrowing power so that you’re confident to repay any loan you take out.
Sounds like a win-win, right?
Let’s break it all down in a little more detail, and how it might affect you come 1 March 2021.
Basically, they put the onus on the lender to determine whether or not a loan is suitable for the applicant, and that the borrower can repay the loan without going into substantial financial hardship.
They were introduced in the wake of the Global Financial Crisis as part of the National Consumer Credit Protection Act 2009.
If you’ve applied for a loan recently, you’ll know firsthand that the bank scrutinises your ability to repay the loan very, very closely.
Ordered take-away a little too much? Had a punt on the latest sports match? Too many streaming subscriptions like Netflix? Chances are these non-essential expenses would draw some very close scrutiny from the lender.
Once the laws are scrapped, however, lenders will be able to rely on the information provided by borrowers.
That means if a would-be borrower overlooks expenses or provides misleading information in their loan application, the lender won’t be the one facing the heat.
Instead, the responsibility is flipped back onto the borrower.
That said, lenders will still be required to comply with APRA’s lending standards, which require sound credit assessment and approval criteria. So it’s not open-slather for banks.
Put simply: the federal government is pulling out all stops to kickstart the national economy in 2021.
“What started a decade ago as a principles-based framework to regulate the provision of consumer credit has now evolved into a regime that is overly prescriptive, complex and unnecessarily onerous on consumers,” says Treasurer Josh Frydenberg.
By scrapping the laws, the federal government hopes to reduce the cost and time it will take you to access credit.
“Now more than ever, it is critical that unnecessary barriers to accessing credit are removed so that consumers can continue to spend and businesses can invest and create jobs,” adds Mr Frydenberg.
As mentioned above, the proposed changes will reduce red tape and make it easier for the majority of Australians and small businesses to access credit.
But you’ll still want to make sure you’re not taking on debt that you can’t afford to pay back.
And that’s where we can make ourselves especially useful.
Not only will we be able to guide you through the updated process, but we’ll be able to help you work out your earnings and expenses so that you take on a loan that you’ll be able to confidently repay.
That way you’ll get the best of both worlds: responsible borrowing and easier access to credit.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Like most sequels, JobKeeper 2.0 won’t be as big a blockbuster as the original. But that’s not to say it won't help many SMEs navigate the difficult times ahead. Today we’ll cover what you need to know about making the transition for your business.
It’s hard to believe that JobKeeper 2.0 is due to begin next week.
But it’s actually been half a year (or 13 fortnightly payments) since the scheme was first launched, over which time around 42% of small businesses have accessed it, according to a MYOB survey.
Today we’ll look at whether your business might be eligible for JobKeeper 2.0, and if not, some other potential options that might be worth considering instead.
The first extension will cover seven JobKeeper fortnights between 28 September 2020 and 3 January 2021.
The rates of the JobKeeper payment in this extension period are:
Tier 1: $1,200 per fortnight (for eligible employees or business partners who worked 80+ hours within a four week designated period)
Tier 2: $750 per fortnight (all other eligible employees and eligible business participants).
To claim JobKeeper payments for this period, you will need to show that your GST turnover has declined in the September 2020 quarter relative to a comparable period (generally the corresponding quarter in 2019).
But here’s the good news just in: if the quarter ending 30 September 2019 is not an appropriate comparison period, you may be able to use the alternative tests, the ATO has just confirmed.
These alternative tests are broadly in line with the original seven alternative test circumstances, and cover businesses that started after the comparison period, had a substantial increase in turnover, had an irregular turnover, or were affected by drought or a natural disaster.
The key difference this time around, however, is that the tests must be applied on the basis that the turnover test period is a quarter (rather than the choice between a month or quarter, which you had for the first version of JobKeeper).
If your business is no longer eligible for JobKeeper, please know there may be other financing options available to assist you through the coming period.
One option to explore is the federal government’s Coronavirus SME Guarantee Scheme, which allows lenders to provide eligible SMEs unsecured loans more cheaply and more freely than regular business loans.
Another potential option is something like invoice financing, which brings forward payment of your invoices so you have cash in hand sooner, rather than having to wait for your client/s to cough up the cash.
But to be honest, there’s a whole range of possible routes available, some of which might suit your business, others that won’t.
To discuss your options, your best bet is to get in touch with us today so we can sit down with you and see if we can help you work out a path moving forward.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You’ve heard the saying ‘safe as houses’, right? Well, it seems that old adage may ring true even in the current pandemic, with many of the nation’s top economic experts saying that’s where they’d put their money right now.
A Finder survey asked 28 leading experts and economists to weigh in on future cash rate moves and other issues related to the state of the Australian economy.
When asked: “Where do you think is the best place to invest your money right now?”, the leading response was “property”, with 1 in 3 experts (32%) backing it as their top option.
This was followed by shares (21%), gold (14%), superannuation (11%) and then cash (7%).
Rest assured it’s not all doom and gloom out there.
According to CoreLogic’s latest data, nationwide median housing values fell just 0.6% in July and fell 1.6% for the quarter, bringing the median dwelling value to $552,912.
However, to put that into context, over the past year national housing values have risen by 7.1%.
Sydney property prices led the way with a 12.1% increase in median value, followed by Melbourne (8.7%), Canberra (7.2%), Hobart (5.9%), Brisbane (3.8%) and Adelaide (2.4%).
Perth (-2.5%) and Darwin (-2.2%) were the only capital cities to record negative growth in housing values over the past 12 months.
Tim Lawless, CoreLogic’s head of research, said housing markets have remained relatively resilient through the COVID-19 period so far.
“The impact from COVID-19 on housing values has been orderly to-date,” says Lawless.
“Record low interest rates, government support and loan repayment holidays for distressed borrowers have helped to insulate the housing market from a more significant downturn.”
However, with fiscal support set to taper from October, and repayment holidays expiring at the end of March next year, Lawless says the medium-term outlook remains skewed to the downside.
“Urgent sales are likely to become more common as we approach these milestones, which will test the market’s resilience,” adds Lawless.
Here are a few other interesting stats and predictions we took out of the Finder survey:
- Almost half of experts (42%) believe now is a good time for homeowners to put their property on the market, while a quarter said homeowners should wait two years.
- Two-thirds of surveyed experts (65%) believe Australia will see GDP growth in 2020, despite the Treasurer confirming in June that the nation is now in recession.
- All experts believe no further cash rate cuts will be implemented this year. However, more than two-thirds (72%) of experts forecast an increase in 2021 or 2022.
- More than half of experts surveyed (58%) believe other banks will follow in St George's footsteps to reduce lenders mortgage insurance (LMI) to $1 for first home buyers with a deposit of just 15%.
As mentioned earlier, it’s expected that properties priced for a quick sale will hit the market in the coming months - properties that may prove difficult for some buyers to resist.
So whether you’re looking to add to your property portfolio, looking for a change of scene, or keen to buy your first home and break into the market, get in touch today.
We’re here to help you find a loan that’s just right for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We’re all looking forward to things eventually getting back to normal, or at least the “new normal”. And while it’s not clear exactly what the “new normal” will look like in the property world, there are some promising early signs.
For instance, you might have seen that interest rates are pressing down towards 2% (and, in a few rare cases, dropping below 2%), and that property prices have dipped a little in some areas.
So what does this mean? Well, it spells good news for prospective buyers who’ve been fortunate enough to escape the financial impacts of COVID-19.
When looking for an ideal post-COVID-19 purchase location, the first thing to consider is that workplaces are likely to have changed forever.
In the post-pandemic world, it’s likely that those who want to work from home won’t face the same hurdles they did in 2019 and, as such, suburban and coastal suburbs may be more in demand.
This predicted shift in preferences away from inner-city living is clear in analysis supplied to Business Insider Australia by Finder, with half the suburbs on the list within walking distance to the beach.
The analysis also took into account factors including crime rates, property costs, and how family-friendly areas are.
So here are the top 10 suburbs to buy in, according to the analysis.
NSW: Cordeaux Heights, in Wollongong, south of Sydney
NSW: Eleebana, Lake Macquarie, north of Sydney
QLD: Westlake, a western suburb in Brisbane
QLD: Bridgeman Downs, a northern suburb in Brisbane
QLD: Cotswold Hills, in Toowoomba, west of Brisbane
WA: Carine, a northern suburb in Perth
WA: Leeming, a southern suburb in Perth
WA: Gooseberry Hill, an eastern suburb in Perth
SA: Aldgate, just south-east of Adelaide
ACT: Fadden, a southern suburb in Canberra
It’s worth noting that most, if not all, of the above suburbs have an average property price between $720,000 and $800,000.
While Victoria didn’t get a look-in for the top 10, the analysis ranked Thomastown, Lalor, Watsonia North, Greenvale, and Gladstone Park in Melbourne’s north favourably. In the city’s west, Kings Park, Keilor Downs, Albanvale, Keilor Park and Kealba also got favourable rankings.
You don’t need a list to tell you where you should live.
Everyone has different preferences, purchasing power, circumstances and dreams, all of which will influence your “top suburb” in the post-pandemic world.
So if you’ve been researching a suburb and have an eye on your next dream property, get in touch today. We’d love to help you arrange finance for it.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
On your marks, get set, go! The race is on for limited spots in the federal government's First Home Loan Deposit Scheme, which kicked off again on July 1.
The scheme allows eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI) – which can save you up to $10,000.
But here's the catch: only 10,000 spots are available this financial year.
That might sound like a lot but 3,000 spots went in the first 10 days last time.
Usually, first home buyers with a deposit of less than 20% have to fork out for LMI when taking out a home loan.
But under the federal government's FHLDS, eligible first home buyers with only a 5% deposit can purchase a property without having to pay for LMI.
Now, it’s important to note this is not a handout – it’s a government guarantee to help first home buyers break into the property market with a smaller deposit.
But the good news is that it is available alongside other state and federal government first home buyer schemes that are currently running.
More details on eligibility and property price caps can be found on the scheme’s website www.nhfic.gov.au.
If you’re thinking about purchasing your first home soon and are considering applying for this scheme – give us a call today.
While 10,000 spots might sound like a lot, the starter’s gun has already gone off and hundreds of first home buyers could apply for the scheme every day in the first two weeks alone.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The “crucial final touches” on the federal government’s $25,000 HomeBuilder scheme have been revealed. Will your build be eligible?
When the federal government announced its $25,000 HomeBuilder scheme in early June the immediate reaction from many was ‘you little beauty’, quickly followed by, ‘wait... will my project even be eligible?’
It’s a question that’s lingered for a few weeks, however we now have more clarity.
And the good news is that the Housing Industry Association (HIA) - the construction industry’s peak national body - has welcomed what it’s labelled the federal government’s “crucial final touches” on the scheme.
So what are these final touches? Let’s take a look.
It looks as though homeowners now have a little more wiggle room when it comes to having their finance, building proposals and other legal requirements approved.
One of the biggest criticisms of the scheme when it was first announced was that homeowners needed to get everything approved and construction commenced within a fixed three-month timeframe.
Now, the scheme’s official FAQ on the Treasury website still states that construction must commence within three months of the contract date.
However, it now adds a provision for cases where approvals are unexpectedly delayed.
“States may exercise discretion where commencement is delayed beyond three months from the contract date due to unforeseen factors outside the control of the parties to the contract. For example, delays in building approvals,” Treasury states.
Here’s what the HIA adds on the update: “Recognising that a fixed three-month timeframe to commence building work did not reflect how dependent home builders are on other players, like the banks, the councils and building certifiers, is extremely important.”
Off-the-plan apartments and townhouses that don’t exceed $750,000 are eligible for HomeBuilder.
But what was doing a lot of people’s heads in was the timing of it all: did it simply need to be an off-the-plan purchase? Could construction have already been underway?
Well, we now have some clarification.
To qualify for the scheme the first box to tick off is that you need to sign the contract to buy the off-the-plan dwelling on or after 4 June 2020, and on or before 31 December 2020.
The second box is that construction needs to commence on or after 4 June 2020, and no later than three months after the contract is signed.
If, however, you sign the contract to buy the dwelling after 4 June 2020, but construction commenced before 4 June 2020, then the home won’t qualify for HomeBuilder.
Now, as mentioned in the above section, keep in mind that states and territories may exercise discretion where the commencement of construction is delayed beyond three months and it’s outside your control.
However, you’ll definitely want to ensure you do your due diligence on the project’s estimated construction date to give yourself the best possible chance of receiving the $25,000 grant.
Last, but certainly not least, Treasury released more information on the timing of the $25,000 payments.
“It is expected that, where possible, states and territories will align the HomeBuilder application processes with existing processes for first home owner grants (or similar),” Treasury states.
Basically, this means the ball is now in the court of state and territory revenue offices, which will soon outline the final details of how applicants can apply as well as the timing of the payments.
And the good news is the HIA is optimistic.
“HIA has been working closely with state and territory revenue offices and we look forward to receiving these details soon, which will assist home buyers and builders to begin taking full advantage of the grant,” the HIA said.
As mentioned above, while the federal government has provided its final touches on the scheme, we’re still waiting for each state and territory to confirm their own final touches.
But if it looks like you’ve ticked the above boxes and you want to start looking at financing options for your HomeBuilder project, please get in touch.
As with most things in life, the more organised you are, the better!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You’ve probably heard the federal government is giving $25,000 grants to eligible Australians looking to build or substantially renovate their homes. Today we’ll look at what that means for first home buyers when combined with state and territory schemes.
If you’ve been umming and ahhing about purchasing your first home for a while now, we have great news: you’d be hard-pressed to find a time when there were more government incentives to help you enter the property market.
For starters, there’s the federal government’s First Home Loan Deposit Scheme, which can help you buy your first home with a deposit of just 5% without having to pay lenders mortgage insurance (LMI) - so that’s one major cost out of the way.
Well, each state and territory (except ACT) has a first homeowner grant program, with most grants between $10,000 and $20,000.
On top of that, the federal government will give eligible Australians $25,000 to build or substantially renovate homes as part of the new HomeBuilder scheme (however, at this stage it’s still unclear whether or not this amount can go towards your initial deposit).
Last but certainly not least, most states and territories have stamp duty discounts or exemptions for first home buyers too, which can save you tens of thousands of dollars - another hurdle cleared!
Below, we’ll break down exactly what’s on offer in each state and territory and just how much these government initiatives could help put you within reach of a deposit on your first home.
First homeowner grant: $10,000 for new homes valued up to $750,000.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: exemption on homes up to $650,000, partial concession on homes between $650,000 and $800,000.
With HomeBuilder, you could have: up to $45,000 in government support + stamp duty exemption.
First homeowner grant: $10,000 (urban) and $20,000 (regional) for new homes valued up to $750,000.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: exemption on homes up to $600,000, partial concession on homes between $600,001 and $750,000.
With HomeBuilder, you could have: between $45,000 and $55,000 in government support + stamp duty exemption.
First homeowner grant: $15,000 on new homes valued at less than $750,000.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: exemption on homes up to $500,000, partial concession on homes up to $550,000.
With HomeBuilder, you could have: up to $50,000 in government support + up to $15,925 in stamp duty concessions.
First homeowner grant: $10,000 on new or substantially renovated homes valued at less than $750,000 south of the 26th parallel (latitude), or less than $1,000,000 north of the 26th parallel. WA also offers $20,000 grants for new homes built on vacant land or off-the-plan single-storey developments.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: exemption on homes valued at up to $430,000, partial concession on homes up to $530,000. An off-the-plan unit rebate is available for more expensive homes.
With HomeBuilder, you could have: up to $65,000 in government support + applicable stamp duty concessions.
First homeowner grant: $15,000 on new homes valued up to $575,000.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: full concession on off-the-plan new or substantially refurbished apartments up to $500,000.
With HomeBuilder, you could have: up to $50,000 in government support + stamp duty concession.
First homeowner grant: $20,000 on new homes (reduced to $10,000 from 1 July 2020).
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: a 50% discount on stamp duty for established properties valued at $400,000 or less.
With HomeBuilder, you could have: up to $55,000 in government support.
First homeowner grant: none.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: first home buyers in the ACT pay no duty so long as their household income is below $160,00-$176,650, depending on how many dependents you have.
With HomeBuilder, you could have: up to $35,000 in government support + stamp duty exemption.
First homeowner grant: $10,000 for new homes.
First Home Loan Deposit Scheme: LMI saving of up to $10,000.
Stamp duty: you can get up to $18,601 off your stamp duty costs.
With HomeBuilder, you could have: up to $45,000 in government support + up to $18,601 in stamp duty savings.
So, that covers the first home buyer schemes. If you think you might be eligible, the next thing to organise is financing your new home.
And that’s where we come in. Lenders will still want you to show some sort of genuine savings before they’ll approve a loan application, and we can help you get everything in order for that assessment process.
So if you’d like help obtaining finance to pay for the first home of your dreams, get in touch with us today – we’re here to help you any way we can.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Got your eye on a shiny new vehicle for your business thanks to the $150,000 instant asset write-off? We've got the answers to the FAQs many business owners are asking ahead of the looming EOFY deadline.
Need a new van for that delivery service your business has started? Or perhaps your trusty old ute is now more ‘old’ than ‘trusty’.
To help businesses with cash flow amidst the coronavirus pandemic, the federal government has increased the instant asset write-off threshold from $30,000 to a whopping $150,000 until June 30.
Under the scheme, you can immediately write off the cost of assets - such as new and second-hand vehicles - allowing you to claim the deduction in one hit, rather than over the lifetime of the assets.
But (and there’s always a but!), there are several important exclusions and limits when it comes to vehicles under the scheme, which the ATO has recently clarified. Here’s a summary of their new guidance.
Unfortunately not. Vehicles with a total cost of less than $150,000 are eligible.
However, if you purchase a car - one that’s designed to carry a load less than one tonne and fewer than nine passengers - then you can only claim a limit of $57,581 (unless it’s been fitted out for use by people with disability).
That said, the threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets (see case studies below).
Good news!
The $150,000 threshold applies to heavy-duty vehicles such as trucks, tractors, machinery and one-tonne utes.
But remember: the total cost of the vehicle must be less than $150,000 (including all relevant taxes) in order to be eligible.
No.
If you use a car for both business and private use, you can only claim the business portion.
The deduction is also limited to the business portion of the car limit.
For example, if you use your car for 75% business use, the total you can claim is 75% of $57,581.
Bad news, sorry.
You must have first used your car, or have it delivered and ready for use, between 12 March 2020 and 30 June 2020.
You cannot claim the instant asset write-off for this period if you have not received your vehicle by 30 June 2020.
Different eligibility criteria and thresholds apply to assets first used, or installed ready for use, prior to 12 March 2020.
Still scratching your head? The below ATO examples* below should help clarify further (*names have been tweaked for fun).
Darryl and Debbie run Downit Wines, a small winery and vineyard business on Tassie’s beautiful east coast.
On 27 March 2020, their business purchases an $80,000 luxury car that’s designed to carry passengers to and from the Hobart and Launceston airports.
Now, because it’s a car, the maximum amount they can write off is the car limit of $57,581, not $80,000.
But pump those brakes for a second.
It turns out they’ll only use the car for work purposes 60% of the time (and 40% personal), so they’ll only be able to claim $34,549 (60% of $57,581).
The business can't claim the excess cost of the car under any other depreciation rules.
It’s not all sommeliers and sipping at Downit Wines.
Darryl and Debbie also need some horsepower to supplement the hard yakka they do around the vineyard, so they bought a ute for $65,000 on 27 April 2020.
Now, the ute isn't designed to carry passengers, has been set up with all the tools in the tray, and has more than a one-tonne load capacity, so the car cost limit of $57,581 doesn't apply.
This means the business can claim a full deduction of $65,000 as an instant asset write-off (assuming the ute is 100% for work purposes).
The expanded instant asset write-off scheme can now be accessed by businesses with an annual turnover of up to $500 million (up from the previous $50 million cut-off).
But remember: the vehicle must be used or ready for use by June 30, which is less than a month away.
So if you’d like help obtaining finance to purchase the vehicle before the EOFY deadline then get in touch with us today – we’re ready to put the pedal to the metal for your business.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Interested in a $10,000 business grant? How about buying a much-needed asset and immediately writing off the cost? Here are four looming deadlines your business may need to start moving on ASAP.
We understand that navigating the challenges of COVID-19 is probably taking up your every waking hour at present (and possibly the non-waking hours, too).
But there are several fast-approaching deadlines for accessing COVID-19 support that you may want to start turning your attention towards if you haven’t already.
Fortunately, few things make a person move faster than a looming deadline - so you’ve got that on your side (and us!).
Small businesses struggling as a result of the COVID-19 pandemic can apply for much needed help through the Small Business Relief Fund, managed by the Council of Small Business Organisations Australia in partnership with Salesforce.
But here’s the catch: applications are only open for a week and close at 5pm (AEST) on Monday June 1. You can apply here.
There are 67 grants of $10,000 each designed to assist businesses that are recovering from the effects of the pandemic.
Most states are also offering $10,000 support grants and assistant packages you can apply for with a June 1 deadline, including NSW, Victoria, WA and SA.
Time’s ticking for your business to make use of the $150,000 instant asset write-off before the end-of-financial-year June 30 deadline.
A few months back, just as coronavirus was ramping up in Australia, the federal government increased the instant asset write-off threshold from $30,000 to a whopping $150,000 as part of its economic stimulus package.
Under the scheme, businesses can immediately write off the cost of assets such as vehicles, tools, equipment and – thanks to the recent threshold increase – heavy vehicles, tractors and machinery.
Better yet, the threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets.
This is something you’ll want to get moving on as soon as possible though, as the asset needs to be used, or installed and ready for use, before EOFY to be eligible.
If you’d like to find out more, feel free to get in touch or visit the scheme web page here.
SMEs in need of working capital due to the coronavirus outbreak can access unsecured loans through the government’s $40 billion Coronavirus SME Loan Guarantee Scheme.
Because the government will guarantee 50% of the value of each new loan, lenders can offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association.
Participating lenders are already accepting applications from SMEs, so if you’re looking to bridge a gap in your business’s cash flow, please give us a call.
We’re more than happy to discuss your eligibility, more features of the scheme, and how you can apply before the 30 September 2020 deadline.
Due to the coronavirus pandemic, the ATO has extended the lodgement date for 2018-19 income tax returns lodged through a tax agent to June 30, 2020. The extension applies to individuals, companies, partnerships and trusts.
But while it might feel you have a full month left to lodge your return, remember that there will be a bottleneck when it gets to crunch time, and your accountant has a lot on their plate at the moment.
So, as with the deadlines above, it’s imperative to get the ball rolling on this now to avoid the $850 late lodgement penalty.
If there’s any way we can help you beat any of the above deadlines - in particular, the instant asset write-off scheme and loan guarantee scheme - then please don’t hesitate to get in touch. We’re here to help you and your business any way we can.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The dreaded and controversial stamp duty tax could soon be a thing of the past, with calls for it to be abolished gaining momentum.
The Property Council of Australia is the latest body to add their voice to the chorus this month after both the NSW and Victorian state governments ramped up calls for stamp duty reform.
Axing the controversial tax is a key measure being proposed in the Property Council’s Seven Point Plan for Economic Recovery, released this week, to help kickstart economic recovery across the nation.
“Stamp duty is a terrible tax," the Property Council’s chief executive Ken Morrison recently explained to the AFR, "every economic analysis puts it at the top of their list of worst taxes. For every $1 raised it does about 80c of harm.”
Stamp duty is a government tax on certain transactions, including when you buy a motor vehicle, an insurance policy, or for the purposes of this article: a piece of real estate.
In a nutshell, state treasurers and many economists want reform in this space because stamp duty is volatile – it rises during property booms and shrinks during downturns.
Now, how much it costs will depend on where you live, and the value of the property you’re buying.
Most states have stamp duty exemptions or concessions in place for first home buyers, but that doesn’t help out those looking to expand their property portfolio.
The tax also acts as a barrier to older Australians who want to downsize and unlock their wealth.
So how much does stamp duty usually cost? Well, as luck would have it, Domain just released a summary of the stamp duty costs for median-priced homes in each capital city:
Sydney: $49,586 (house) or $28,942 (unit)
Melbourne: $50,171 (house) or $28,328 (unit)
Hobart: $18,847 (house) or $15,351 (unit)
Adelaide: $23,663 (house) or $12,522 (unit)
Perth: $19,063 (house) or $10,679 (unit)
Canberra: $23,914 (house) or $9396 (unit)
Brisbane: $12,165 (house) or $4342 (unit)
Darwin: $4,868 (house) or $0 (unit)
Those figures are for non-first-home buyers who are purchasing established properties.
The NSW government is considering a broad-based property tax (aka land tax).
Victorian Treasurer Tim Pallas meanwhile, says a review of the state’s revenue base after the COVID-19 pandemic is needed, but he’s not sure that switching from stamp duty to land tax is the way to go.
"It’s a bit like a Mills & Boon novel: it might be satisfying and uplifting to read, but getting to that point without causing major trauma to the community is a very serious consideration,” he said.
Another option being floated by the Property Council is to replace stamp duty revenue by broadening the GST base.
As mentioned earlier in the article, most states and territories already have certain exemptions and concessions that apply when it comes to stamp duty, particularly for first home buyers.
Generally, it depends on the price of the property you have purchased, or if it was off-the-plan, as to whether you’ll be eligible.
And obviously, the less stamp duty you pay, the more of your hard-earned-money you can put towards your home loan deposit.
So if you’d like a hand figuring it all out please get in touch - we’re happy to help you crunch the numbers.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Here’s a bit of welcome news for mortgage holders: Australia’s record-low cash rate is likely to remain in place until 2023, according to leading economic and property experts.
In March, the Reserve Bank of Australia (RBA) called an emergency meeting, cutting the cash rate for a second time that month and taking it to a record-low of 0.25%.
It capped off an action-packed 12 months, with a total of five rate cuts since May 2019.
But for avid followers of the RBA’s cash rate, “the next few years are likely to be pretty boring”, says AMP Capital chief economist Shane Oliver.
CoreLogic, the nation’s largest provider of property information and analytics, predicts the cash rate will stay at 0.25% until 2023.
“The RBA has previously been clear that the cash rate won’t move higher until inflation is well within the 2-3% target range and labour market indicators are trending towards full employment, implying an unemployment rate around the 4.5% mark,” says CoreLogic.
However, the RBA has recently indicated unemployment is likely to peak around 10% in June and inflation could turn negative over the coming months.
“Arguably, it’s safe to assume neither of these indicators [inflation or unemployment] will be in a position to trigger an increase in the cash rate target for at least the next couple of years,” CoreLogic adds.
Westpac Chief Economist Bill Evans agrees with that timeframe, as does AMP’s Mr Oliver.
“We expect that the overnight cash rate is unlikely to be lifted before December 2023,” says Mr Evans.
Put simply: the current cash rate means extremely low mortgage rates, and tough competition amongst lenders.
“Average variable mortgage rates for owner-occupiers are below 3% while investor variable mortgage rates are in the low 3% range,” CoreLogic says.
“Fixed-term mortgage rates are even lower. Such a low cost of debt is a key factor that should help to support housing demand as the economy emerges from the COVID-19 hibernation.”
Well, with all the above in mind, now’s a great time to consider your refinancing options.
And CoreLogic says it’s already seeing more and more homeowners do just that.
“We continue to see refinancing … at elevated levels relative to the same time last year as mortgagors seek out the most competitive interest rates available,” it says.
So, if you too would like to explore your refinancing options, then please get in touch – we’re ready to jump into action and make it happen for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Two months and counting (down). That’s how long your business has to make use of the $150,000 instant asset write off before the end-of-financial-year June 30 deadline.
Early last month, just as coronavirus was ramping up in Australia, the federal government increased the instant asset write-off threshold from $30,000 to a whopping $150,000 as part of its economic stimulus package.
Under the scheme, businesses can immediately write off the cost of assets such as vehicles, tools, equipment and - thanks to the recent threshold increase - heavy vehicles, tractors and machinery.
Better yet, the threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets.
Not only was the threshold increased, but the scheme can now be accessed by businesses with an annual turnover of up to $500 million (up from $50 million).
Assets that could be immediately written off include a concrete tank for a builder, a tractor for a farming business, or a truck for a delivery business.
But it’s not enough to simply purchase the asset to be eligible. The new or second-hand asset must also be first used, or be installed and ready for use, this financial year.
Now, it’s important to keep in mind that “write-off” doesn’t mean “free asset”.
Basically, this initiative allows you to immediately claim all the tax deductions you would have claimed over the life of the asset.
This can help with your business’s cash flow, as getting the cash back sooner means you can re-inject it straight back into other parts of your business.
Say ‘gday’ to Bruce, who runs Fair Dinkum Farms in the Darling Downs and has an aggregated annual turnover of $25 million for the 2019‑20 income year.
In May, Bruce finally splashes out and purchases the second-hand tractor he’s had his eye on for a while now for $140,000, exclusive of GST, for use in his business.
Under the new $150,000 instant asset write‑off, Fair Dinkum Farms can claim an immediate deduction of $140,000 for the purchase of the tractor in the 2019‑20 income year.
This is $136,101 more than he could have immediately claimed under normal arrangements, as Bruce would have only been able to claim $3,899 using the diminishing value method over a 12 year period.
At the company tax rate of 27.5%, old mate Bruce will pay $37,427.78 less tax in 2019‑20 than he would have if the instant asset write-off scheme wasn’t in place.
This will improve Fair Dinkum Farms’ cash flow and help Bruce’s business withstand the economic impact of the coronavirus.
Now, there’s a limit relating to cars that we should note.
If you purchase a car for your business, the instant asset write-off is limited to $57,581 (the business portion of the car limit) for the 2019-20 income tax year.
You cannot claim the excess cost of the car under any other depreciation rules.
Also, say the vehicle will be used 80% of the time for business purposes and 20% for personal usage, you can only claim deductions for 80% of the asset.
When purchasing an asset under this scheme, it’s crucial to select the correct finance product.
And that’s where we can help out. We can present you with financing options for the instant asset write-off scheme that are well suited to your business’s needs now, and into the future.
So if you’d like help obtaining finance that’s gentle on your cash flow, and helps you achieve your long-term goals, please get in touch this month well ahead of the deadline - we’d love to help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Fixed rates are now well below variable rates for home loans, in fact, they’re the lowest they’ve been in Australian history.
This interest rates page shows some of the best deals available.
The Reserve Bank of Australia (RBA) cut variable rates by a total of 0.5% in March 2020 in response to the Coronavirus outbreak. The lenders passed on some, but not all of this drop in rates with most choosing to pass on 0.25% in total.
However, fixed interest rates have dropped by as much as 0.8% and are now well and truly below variable rates. So how did this happen?
The government issued cheap 3 year bonds to the banks which significantly reduced the cost of funds for fixed rate loans compared to variable rate loans. This is an oversimplification, but effectively it’s much cheaper for banks to offer fixed rate loans than it was in 2019.
Historically, if the fixed rates are below variable rates for home loans then this is an indication that the money market is predicting interest rates to fall. If they are higher then the money market is predicting rates to increase.
The official RBA cash rate currently sits at 0.25% which is the lowest in Australian history. The RBA could possibly do one more rate cut, most economists think this is very unlikely.
Since the RBA is anticipating significant job losses, it noted that the cash rate could remain low for quite some time.
“Members supported the proposal and agreed that the cash rate would not be increased from its lower level until progress is made towards full employment and there is confidence that inflation will be sustainably within the 2-3 per cent target range,” the RBA noted.
A break fee is a fee that you may pay if your exit your fixed rate loan early by refinancing, selling your property or paying out your loan. You may also pay it if you pay too much off of your loan although the limits vary between lenders.
This is to reimburse the lender for their economic loss as they have borrowed the funds at a fixed rate as well.
As the Australian Government has given cheap fixed rate loans to the banks it is very unlikely that the lender will have an economic loss if you repay your loan early. For this reason, the risk is reduced, as the lender may actually benefit if you repay your loan early.
There are no guarantees, of course, however, we consider it to be a much lower risk than normal. We still wouldn’t recommend that you fix if you need the flexibility to pay off your loan early.
From an interest rate point of view yes, fixing is cheaper than variable and it’s unlikely that variable rates will drop to the level that fixed rates are at now.
However fixing isn’t right for everyone. Please read our page ‘Should I fix my home loan?’ for more information about the risks and restrictions of fixing your loan.
If you still need help to determine if fixing your home loan is right for you, talk to our award-winning mortgage brokers.
They are safely working from home, and can help you with any queries you have. Call Justin Mcilveen on 0415 329 878 or fill in a short assessment form.
It’s fair to say it’s an unusual time to be a first home buyer. But there are still opportunities out there for those whose jobs haven’t been affected by COVID-19.
Here are five key talking points we’ve been regularly discussing with first home buyers in the current market.
Many first home buyers have been saving their home loan deposit over the last 5-10 years, trying to reach that magic 20% figure where you don’t have to pay Lenders Mortgage Insurance (LMI).
But a new path recently opened up for first home buyers: the FHLDS.
Places in the scheme, which started on January 1, are still available and can allow eligible first home buyers to purchase a property with a deposit of just 5% without having to pay LMI.
If you’d like to take advantage of the scheme, give us a call and we can help you through the process.
This will depend on your individual situation and how much coronavirus has impacted your household’s bottom line.
Interestingly, though, the latest Australian Bureau of Statistics data doesn’t suggest it was any tougher for first home buyers to get a loan in February than the previous few months.
Indeed, over the month, home loans for owner-occupier first-home buyers increased by 0.4%.
That said, COVID-19 didn’t really start impacting the Australian economy until March, so we’ll keep monitoring the data for you in coming months.
One of Australia’s largest insurance groups, QBE, has temporarily suspended offering LMI to specific groups of new mortgage borrowers, such as those working in hospitality, tourism, gyms and beauty salons.
The good news is that Australia’s other major LMI provider, Genworth, told the AFR it has no plans to change its existing position on LMI, stating that it trusted lenders to “apply responsible lending standards and assess applications on their merits”.
Also, if you’re taking out your first home loan through the FHLDS, remember that the whole point of the scheme is that you don’t have to pay LMI - so that’s another reason to consider applying.
In the current COVID-19 climate, it’s safe to say that lenders will be scrutinising your income and will require sound evidence that your income will be stable.
This shouldn’t create too big a headache for those employed in essential services, such as a Coles permanent employee, a pharmacist, or an IT professional in a government department, for example.
But others in less coronavirus-proof industries may find it more difficult to prove their income is stable.
For example, some lenders are no longer accepting bonus income for borrowers outside essential services, unless their employer can write a letter to say that the bonus will continue to be paid out at the current level.
Your best bet is to give us a call - we can run through your situation and help you identify any areas that may be an issue in advance.
There’s no shortage of recent stories out there of valuations coming in lower than the contract price, and the gap is proving difficult for some off-the-plan buyers to make up.
So if you’re a first home buyer and you’re worried about a lower valuation then please get in touch. We can run through the options that may be available to you to make up the shortfall, including going through the FHLDS (mentioned above).
Buying your first home can be a bit overwhelming at the best of times, let alone during a period of uncertainty and rapid change. Rest assured though that we’re on top of it.
So if you’d like us to help you explore your options and secure a competitive home loan then please get in touch – we’re ready to jump into action and make it happen for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You don’t need us to tell you how much the world has changed - there’s been no shortage of news bulletins updating you on that. So rather than telling you about more changes, today we’re going to explain how we can help.
While we can’t babysit your child so they stop shouting out and interrupting that important call you’re trying to make in your new home office, we might be able to reduce the number of important calls you need to make instead.
Here are four ways we can take a load off your shoulders right now.
As you’re probably aware, many bank branches around the country have recently closed temporarily.
And the ones that are open? Well, it’s not really a great time to visit them in-person about your mortgage or business loan.
Bank call centres aren’t much help either - they’re inundated. A whopping three-hours on hold is pretty much the standard wait time at the moment (that’s enough elevator music to drive anyone crazy!).
Now - we’re not huge fans of on-hold music either - but we’re more than happy to jump on the phone to your lender to help sort out any matters relating to your loan at this time.
When was the last time you did a home loan review?
If it was more than a year ago, now’s a good time because the finance and lending landscape has undergone several big changes over the past 12 months - including five RBA cash rate cuts.
So if you’re having trouble meeting your monthly repayments reach out to us and we can discuss some of your refinancing options.
And don’t forget to consider consolidating your debts - including your credit card, car loans or personal loans - so you have fewer debts to keep track of each month.
If COVID-19 has impacted your income to the point where you may need to pause your loan repayments, then we can help break down your lender’s deferral policy and support package policy for you.
Six-month loan repayment deferrals are available for both business loans and mortgages (but it may depend on your lender’s hardship policy for the latter).
We can also talk you through some of the other options that might be available to you to reduce your home loan repayments each month.
This one is a little left-of-field, but no less important in the current climate.
For many people, this is their first time working from home and we brokers know better than most that making that transition can be a tough gig.
So, if isolation is getting you down and you just want to chat to someone friendly for a few minutes, feel free to pick up the phone and give us a call.
Not only can we share some tips with you when it comes to nailing work/life balance in a home setting, we promise not to put you on hold for three hours beforehand.
And hey, it’s all good with us if the kids are running amuck in the background!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
This is one article we hope you never have to read. But if COVID-19 has impacted your income to the point where you may need to pause your mortgage repayments, then we’ve broken down the banks’ deferral policies for you.
Late last week the Australian Banking Association (ABA) announced that small businesses affected by the coronavirus would have their loan repayments deferred for six months.
But when it came to home loan customers, there was no similar, wide-sweeping announcement from the ABA.
Rest assured though that all the big four banks are allowing customers who have been impacted by the coronavirus to hit pause on their mortgages for up to six months.
Many of the smaller lenders are also allowing deferral relief measures too, including Macquarie and Bank of Queensland, for example.
Below we’ve outlined the deferral policies each of the major banks are offering customers. It’s important to note, however, that these aren’t the only hardship options available to you, so if you’d like to find out more, please get in touch.
All CBA home loan customers are now eligible to defer loan repayments by up to six months. A digital registration process is available for any home loan customer wishing to defer their repayments.
Here’s a full statement on the support CBA is providing for personal customers.
“Westpac customers who have lost their job or suffered loss of income as a result of COVID-19 should contact us for three months deferral on their home loan mortgage repayments, with extension for a further three months available after review,” the bank said in a statement.
Here’s the statement and support package details in full.
Home loan customers experiencing financial challenges will be able to pause their repayments for up to six months, with NAB checking in after three months.
For a customer with a typical home loan of $400,000, this will mean access to an additional $11,006 over six months, or $1,834 per month, NAB says.
Check out their statement for more details on their support package.
If you’re experiencing financial difficulty due to COVID-19, ANZ may be able to support you by putting your home loan repayments on hold for six months, with interest capitalised (see below).
If you pause your repayments, ANZ will check in with you after three months.
ANZ have also released a statement detailing their full customer support package.
For all other lenders please check their website for more details, as APRA has recently advised they must report and publicly disclose the nature and terms of any repayment deferrals.
If you’re having trouble finding the details, google: [your lender’s name] + home loan deferral coronavirus.
Failing that, check out their website’s ‘Newsroom’ or ‘Media’ page for recent announcements.
It’s important to note the above policies only state that they’ll defer your repayments - it’s likely they won’t stop interest from accruing on your home loan.
For example, as ANZ notes in their statement, home loans with repayments paused will have their “interest capitalised”.
Basically, that means your home loan amount will continue to grow while repayments are on pause, as any unpaid interest will be added to your outstanding loan balance.
With that in mind it’s worth noting there are other options you can explore to reduce your home loan repayments each month besides hitting the pause button, so please feel free to get in touch with us if you’d like to explore those avenues.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Homeowners who have had their income impacted by the coronavirus outbreak are being encouraged to seek out hardship options with their lender.
The economic impact of the coronavirus outbreak is evolving daily, if not hourly, across the Australian financial landscape.
Businesses have closed, jobs have been lost, and casual workers have had their hours slashed from work rosters.
If you’re one of the many Australians who have been affected - or are worried that you soon will be - rest assured that you can talk to your lender about hardship options without it affecting your credit report.
Here’s a statement released by Commonwealth Bank CEO Matt Comyn, for example:
“We encourage our retail customers who may be facing hardship due to impacts of the virus to contact us so that we can provide them with assistance, for example hardship options including deferral of loan repayments.”
If you don’t believe you need to seek financial hardship, but you’d still like a bit of extra breathing room, it may be worth considering refinancing or renegotiating your home loan.
There have been four rate cuts in the past year - including one last month that reduced the RBA’s official cash rate to a record low of 0.5%.
And here’s the thing: lenders don’t automatically drop your repayments when the interest rate falls.
So if you haven’t asked your lender to reduce your home loan rate over the past year - or even the past month - then you may be able to reduce your monthly repayments by refinancing.
We understand that these are tough and uncertain times, yet rest assured we’re here for you no matter what lies ahead.
If you’d like us to help you explore either your hardship or refinancing options then please get in touch - we’re ready to assist you any way we can.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Small businesses all around the world are facing uncertain times. However, rather than shutting up shop until COVID-19 passes, the federal government is hoping to stimulate SME spending through a raft of initiatives and tax incentives.
Indeed, the government estimates its two new business investment initiatives have the capacity to support more than 99% of businesses across Australia (3.5 million SMEs).
Basically, it’s hoping these measures will encourage SME owners to “stick with investments they had planned, and encourage them to bring investment forward to support economic growth over the short term”.
Let’s take a look at what they involve.
The instant asset write-off threshold has been increased from $30,000 to $150,000 (ex GST) and can now be accessed by businesses with an annual turnover of up to $500 million (up from $50 million) until June 30 2020.
Assets that may be able to be immediately written off include a concrete tank for a builder, a tractor for a farming business, or a truck for a delivery business, for example.
Now, it’s important to keep in mind that “write-off” doesn’t mean “free asset”.
Basically, this initiative allows you to immediately claim all the tax deductions you would have claimed over the life of the asset.
This can help with your business’s cash flow, as getting this cash back sooner means you can re-inject it straight back into other parts of your business.
The other big initiative in the federal government’s plan to support SMEs is accelerated depreciation.
Basically, businesses will be able to immediately deduct 50% of the asset cost in the year of purchase and then also depreciate the remaining 50% over the asset’s useful life, so long as the business has a turnover of less than $500 million.
This initiative will provide businesses with a 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.
Sound a little confusing? The good news is that the Business.gov.au website has two great case studies that explain exactly how this initiative works in more detail.
If you’d like to find out more about the instant asset write-off or the accelerated depreciation deduction, and how they might work with an asset purchase for your business, get in touch today. We’d love to help out any way we can.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
First home buyers are throwing themselves into the property market in numbers not seen since 2009.
The number of owner-occupier first home buyer loan commitments reached its highest point in ten years in January, with newcomers taking out 9,945 loans (seasonally adjusted), according to ABS data.
That’s a 3.2% rise on the previous month and a 20% increase on January 2019 (7921 loans).
A recent upwards trend in the home loan market was also reported in figures released by The Australian Prudential Regulation Authority (APRA).
The APRA data showed a 12.4% increase in the value of new housing loans settled by authorised deposit-taking institutions (aka lenders) in the December 2019 quarter.
Two things, mainly.
The first is the federal government's First Home Loan Deposit Scheme.
The scheme, which started on January 1, can allow first home buyers to purchase a property with a deposit of 5% without having to pay Lenders Mortgage Insurance (LMI).
As of late February, it was reported that the majority of the 5,000 places available through 25 non-major lenders for this current financial year were still available to be reserved by potential first home buyers. So if you’d like to find out more get in touch!
The other main contributing factor to the growth spurt in first home buyer numbers is low rates.
Earlier this month the Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points to a new record low of 0.50%.
This came after three cash rate cuts in 2019, with the latest as recent as October.
And interestingly, RBA Governor Philip Lowe has hinted more rate cuts could be on the way in coming months, saying the RBA will continue to closely assess the implications of the coronavirus
For those thinking of entering the property market for the first time there’s a lot of recent changes to consider - including the record-low RBA cash rate and the federal government’s First Home Loan Deposit Scheme.
So if you’re thinking about purchasing your first home soon, get in touch today, we’d love to help you through the process.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
SME owners concerned about the coronavirus outbreak impacting their cash flow are being urged to talk to their creditors as soon as possible.
Earlier this month the RBA cut the official cash rate by 25 basis points to a new record low of 0.50% due to the impact of the coronavirus outbreak on global financial markets.
And as the economic ripple effects of the coronavirus start to hit Australian businesses, financial and consumer law firm MyCRA Lawyers says the repercussions of not meeting loan repayments in a timely fashion could impact businesses for five years.
“The risk of an extended and prolonged economic downturn is real and affecting the entire economy,” says MyCRA Lawyer’s CEO Graham Doessel.
“The problem is even though the tourists and customers may have stopped, the bills won’t stop and that can mean defaults on people’s credit files.”
Mr Doessel says as soon as you are 14 days or more late in making a loan repayment it can go on your comprehensive credit file for two years.
“This will impact your ability to access credit,” Mr Doessel says.
“[If you] get a default or a court judgement on your file you will be feeling the financial symptoms of coronavirus for five years.”
Mr Doessel says if your business is struggling to meet its bills you should contact your creditors straight away and apply for hardship.
“Most lenders have a positive obligation to offer hardship in genuine cases. If you have seen your cash flow decimated due to coronavirus, reach out to your creditors and ask for some breathing room,” Mr Doessel says.
“Whatever you do, do not stick your head in the sand, because you can’t hide from your financial obligations.”
Mr Doessel adds that lenders and companies like Telstra, Optus, AGL and Origin Energy have hardship policies for genuine victims of circumstances beyond their control.
“Anyone who finds themselves financially affected by the virus should make a list of their bills and contact each credit provider - in writing if possible - to let them know the circumstances and to check no bills have gone unpaid,” he said.
“Most companies have the discretion to forgive a debt in extreme cases.”
The coronavirus outbreak comes as many Australian businesses are still reeling from bushfires.
Indeed, a NAB survey has found that two-thirds of Australian SMEs have been directly or indirectly impacted by the recent bushfires, with business disruption, higher insurance, and lower customer confidence cited as key factors.
“We know that many families and businesses face an uncertain future and we recognise the significant impact the fires have had on cash flow, loss of customers and supplier disruption,” says NAB Chief Customer Officer of Business and Private Banking Anthony Healy.
There’s no doubt many Australian businesses are doing it tough right now - whether that’s because of the coronavirus outbreak or the summer bushfires.
If yours is one of them, please get in touch. We’re ready to assist you in any way we can and will work through your available options with you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Employers who have underpaid their staff superannuation have been granted a one-off amnesty to make things right, but that doesn’t mean they’re completely ‘off the hook’.
The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019, which just passed federal parliament, encourages employers to come forward and pay any unpaid superannuation in full.
Small Business Ombudsman Kate Carnell says while most small businesses do the right thing in this area, with 95% already complying, the amnesty will give them a further six months to ensure they’re compliant.
"This is a one-off amnesty that gives small business an opportunity to get up to date with outstanding payments to current and past employees, without being slugged with the harsh penalties that usually apply,” explains Ms Carnell.
The federal government says the amnesty doesn’t mean employers are off the hook.
Employers must still pay all that is owing to their employees, at a high penalty rate of interest. However, the amnesty will not hit employers with the large lump-sum penalties usually associated with late payment.
Those lump sum penalties generally include a minimum 100% penalty on top of the super guarantee shortfall owed, and up to 200% for the most serious cases.
“We estimate … 7,000 employers will come forward in the next six months before the amnesty ends,” says Assistant Minister for Superannuation Jane Hume.
The Institute of Public Accountants (IPA) chief executive officer Andrew Conway says the one-off amnesty allows employers to clean the slate.
“We acknowledge that small businesses can sometimes experience cash flow issues, making them vulnerable when it comes to meeting their super guarantee obligations by the required due date. This amnesty gives them time to atone,” says Mr Conway.
If you think your business might have made a mistake and underpaid staff super, but you’re worried about the cash flow issues raised by Mr Conway, get in touch.
We can help you apply for business finance that’ll help support both your employees’ future and your business’s cash flow.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Downsizers are tipped to take advantage of ‘the perfect storm’ and get the most out of the property market this year, predicts the national body representing professional buyers’ agents.
With softer lending conditions and strong property prices tipped for 2020, cashed-up downsizers looking to sell the family home and move into apartments or regional areas are in the box seat, says Real Estate Buyers Agents Association (REBAA) president Cate Bakos.
“With the potential for further low interests, softer lending conditions and low stock levels, it could be ‘the perfect storm’ for downsizers this year,” says Ms Bakos.
“The sorts of challenges that most buyers face - including valuations and gaining finance approval - is obviously not a concern for a buyer who is not impacted by a shortfall.”
Ms Bakos adds that low loan-to-value ratios, or even cash purchases, will eradicate any concerns about valuation dilemmas and make downsizers a formidable opposition at any auction.
“There is no doubt that wealthy older buyers – downsizers, baby boomers, empty nesters, retirees – will be a powerful force in the property market in 2020 and one that won’t be going away soon," she says.
Interested in the idea of downsizing? You’re not alone.
In fact, more than half of Australians over the age of 55 are open to downsizing, according to another recent report by the Australian Housing and Urban Research Institute (AHURI).
According to the report downsizers are mobile, with nearly half moving to new neighbourhoods; the main reasons for downsizing were lifestyle, financial considerations and reduced maintenance.
“While downsizing may include a reduction in dwelling size, to older Australians it points to a housing aspiration where the internal and outdoor spaces are manageable, and represents a financial benefit,” explains lead report author Dr Amity James.
In fact, most downsizers move into a dwelling with three or more bedrooms, the report shows.
“Most downsizers still want space and regard spare bedrooms as necessary in a dwelling,” Dr James adds.
If you’re interested in downsizing to improve your lifestyle and reduce home maintenance then feel free to get in touch.
We’d be more than happy to chat with you about all things finance for that new home you’ve got your eye on.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Once upon a time you were rewarded for loyalty. But borrowers with older mortgages are typically paying a higher interest rate than customers on new loans, confirms the Reserve Bank of Australia (RBA).
The RBA’s study finds that the difference in interest rates between new and outstanding variable-rate home loans increases with the age of the loan.
For example, for loans written four years ago, borrowers are charged an average of 40 basis points higher interest than new loans.
“For a loan balance of $250,000, this difference implies an extra $1,000 of interest payments per year,” explains the RBA.
And for loans more than eight-years-old, on average, you pay about 60 basis points more than a new customer.
The RBA says the difference in rates between older and newer mortgages can be partially explained by a shift in the mix of different types of variable-rate mortgages over time.
“In particular, the share of interest-only and investor loans in new lending has declined noticeably in recent years and these tend to have higher interest rates than other loans,” the RBA says.
“Nevertheless, even within given types of mortgages, older mortgages still tend to have higher interest rates than new mortgages.”
Here’s the real kicker, though. With competition for borrowers intensifying over recent years, banks are offering large discounts on their standard variable rates (SVRs).
What’s an SVR? It’s the reference rate that a bank prices its variable-rate loans against.
Basically, it’s the interest rate that banks and media quote when they report whether or not a rate cut is being passed through to customers.
But, as the RBA points out, very few borrowers actually pay interest rates as high as the SVR.
Instead, most borrowers are on advertised rates that are “materially lower” than a lender’s SVR, or have negotiated a further discount - and those discounts are getting bigger and bigger each year.
“In recent years, the average discounts relative to SVRs offered by major banks on new variable-rate mortgages have grown, widening from around 100 basis points in 2015 to more than 150 basis points in 2019,” the RBA says.
“By increasing the discounts on rates for new or refinancing borrowers over time, rather than lowering SVRs, banks are able to compete for new borrowers without lowering the interest rates charged to existing borrowers.”
The discounts borrowers receive on loans are usually fixed over the life of the loan. However, the good news is that they can be renegotiated.
“Well-informed borrowers have been able to negotiate a larger discount with their existing lender, without the need to refinance their loan,” explains the RBA.
So, if you’d like to put yourself into the RBA’s “well-informed borrower” category, then get in touch with us today.
We’d be more than happy to help you refinance your home loan, whether that be renegotiating with your current lender or looking around elsewhere.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Properties with high energy-efficiency ratings typically sell for up to 10% more, a review of international research shows.
The review, which was conducted by the University of Wollongong, compiled research undertaken in 14 countries and included data from the Australian Capital Territory (ACT), which is the only Australian jurisdiction to require that sellers disclose the energy-efficiency rating of their home.
In the ACT, the review found there was a 9.4% price premium for a house with a 7-star NatHERS rating (see below) compared to a house with 3-star NatHERS rating, and a 2.4% premium for a 6-star house.
If you consider that the ACT has a median house price of $773,635, that equates to potential price premiums of $72,721 (7-star) and $18,500 (6-star).
This latest review backs up similar research findings conducted by the University of Western Sydney in the commercial building sector, in which disclosing energy ratings is standard practice across Australia.
“Everybody wants an energy-efficient home. After all, an energy-efficient home is comfortable to live in, without large energy bills,” says Dr Daniel Daly, a research fellow at the Sustainable Buildings Research Centre, University of Wollongong.
“These can be important factors for prospective home-owners or renters.”
The Nationwide House Energy Rating Scheme (NatHERS) is a star rating system out of ten that rates the energy efficiency of a home, based on its design.
The government’s Your Home website is a great starting point when it comes to making your property more environmentally sustainable.
It includes information and tips on how to include more energy-saving features in your home, which may include solar panels, insulation, double-glazed windows, draught sealing, batteries, and rainwater tanks.
There are many advantages to owning a property with a high NatHERS rating.
So if you’re looking to build, renovate or simply upgrade your property, then get in touch. We’d love to talk to you about your financing options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Why it’s time to break away from traditional accounting firms, what going it alone meant for us, and why we are so pleased that we did.
By Nick Gregory & Joel Hams
There is something exciting about the beginning of a new year. A clean slate to start afresh. Inevitably, pondering the opportunities that a new year holds leads to thoughts of resolutions. This year, instead of focusing on what to change for next year (which seems a negative way to start a new year) we decided to take some time out over a cheeky Christmas drink and reflect on what a massive 18 months it’s been with the establishment of the Scarlett Financial Brisbane office and more specifically, our Business Advisory practice.
Looking back over the 15-ish years we have been working together, there was a common theme that ran through us both and our interactions together. We were both incredibly career-focused; always pushing for the next promotion, both driven to achieve what we thought was the ultimate goal - to become ‘partners’ in an accounting firm. It is only now, 15+ years on and after everything we have been through in the last 18 months that we can really articulate why that was the goal.
To us it means freedom. Freedom to work together to build a business that we are proud of, a business that creates value for our employees, our clients and for us. Freedom to work when we want, and how we want, and freedom to decide for ourselves that it is more important to take the morning having breakfast with our wives and kids than to be at our desk at 8:30am. Perhaps controversially, it also means freedom to decide who we will work with because life is too short, and everyone is time-poor and nothing drives home those two points more than working with the ‘wrong people’. This is also known as our ‘no d*ckhead policy’.
Upon reflection, it seemed inevitable that we would end up in business together, so when we were offered the opportunity to join the Scarlett Financial group as owners, to establish the Brisbane office and create our own accounting firm, the decision was an easy one. In fact, it was almost as if the Scarlett Financial model was designed with us in mind.
The business model is simple, a flat service fee on your cash collected billings (i.e. no pay to play), no other ongoing costs and a kickback share of group profits. When we launched, we had a fully fitted-out office, a website with our mugs on it, phone lines and internet, business cards and other marketing material; all we had to pay for was two laptops, a Xero subscription (which soon became free) and some professional registrations, call it $10k.
… an easy decision!
That’s enough about us, what about our clients? Throughout the process of setting up our firm, we have been constantly humbled by the support we have received from clients. Our clients were genuinely excited for us when we started up and chose to support us (beyond their own work) by actively referring new opportunities our way. This outpouring of referrals from long-standing relationships continues to be a great source of pride to us.
We have always believed that the true value of an accounting firm rests with fostering and maintaining great client relationships, supportive relationships that go beyond the idea that you speak to your accountant once a year at tax time. In designing our firm, we placed this aspect at the centre of our values. We can now offer our clients a full suite of financial services; accounting as the bedrock, along with financial planning, finance broking and insurance broking services available to provide holistic value. If it’s a service that we don’t offer (yet) we’ve got awesome contacts in other industries – relationships that we are able to actively foster because of that freedom that we mentioned earlier. By staying boutique and placing a deliberate cap on our total client numbers, we are ensuring our client relationships remain close and personal and more important than growing our business.
So, after all that, we did end up making a new year’s resolution; to remember how and why we started this journey and especially the people who made it possible.
What about you?
Throughout professional services firms (accounting, financial planning, finance broking, insurance broking etc), bright young professionals are charged with the responsibility of managing client and team relationships, delivering work and winning new business for their firm. Critically, these expectations are typically met with long work hours and mediocre salaries. Good combination, right?
If this sounds like you, why wouldn’t you break away from the traditional structure, own your own business (you are doing it all anyway) and create the lifestyle and financial freedom you are chasing from becoming a ‘partner’? Scarlett Financial can help, if you’re ready to evolve beyond what your current firm can offer, reach out to us for a chat - what do you have to lose (except long hours, poor pay, rigid hierarchies, top down management styles and office policies that get in the way of delivering great work)?
Applications for the new First Home Loan Deposit Scheme are now open, with 10,000 guarantees available to first home buyers looking to get a leg up into the property market.
Now, with 10,000 spots it might sound like you've got plenty of time up your sleeve to take advantage of the new scheme, but consider this: 110,000 Australians bought their first home in 2018.
So if you're interested in applying for this scheme, you'll want to put it at the top of your to-do list in 2020 and get in touch with us ASAP.
Ok, so currently people with a deposit of less than 20% usually have to pay Lenders Mortgage Insurance (LMI).
But under the government scheme, first home buyers with only a 5% deposit could be eligible to purchase a property without forking out for LMI.
Now, it's important to note that this is not a handout – it's simply a government guarantee.
But this guarantee can give first home buyers a “leg up”, says the federal government, as it could save you as much as $10,000 in LMI insurance.
The scheme commenced on 1 January 2020.
In order to be eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).
More details on eligibility can be found here.
Below are the property price caps for each city and regional centre with a population over 250,000, followed by the price caps for the rest of the state.
– NSW: $700,000 (Sydney, Newcastle/Lake Macquarie, Illawarra) and $450,000 (rest of state)
– VIC: $600,000 (Melbourne and Geelong) and $375,000 (rest of state)
– QLD: $475,000 (Brisbane, Gold Coast, Sunshine Coast) and $400,000 (rest of state)
– WA: $400,000 (Perth) and $300,000 (rest of state)
– SA: $400,000 (Adelaide) and $250,000 (rest of state)
– TAS: $400,000 (Hobart) and $300,000 (rest of state)
– ACT: $500,000
– NT: $375,000
If you're considering purchasing your first home in 2020 but don’t have a 20% deposit saved up yet – get in touch.
We’d love to run you through this new scheme in more detail and, if you're eligible, help you apply for finance with one of the scheme's participating lenders.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Did you know there’s around $1.1 billion owed to Aussie families in unclaimed shares, bank accounts and life insurance? With the festive season just around the corner, here’s how to find some long lost funds for you and your family in less than one minute.
They say Christmas is a time for giving. But let’s be honest, it’s always nice to get a little surprise, too.
The beauty of this little life hack is that - if you’re lucky - you might experience both ahead of the budget-blowout that is the festive season.
Don’t believe us? A friend who gave us the idea for this timely post found $1140 for his aunty and $68 for his brother. That’s more than $1200 by simply searching his last name in a government register.
Sure, he didn’t find any money for himself - but his brother has promised to finally fork out for the family Xmas turkey this year!
Ok, so it’s super quick and simple.
Just click on this ASIC MoneySmart website link. Then type in your name in the search bar.
If nothing comes up try typing in just your last name and you might even spot some relatives who are owed money.
If the search brings up money that’s owed to you, simply scroll down the bottom of the ASIC MoneySmart website link for steps on how to claim the money.
The above link is run by the federal government. But there are also state and territory registers for unclaimed money as well, including:
NSW - Revenue NSW
Victoria - State Revenue Office Victoria
Queensland - Public Trustee of Queensland
Western Australia - WA Department of Treasury
South Australia - SA Department of Treasury and Finance
Tasmania - Tasmanian Department of Treasury and Finance
ACT - Public Trustee and Guardian for the ACT
Northern Territory - Northern Territory Treasury
Searching for unclaimed money in the above registers is straightforward and similar to the process for the MoneySmart register.
Whether your search for unclaimed money is fruitful or not, we hope that you enjoy celebrating the festive season with family and friends in the coming weeks.
And when 2020 rolls around, if you need to check anything finance-related, please don’t hesitate to reach out to us. We’d love to work with you again in the new year.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We all know that choosing the perfect investment and getting the timing right are both critical. What people often overlook, however, is selecting the right investment ownership model.
How you own your investment – and with whom – is a decision you'll want to nail from the outset.
That's because the asset ownership structure you select can dictate the tax you pay, access to finance, estate planning, control of your investment, costs associated with maintaining it, and the risks you face.
Today we're going to take a quick look at your options when it comes to asset and investment ownership.
Sole ownership is the complete ownership of an asset by one individual. This is perhaps the simplest and least costly form of asset ownership.
You're entirely responsible for the asset, which means you carry full liability for all debts, finances and taxes.
Joint ownership involves two or more individuals owning a share of the asset.
Depending on your situation there may be tax benefits or tax discounts associated with joint ownership. For example, joint ownership of a property by a husband and wife may qualify for a tax benefit. You may also receive a 50% discount on Capital Gains Tax (CGT).
One of the main disadvantages of personal asset ownership is that it offers little protection for your investment if you become bankrupt or are sued.
A trust is an investment structure that obliges a person, or group of people (trustees) to hold assets for the benefit of others.
Trust ownership can offer additional asset protection, allow for profit sharing and tax benefits, including a 50% discount on CGT. It can also help with estate planning and reduce the costs associated with transferring asset ownership.
Trusts, however, can be costly and complicated to establish and are also associated with more reporting and administrative responsibilities than personal ownership. Depending on the trust structure you select, it can also be more complicated to secure an investment loan.
A company can own a stake, or the entirety, of an asset.
Again, company ownership can help protect assets from personal losses and liabilities. It can also deliver tax benefits because any income and capital gains is taxed at the company tax rate of 30% (which may be significantly less than your personal marginal tax rate).
On the other hand, companies miss out on the 50% discount on CGT that is possible through personal or trust ownership.
Your control over the asset – including when you buy and sell – may also be diluted via a company structure.
Investing through a superannuation structure can deliver significant tax benefits as any income earned via super can be taxed at as little as 15%. CGT from investments via super may be discounted by a third.
Investing through your super is also an estate planning strategy that many people consider.
That said, there are complex rules around super contribution caps, tax treatment and borrowing arrangements when investing via super. The location, type and liquidity of your investment may also be restricted.
Understanding which ownership option is the best fit for you and your asset can be complex. As you can see, it's not straightforward - there's a lot of considerations and no two situations will be the same.
So if you want to get it right from day dot, get in touch.
We can take into account all relevant information to help you decide what option to choose so your asset is owned in the most beneficial way.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We all want what's best for our children. So while investing in their name from an early stage might sound like a great idea, you need to tread as carefully as you would around an abandoned lego construction site.
Some people invest in their child's name as a way of engaging with them and encouraging them to invest in their future from an early age.
That said, there actually aren't that many pros to putting money away on their behalf.
As it stands, minors can earn up to $416 per year tax-free before high tax rates kick in.
This means the pros are most likely outweighed by the cons when it comes to investing in your child's name.
The first downside of investing in your child's name is the difficulty involved.
Most fund managers won't accept direct applications from minors due to the potential legal implications, while some companies prohibit shares from being purchased by anyone under the age of 18.
Additionally, a few decades ago the Australian government closed a loophole which was thought to allow wealthy parents to escape tax responsibilities by investing money in the name of a minor.
This means once a child's unearned income has exceeded $416 a year tax rates of up to 66% now apply.
There are a number of alternatives to investing which could result in a higher return, including investment bonds.
If your family pays a higher rate of tax – particularly if both parents are working – investment bonds could be a more effective way to invest and save on tax. That's because earnings are taxed at 30% within the bond.
Investment bonds are also handy when it comes to your kids because they're designed for the long-term. Usually 10 years or more.
They can then be transferred when the child comes of age.
You could also benefit from investing in the name of an adult spouse with a lower income.
However, if you're looking to invest in stocks and shares or an exchange-traded fund (ETF) semi-regularly, bear in mind you'll need to put away larger sums to make the brokerage costs worthwhile.
If you'd like help investing in both your child's name and their future, then don't hesitate to get in touch.
That way the only costly misstep you'll have to worry about is that of the scattered lego kind.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Could you say goodbye to Netflix to take out a loan? That’s one example corporate watchdog ASIC has included in its responsible lending update.
Now, rest assured that you don’t actually have to say goodbye to Netflix to take out a loan. It’s just a “non-essential” expenses example ASIC has provided in its updated Regulatory Guide 209 (RG 209) to provide greater clarity and support to lenders and brokers.
In one of the 39 guidance examples in the updated guide, a prospective borrower named Leah “advises her lender that she could cancel her monthly streaming services” to cover the monthly repayment of a proposed smaller loan.
Rough. We know. Apparently Leah didn’t even get to finish the latest season of The Crown.
But rest assured that if (unlike Leah) you can’t live without your fix of Netflix there’s scope for other non-essential expenses to be cut instead - if you need to make cuts at all (it depends on your financial situation).
“Examples in this guide are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements,” ASIC explains in the principles-based guide which it says allows for “flexibility to determine what is appropriate in individual circumstances”.
ASIC has also included a section that confirms small business lending is not subject to responsible lending obligations, irrespective of the nature of the security used for the loan.
Absolutely. There’s an interesting section in the updated guidance where ASIC states:
“We recognise that a consumer may be able to reduce their spending and change their lifestyle in order to afford a particular loan and be able to do so without substantial hardship.”
And a related section that states: “There may be some lifestyle changes the consumer would not be prepared to make to afford credit.”
So come in for a chat. We can discuss with you what your essential expenses and your non-essential expenses are, and how they may impact your credit application.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The country's top financial regulators are concerned banks are ‘too cautious’ when it comes to loans for small business borrowers.
The Council of Financial Regulators (CFR) - which is chaired by RBA governor Philip Lowe and includes APRA, ASIC and federal Treasury - met to discuss the tight credit conditions for small businesses and the associated reduced risk appetite from many lenders.
As a result, ASIC will soon officially confirm that the responsible lending laws don’t apply to small businesses.
In their post-meeting quarterly statement, the CFR stressed that the flow of credit is fundamentally important to the functioning of the Australian economy.
“(We) discussed the concern that lenders' risk appetite for some types of lending may have swung too far towards caution,” the CFR said.
The CFR’s statement is in response to repeated complaints from bankers this year that tighter small business lending has been an unintended consequence of the Hayne royal commission.
During the meeting, CFR members discussed that in the coming weeks ASIC will release updated guidance on responsible lending provisions.
“It will confirm that responsible lending requirements do not apply to loans made predominantly for business purposes, regardless of the type of security offered for the loan,” said the CFR statement (and yes, they even bolded the ‘do not’ bit!).
The guidance will also assist lenders to better understand their obligations and reduce the risk of non-compliance.
That’s the easy bit - get in touch with us.
The lending appetite in the SME space is something we’re well across and are more than happy to bring you up to speed on.
So drop us a line and we’ll be happy to run you through some of your business’s financing options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
NRL vs AFL. Neighbours vs Home & Away. Gas vs charcoal grill. We Aussies are no strangers to a heated debate. And that extends to the shares vs property discussion.
You've probably seen it unfold at the family BBQ before.
Uncle Mick will swear black and blue that property is the only way to go, as he bought his $1 million beachside shack for just $20,000 thirty years ago.
He's immediately countered by your know-it-all second cousin James. His hand-picked share portfolio has outperformed the property market five years running, he claims, as he casually reels off lingo such as “bullish” and “bearish”.
But as with most things in life, the best option depends on your individual situation, so let's run through the five major pros and cons of each.
As you can see, what might be a major sticking point for your uncle, could be water off a duck's back for your second cousin. And vice-versa.
So rather than getting drawn into a pointless debate and being forced to pick a side, come in and chat to us for unbiased advice on what would best suit your individual situation.
Besides, someone's got to keep an eye on those lamb snags (which are clearly superior to beef snags).
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
SMEs are set to have better access to finance, with the Australian government making two key moves this month to free-up lending to small business operators.
Firstly, Treasurer Josh Frydenberg says he will instruct the corporate watchdog ASIC to tell banks to waive responsible lending standards for small businesses.
Mr Frydenberg says while small businesses are exempt from responsible lending standards, many have been inadvertently caught in the tightening of those standards in the wake of the Hayne Royal Commission.
“There's a real grey area as to what is a small business loan and a personal loan," Mr Frydenberg told Fairfax.
“Small businesses are exempt from responsible lending standards; however, they are being inadvertently caught in the tightening of those standards post the Hayne royal commission as many use the family home to secure finance.”
Mr Frydenberg also recently released exposure draft legislation to allow the government to invest in an Australian Business Growth Fund (BGF).
The government is committing $100 million to establish the BGF and partnering with financial institutions to provide equity funding to SMEs.
The aim is for the fund to mature to $1 billion to help SMEs get access to the finance they need.
Australia currently lacks a patient capital market for small and medium enterprises, the exposure draft’s explanatory materials states. Patient capital can provide entrepreneurs with the finance needed to expand without relinquishing control of their business.
“The government will help small businesses grow by co-investing with other financial institutions to establish a BGF that will provide equity finance to small businesses across a range of industries and locations,” the explanatory materials state.
Mr Frydenberg adds that many SMEs find it difficult to obtain finance other than on a secured basis – typically, against the family home.
They also find it difficult to access additional funding once they have pledged all of their real estate as collateral.
“With better access to more competitive finance, SME’s will be able to grow, fulfil their potential and continue to underpin Australian economic growth and employment,” Mr Frydenberg’s statement said.
Legislation to establish the BGF will be introduced to parliament before the end of 2019.
If you’re a small business owner wanting access to finance, you don’t have to sit and wait for the government’s initiatives to take effect.
Instead, get in touch with us. We’re happy to talk through your current situation and help you explore your options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The property price caps in each state have been revealed for the federal government’s new first home buyer scheme. Read on to find out the maximum value of a property you can purchase under the scheme.
Imagine buying your first home with a 5% deposit and not having to pay lenders mortgage insurance (LMI).
Sounds good, right?
Well, the federal government has finally revealed more details in a draft mandate for the scheme, including the property price caps in each state.
Below are the property price caps for each city and regional centre with a population over 250,000, followed by the price caps for the rest of the state.
- NSW: $700,000 (Sydney, Newcastle/Lake Macquarie, Illawarra) and $450,000 (rest of state)
- VIC: $600,000 (Melbourne and Geelong) and $375,000 (rest of state)
- QLD: $475,000 (Brisbane, Gold Coast, Sunshine Coast) and $400,000 (rest of state)
- WA: $400,000 (Perth) and $300,000 (rest of state)
- SA: $400,000 (Adelaide) and $250,000 (rest of state)
- TAS: $400,000 (Hobart) and $300,000 (rest of state)
- ACT: $500,000
- NT: $375,000
Ok, so currently people with a deposit of less than 20% usually have to pay LMI.
But under the government scheme, eligible first home buyers with only a 5% deposit could be eligible to purchase a property without forking out for LMI.
Now, it’s important to note that this is not a handout - it’s simply a government guarantee.
But this guarantee could be very helpful, as it could save you as much as $10,000 in insurance.
The scheme is due to commence on 1 January 2020.
In order to be eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).
But here’s the catch: the offer is limited to just 10,000 first home buyer loans each year. That’s less than 10% of the 110,000 Australians who bought their first home in 2018.
That’s the million-dollar question! (or, depending on where you live, the $400,000 question).
It looks as though applications will be granted on a "first come, first served" basis.
So if you’re considering purchasing a property but don’t have a 20% deposit saved up yet - get in touch.
We’d love to run you through the scheme in more detail and help you plan ahead for the new year.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Are you paid weekly, fortnightly or monthly? New research indicates that how often you’re paid has a pretty big bearing on whether you’re a saver or a spender.
The research, conducted by small business platform Xero, shows that Aussies who receive their salaries weekly are more likely to splash their hard-earned cash than those who are paid monthly due to a term they’ve dubbed ‘payphoria’.
This, in turn, can play a big part when it comes to your ability to save for a home loan deposit.
The research analysed the payday habits of 1,000 Australians and found that a whopping 63% of workers claim to have financial difficulties before payday and rely on short-term fixes for support.
In fact, one in three workers have less than $100 in the lead up to payday, resulting in them foregoing luxuries such as coffee and eating out, or even delaying household bills.
“It’s not surprising that when payday does come around, Aussies are experiencing rushes of ‘payphoria’ and are wanting to reward their hard work by spending up,” explains Xero small business advocate Angus Capel.
Hence, the research suggests that the more paydays we experience, the more of these ‘payphoria’ spending sprees we reward ourselves with.
Below is Xero’s breakdown of Aussie savers versus spenders.
- 70% of Australians identified as savers (despite much of the research suggesting otherwise!)
- they’re more likely to be paid monthly
- they’re more likely to budget and keep track of expenses and spending habits (87%)
- they feel worried if they don’t have enough savings (95%)
- they’re more likely to be married with no children and live in metro areas
- their key financial goals are on financial management such as retirement, having an emergency fund and paying off mortgages.
- 30% of Australians identified as spenders
- they’re more likely to be paid weekly
- they don’t want to give up luxuries that come with saving (77%)
- they believe lifestyle is more important than saving for the future (56%)
- they’re more likely to use their income to pay off debts like credit card bills
- they’re more likely to have children under the age of 18 and live in regional areas.
If you think you’re leaning more towards spender than you are saver, then get in touch.
We can provide you with some effective saving techniques that can help put you on the right path to saving for a home loan deposit.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Got a large, overdue tax debt with the Australian Tax Office (ATO)? Then best listen up, because certain tax debt information can now be reported to credit reporting bureaus (CRBs).
A new Australian law means the ATO will be able to disclose the tax debt information of a business to CRBs when certain criteria are met.
The ATO will only disclose tax debt information if the business meets all of the following criteria:
- it has an Australian business number (ABN), and is not an excluded entity
- it has one or more tax debts, of which more than $100,000 is overdue by more than 90 days
- it is not effectively engaging with the ATO to manage its tax debt, and
- the Inspector-General of Taxation is not considering an ongoing complaint about the proposed reporting of the entity's tax debt information.
The ATO says the purpose of this law is to encourage businesses to engage with them to manage their tax debts and, where a business is unable to pay a tax debt in full by the due date, enter into a sustainable payment plan that’s agreed upon between the two parties.
The ATO adds that the law is also to support more informed decision making within the business community by making large overdue tax debts more visible.
Finally, the ATO says the law will reduce the unfair advantage obtained by businesses that do not pay their tax on time and do not engage with the ATO in managing their tax debts.
The ATO will notify a business in writing if it meets the reporting criteria and give it 28 days to engage with the ATO and take action to avoid having its tax debt information reported.
Get in touch with the ATO - you may be able to agree on a payment plan.
That said, not everyone enjoys the ATO hovering over their shoulder. If that includes you, it’s definitely worth also getting in touch with us to explore your options with business loan lenders.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You know that infuriating habit the big banks have of failing to pass on the RBA’s cash rate cuts in full? Well, it’s finally triggered the federal government to order an inquiry into home loan pricing.
The inquiry, which is being conducted by the Australian Competition and Consumer Commission (ACCC), comes just weeks after the Reserve Bank of Australia (RBA) slashed the official cash rate by 25 basis points for the third time this year to a record new low of 0.75%.
What really drew the ire of the public and politicians alike, however, was that the big banks only passed on between 0.13% and 0.15% (out of 0.25%) of the latest RBA cut to customers.
This is after they only passed on 0.40% to 0.44% (out of 0.50%) for the previous two RBA cuts.
Treasurer Josh Frydenberg said if the big banks had passed on the recent rate cuts in full, a family with a $400,000 mortgage would be paying around $2,200 a year less in interest payments.
That compares to the $1,680 they’re saving from the 57 basis point rate cut that they are currently getting (on average), he added.
“In other words, families would be $519 better off if the banks had passed on the rate cut in full, not just a part of it,” Treasurer Frydenberg said.
The ACCC will investigate a wide range of issues - on top of why RBA cuts aren’t always passed on in full - including the rates paid by new customers versus existing customers (in other words: the ‘loyalty tax’).
In addition, the inquiry will consider what prevents more consumers from switching to cheaper home loans.
“We have evidence that customers can save considerable money by switching providers, and we want to fully understand what the barriers are that stand in their way, particularly barriers created by the banks,” ACCC Chair Rod Sims said.
“It is also very difficult for customers to find out what mortgage rate they could pay with another financial institution, without going through a lengthy and time-consuming application process.”
Mr Sims added the inquiry will aim to provide answers to the questions that banking customers have long asked.
“For example, there is an unusually large difference between the headline rate and the actual rates many customers are paying, which can be confusing for consumers,” he said.
The ACCC is expected to produce a preliminary report by the end of March 2020, with a final report due 30 September 2020.
All in all, the ACCC inquiry is aimed at increasing transparency when it comes to how banks price their home loans.
The good news for you is that you’re not alone. If you ever have a question about your home loan that you need clarity on, all you need to do is get in touch with us. We’d be more than happy to look into it.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Got retirement on your radar? A reverse mortgage can help you improve your standard of living during your golden years. Today we’ll look at how some Aussies are using them.
From 2014 to 2054, the number of people in Australia aged between 65 and 84 is likely to more than double, according to ASIC.
This will likely see an increase in demand for equity release products such as reverse mortgages.
“Reverse mortgage products can help many Australians achieve a better quality of life in retirement,” says ASIC Deputy Chair Peter Kell.
With that in mind, today we’ll run through seven real-life ASIC case studies that show how a reverse mortgage can help older Australians achieve financial and lifestyle goals.
Jenny was 74-years-old and living solely on a pension. She had only $664 in her transaction account and $15,260 of credit card debt when she applied for a reverse mortgage.
Jenny took out a $50,000 reverse mortgage to refinance her credit card debt, make home improvements, and cover day-to-day living expenses.
Caroline moved homes to be closer to her children, but found her pension did not allow her to spend time with them or go on holidays.
“I thought why should I sit here and twiddle my thumbs when I’ve only a few years left, so I arranged for some extra money to allow me to just enjoy my time,” said Caroline.
Fancy a trip overseas? Or perhaps campervanning around Australia is more your style?
Joey was 66-years-old, retired, and living primarily off his pension. He had a property valued at $360,000 and only $1,019 of cash in his bank account which was held by a different lender.
Joey paid for his holiday by borrowing a $70,000 lump sum through a reverse mortgage.
Kathleen lived by herself and was saving for retirement. However, when one of her grown children unexpectedly needed extra support, Kathleen left her job to help provide care.
Without work income, she could not afford to cover her debt repayments so she took out a reverse mortgage.
Later, Kathleen was able to re-enter the workforce and made voluntary repayments on her reverse mortgage.
Fred was 65-years-old and living alone after separating from his partner. He decided to quit his job and redirect his efforts into building his dream home.
Living on the Newstart Allowance, Fred chose to take out a reverse mortgage to cover the shortfall that losing his partner’s savings and wages caused in finishing the new build.
He planned to finish the home, staying in it no more than 12 months, then downsize in the same area to pay off the reverse mortgage.
Amy and Roger had lived in the same home for the last 30 years. They took out a reverse mortgage to finance home improvements that they believed would allow them to continue to living independently in their home as they grew older.
These improvements included building a ramp to replace stairs, replacing ageing carpets, and installing heating and cooling systems.
Tom worked for the same employer for about 40 years. After taking unpaid leave to recover from an unexpected illness, his employment was terminated with three weeks’ salary.
Tom was ineligible to receive the age pension so he took out a reverse mortgage to supplement his superannuation and cover his day-to-day living expenses.
It’s important to note that a reverse mortgage isn’t for everyone.
There will be some scenarios where it may be a good fit, and others where there may be other more suitable options available.
If you’d like to weigh up which category you fall into, get in touch. We’d love to chat with you about your future needs and whether a reverse mortgage could help fulfil them.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The ‘pendulum may have swung a bit too far’ when it comes to the tight lending standards currently imposed on small businesses, says the Reserve Bank of Australia (RBA).
Since the RBA cut the official cash rate to a new record low of 0.75% on Tuesday, most of the attention has been on whether the banks would pass the full 25 basis point cut to home loan customers (spoiler: the big four banks only passed on 0.13-0.15%).
As such, several pointed remarks made by RBA Governor Philip Lowe in regards to lenders’ “tight" lending standards imposed on SMEs have flown under the radar.
“In some areas the pendulum may have swung a bit too far,” Dr Lowe said at the Reserve Bank Board Dinner on Tuesday night.
“It is important that our financial institutions support small businesses in particular. Lenders should not be so scared of making a loan that goes bad that they don't provide the credit that the economy needs.
“We will all be better off if businesses have the confidence to expand, invest, innovate and hire people.”
Dr Lowe’s comments come just weeks after a number of reports highlighted many small businesses were struggling due to financing complications.
One report, by market analysis firm East & Partners on behalf of Scottish Pacific, showed that more than one-in-five business owners said that being rejected from a lending product was the main reason for their cash flow issues.
Another report, by the Australian Banking Association (ABA), showed that while 9 million Australians have dreamed of starting their own business, 60% are held back from their dreams due to ‘access to money’.
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has urged lenders to heed Dr Lowe’s advice.
“The overwhelming feedback to my office from the small business community is that a lack of access to funding is their biggest barrier to growth,” Ms Carnell said.
“If our financial institutions change the way they do business with SMEs, it might just give small businesses the confidence they need to grow, which would be of significant benefit to the Australian economy.
“It’s time we all sit up and listen to the RBA Governor.”
Let’s face it: sitting around waiting for everyone else to listen to the RBA Governor probably isn’t the most proactive business strategy if you’re in need of equipment or asset finance for your business.
So if you’re an SME owner looking to fund your business’s growth, then get in touch.
We’ve got a number of lenders on our panel and would be happy to run you through some options to help you grow your business.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Three-in-five prospective first home buyers intend to buy soon with a smaller deposit, rather than wait until they have saved a 20% deposit. So how do they plan on doing so?
It usually takes between seven to 14 years for first home buyers to save a 20% first home deposit, according to a new report by Genworth on recent and prospective first home buyers (FHBs).
With that in mind, it’s no wonder that 59% of prospective FHBs are eagerly exploring their options to buy now in the current market, rather than risk waiting until house prices rise.
Indeed, about two-thirds of recent and prospective FHBs are of the opinion that property prices will stabilise or increase over the next 12 months.
So what options are available for prospective FHBs with a deposit of less than 20%?
The first option, which doesn’t come into play until 1 January 2020, is the Federal Government’s ‘First Home Loan Deposit Scheme’, which three in four prospective FHBs intend to apply for.
Under the scheme, some FHBs will be able to borrow up to 95% of the value of their property without forking out for Lenders Mortgage Insurance (LMI).
But with the scheme limited to just 10,000 FHB loans each year, and the number of Australians who bought their first home in 2018 totalling 110,000, it’s important to have a Plan B up your sleeve.
In recent times, one-in-three FHBs have opted to bite the bullet and fork out for LMI in order to secure a home loan with less than a 20% deposit.
LMI usually costs between $3,000 and $13,000, depending on the size of the home loan and how much of your deposit you’ve saved.
It’s an insurance policy you’re generally required to take out if you have a deposit of less than 20% (it reimburses a lender if you fail to make repayments and your home is repossessed and sold for less than its outstanding mortgage debt).
The third option, which is being considered by one-in-four prospective FHBs, is to ask the ‘Bank of Mum and Dad’ for assistance.
Of recent FHBs that pursued this strategy, 28% had their family gift them some money, 21% had their family lend them some money, and 16% had their family act as guarantor.
The fourth option, which is not covered in the Genworth report, is to buy off-the-plan, which often requires a deposit of 10% to be paid to the developer to secure the property.
This means you’ll have more time to save for the remaining 10% before settlement while the property is being built.
That said, buying off the plan isn’t without its risks, so be sure to do your research on every facet of the development that happens to catch your eye (the internet is littered with stories of off-the-plan purchases that have gone awry).
If you’re a prospective FHB and you want to find out more about entering the property market sooner rather than later, please get in touch.
We’d be more than happy to run you through your options if you’re looking to buy a home with a deposit less than 20%.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Imagine buying your first home with only a 5% deposit and not having to pay lenders mortgage insurance (LMI). Well, that dream is one step closer to reality after the government introduced legislation to implement the First Home Loan Deposit Scheme.
Currently, people with a deposit of less than 20% usually have to pay LMI.
But under the scheme, some first home buyers will be able to borrow up to 95% of the value of their property without forking out for LMI.
The result: first home buyers stand to save up to $10,000 in LMI, allowing them to enter the property market earlier than they would have otherwise.
Now, the scheme is due to commence on 1 January 2020.
But here’s the catch: it’s limited to just 10,000 first home buyer loans each year.
That number is less than 10% of the 110,000 Australians who bought their first home in 2018.
When the Coalition announced the scheme prior to the last election it warned that in order to be eligible first home buyers could not have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).
The recently introduced legislation further stipulates that there will be dwelling price caps which will differ from state to state, as well as between city and regional areas.
These caps haven’t been quantified just yet. But the keyword is that the scheme will be limited to ‘modest’ dwellings.
“Setting caps on the value of properties that can be purchased under the scheme will be a key lever used to constrain potential demand. It will be necessary to set these caps so that only modest properties in regional towns and capital cities can be purchased,” the legislation reads.
“This will also help to target access to the scheme to those first home buyers in more genuine need of assistance.”
So, while we don’t know what these caps are, it’s fair to say that you’re not going to be able to use the scheme to turn a 20% deposit on a $300,000 unit into a 5% deposit on a $1.2 million house.
To implement the scheme, the National Housing Finance and Investment Corporation (NHFIC) will contract with a panel of lenders, and smaller banks and non-bank lenders will be prioritised to encourage competition.
Participating lenders or mortgage brokers will then assess scheme eligibility alongside normal considerations such as loan serviceability tests.
An alternative model being considered is to have borrowers apply to the NHFIC directly to confirm eligibility. Approved borrowers would then approach a participating lender (directly or via a mortgage broker) to obtain the loan.
Well, preliminary consultations were initiated in late-May and involved a large number of meetings with a broad range of stakeholders, including lenders (large and small), LMI providers, industry associations, mortgage brokers, and consumer advocates.
Further consultation will continue on the legislative framework before the scheme’s eligibility and operations are fully revealed.
If you’re a first home buyer looking at cracking into the property market in 2020 - or know someone who is - then get in touch.
Rest assured that we’ll be closely watching how the First Home Loan Deposit Scheme develops and will be able to help you get your application in pronto.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Lending to Aussie households spiked 3.9% in July, the strongest growth seen since October 2014, according to the Australian Bureau of Statistics (ABS).
The bumper month follows a 1.9% rise in June 2019, suggesting the tide has finally started to turn in the lending market.
“Whoa. Quite the surge in housing credit in July,” remarked CoreLogic’s head of research Tim Lawless, “haven't seen numbers like this since 2015/16”.
Lending for investors rose 4.7% in July with rises across all states and territories, while lending to owner-occupiers also recorded substantial gains at 5.3%.
Meanwhile, home loans to first home buyers rose 1.3% in July. This is the fourth consecutive month of growth for this segment.
The rise came the same month that the prudential regulator, APRA, eased loan serviceability standards.
Essentially, APRA stopped telling lenders to assess whether borrowers could afford their repayment obligations based on a minimum interest rate of 7%.
BIS Oxford Economics' Maree Kilroy adds that investor sentiment also received a boost following the Coalition government’s federal election victory, and pointed to back-to-back rate cuts in June and July.
"After withdrawing from the market for several years, investors have reacted positively," Kilroy says.
Lawless agrees that the surge is due to "two rate cuts, easier credit, sentiment boost post-election and removal of macro-prudential".
And his colleague, Cameron Kusher, suggests this might only be the beginning.
"Importantly this is only to July. We could see these figures go much higher by the time we are right in the middle of spring," Kusher says.
As Kusher suggests, this might just be the beginning of a lending surge.
Spring usually brings plenty of new properties onto the market - everything looks nicer in spring!
So if one of them happens to catch your eye, get in touch and we’ll be happy to guide you through the process of obtaining finance.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Marge, Marge, the rains are ‘ere! Home prices have recorded their first rise since October 2017, with national dwelling values increasing 0.8% over August, according to the latest CoreLogic report.
Housing values across capital cities rose by 1%, with Sydney (1.6%), Melbourne (1.4%), Canberra (0.8%), Hobart (0.5%) and Brisbane (0.2%) leading the way.
While the lift in annual housing values is substantial, the recent growth is a continuation of the trend seen throughout the year whereby value falls were consistently losing momentum, and have now started to rise.
Indeed, while Adelaide (-0.2%), Perth (-0.5%) and Darwin (-1.2%) recorded losses, the figures are a substantial improvement on what the three cities recorded over the last quarter and year.
Likewise, while the combined regional figure was -0.1%, this was much better than the quarter (-0.6%) and annual (-2.9%) figures recorded for that market.
The significant lift in values in August aligns with a consistent increase in auction clearance rates and a deeper pool of buyers at a time when the volume of stock advertised for sale remains low, says CoreLogic research director Tim Lawless.
“It’s likely that buyer demand and confidence is responding to the positive effect of a stable federal government, as well as lower interest rates, tax cuts and a subtle easing in credit policy,” says Lawless.
“While the recovery trend is still early, it does appear that growth trends are gathering some pace, particularly in the largest capital cities.”
Lawless says while he had previously believed the housing market recovery would be a “slow and steady one”, this might not necessarily be the case.
“With housing credit restrictions easing and mortgage rates likely to reduce further, this rebound could potentially turn into a ‘v-shaped’ recovery,” Lawless says.
“At the outset, it appears that a rapid recovery would confirm that low interest rates and a loosening in credit policy is reigniting some market exuberance.”
The spring selling season will be a timely test of the market’s depth.
“A key contributor to the housing recovery has been the increase in buyers, but also a lack of advertised stock. As stock levels continue to rise throughout spring, we will get a much better understanding of the depth of the current recovery,” Lawless says.
“As listing numbers and auction volumes rise, clearance rates may soften if buyer demand doesn’t lift to match the increase in supply.”
These latest figures indicate that the housing market recovery is underway, so if you’re interested in making a purchase, then please don’t hesitate to get in touch.
As mentioned above, spring tends to bring more properties onto the market, so if you’ve got your eye on one, let us know and we’ll be happy to help you obtain finance for it.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Ever thought about investing in solar panels for your home? If so, you’ll know it’s a big decision and there’s a lot to wrap your head around. Fortunately, the consumer watchdog is proposing a new retailer code to make solar purchases safer and easier.
Australia is the sunniest continent on Earth. Yep, even more so than Africa.
Which is why it makes sense that more than two million homes have already decked out their rooftops with solar panels.
Sure, the initial outlay is between $5,000 and $10,000, but solar installations usually pay themselves off in two to six years - and then they save you a whole lot of money on power bills in the long run.
The thing is, though, household solar can be tricky to research if you’re not familiar with the industry - not to mention all the potential government rebates and incentives you need to wrap your head around.
The Australian Competition and Consumer Commission (ACCC) has proposed a new consumer code for retailers selling solar and energy storage systems, with a draft determination due on September 9.
The New Energy Tech Consumer Code (the Code) sets minimum standards of good practice and consumer protection and will apply to all aspects of customers’ interactions with participating retailers.
That includes their marketing, finance and payments, warranties and complaints handling processes.
"Products like solar panels or battery storage involve significant financial outlays for households," ACCC Deputy Chair Delia Rickard explains.
"This Code aims to give consumers more protection and more information to help them make informed purchases."
Signatories to the Code must comply with obligations, including that they:
- avoid high-pressure sales tactics
- ensure their advertising is clear and accurate
- educate consumers about their rights
- provide clear information about product performance and maintenance
- take extra steps to protect vulnerable consumers
- implement effective complaints handling processes.
The proposed code will also effectively prevent signatories from offering finance through ‘buy now pay later’ arrangements.
There are a number of state government programs across Australia that offer interest-free loans for eligible households in the solar space, including in NSW, Victoria, Queensland and South Australia.
If you’re not eligible for any of the above schemes, rest assured that there are other smart ways to finance the installation of household solar.
If you’d like to find out more, get in touch. We’d be happy to talk you through some of your options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Indulgences such as caviar, wagyu beef and the finest bottles of wine shouldn’t count against you when lenders assess your application for finance, a Federal Court judge has said.
Ok, so maybe Federal Court Justice Nye Perram has a slightly different grocery list to the rest of us.
But his recent judgement should be welcome news to potential borrowers who have splashed out on the odd luxury over the past six months and are worried that it would completely derail their loan application.
Well, the corporate watchdog (the Australian Securities and Investments Commission, aka ASIC) filed a court case against Westpac in 2017 in an attempt to strengthen lending standards.
ASIC argued that Westpac’s automated decision system relied solely on a household expenses benchmark that underestimated real living expenses and, as such, was flawed.
However, Justice Perram ruled that Westpac had done nothing wrong by using its automated system, rather than manually checking the borrowers' living expenses, when approving more than 260,000 home loans between December 2011 and March 2015.
Justice Perram said that current laws do not explicitly require banks to check expenses.
“[I’m] unable to discern why, as a matter of principle, the consumer's declared living expenses must be considered,” he said.
"I may eat wagyu beef every day washed down with the finest shiraz but, if I really want my new home, I can make do on much more modest fare.
"The fact that the consumer spends $100 per month on caviar throws no light on whether a given loan will put the consumer into circumstances of substantial hardship.”
Basically, what Justice Perram is saying is that just because you fork out for expensive items before you apply for a mortgage, doesn’t mean you’re incapable of reducing your expenses once you’ve taken out a loan.
The Australian Financial Review (AFR) followed up on the decision with a scathing smackdown of ASIC in an editorial that asked: “why did ASIC even bother?”.
“Leave banks – the institutions with the expertise and incentive to write good loans – to assess risks for home loans. Not second-guessing bureaucrats,” the editorial stated.
“After all, it is hardly in a bank’s own interest to lend to people who are unlikely to be able to pay the money back.”
CoreLogic Research Analyst Cameron Kusher meanwhile wrote that it was not only a big win for Westpac, but the entire lending industry.
“The judge in the ASIC/Westpac case seems to really get it. While you might spend a lot more before you get a mortgage, getting a loan is about knowing someone has the capacity to change their spending behaviour once they have a mortgage,” he said.
“Lending has become so prescriptive when it is really the unexpected life events that cause someone to default on their mortgage. You can't foresee everything.”
Meanwhile, ASIC commissioner Sean Hughes said the commission was consulting on new guidance in relation to responsible lending obligations.
Westpac says the decision provides clarity for the interpretation of responsible lending obligations, however consumer groups who found the decision “disappointing” are calling on the government to amend responsible lending laws.
While this court ruling may have the potential to somewhat relax the tight lending standards currently in place, it's better to be safe than sorry when applying for a loan and we can provide you with some good tips on how to get your accounts in order.
After all, it is still up to the lender's discretion (perhaps hold off on the caviar for a while longer!).
So if you’re considering applying for finance in the near future, get in touch.
We’d be more than happy to help guide you through the ever-evolving responsible lending landscape.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Businesses that put off paying large tax bills for too long may soon find that the Australian Taxation Office (ATO) has notified credit reporting bureaus.
The proposal is part of The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No.1) Bill, which was recently introduced into parliament.
The Bill will provide the ATO with the discretion to disclose to credit reporting bureaus when a business has a debt of $100,000 for 90 days or more.
“This will reduce the unfair advantage obtained by businesses who do not pay their tax debts and will encourage businesses to engage with the ATO to manage their tax debts,” says assistant treasurer Michael Sukkar.
Credit reporting bureau CreditorWatch adds: “By (the ATO) disclosing this information, the default would be visible on a commercial credit report and the credit scores of companies could be negatively affected.”
Unlikely - the key word above is “discretion”.
Mr Sukkar says it will apply to “particular businesses that are not effectively engaging with the ATO to manage their tax debts”.
So, if this applies to you and your business, the most important thing you can do is not bury your head in the sand.
First, get in touch with the ATO, which encourages businesses to engage with it to manage their tax debts. You may be able to enter into a “sustainable payment plan” that is agreed upon by both parties.
However, not everyone enjoys the ATO impatiently hovering over their shoulder waiting for them to pay off a large tax debt.
If you’re one of those people, it’s definitely worth getting in touch with us to explore some of your other options with business loan lenders.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
It's no secret that Australians love to travel. The thing is, we also love to own our own home. Can you do both? It turns out most people can!
There's this myth that once you take out a mortgage you're locked down in Australia for good. Or at least for the foreseeable future.
It's no doubt a major deterrent for young people embarking on home ownership.
But it turns out that's simply not true: where there's a will, there's a way.
Research just out from InsureandGo shows most people (55%) go on at least one overseas holiday within three years of buying their home.
More interesting still, 21% of home owners travel overseas within their first year of buying a home, and 39% within two years.
Then there's the 10% who are super keen to scratch that travel bug itch and go jet-setting within six months of buying a home.
Cheap airfares are a good start.
Nowadays you can get ahead of the pack and receive free email notifications when a jaw-dropping deal is going through services such as I Know the Pilot and Scott's Cheap Flights.
They'll send you an email alert when they've found a cheap airfare that matches any airports you'd like to depart from and arrive at.
Rest assured that if the budget is tight, there's always Australia to explore.
We take it for granted sometimes, but don't forget that 8.8 million people travel from all across the world to visit our beautiful country each year.
The first few years of your mortgage may serve as the perfect chance to join them in exploring our vast continent.
In fact, that's exactly what half of all new home owners do within the first year of taking out a mortgage, according to the InsureandGo report.
You don't have to fly across the country and fork out hundreds of dollars, either. Every state has its own beautiful coastline and national parks, many of which are situated near affordable campgrounds.
Becoming a house-owner these days doesn't mean you have to become house-bound.
Sure, meeting your mortgage repayments will always come first. But it's also important to give yourself and your family a much needed holiday every now and then.
By combining clever budgeting, smart saving, good deals, and a dose of discipline, you don't have to sacrifice travel for home ownership.
To find out more about budgeting with a mortgage, get in touch. We'd love to help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
As technology continues to evolve, so too do the challenges of keeping your family budget in check. This week we're going to look at a couple of technological trends that could put your family budget under some real strain in 2019.
Sure, having everything there at the click of a button these days is convenient. But convenient isn't free.
In fact, it can blow out your annual family budget by thousands of dollars each year, which can put strain on more important bills such as your mortgage and utilities.
Below we'll explore a couple of the technological trends that are really starting to chew up more and more of the average Australian household budget.
Remember the good old days when you used to ring up your local Thai restaurant and place an order directly with the store?
Sure, you'd have to pick it up, but you paid less and the restaurant got the full cut.
Those days seem long gone since Uber Eats, Deliveroo, Menulog and other food delivery services burst onto the scene.
These days you pay about $5 extra each time you order through Uber Eats, and they claim about a 35% commission.
But it's not just the extra expense per meal. The thing about these apps is that they make it all too tempting to skip making dinner and order takeaway instead.
More than half of Australians are now struggling to plan and cook meals and turn to these apps instead, according to a survey by Australian Beef, and it's costing an extra $4000 per year in some cases.
The solution? Spend more time cooking fresh food instead. Rather than thinking of it as a chore, consider it an option to spend more time participating in an activity with your loved ones.
It's cheaper, healthier and more fun!
Video and music streaming subscriptions services have exploded in popularity over the last two to three years.
Entertainment giants have realised that the best source of revenue is recurring revenue, so they're all climbing over one another to win over your hard earned cash.
One or two subscription services obviously won't have too big of an impact on your bottom line (in fact it may even save you money), however problems start arising if you subscribe to a number of them.
For example, there's Netflix ($18/month), Stan ($17), Foxtel ($50), Kayo ($25), Spotify ($12) and 10 All Access ($10), to name but a few.
Taking out just Netflix and Spotify would cost you $360 a year – about a dollar a day.
Subscribe to the whole lot however and you're looking at an extra $1200, not to mention any other services family members may subscribe to such as Xbox Live, Podcasts, Youtube Premium, Twitch and Amazon's Audible.
Long story short: they can add up very quickly!
The solution? Stick to your favourite one or two.
There's plenty of free entertainment options out there, such as ABC iview and SBS on Demand.
And sure, it might be a bit old fashioned, but your local library is free and offers an endless stream of entertainment.
Don't get us wrong: we're definitely not saying you should shun technology altogether. After all, it makes everything much more convenient.
Rather, instead of the the technology harnessing you, harness it instead.
If you use it wisely and in small doses you can get the best of both worlds: an enjoyable today and a well-funded future.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
There's been a lot of noise in the home lending and financial space recently, so there's every chance you may have missed it, but some lenders are starting to cut rates.
The RBA may have kept rates on hold for 30 consecutive months, but that hasn't stopped lenders from making cuts (or increases) on their own accord.
Bendigo Bank is the latest bank to make a downward move, cutting its interest rates by as much as 0.20 percentage points for new borrowers across a range of its products, while rates for existing borrowers remain unchanged.
Bendigo is by no means the only lender cutting rates. In fact, it's the eighth or ninth lender to make variable cuts this year.
Other lenders that have made cuts include Heritage Bank, Bankwest and State Custodians.
The move comes after RBA governor Phil Lowe recently indicated there's now a 50/50 chance that the next official cash rate move could be down, despite most pundits previously predicting it would be up.
That said, 14 to 15 lenders have recently increased the variable rate on loans for existing customers, including NAB, Macquarie and ING.
So, what does this all mean?
Well, with so much movement and uncertainty in the market, it might be a good time to give us a call for a home loan health check.
We'd be more than happy to look at your current home loan to make sure it's still appropriate to your needs – or whether the market has shifted enough for you to start considering other options.
In other news, Treasury Secretary Philip Gaetjens has highlighted the important role that mortgage brokers play in promoting competition in the home lending sector.
He's warned the government and Labor not to damage competition, which could happen if they adopt a banking royal commission recommendation to change the broker remuneration structure to a user-pays model.
“One issue, in particular, where Treasury did express a strong opinion was in relation to the role of mortgage brokers in promoting competition,” Mr Gaetjens told a Senate Estimates committee on Wednesday.
“As governments of all persuasions have recognised, it is important that care be taken to not damage – and where possible, to enhance – competition in the banking sector.”
Queensland-based lender Heritage Bank has also publicly defended broker commissions.
“We do not support increasing the costs for customers to obtain a home loan in the form of a customer-paid fee for service and worsen the current affordability crisis for those customers already struggling to afford a home,” says Heritage Bank CEO Peter Lock, whose comments echo those made by several other non-major lenders, including P&N Bank and ING.
“A major contraction of the mortgage broking industry would reduce competition and put the big banks in an even more powerful position in the home loan market.”
As we've mentioned in previous articles, if you value the service we offer, now more than ever we'd love for you to let those in Canberra know.
Doing so takes just a few minutes, and can be done using this pre-populated letter here. Many thanks!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Higher interest rates, increased fees, less flexibility and fewer options. That's how borrowers will lose out if the banking Royal Commission's recommendations around how mortgage brokers are paid are implemented. Here's how you can have your say!
You may have seen in the news that the banking Royal Commission recently recommended that the cost of using a mortgage broker should be transferred from the banks to the customers.
Now, first things first: it’s business as usual for us.
We're here to help you and will always do so with your best interests at heart.
However, it's important to note that if these recommendations are adopted, it would cost customers using a mortgage brokers thousands of extra dollars up-front when buying a home.
On top of this, the imposition of a blanket ban on commissions (starting with the removal of trail commissions from 2020) would significantly lower broker remuneration, kill competition, and drive up the cost of borrowing for millions of Australians.
Mortgage & Finance Association of Australia (MFAA) CEO Mike Felton explains: “The recommendations on brokers represent a massive win for the big banks. The Royal Commission was set up to protect (consumers) from big bank power but has simply entrenched it further”.
“How mortgage brokers can be front and centre of the recommendations is inexplicable. A massive new bank fee added to the cost of buying a home cannot be a good outcome for Australians.”
Reviews by ASIC and the Productivity Commission have found that brokers drive competition by providing a shopfront for smaller lenders.
In fact, mortgage brokers now originate 59.1% of all mortgages in Australia, and more than half a million home buyers use a broker each year.
“I fail to see how decimating the broker channel, leaving Australians with a handful of lenders to choose from, is good for competition, or good for customers,” adds Mr Felton.
Additionally, over the past three decades brokers have contributed to the fall in net interest margin for banks of over 3% points, according to Deloitte. This saves you $300,000 on a $500,000 30-year home loan (based on an interest rate fall from 7% to 4% pa).
Here are some other interesting stats from the Deloitte Access Economics report and independent research released last month from a survey of 5,800 Australian broker and bank customers:
- 58% of Australian consumers who intend to use a mortgage broker in future would be unwilling to pay a broker fee of any nature.
- Only 3.5% of consumers would be willing to pay a fee of $2,000 or more.
- A mortgage broker earns on average $86,417 before tax.
As the stats indicate, most mortgage brokers are small businesses that would be crippled by the proposed changes - and it would only be the big banks that profited!
Right now there's an industry-wide, grassroots campaign running for everyday Australians to send a message to the government that they don't want mortgage broking fees transferred onto them.
Here's what you can do in four easy steps:
1. Take action with your local politician: Contact your Federal MP and let them know how you feel by visiting this site. It takes just a couple of minutes as there's a pre-populated letter already filled out for you (you can edit it as well).
2. Get others involved: Talk to your family, friends and your customers and ask them to go to the site and contact their Federal MP as well.
3. Sign and share the petition: There is also a petition available at www.brokerbehindyou.com.au – please sign and share the petition to ensure policy makers understand the weight of support behind the channel.
4. Share the campaign: Additional campaign advertising collateral will be made available on the website for you to share and promote on your social media platforms daily over the next few weeks and beyond.
If you’d like any further information on this issue, please don’t hesitate to get in touch. We'd love to discuss it with you!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
More than 1000 pages and 76 recommendations – the Royal Commission final report doesn't exactly make for light reading. Fortunately, we've cut to the chase with the key recommendations and how they'll affect you.
Below we've outlined the biggest changes recommended by the Honourable Kenneth Madison Hayne AC QC in the banking and finance Royal Commission's final report.
Keep in mind that these are only recommendations – the government of the day will still need to pass them, most likely after a May federal election.
Perhaps the biggest recommendation from the report is to ban trail commissions for mortgage brokers on all new loans by July 1st 2020.
Mr Hayne has recommended switching to a consumer-pays model whereby borrowers foot the bill – not the banks.
The thing is, mortgage brokers have historically created a lot more competition within the industry by bringing 'second tier' lenders into the frame.
However, if customers are forced to pay a $2000 fee to engage the services of a mortgage broker, 96.5% of people say they won't use them. That's according to independent research cited by the MFAA.
Instead, people will head into their local bank branch – most likely a Big Four – for a loan.
Now, call us cynical, but what may happen over time is that banks start to increase mortgage rates because there is less competition.
In total, there were 15 recommendations relating to the insurance sector – many of which will hinge on a review by ASIC in 2022.
Mr Hayne has suggested that grandfathered commissions on all financial products should be scrapped and that commissions relating to life insurance should be reduced before being completely eliminated following the 2022 review.
If this were to occur, a scenario may play out similar to the mortgage broker example above – there will likely be fewer financial advisers offering services in this space and competition may be reduced.
It could also see more people rely on insurance from their superannuation fund, even though many of these policies are full of exclusions, poor definitions and poor claims handling.
There were, however, some positive recommendations when it came to insurance.
For instance, Mr Hayne has recommended replacing “the duty of disclosure with a duty to take reasonable care not to make a misrepresentation”.
In a nutshell that means the onus will be on insurance companies to get all relevant information from you when they're selling insurance, instead of later penalising you if you forgot to mention something you didn't think was all too important.
Mr Hayne has recommended that each person should have only one default superannuation account.
“Because some employees, especially those who are young and working part-time, do not make informed choices about their superannuation arrangements, default arrangements are essential,” he wrote.
Mr Hayne also recommends banning advice fees from MySuper accounts and limiting deduction of advice fees from choice accounts.
He also recommended “no hawking” when it comes superannuation accounts (as he did with insurance products too).
“Superannuation is not a product to be sold. It is a compulsory product,” he wrote.
Despite 61% of submissions to the Royal Commission relating to the banking sector, as you can see, many recommendations will affect the mortgage, insurance, superannuation and financial advice industries.
If you want to find out more about any of the above, don't hesitate to get in touch. We'd be more than happy to talk you through it.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Once again the Big 4 Banks have escaped major punishment and gotten exactly what they wanted: adding a multi-thousand-dollar tax on borrowing that'll hit consumers and brokers hardest.
By now you might have seen some of the Royal Commission recommendations in their final report.
All in all, the banks got off with a very light rap on the knuckles – as indicated by all four banks having their best day in months on the ASX.
On the other hand, the existing business model for 20,000 mortgage brokers – most of whom run businesses just like ours – is at risk.
That's because one recommendation made by the Honourable Kenneth Madison Hayne AC QC in the final report is to ban trail commissions on all new loans by July 1st 2020.
It's then proposed that over the following two to three years, all other commissions be phased out, with mortgage brokers shifting to a consumer-pays model whereby borrowers foot the bill.
This is exactly what the banks want.
Because if implemented, the banning of mortgage broker commissions will strengthen the profits and position of the major banks and reduce lender competition substantially.
According to a report on ABC news, Credit Suisse says this move will collectively save the banks a whopping $1.8 billion over five years.
That's a staggering amount.
Destroying the viability of the mortgage broker channel would immediately reduce competition and drive customers back into the banks with the largest branch networks.
With less competition, the banks will likely increase their rates.
MFAA CEO Mike Felton says these recommendations do not represent a good outcome for consumers.
“These policy recommendations are effectively a new multi-thousand-dollar tax on borrowing. They will put the broker channel at severe risk, damaging competition and access to credit and entrench bank power,” Mr Felton says.
“I fail to see how decimating the broker channel, leaving Australians with a handful of lenders to choose from, is good for competition, or good for customers. We are critical to the health of Australia’s mortgage lending market.”
At this stage it remains unclear whether the Final Report is recommending a consumer fee-for-service or the so-called ‘Netherlands’ model.
“If the recommendation is a broker only consumer fee-for-service, that will mean brokers and smaller lenders will no longer be able to compete on a level playing field with the big banks with major branch networks,” Mr Felton explains.
“We know from recent, independent research that 96.5% of customers are not willing to make a payment to a broker of $2,000 and most are unwilling to pay anything at all.”
Meanwhile Peter White, managing director of the Finance Brokers Association of Australia (FBAA), says brokers should never have found themselves in the firing line.
“This royal commission is about the greed of the big banks and insurance companies, and so it should be because their behaviour has been appalling,” he said.
It's not just the mortgage broking industry that's been left dumbfounded by the recommendation. Here's what Financial economist and Australian Financial Review contributing editor Christopher Joye had to say:
“The biggest winners from the royal commission are demonstrably the big banks while the largest losers are Australia's mortgage brokers. Indeed, the top end of town have done an amazing job convincing everyone that brokers should be made the 'fall guys' for their own deeds, surreptitiously fattening their profits, despite no evidence of pervasive misconduct,” Mr Joye said.
For the time being, the recommendations remain just that: recommendations.
They're not set in stone. Not yet.
Because while the Coalition and Labor have both said they'll take action on all 76 recommendations in the report, there is an election coming up.
Enough noise made now could result in one of the two major political parties sitting up and taking notice.
That means there's still time to let your local MP know that you're happy with the way the system is and that you don't want the banks transferring the costs of a mortgage broker onto customers.
If you'd like any further information on this issue, please don't hesitate to get in touch.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Sharing is caring, right? However, when it comes to the sharing economy, the ATO is feeling neglected and wants its fair share. Here's what you need to know if you rent out your property on Airbnb.
If you need any more convincing that the Australian Tax Office (ATO) will be cracking down on undeclared income from sharing economy platforms such as Airbnb this year, check out the name of the consultation paper that Treasury released this week:
'Tackling the black economy: A sharing economy reporting regime.'
Now, the number of Australians involved with "the black economy" is quite hard to quantify, but Treasury has given it a crack.
They believe almost 11 million Australians earned extra money from sharing economy services - including Airbnb, Uber, Uber Eats, Airtasker, Parkhound and many other platforms - from July to December 2017.
And while Airbnb doesn't release any official data, independent monitoring website Inside Airbnb says listings in Australia grew from 43,610 in 2016 to 89,863 in December 2017.
No wonder the tax man feels like he's missing out.
It's no secret the ATO is well aware that a lot of people haven't been declaring income from sharing platforms in recent years. In 2016 they released this video, and more recently built this information webpage.
However this consultation paper is the clearest indication yet that a tax crackdown is nigh.
“During its consultations, the Taskforce heard that as the sharing economy grows there is an increasing risk that sellers may not be paying the right amount of tax,” the report states.
“The ATO has already begun to work with businesses on a reporting regime, obtaining information from some ride-sourcing providers and accommodation providers under its formal information gathering powers.”
In a nutshell: the ATO will be granted access to your Airbnb and Uber income data if they require it.
Well, if you're not already, then it's time to start keeping accurate records of the income you're earning in the sharing economy space. That includes platforms such as Uber, Airtasker and many other players.
Declaring the income is straightforward and just like any other form of income you earn: basically keep statements showing income from your guests, and don't forget to keep receipts of any expenses you want to claim deductions for. That will make it straight-forward come tax time.
It might be worth checking out this information page from the ATO for further tips.
Finally, keep in mind that if the ATO is cracking down in this space they might also look more closely into some of your past tax returns. In which case, here's what you need to know about correcting a past income tax return if declaring income in the sharing economy space slipped your mind in the past.
It may increase the tax you owe, but the ATO generally treats it as a voluntary disclosure. You'll still have to pay any outstanding tax, but you're likely to receive concessional treatment for any penalties and interest charges that apply.
If you'd like any further information on this new and emerging space, feel free to get in touch. We'd be happy to help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Productivity Commission has released a major report into Australia's superannuation system, and in it identified 31 recommendations for overhauling the system. Here's what you need to know.
Now, there's no guarantee that all – or any, for that matter – of these recommendations will be adopted.
The Productivity Commission is the Australian Government’s independent research and advisory body, and as such, the Government of the day will need to adopt and pass the recommended policies.
But here's a summary of the 31 recommendations that landed on their desk with a thump.
Employees should only have a default superannuation account created for them if they are new to the workforce or do not already have a superannuation account (and if they don't nominate a fund of their own).
A ‘best in show’ shortlist of up to 10 superannuation products should be presented to all employees who are new to the workforce so they can choose a product.
An independent expert panel should be created to run a competitive process to develop the ‘best in show’ shortlist.
Federal legislation should require all APRA-regulated superannuation funds to undertake annual outcomes tests for their MySuper and choice offerings with clear benchmarks.
All superannuation accounts with balances under $6000, or 13 months or more of inactivity, should be automatically consolidated into one account by the ATO.
A simple, single-page product dashboard for all superannuation investment options should be made available to consumers on an Australian government website.
The ATO should provide a link to a member's single page dashboard via its centralised online service.
The Corporations Act 2001 should be amended to ensure that the term ‘advice’ can only be used in association with 'personal advice' – that is, advice that takes into consideration personal circumstances.
The Australian Government should comprehensively evaluate the programs it funds that aim to improve the financial literacy of Australians.
The Australian Government should reassess the benefits, costs and detailed design of the Retirement Income Covenant.
All superannuation members who reach 55 years of age should be prompted to visit the ‘Retirement and Superannuation’ section of ASIC’s MoneySmart website.
Specialist training should be required for persons providing advice to set up an SMSF, as well as other safeguards.
The new Consumer Data Right – which gives Australians greater control over their data in the banking, energy and telecommunication sectors – should be rolled out in the superannuation sector.
All fees charged by APRA-regulated superannuation funds should be levied on a cost-recovery basis. A ban on trailing financial adviser commissions in superannuation should also be put in place.
Insurance through superannuation should be opt-in for members under 25 years of age. Insurance cover on accounts should also cease if no contributions have been made for the past 13 months.
The trustees of all APRA-regulated superannuation funds should articulate and quantify the balance erosion trade-off determination they have made for their members.
A joint regulator taskforce, including members from ASIC and APRA, should immediately be established to implement and advance a binding and enforceable insurance code of conduct.
An independent public inquiry into insurance in superannuation should be commissioned, which would evaluate the effectiveness of initiatives to date.
APRA should amend its prudential standards to provide greater regulation of trustee board directors.
Trustee boards of all APRA-regulated superannuation funds should disclose to APRA when they enter a merger agreement with another fund.
Superannuation fund mergers and transfer events should be given relief from capital gains tax liabilities.
The definition of what it means for a trustee to act in members’ best interests under the Superannuation Industry (Supervision) Act 1993 should be amended to be clearer.
APRA should focus more on matters relating to licensing and authorisation, ensuring high standards of system and fund performance.
ASIC should focus more on the conduct of superannuation trustees and financial advisers, and on the appropriateness of products and disclosure.
The Australian Government should clarify the roles, strengths and suitabilities of APRA and ASIC when it comes to regulating superannuation.
The Australian Government should immediately initiate the independent capability review of APRA to measure its efficiency and effectiveness.
A permanent superannuation data working group should be established – comprised of APRA, ASIC, the ATO, the ABS, and the Commonwealth Treasury - to improve the consistency and collection of superannuation data.
Federal funding should be provided to support an independent superannuation members’ advocacy and assistance body.
APRA and ASIC should jointly produce a 'State of Superannuation' report every two years on the performance of the superannuation system.
An independent public inquiry should be commissioned into the role of compulsory super in the broader retirement incomes system.
A steering group of departmental and agency heads should be established to oversee the implementation of these recommendations.
For more information on these recommendations, check out the Productivity Commission's overview of the report here, or the full report here.
And of course, if you'd like anything in the report explained to you, feel free to get in touch with us anytime.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Tipsy topples, scooter smashes, sporting sprains and medical mishaps – before you go jet-setting overseas these holidays we'll explore the most common ways travel insurance policies are voided.
Travel insurance is a critical consideration for any overseas holiday.
But all too often we forget to read the fine print of our travel insurance product disclosure statements (PDS) before adopting a carefree, caution-to-the-wind holiday attitude.
In fact, of all the Australians who take out travel insurance policies, less than half (42%) are properly insured throughout their trip.
And when you consider that falling ill or getting injured overseas can leave you as much as $223,255 out of pocket (about half the average Australian mortgage!), then there are a lot of travellers out there rolling the dice.
Let's take a look at some of the most commonly overlooked exclusions.
This is bit of a murky one – about as murky as that last big night out you might have had.
But it's an ace up the sleeve of insurers that they like to pull out every now and then to avoid paying a claim.
For instance, a man attending a wedding in Phuket fell down some stairs at a hotel, breaking his leg and several ribs.
Because he’d been celebrating with a few alcoholic drinks, his insurer refused his claim for medical expenses, citing his intoxication at the time, a DFAT-commissioned report states.
The incident cost him $10,300 in medical expenses, which had to be paid in full before he could leave hospital. He was also unable to work for the next six weeks, causing further financial strain.
With that in mind, let's take a look a quick look at the policy wordings of some insurers that Aussies commonly use:
TID (Lloyds): "We will not pay for any claim arising from or relating to the following: If you, your close relative or a member of your travelling party: is under the influence of, or is addicted to, intoxicating liquor."
Good2Go (AIG): "Your Policy does not provide for losses, liability or expenses that are for, related to or as a result of: You or Your Travelling Companion … being affected by alcohol."
The government's Smartraveller website probably puts it best: “Take it easy on the grog – if your alcohol or drug intake is the cause of, or a factor in, an adverse event, it won't be covered by your policy".
Riding around on a moped, quad bike or motorcycle and exploring the back alleys or coastal roads might feel convenient and carefree – however it'll be anything but if you crash, or someone runs into you.
In fact, 1 in 4 Australians who visit south east Asia ride a scooter, yet are not covered when doing so. That's because most insurers adopt the national standard for the definition of a moped – an engine capacity under 50cc.
If the engine is bigger than that – and most are at least 125cc these days – you'll need an Australian motorcycle licence, and in many cases an international or local motorcycle licence, in order to be covered.
Not so long ago a 21-year-old Sunshine Coast man died while holidaying in Bali after crashing his scooter.
A huge fundraising effort raised $50,000 in less than a week to pay for an RACQ LifeFlight air ambulance jet to bring him home. Sadly, the man passed away a few days after arriving at the Royal Brisbane Hospital.
Each travel insurance policy will differ when it comes to what sporting, leisure and adventure activities are covered – or what you need to pay extra for.
In fact, 2 out of every 3 people who travel to South East Asia engage in some form of risky behaviour, much of which will void many travel insurance policies.
So consider what activity you'll want to participate in and search the PDS document (use the Ctrl + F keyboard search trick) to see whether it's covered or excluded.
If you're travelling to Europe or Japan and want to do some skiing or snowboarding, it's likely that you'll need to pay for additional coverage. The same goes for some water-based adventure activities, such as jet-skiing or scuba diving to certain depths.
If you're heading to south east Asia and want to do some surfing, cycling or white water rafting then good news: many policies cover them, but it's definitely worth double checking.
The other big one that can land you in hot water is not declaring a pre-existing medical condition to your insurer.
In fact, about 1 in 6 travellers fail to do so.
Claims can be voided by something as seemingly unimportant such as an allergy, all the way through to a cancer you've beaten.
For example, according to DFAT, one poor bloke took a fall at home and fractured his hip a few months before a long-awaited cruise to Alaska.
During rough weather at sea, he had another fall and broke his hip in a different place.
Due to the pre-existing hip injury his insurer refused to meet the costs of being treated on the ship, evacuated to a hospital in Anchorage, and transferred to LA for surgery.
In the end, he was billed for $120,000 in medical treatment and a further $70,000 in medical evacuation costs. He settled the bills by mortgaging his house.
The moral of the story is simple: don't risk a mortgage or your life savings by failing to see if you'll be covered these holidays.
If you're travelling overseas it pays to spend 15-30 minutes reading through the PDS to ensure you'll be covered for the activities you plan to participate in.
And if you're not sure, get in touch with the insurer – it's better to be safe than sorry.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Borrowers who don't shop around due to the banks' unclear pricing tactics are losing out on an average of $850 a year, an ACCC report has found.
Get a load of this: there's this tactic that the big four banks (ANZ, CBA, NAB and Westpac) use that makes it “difficult” and “frustrating” for borrowers to discover their best home loan offer.
The tactic is called discretionary pricing, and the Australian Competition and Consumer Commission (ACCC) has just released a scathing report on it.
The banks don't really advertise their best home loan deals. But there are two kinds of discounts that they do offer.
The first is their “advertised discounts”, which are generally published on their website and relatively easy for borrowers to discover.
The second is “discretionary discounts”, which are much harder to find.
Discretionary discounts are offered on a case-by-case basis to individual borrowers, usually after the lender has assessed their application.
However, the criteria for discretionary discounts is generally not disclosed to borrowers.
Basically, the banks are intentionally making it pretty damn hard and time-consuming for borrowers to obtain accurate lowest interest rate offers from multiple lenders.
In doing so, they're hoping you'll just get too frustrated and put the whole 'searching around for a better deal' thing in the too-hard-basket.
The ACCC says that's how it was for 70% of recent borrowers from one bank – they obtained just one quote before taking out their residential mortgage.
“The lack of transparency in discretionary discounts makes it unnecessarily difficult and more costly for borrowers to discover the best price offers,” says the ACCC.
“This adversely impacts borrowers’ willingness to shop around, either for a new residential mortgage or when they are contemplating switching their existing residential mortgage to another lender. The unnecessarily high cost that prospective borrowers incur to discover price information from lenders causes inefficiency.”
Extremely so.
The rate of borrowers switching lenders remained extremely low last financial year.
In fact, less than 4% of borrowers with variable rate residential mortgages with the top five banks refinanced to another lender, says the ACCC.
That's just 1 in every 25 mortgages.
(It's also worth noting that only 11% of people got a better home loan deal from their current bank by either asking for it or being offered it.)
“The big four banks profit from the suppression of borrower incentives to shop around and lack strong incentives to make prices more transparent,” says the ACCC.
In two words: A lot.
The ACCC believes an existing borrower with an average-sized residential mortgage who negotiates to pay the same interest rate as the average new borrower could initially save up to $850 a year in interest.
“This could add up to tens of thousands of dollars over the full term of their residential mortgage in net present value terms,” the ACCC adds.
Unlikely. Well, anytime soon that is. Here's what the ACCC say about it:
“At least one Inquiry Bank appears to be aware of borrower frustration with discretionary pricing. There is little evidence of any Inquiry Bank responding to that frustration by moving away from the practice,” the ACCC says.
“More generally, the Inquiry Banks, particularly the big four banks, lack a strong incentive to reduce the cost that prospective borrowers incur to discover price information because they profit from the suppression of borrowers’ incentives to shop around.”
That's the easy part. Get in touch with us to discuss your refinancing and/or renegotiating options.
By teaming up with us, not only can you save yourself the headache of having to research what each lender's best available discount is, we will happily negotiate for it on your behalf.
So if you're interested in potentially cutting down the amount of interest you pay each year, give us a call today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Seven in 10 Australian mortgage holders have not stress tested their home loan. But don't stress, it's much easier to do than you think.
Deloitte Access Economics' latest report makes for pretty interesting reading.
It turns out the average Australian has a “wide-ranging hesitancy to make any sort of change” when it comes to their mortgages and other financial products.
“Why is it that educated consumers who know they're not getting the best deal on many of their household products are so unwilling to take action to improve their household finances?” asks Deloitte.
It turns out that 41% of Australians with a mortgage don't check for interest rate changes because they either have no interest, don't know what the RBA cash rate is, or do not see its relevance.
Even more interesting is that 68% of people say they have never stress tested their home loan.
“This is a particular worry,” says Deloitte.
“Recent estimates show that a 0.5% increase from current interest rates would cause mortgage stress to jump from one in four mortgaged households to one in three.”
Worse still, a 2% increase would throw half of all mortgaged households into stress.
Now, that might sound like a big increase, but don't forget that it wasn't so long ago that interest rates were at that level. In fact, it was only six years ago in June 2012.
Simple.
Calculate how much extra a 0.5%, 1% and 2% increase on your mortgage would cost you each month and whether your budget can allow for it.
If you'd run into trouble, give us a call and we can work through some risk mitigation options with you, which could include locking in a home loan rate.
Interestingly, 1 in 3 people know there are better deals out there, while 1 in 5 don't bother to check for a better deal.
It turns out there are three key reasons people don't change to a home loan that would see them better off financially, with the first being decision making paralysis.
“Too often, many consumers get stuck before making a choice – and then they do nothing,” explains Deloitte.
Another big reason is people “hate feeling dumb”.
“Consumers also hesitate when they fear or worry about the possibility of making a bad decision. This, coupled with the fact that people tend to avoid what makes them nervous,” adds Deloitte.
The final key reason is that people simply put it off.
“Outcomes set in the distant future typically lack a sense of urgency in contrast with everyday needs, making it easy to defer decision making to a tomorrow that never arrives,” says Deloitte.
Well, here's the good news. We can help you overcome all three.
For decision making paralysis we can come up with a shortlist of options, reducing the choices you need to make.
Worried about feeling dumb? I bet you we'd feel pretty dumb if we did your job for a day too. But we make it our business to help educate you and bring you up to speed in this market.
And how can you overcome avoidance? Simple. Give us a quick call today and we'll get the ball rolling for you. You'll be surprised how little time and effort it takes.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
One in six customers who use payment methods such as Afterpay and Zip Pay run into financial strife – and ASIC is putting the 'buy now, pay later' industry under the spotlight.
ASIC's first review of this evolving market finds that buy now pay later arrangements are having a negative impact on spending habits, especially those of younger consumers.
Six buy now pay later providers were reviewed, including Afterpay, zipPay, Certegy Ezi-Pay, Oxipay, BrightePay, and Openpay.
ASIC identifies a real risk that some buy now pay later arrangements increase the amount of debt held by consumers and contribute to financial over-commitment.
It finds that 1 in 6 users (16%) believe they have experienced at least one type of negative financial impact due to a buy now pay later arrangement.
In fact, 7% delay paying other bills, 5% borrow money from family or friends, and 4% get a loan or cash advance on their credit card to pay the money back.
Those who do pay it off on time? Well, 1 in 4 users (23%) use a credit card to make their repayments anyway.
Interestingly, 60% of buy now pay later users are aged between 18 and 34 years old and more than 2 in 5 users (44%) have an annual income of less than $40,000.
Each provider in ASIC's review contractually prevents merchants from charging consumers higher prices for using a buy now pay later arrangement.
However, ASIC has received anecdotal evidence that some merchants may be charging consumers significantly higher prices for using a buy now pay later arrangement for purchases over $2,000, or where the price is less transparent and ‘negotiable’ (eg. solar power products, services).
Buy now pay later arrangements result in 81% of consumers buying a more expensive item than they would have otherwise been able to afford.
Seven in 10 users are now also making more spontaneous purchases.
As a result, as of 30 June 2018, there was a whopping $903 million in outstanding buy now pay later balances across Australia. That's $37 for every man, woman and child in Australia.
Finally, in ASIC's view, each buy now pay later provider includes terms within their standard contracts that are potentially unfair to consumers.
They also provide a very broad range of circumstances under which a consumer will be regarded to be in ‘default’ and hold consumers liable for unauthorised transactions, even when the provider knows or suspects the transaction may be unauthorised.
Given the potential risks to consumers, ASIC has supported extending proposed product intervention powers to all credit facilities regulated under the ASIC Act.
Basically, this would provide ASIC with a much more flexible tool kit to address emerging products and services such as buy now pay later arrangements.
It could also ensure ASIC can take appropriate action where significant consumer detriment is identified.
What you can do in the meantime, however, is only shop for items you can afford through better budgeting so that your important debts, such as your mortgage, don't become stressed from a flow-on effect.
That's something we can help you with.
And if you do really want something that you need to take out a loan to purchase an item such as a car then give us a call.
There are a number of reputable and responsible lenders to choose from that operate under the National Consumer Credit Protection Act, unlike buy now pay later providers.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We thought we'd have a little fun this week and look at how much it costs the average Aussie family to own a pet. After all, two in three households have one and very few budget for them!
Let's be honest, owning a pet goes hand-in-hand with the great Australian dream of property ownership.
So let's be clear here: we're definitely not making a case against pet ownership. However as Christmas time usually coincides with a spike in pet purchases, it's a good time to look at the monthly cost factor.
Because if you've decided to take on the responsibility of welcoming a pet into your household, then it's something you oughta plan for and do right!
Believe it or not, but two in three Australian households own a pet.
Yet how many of them do you think run a proper budget for it? Probably very few.
And when you consider that more than $12 billion is spent on pet products and services every year, that's a lot of unallocated money!
So if you're looking to get a pet for your family, here's the most common options available, listed from most expensive to cheapest.
If you're looking at adding a puppy or rescue dog to your very own wolf-pack as 38% of Australia households have already done, expect to pay about $1475 per year.
Basically, you're looking at an average of $123 a month for food, vet care, health products, grooming and boarding.
To avoid any vet bill blow outs, it might also be worth considering pet insurance, which will cost an extra $293 per year. Or $25 per month.
And while we're at it, here's a fun fact: the number one thing that dogs eat that makes them sick is underwear! So be sure to keep them out of reach!
It's also worth noting that the above figures don't factor in upfront costs, which can range from $1000-$5000 to purchase a select breed, or $300-$500 to adopt an RSPCA dog.
If you're more of a cat person, like 29% of Australian households, expect to pay $1,029 per year. That's about $86 a month.
Pet insurance is slightly cheaper for cats, coming in at $20 a month, but then again – cats probably aren't underwear connoisseurs!
It costs between $100 and $300 to adopt a cat from the RSPCA – depending on their age – while a select breed will cost you between $1,000 and $2,500, and sometimes even more.
If you're looking to ease yourself into pet ownership, welcoming a bird or fish into the fold is a much cheaper option.
It costs just $115 per year on average to own a bird, while fish are even cheaper at $50 per year.
As you can see, purchasing a pet is unlikely to cost you an arm or a leg (so long as they have adequate play toys!).
However, you can minimise the impact it has on your bottom line by including the monthly amount in your family budget, and protecting against vet cost blow-outs with pet insurance.
If you'd like to know more about budgeting, get in touch. We'd be happy to help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
There's been a couple of fairly big property-related announcements recently, including a stamp duty overhaul in NSW and NAB increasing interest rates. Let's break down what they could mean for you.
First, let's start with the good.
The NSW Government recently announced it will peg stamp duty to the rate of inflation. It's the first state to do so after leaving its current system largely unchanged for over 30 years.
In a nutshell, the seven different price brackets that determine how much stamp duty NSW homebuyers pay will be adjusted to the Consumer Price Index (CPI).
Well, over the past 15 years the average rate of stamp duty in NSW rose from 3.37 per cent to 4.05 per cent.
At the same time, the median house price in Sydney rose from around $400,000 to $1 million.
The NSW government says the changes, which are effective from July 1, will ensure the tax on housing does not continue to grow.
The immediate savings will be “modest” - think in the ballpark of $500 by 2021 - but they will become more substantial for home buyers over the long run.
If stamp duty brackets had been indexed to CPI 15 years ago, for example, the amount payable on a $500,000 home would be around $2000 lower today.
Meanwhile, the amount payable on a $1.5 million home would be around $6400 lower.
“Whether you are a first homebuyer, a downsizer or upgrading to the family home you will ultimately benefit as a result of this reform,” says NSW Treasurer Dominic Perrottet.
So will other states follow suit? Well, that remains to be seen, but this is a great first step.
Ok, now time for the not-so-good news.
The National Australia Bank (NAB) recently announced it's slashing the discount offered to new borrowers from 0.48% to 0.30%.
That effectively translates to a rate of 3.87%, up from 3.69%.
The new rate applies to all new principal and interest loan customers. The good news is that NAB has committed to keeping its standard variable rate on hold for existing customers for as long as is reasonably possible.
NAB's move comes just two months after Westpac, CBA and ANZ raised their own interest rates.
At the time, NAB said it wouldn't raise rates so that it could rebuild trust with customers following the Royal Commission report into mortgage lending practices.
The big question is: will the other banks follow suit once again and increase rates further? That remains to be seen, but the message is clear: interest rates are going up.
Actions you can take to combat rising interest rates include shopping around, locking in a rate, or consolidating your debts.
If you'd like help putting any of the above strategies into place, get in touch with us today. We'd love to help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Most of us roll our eyes when we start seeing shopping centres spruik Christmas merchandise in November. While it's important not to get caught up in the festivities too early, now's actually a great time to start prepping to ensure your budget doesn't blow out over the silly season.
The best bit? By following some of the below tips, you can turn the retailers' early mind games against them and save money instead!
Christmas time tends to lead to a lot of socialising. Even if you aren't the one catering, requests to bring a plate can add up over time.
Make a point of keeping an eye out for food and drinks specials ahead of time and buy items like boxes of chocolates, long life snacks and drinks when they are on special. That will make it much easier to stretch the food budget over Christmas.
For people who have a large family or friendship circle, Christmas can lead to a long list of presents to buy. Many people prefer not to get extra clutter for their kids, so suggest a Secret Santa arrangement instead of buying for every person.
This way you can put more thought into each gift as well as not creating more stress.
If the end of term results in your kids bringing home sheets of artwork, why not recycle these and use them for wrapping paper for the extended family?
Not only does this mean that the kids get to see their artwork being passed on to loved ones, but it also saves you money on buying wrapping paper that will be in the bin by Christmas morning.
Rather than dwelling on social media posts of the perfect Christmas morning with matching pyjamas, shift your focus to the true meaning of Christmas: helping others who are less fortunate.
For instance, instead of getting new books for Christmas Eve story time you could choose books from the library and make a donation to charity that helps literacy in at-need communities.
With a large percentage of Australians overspending at Christmas (and feeling guilty about it), it's important to keep a budget for Christmas and any associated events – like holidays – over that time.
By following a budget, and starting now, you can spread out your spending – $200 a week over five weeks is much better than $1000 in the week before Christmas.
- Create a list of who you need to buy for and brainstorm present ideas before you go shopping.
- Make your own gifts.
- Buy online when sales specials are on. This can help you avoid pressure from sales staff and impulse purchases.
- If hosting a Christmas day event, organise it early so attendees can help out with the food and drinks.
If you're struggling with your budget and don't know how you're going to make the money stretch over Christmas, give us a call.
We'd love to help you come up with some strategies to ensure that you and your family get to make the most of the silly season ahead.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
When it comes to money-saving and budgeting, many of us are in the dark as to where we should be making significant savings. A good place to start? Cutting down on ‘micro-transactions’.
The lure of micro-transactions - purchases that are low in cost and trivial in nature - can be a real obstacle for those trying to achieve their financial goals.
Indeed, while the cost of these transactions may seem infinitesimal in the grand scheme of things, they can add up to the equivalent price of that trip you always wanted to take, or the sophisticated new piece of technology you’re desperate to try.
Of course, there are a myriad ways to reach your financial goals, including creating an investment strategy that’s ideal for your personal situation.
For many of us, however, addressing our penchant for micro-transactions could be a surprisingly effective way to achieving your financial goals faster. Here are a few examples.
Picking up a hot cup of takeaway coffee in the morning is an irresistible slice of luxury for many of today’s busy workers.
However, while a cup only costs a few dollars, transactions can easily add up for caffeine addicts.
One $4 cup of coffee costs you $28 per week. Over one month that’s almost $120. Over a year it’s almost $1500.
Consider switching to home-brewed coffee in a flask. As well as saving you a lot of money, you’ll be saving the environment by avoiding disposable cups. The same can be said for bottled water.
Having a gym membership can make you feel virtuous and healthy, but how often do you actually make use of it?
If the answer is “not as much as I should” then you need to reconsider your membership.
The daily cost of a gym membership is about the same as a cup of coffee. That’s another $1500 each year right there.
The great thing about exercise is that it can be done for free - throw on some jogging shoes and think about all the cash you’re saving!
There are plenty of possible ways you could be overpaying on household bills.
Many people still pay for a landline, for example, but the rise of the mobile has made domestic phones almost redundant.
And do you really need high speed NBN? Most of the Telcos are offering BYO mobile phone plans with endless data for about $60-$70 a month - with unlimited calls and texts.
Once you go past a 40GB cap your internet speed is reduced to 1.5Mbps - which is still fast enough to stream Netflix in standard definition, browse the web, and listen to music.
The best bit? Your smartphone can double as a hotspot modem to your other devices.
Other common ways of overspending on household bills include failing to set a thermostat correctly, leaving electrical items on standby, using inefficient light bulbs or failing to obtain accurate meter readings.
Dig a little deeper into where your money is going on household bills and you could save a significant sum.
If you’d like to find out other ways you can reach your financial goals faster - get in touch - we’d love to help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Property owners and prospective first home buyers are increasingly in need of clear guidance on home lending as the housing markets in Melbourne and Sydney begin to cool, says the Housing Industry Association (HIA).
The RBA on Tuesday again resolved to leave the official cash rate on hold at 1.5%, noting that the current settings continue to offer appropriate support for the Australian economy.
Despite the stable cash rate, Geordan Murray, HIA Senior Economist, says borrowers are still wary of any potential hike in their borrowing costs.
“In the post GFC era lenders have frequently adjusted home loan rates independently of movements in the official cash rate in order to ensure that their lending rates more accurately reflect their true cost of capital,” explains Murray.
Murray adds that as the housing markets in Melbourne and Sydney continue to cool it will be increasingly important that households have clear guidance on any potential changes they may face in home lending.
While industry guidance is great, having a trusted professional (that’s us!) watching out for market changes on your behalf is even better.
That’s because over the last couple of years there has been an additional degree of complexity in the home loan market - and we can help decipher what that all means for you.
“Lenders have been squeezed by regulators which led to a degree of credit rationing and higher borrowing costs for investors and those wishing to borrow in interest only terms,” explains Murray.
A while back APRA - the regulator - introduced a range of measures that tightened lending standards to curb growth in risky lending.
“APRA’s interventions were appropriate at the time that they were implemented. (However) the housing downturn now has its own momentum and does not need additional assistance from the regulator,” says Murray.
In fact, recent figures published by the RBA show that growth in housing credit to investors has dropped to a historic low and owner-occupier lending growth is also now slowing.
“The housing market is now in a very different position to the time when APRA imposed the restrictions. We have already seen the speed limit on investor lending dropped but other restrictions remain,” says Murray.
“It will be important for the RBA, APRA and the federal government to monitor developments in the housing market and ensure that we have appropriate policy settings to ride out the cyclical downturn smoothly."
As Murray explains, now more than ever borrowers are needing someone to help guide them through uncertain lending times.
That’s where we can help.
We have our ear to the ground when it comes to all industry movements, which means you don’t have to stress about doing so.
So if you’d like to find out more about how we can help you navigate the tricky lending times ahead, get in touch today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Business partnerships are a lot like marriages. You map out future goals together, become quite dependent on each other, and shy away from the thought of your partner no longer being around.
But failing to prepare for worst case scenarios can lead to complications should your business partner unexpectedly pass away. Here's how Buy/Sell Insurance can help protect your business.
Buy/Sell Insurance is a relatively simple concept.
Basically, it pays out a lump sum if a business partner passes away or cannot stay in the business due to a serious injury.
With the insurance payout the remaining business partners then purchase the departing owner's share from their estate – according to a transfer agreement that's already been drawn up – and continue running the business.
One of the major benefits of Buy/Sell Insurance is that it's a mutually beneficial policy: both the family of the deceased and the surviving partners benefit from the agreement.
Another key benefit of Buy/Sell Insurance is that the remaining owners don't have to sell the business (or a good chunk of it) in order to pay out the departing owner's estate.
It can also help minimise the risk of the departing owner's spouse, family or estate creating legal issues that could lead to the business's assets being frozen, or a share of the business being claimed or sold to a third party.
It's important to agree with your business partners on the value of the business. That's because this will help you take out an appropriate level of cover.
If you reach a consensus that the business is valued at $1 million, and there's two partners, the amount insured on the life of each partner should be about $500,000. If there's four partners, the amount insured on the life of each partner would be $250,000.
You'll also need to agree on how the policies will be owned.
Policies can be owned individually, cross-owned (owned on behalf of the lives of other owners), or owned via superannuation, a trust, or a trading entity.
Finally, you'll also need to agree on the types of risks covered.
Options include life insurance (the death of a partner), TPD insurance (if a partner becomes totally and permanently disabled), and/or Trauma Insurance (if they suffer from a heart attack, stroke or cancer).
Robert and Susan are business partners in a private medical practice.
They're both married, both have young children and their business is based in a new and growing suburb. The practice is experiencing growth each quarter.
To protect both themselves and their families, they decide to take out Buy/Sell Insurance.
They get a valuation on the business, which comes in at $2 million, so they take out cover for $1 million each.
Both being medical professionals, they are all too familiar with accidents and illnesses. So they take out Trauma and TPD insurance on top of Life Insurance.
When Susan unexpectedly passes away, her estate receives the $1 million life insurance payout and Robert is transferred her share of the business and becomes the sole owner.
There are a whole lot of important factors that need to be weighed up when contemplating By/Sell Insurance, including tax considerations and the set-up structure.
So for more information, get in touch. We'd be more than happy to help run through your options to help ensure your business doesn't suffer if a partner unexpectedly passes away.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
With housing values falling across half of Australia's capital cities over the past year - and the media well and truly letting us know all about it - it can be all too easy to forget many regions are doing well. Here's where property prices have recently experienced healthy growth.
The good news is that almost half of Australia's 88 sub-regions have experienced growth in housing values over the past twelve months, according to CoreLogic.
These sub-regions are more formally known as SA4 sub-regions, which have populations between 100,000 and 500,000 people.
“Half of these regions have recorded a higher rate of annual capital gain relative to their five year average rate of growth, suggesting some acceleration in market conditions,” says CoreLogic's Tim Lawless.
“In fact, 35% of the SA4 sub-regions have recorded an improvement in their rate of capital gain over the past 12 months relative to their five year average rate of growth.”
Two words: regional areas.
In fact, 57% of all regional areas recorded a rise in dwelling values over the past twelve months, while only 39% of the capital city sub-regions recorded an increase.
Here's a list of the top 10 healthiest growth markets, all of which outperformed their five-year average.
1. Geelong, Victoria, 11.8% growth
2. Hobart, Tasmania, 10.7% growth
3. South East, Tasmania, 9.9% growth
4. Launceston and North East, Tasmania, 9.3% growth
5. Ballarat, Victoria, 7.1% growth
6. Central West, NSW, 6.1% growth
7. Sunshine Coast, Queensland, 6.0% growth
8. South Australia Outback, SA, 5.8% growth
9. Latrobe – Gippsland, Victoria, 5.3% growth
10. Northern Territory Outback, NT, 5.3% growth
The ‘healthier’ conditions across regional markets can be attributed to a range of factors, says Lawless, including:
More sustainable growth conditions: “Most regional areas have seen relatively sedate housing market conditions compared with the heroic gains across Sydney and Melbourne. The more sustainable history of price growth has kept a lid on housing affordability and made these markets attractive to migrants,” says Lawless.
The ripple effect: “A ripple of demand has been emanating from the largest capitals towards the satellite cities where housing is generally more affordable and lifestyle factors can be appealing.”
Sea change: “Many coastal and lifestyle markets have benefited from a rise in buyer demand, either from those looking for a new residence, second home or investment option.”
Bounce back: “Many of the hard hit mining regions have now levelled out and are now showing some growth.”
There are some capital cities also doing well, says Lawless.
In Brisbane, seven of the nine SA4 sub-regions have seen a rise in values over the past year.
In Adelaide, three of the four SA4 sub-regions have recorded an annual gain.
Hobart is also experiencing significant growth (10.7%), as seen by its second place spot on the list.
“While conditions are broadly slowing, especially around Sydney and Melbourne, many areas of the country are benefitting from a history of more sustainable growth rates, improving demand and reasonably strong economic conditions,” says Lawless.
If you're a first home buyer or an investor looking to purchase property in an area that's recently experienced growth then get in touch.
We’d love to help you source a great home loan and help make your property ownership dream become a reality.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
It's an unfortunate fact of life: as you grow older, your memory is likely to fade. While you'll probably be forgiven for forgetting the odd anniversary, the stakes are much higher when it comes to keeping track of your finances.
Most of us have watched on as a loved one's memory has faltered and faded. It's painful to see.
But, as with many reminders of our own mortality, all too often we put the experience behind us and hope we never suffer a similar fate.
But if you start to experience early warning signs of memory loss in yourself, or a loved one, there are some simple steps you can take to safeguard your financial future.
Dementia (including Alzheimer's disease) is Australia's second leading cause of death, only behind heart disease.
In fact, 35 Australians die as a result of dementia every day.
However, due to Australia's ageing population, ABS statisticians believe dementia will overtake heart disease as Australia's leading cause of death as soon as 2021.
Staying on top of your spending, saving, investments and bills can be tricky at the best of times.
But dementia and ageing can complicate matters further. Not only may you forget your banking details, but it could become harder for your to absorb information and comprehend advice.
So while you may have worked hard to enjoy a comfortable retirement, your failing memory could leave you feeling scared and confused, unable to meet your financial commitments or make sound financial decisions.
To protect yourself and your loved ones from the financial consequences of memory loss, ASIC recommends you take the following steps.
Simplify your finances by having just the one transaction account, reducing your credit cards, and saying goodbye to the trusty old cheque book.
Also, create a list of your regular bills and stick it to your fridge. Once each bill has been paid, immediately cross it off the list. You can also set up a direct debit system, which will take away the hassle almost entirely.
Choose a person to manage your affairs if you lose the ability to make decisions for yourself.
People often choose someone they trust implicitly such as a spouse, child, another relative or friend. But it could also be someone independent, such as a solicitor.
Another safeguard is to choose two enduring powers of attorney. Just make sure they're two people who know how to agree with one another and will always act in your best interests.
Importantly, make the appointment early.
If you leave it too late then a court or tribunal may make the decision for you.
If you haven't created a will, or it's been a long time since you updated it, then it's time to create one – no matter your age or memory capacity.
Now, unlike your other assets, your Super account does not automatically form part of your estate.
You generally have two options to ensure your Super fund goes to the right people in the event of your death.
The first is to make a binding death benefit nomination (aka a binding beneficiary nomination) through your Super fund. The second option is to nominate your estate as the beneficiary of your Super fund. This will ensure your Super will be distributed according to the terms of your will.
Last but not least, you need to compile an easily accessible file of all your personal and financial information. After all, you want to make this whole process as easy as possible for your power of attorney.
The list will be quite long, and should include your birth and marriage certificates, your Will, tax file number, a list of your assets, house deeds and insurance policy details.
Financial documents may include bank accounts, ongoing direct debits, mortgage details, Superannuation papers, information on any loans or debts you have, investment documents, and any pre-paid funeral plans.
Finally, don't forget all your important health documents, such as Medicare card number, pensioner concession card, and private health insurance policy.
As you can see, it's quite the list to get in order – no wonder people put it off!
So if you need any information from us to help you put your list together, don't hesitate to get it in touch.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
It may seem as though every time you open a newspaper there's another story about the sky falling in on the property market. But here's why it's being labelled the “house price fall we had to have”.
We've all seen the news. Auction clearance rates are down, property prices are dipping, loans are becoming harder to source.
Well, Deloitte has finally gone out and put a dollar figure on the downturn.
“In Sydney and Melbourne, housing prices are falling by over $1,000 a week,” says Deloitte partner Chris Richardson.
Rest assured, Deloitte points out that's not as bad as it sounds.
Richardson is quick to channel Paul Keating's famous description of the 1990s recession (“the recession we had to have”).
He says while property prices are falling, they're actually moving into safer territory and the economy will remain robust.
“Yes, (property prices) are falling. But they're not falling at a dangerous rate and it's ... shifting them to safer territory,” Richardson says.
Prices surged over the past five years thanks to historically low interest rates on home loans, Richardson says.
“House prices here in Australia had streaked past anything sensible by way of valuation,” explains Richardson.
Now, with the banks recently increasing interest rates, prices are dipping. And our nation's two biggest capital cities have been the first to bear the brunt.
The other two major reasons for the price dip are: the banks being more cautious about who they loan to (due to a regulator crackdown) and a dip in foreign investors.
“Despite the house price fall we had to have, Australia’s growth has continued to accelerate, and our ongoing strength is forecast to be good enough - at a smidge above trend both this year and next - to keep job gains solid and unemployment edging down,” says Richardson.
As you might expect, first home buyers are making the most of the market dip.
ABS data shows that First Home Buyers (FHB) made up 18% of owner occupier mortgages during the three months to August 2018.
That's a six year high.
Over the same three month period in previous years it's been 16.2% (2017), 13.3% (2016) and 14% (2015).
“First Home Buyer participation in Australia’s mortgage market is now at its healthiest since 2012,” says Shane Garrett, Chief Economist for Master Builders Australia.
“Along with the introduction of enhanced FHB incentives in NSW and Victoria, the strong pace of job creation is helping more and more Australians to become homeowners for the first time.”
If you're a potential first home buyer keen to get a foothold in the property market, then get in touch.
As we touched upon earlier, banks are tightening their lending standards. However, we can provide you with valuable information on how to get your accounts in order.
We can also de-mystify the daunting prospect of buying your first home and help you secure a loan with a lender that's a good fit for your situation.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Just like a Melbourne Cup winner tearing down the outside, the October 31 tax deadline can quickly rush up on you. As the Australian Tax Office can fine those who fail to get theirs in on time, it might be time to get cracking.
The good news is you still have time to get it done, but it's best to start preparing now if you haven't already.
That's because the worst thing you could do is leave it to the last minute, as a rush job can lead to mistakes.
With that in mind, it’s a good idea to consider where the ATO says people tend to go wrong.
1. Leaving out some of their income. Did you work a temporary job or earn some money renting out a room on Airbnb? Maybe you got lucky and even made a profit on cryptocurrency?
It is all taxable and needs to be included in your return.
2. Claiming deductions for personal expenses.You cannot claim the cost of getting to and from work, normal clothes or personal phone calls.
3. Forgetting to keep receipts or records of their expenses. If you can't prove you bought it, don’t claim it.
4. Claiming for something they never paid for. Sometimes people think they are entitled to a “standard deduction” for things like work expenses. Unfortunately no such thing exists.
5. Claiming personal expenses for rental properties: If you use a rental property for personal use sometimes - such a holiday home - make sure you don’t claim for the period you used it.
Likewise, if you have multiple assets under the one loan – say a car or a boat lumped in with your mortgage – make sure you only claim the relevant portion.
If you are still confused about what you can claim, the ATO says there are three golden rules for work related expenses: you must have spent the money yourself (and not have been reimbursed), it must be directly related to earning your income, and, finally, you must have a record to prove it.
The last point is worth reiterating. Of all the adjustments made by the tax office, around half are because the person claiming had no records, or their records were of a poor quality.
Good record keeping is the key.
If you do make a mistake on your return and realise it after filing, don’t panic.
Getting in contact with the ATO as soon as possible and letting them know what went wrong will help you avoid, or at least reduce, any possible penalty.
Every now and then we're all guilty of leaving something a little too late and needing an extra (stable)hand.
The good news is that there's still time.
So if you'd like a hand with beating the deadline on your tax return then get in touch. We'd love to help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You've probably seen 'negative gearing' and 'capital gains tax' in the news recently. That's because they're set to become hot topics ahead of the next federal election. Today we'll take a look at both.
If you're an aspiring first home buyer, negative gearing and capital gains tax (CGT) are things that you may have heard a lot about, without paying a whole lot of attention.
That's because, well, if you don't have an investment property yourself, who really cares?
However, Labor is proposing to reform both negative gearing and the CGT if it wins the next election.
Reforms may have a flow-on effect for the entire property market – whether you're an aspiring first home buyer, or a budding property baron.
But before we (cautiously) tread our way into the political hoo-ha, let's take a look at what negative gearing and CGT actually are.
Ok, rest assured it's all much simpler than it sounds.
Gearing is when you borrow money to invest.
Negative gearing is when the rental income from your investment is less than your interest repayments and expenses.
Well, negative gearing is a common technique used by property investors, who are often prepared to accept a loss to reduce their taxable personal income.
In turn, this minimises the amount of overall tax they need to pay.
For example, if you're earning $90,000 a year, and you're losing $10,000 on your investment property, your taxable income drops to $80,000.
Still with us? Great.
Ok, so we've established that negative gearing can help minimise your personal tax each year.
But you're still going to need to pay tax on the profit that you make once you sell the investment property – this is called capital gains tax (CGT).
However, if the property is held for more than a year, investors may be entitled to a 50% discount on their CGT.
Well, property investors first and foremost. Australia has more than one million landlords using a negative gearing strategy, according to the ABC.
The Liberal party says negative gearing benefits middle-income earners such as nurses, teachers and policemen.
However Labor disputes this, saying it's mainly used to benefit high-income earners.
They point to Grattan Institute data which shows it's used most by surgeons, anaesthetists and lawyers.
That all said, the option is open to all. It's just whether or not it's in your own best interests – and that varies according to your personal situation.
Now, earlier we mentioned that Labor was looking at reforming negative gearing and CGT, remember?
Labor wants to limit negative gearing to newly built properties and halve the CGT discount from 50% to 25%. Labor says this will help first-home buyers get a foothold in the property market.
The Liberal party, on the other hand, says these policies will crash the property market.
Now, that's about as much as we can say about the situation without wandering too far down the political footpath.
Suffice to say many economists say the reforms have the potential to lower property prices. That's good for first home buyers, not so good for (current) property investors.
The above outline is only scraping the surface of negative gearing and CGT.
It's also important to reiterate that everybody's situation is different.
How much you earn, where your property is located, your age, and many other factors will all have a significant bearing on whether or not negative gearing would be a good fit for you.
There's also plenty of pros and cons, not to mention risks vs reward, to weigh up. All of which, once again, will depend on your individual circumstances.
So if you'd like to find out more, get in touch. We'd love to discuss your options further with you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Sticking to a financial plan – such as paying off a mortgage – can be a long journey that's punctuated by high highs and low lows. Here are some tips to get you through the tougher times.
October is generally the month that people all around Australia and the world dedicate to improving awareness around mental health.
According to Mental Health Australia, 1 in 5 Australians are affected by mental illness, yet many don't seek help because of stigma.
The thing is, mental health and financial safety are strongly linked, with many studies showing personal finances are one of the main sources of stress.
With that in mind, below we've outlined six ways you can help protect your mental health from being eroded by financial concerns.
First, however, we believe it's important to add that if you're feeling severely down or depressed, please contact your GP or call Lifeline on 13 11 14.
Signs that you may not be coping as well as normal include:
- Arguing with the people closest to you about money
- Sleeping difficulties
- Feeling angry, fearful or resentful
- Sudden mood swings
- Loss of appetite
- Not wanting to hang out with family or friends as much as usual.
Exercise releases feel-good chemicals such as endorphins and serotonin. It also gets you out and about, which minimises your feelings of loneliness.
You don't have to run a marathon or anything either. Just a brisk 30 minute walk each day will deliver both physical and mental health benefits – and help you sleep better at night.
There's not much use doing all that exercise if you're just going to smash a few Big Macs straight after.
Instead, try cooking some new healthy recipes with your loved one, or inviting a friend you haven't seen for a while to come eat with you.
A healthy diet not only improves your physical health, but it'll make you feel better too.
The best bit? Cooking uses brain power, which will help distract you from any issues that are making you down or anxious. And they'll make you proud of your gourmet creations, of course!
Make an effort to reach out to and catch up with family, friends and other members of your community.
Don't wait for them to reach out to you – be the one who initiates contact.
It doesn't have to cost you anything extra, either. Kill two (or three!) birds with one stone and invite them over for a walk, or a home-cooked meal.
Always look on the bright side of life.
For example, if you've recently become redundant, look at it as an opportunity to launch into a new job, or finally give running your own business a shot.
Also, adopt a positive attitude to seeking support. Rather than feeling down about seeking help, take pride in the fact that you've got the initiative to recognise when you're not feeling up to par.
Sometimes, our finances can feel all too overwhelming, which in turn, gets us feeling down.
If you fall into that category, brushing up on your financial education can help you feel a whole lot better about things – not to mention equip you with the tools you need to improve your budget bottom line.
Our regular blog covers a wide range of topics that can help you improve your financial literacy.
Alternatively, don't hesitate to give us a call if you're worried about your finances, such as paying off your mortgage.
We'd be more than happy to workshop some ideas with you to help improve your situation and get you sleeping better at night.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We all know that choosing the perfect investment and getting the timing right are both critical. What people often overlook, however, is selecting the right investment ownership structure.
How you own your investment – and with whom – is a decision you'll want to nail from the outset.
That's because the asset ownership structure you select can dictate the tax you pay, access to finance, estate planning, control of your investment, costs associated with maintaining it, and the risks you face.
Today we're going to take a quick look at your options when it comes to asset and investment ownership.
Sole ownership is the complete ownership of an asset by one individual. This is perhaps the simplest and least costly form of asset ownership.
You're entirely responsible for the asset, which means you carry full liability for all debts, finances and taxes.
Joint ownership involves two or more individuals owning a share of the asset.
Depending on your situation there may be tax benefits or tax discounts associated with joint ownership. For example, joint ownership of a property by a husband and wife may qualify for a tax benefit. You may also receive a 50% discount on Capital Gains Tax (CGT).
One of the main disadvantages of personal asset ownership is that it offers little protection for your investment if you become bankrupt or are sued.
A trust is an investment structure that obliges a person, or group of people (trustees) to hold assets for the benefit of others.
Trust ownership can offer additional asset protection, allow for profit sharing and tax benefits, including a 50% discount on CGT. It can also help with estate planning and reduce the costs associated with transferring asset ownership.
Trusts, however, can be costly and complicated to establish and are also associated with more reporting and administrative responsibilities than personal ownership. Depending on the trust structure you select, it can also be more complicated to secure an investment loan.
A company can own a stake, or the entirety, of an asset.
Again, company ownership can help protect assets from personal losses and liabilities. It can also deliver tax benefits because any income and capital gains is taxed at the company tax rate of 30% (which may be significantly less than your personal marginal tax rate).
On the other hand, companies miss out on the 50% discount on CGT that is possible through personal or trust ownership.
Your control over the asset – including when you buy and sell – may also be diluted via a company structure.
Investing through a superannuation structure can deliver significant tax benefits as any income earned via super can be taxed at as little as 15%. CGT from investments via super may be discounted by a third.
Investing through your super is also an estate planning strategy that many people consider.
That said, there are complex rules around super contribution caps, tax treatment and borrowing arrangements when investing via super. The location, type and liquidity of your investment may also be restricted.
Understanding which ownership option is the best fit for you and your asset can be complex. As you can see, it's not straightforward - there's a lot of considerations and no two situations will be the same.
So if you want to get it right from day dot, get in touch.
We can take into account all relevant information to help you decide what option to choose so your asset is owned in the most beneficial way.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
A question we often get goes something along the lines of: 'I make my repayments on time, and I save $1,000 per month, why is the bank saying I can’t service a loan?' Here's how banks conduct loan serviceability.
When a bank calculates loan serviceability, they are essentially evaluating your ability to pay back a loan.
Lenders base this decision on a number of factors, including your income, the loan amount, and other commitments or extra expenses.
With all of these things in mind, the bank figures out a debt service ratio (DSR). In a nutshell, the DSR is the percentage of your monthly income expected to be spent on debt expenses.
Lenders usually cap this at 30 or 35%.
Of course, the borrower's standard salary is considered here. But so too are bonuses like overtime, commission, and even company cars.
For nurses and the emergency services, all overtime payments are included in serviceability calculations.
For other professions where overtime payments are more infrequent, only a proportion of overtime is included.
If you have a second job, you must be employed there for a year before this income affects serviceability. And for investment properties, most banks will consider just 75% of the rental income (to allow for associated fees).
Lenders can also take into account Centrelink benefits like Family Tax Benefit if your children are younger than 11-years-old.
If you have been making all of your repayments on time and saving a decent chunk of your income, you may well be wondering why a bank has just knocked back your loan application.
One explanation may be that lenders calculate repayments by adding a margin of 2.5% or more to the variable rate. This is known as an 'assessment rate'. It's used to predict whether you would be able to meet repayments if interest rates rose to 7.5 or 8%.
Unfortunately, this – as well as credit card debt, student loans, car loans and the number of children or dependents living in your home – can negatively affect loan serviceability and make it much harder to get the finance you need.
Bearing these factors in mind can help you rearrange your finances and improve your chances.
If you've recently been advised by a lender that you can’t service a loan, don't hesitate to give us a call.
We'd be more than happy to look into your individual situation, help you address any issues, and line you up with a lender that's offering a great home loan.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Many people only pay their bills on time to avoid being slugged with late fees and a bad credit rating. But a big change this month means that you can now be rewarded for timely repayments.
From mid-September, ANZ, NAB, Westpac and CBA all agreed to commence Comprehensive Credit Reporting (CCR).
It's seen as a more “positive” reporting system than the “negative” credit reporting system that has previously been in place.
CCR was introduced back in July but it's just taken a while for the big four banks to get onboard.
CCR will see the banks provide additional data to credit reporting bodies such as Experian, Illion and Equifax.
The data that they're now required to supply to these agencies include:
- The type of loan or credit account.
- When it was opened or closed.
- The credit limit.
- When payments were made on time.
- And when payments were made 15 days late (not to mention the ones that are made 45 days late!).
In years gone by, the credit reporting bodies only heard about you when you had messed up.
Basically, this meant that banks, credit unions and lenders could only really assess your borrowing capacity on the negative aspects of your credit history. This included late payments or defaults.
However, now that CCR has been adopted by the major banks, your positive credit history, such as timely repayments, will be reported too.
This now gives your credit score the chance to go up – not just down.
Just by knowing the above information you're already more informed than 60% of the population, according to research by credit reporting agency Experian.
But the best bit is: positive credit reporting can help you obtain a loan for a home or business.
“From our experience in the 19 other countries where we operate credit bureaus, positive data sharing is a much fairer system and provides consumers with better credit opportunities,” says Experian Australia's Poli Konstantinidis.
“It doesn’t just help those with strong credit scores, it also means those without a long credit history, young first home buyers for example, can build one quicker than before.”
Well, that's simple. Make sure you're paying all your bills on time!
“This isn't about the value of the car you drive or how big your recent pay rise was,” says Konstantinidis.
“Pay credit cards and loans on time, as lenders may now consider this when deciding whether or not to approve your credit application.”
You'll also want to check your current credit score.
You can get a free credit report once a year from one of three national credit reporting bodies (CRB’s). You can find out how on this government website.
If you need a hand doing so – or you discover that you have a poor rating and want help improving it – then get in touch.
We'd be more than happy to help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
It's a morbid thought that many of us tend to shy away from, but end-of-life financial planning is a crucial stage in any successful financial management plan.
One day down the track you'll no longer be around to use or take care of your assets.
It's an unfortunate, but certain, fact of life.
But that doesn't mean that everything you've accumulated can't still benefit the people or causes you care about.
To maximise the chances of this happening in the smoothest way possible it's important to establish a well thought-out will, a trusted power of attorney, and a nominated beneficiary – all of which we'll touch upon below.
A will is a legally binding document that states how you wish your assets to be distributed. It can stipulate who should look after your young children, any trusts you'd like established, donations you'd like to give to charity, and your funeral and burial wishes.
It's fair to say that wills are a little more complicated to draw up than scribbling down a bunch of instructions on the back of a napkin. Thus it's always worth taking a co-ordinated approach to formulating your will with the help of a solicitor, accountant and a financial adviser.
A power of attorney is an individual who you wish to be responsible for managing, or partially managing your affairs, when you're unable to do so.
The powers that your legal appointee can exercise vary between state and territory, but they can include being able to make financial decisions, medical decisions and legal decisions on your behalf.
If you'd like to give this trusted individual a bit more guidance you can get additional legal documents, such as an advanced healthcare directive, drawn up.
A nominated beneficiary is an individual, institution, charity or similar organisation you wish to leave your superannuation to.
This could be your spouse, your children, or even your local dog shelter - it's up to you!
But it's important to note that if you do not make a binding nomination, your superannuation fund trustee will decide who your money goes to, which can lead to lengthy delays or family disputes.
The money and assets you leave behind can form a cherished legacy or spark legal issues that tear your family apart.
The way in which your assets are passed on can have considerable tax implications, which can inadvertently disadvantage your beneficiaries if you haven't thought them through.
And if you haven't even got so far as establishing a valid will (and die intestate) your assets, bills and taxes will be distributed by a court-appointed administrator.
None of us knows how long we have left, which is why it's important to ensure that your financial affairs are in order while you're still able to attend to them.
Ensuring that your financial affairs will be managed in line with your wishes and disposed of as you intend is important to many people.
Setting up a will, a suitable power of attorney, and a nominated beneficiary now minimises the risk of your wishes being ignored or overridden later.
Setting up appropriate arrangements for the management of your financial affairs when you're no longer around is thankfully easier to do than you may think.
We can outline the various options which are open to you, as well as suggest cost-effective methods of making sure that the right legal framework is in place in good time.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Hindsight is 20/20, right? The Global Financial Crisis, Trump's election and the rise and fall of Bitcoin all seem obvious enough in retrospect. But here's the thing: very few people ever make money from random and unexpected events, despite many trying!
Black Swan events are ones that are almost completely unpredictable yet have profound and lingering effects on people – not to mention a disproportionate amount of people trying (and failing) to cash in on them.
The term was recently popularised by Nassim Nicholas Taleb, a finance professor, writer, and former Wall Street trader.
But it dates back much, much further than that.
In fact, the term 'Black Swan' dates all the way back to the 2nd century when it was coined by Roman poet Juvenal.
It was written in Latin, and when translated to English, went something along the lines of "a rare bird in the lands and very much like a black swan".
The phrase was pretty common for something 'impossible' in England during the 16th century, when it was still assumed that only white swans existed.
However, in 1967 Dutch explorers became the first Europeans to see black swans: in none other than Western Australia.
As a result, the term morphed into a saying for something that was once deemed impossible but later disproven.
As mentioned earlier, Taleb popularised the phrase once more around the turn of this century.
He did so with his book 'Fooled By Randomness', which concerned financial events, and again with his 2007 book 'The Black Swan', which highlights events outside the financial sphere.
Taleb says Black Swan events are made up of three key attributes.
First, they are an outlier - basically an event that's so outside the usual that no past indicators could have pointed to it as a possibility.
Second, they have catastrophic ramifications on the world. And third, despite being completely unpredictable events, we humans try to rationalise them as something that should have been completely predictable after the fact.
- The unprecedented rise and fall of Bitcoin in 2017.
- Donald Trump's run to the White House in 2015-16.
- The Global Financial Crisis in 2008.
- The dot-com bubble burst of 2001.
In a nutshell: the horse has usually already bolted.
You see, by nature Black Swan events cannot be predicted.
To successfully predict one, you'd need to either get extremely lucky, or bet on a large number of speculative investments until one finally worked out – and neither are sensible investment strategies.
And by the time people usually want to put their hard earned money towards it, so has every other man and his dog and the market becomes extremely unstable (think Bitcoin 2017).
That's why when you invest you shouldn't waste time, money and effort trying to predict the unpredictable.
Because if you see something that walks like a Black Swan and grunts like a Black Swan, it probably is. And it's therefore worth checking with us before you put your savings on it.
Your focus should always remain on the things you can control.
They include your risk profile, investment horizon, fees and tax structures.
By planning ahead you can stick to the things you know and leave the speculation to those who have left their run towards retirement way too late.
And if you haven't started planning your run to a blissful retirement yet? Get in touch. We'd love to show you how you can live your 'golden years' without having to try and get lucky striking gold.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We've all heard the horror stories about a mechanically-challenged friend buying a car and it turning out to be an absolute lemon.
Well, the truth is that sourcing finance for the car isn't all too dissimilar. But here are 12 reasons why you won't end up with a lemon of a loan with us!
Using a car finance broker is free. We won't charge you for any of the work we do on your behalf. Also, all enquiries are free and there's absolutely no obligation to go ahead with any of the options we present to you.
While it's true we work on a commission basis from the lender, we work for you. Not the car dealership. Not the bank. You.
If we don't find you a loan product that you're completely happy with, then you'll go elsewhere and we don't get paid. And fair enough!
We don't want to brag, but negotiating with lenders is our thing. We deal with lenders on a daily basis and know just how hard to push when sourcing you a loan. This can result in discounted interest rates for you.
Using a finance broker saves you time. And as we all know time = money.
By having us go out and negotiate on your behalf it can save you countless hours researching interest rates and repayments, and then getting in touch and negotiating with various banks and lenders.
It's our number one priority to make you happy by helping you source a loan that suits your needs.
It's really important for our business and reputation that we nail our job. The big banks don't have this same incentive to ensure you're completely satisfied with the quality of their service. Neither do the car dealerships!
There's this little trick car dealerships like to use – the old 'Drive away, 0% finance to pay'.
But all too often the dealerships sell these vehicles at inflated prices.
For example, a car that has a price tag of $24,990 with a 0% finance deal might sound great, but the automaker would most likely be willing to sell it to you upfront for $19,990. Therefore, you can actually end up paying $1000-$2000 less if you take out a competitive loan through us.
Did you know that 80% of people don't read Product Disclosure Statements?
You can't exactly blame them. If you read every PDS, T&Cs and Privacy Policy you came across it would literally take you weeks to complete each year.
Instead, by using us we can give you the low down on the important points in the PDS to help you avoid getting stung by hidden nasties.
We've got access to dozens of lenders on the market to help you score a competitive rate. Not only that, we've got our fingers on the pulse when it comes to the deals that lenders are offering.
You won't have access to this many lenders if you deal directly with a bank or car dealership.
After finding out a little more about your situation, we'll be able to get in touch with our panel of lenders to find a loan that's suited to your personal needs.
This can even include finding a vehicle that's suited to your family's needs, if you need us to do so!
If you've run into a bit of credit trouble in the past, we can still help you source a line of credit for your vehicle. We've got good experience in this department and know which lenders to approach to help you get a loan.
We take all of the legwork out of sourcing car finance. We'll liaise with lenders on your behalf, compare what they can offer, and come back to you with the options that we believe will suit you.
That will take a big weight off your shoulders as well as a lot of potential stress!
If you apply for finance with more than one lender it can have a detrimental impact on your credit file. However working with a finance broker can allow you to apply with a number of lenders through just the one application.
While online (and big bank) options exist, we pride ourselves on our personal touch. If you've ever got any queries or concerns about your loan you can pick up the phone and we'll sort it out for you.
That's much better than calling up a call centre and being bumped around from anonymous customer service person to anonymous customer service person.
All too often the process of sourcing car finance is put in the too-hard-basket. But by simply picking up the phone and calling us now we can help you get the ball rolling.
It's quick and easy, too. We'll get some initials details from you and get cracking asap.
That way you can get stuck into the other tasks on your to-do-list, or simply kick back and watch Netflix!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Choosing the right superannuation fund can be like navigating a maze. Just when you think you're onto a winner you run into a dead end – whether that be because of high fees, hidden costs, or poor performance. Today we'll break down the process of choosing a fund in 9 simple steps.
Superannuation is a $2.6 trillion industry. And 40% of Australians have retirement funds swirling around in more than one account.
This leaves those retirement funds open to being eaten away by duplicate fees and multiple life insurance policies.
So to make it easier for Australians to keep track of their Super, the Royal Commission recently recommended that each person should have only one default superannuation account.
Late last year the Productivity Commission also recommended that a ‘best in show’ shortlist of up to 10 superannuation products should be presented to all employees who are new to the workforce to help them choose a default product.
However, rather than wait and see if those changes are ever enacted, it's important to get on the front foot and take charge yourself. Here we'll walk you through how to do so in 9 simple steps.
Before you spend too much time researching, first check with your employer to see if you can actually choose a fund.
While most people can choose a fund for their employer's Super contributions to be paid to, members of defined benefit funds or people who are covered by industrial agreements don't have this choice.
Before you can start creating a shortlist of potential Super funds, you need to identify your level of risk tolerance.
Are you a 'slow and steady wins the race' kind of person? Do you prefer a good balance? Or are you willing to accept a little more risk for the potential of higher returns?
Your answer may depend on where you're at in your life cycle, and it's worth discussing with your financial adviser.
Once you've identified your risk profile you can start looking for Super funds that fit that within those parameters.
Super comparison websites can help you narrow down your list, but you should never make your decision on the website rating alone.
That's because it's important to remember that comparison websites are also businesses. And the purpose of a business is to make money.
Instead, use them only as a way to narrow what is a very wide field.
Better yet, we'd be happy to provide you with a short list of funds that will suit your unique situation.
Once you've got a shortlist, it's time to start comparing performance.
Keep in mind that while past performance is no guarantee of future results, the Productivity Commission does see merit in past performances in the Super field.
“The age-old adage that past performance is no guarantee of future performance is only true of investment markets in a narrow sense,” The Productivity Commission said in its report.
“Good long-term performance is associated with low fees, good governance, and sufficient scale.”
Try and pick out a fund that has performed consistently well over 5-10 years, not a fund that had a bumper year in 2018.
As the Productivity Commission alluded to, when comparing Super funds it's good to start with the fees. And as ASIC states - “The lower the better … a 1% difference in fees now could be up to a 20% difference in 30 years”.
Here is a list of fees and costs to keep an eye out for in the Product Disclosure Statement (PDS): administration fees, investment fees, switching fees, buy/sell spread fee, insurance premiums, exit fees and activity-based fees
ASIC has also written this report to help you avoid getting stung by any hidden fees and costs.
Most superannuation accounts come with life insurance policies.
Changing Super funds means you may not get the same death, total permanent disability or income protection cover that your your old fund had. The premium and coverage will also differ from fund to fund.
And it's important to note that if you do switch, you may find that you won't be covered for a pre-existing medical condition, or if you're aged 60 or over.
The other consideration is that you may not need life insurance within your Super policy at all, as you may already have a standalone policy.
Either way, it's important seek financial advice if you're unsure.
Before you decide to make the move to a particular Super fund it's worth calling the fund directly to see what other services they offer.
For example, your employer may pay more than 9.5% for certain Super funds or if you make extra contributions yourself.
Once you've chosen a new Super fund you'll need to open an account.
You'll then need to provide your employer with all the details of your new fund.
While you're at it, you should also look for any lost Super you may have. There's a chance you may have some in a default account from a pervious job. You can find and manage your Super using ATO online services through myGov.
You can also roll over your Super into your new chosen fund through myGov, or by requesting a form from your new fund. Most Super funds are more than happy to guide you through the process.
Finally, if you have any doubts along the way, or simply would prefer someone to help guide and educate you through the steps, then don't hesitate to get in touch.
We're here to help you set goals and plan for retirement – and choosing the right Super fund is a big part of that.
We can also run you through the full list of Super options – including self-managed Super funds (SMSFs), MySuper and Industry Super Funds – to see which one is right for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Australia's housing market might be on a bit of a downward trajectory, but that doesn't mean the value of your home can't buck the trend. Here are five ways you can increase the value of your property, without necessarily increasing your monthly mortgage repayments.
You've probably seen a whole bunch of doom and gloom about the property market being in a slump.
First off, rest assured that it's not the end of the world.
In fact, national dwelling values have simply returned to September 2016 levels, according to recent CoreLogic figures.
The good news is that with a bit of elbow grease and hard yakka you may be able to make that back up.
Here are five affordable suggestions for doing so.
It's time to get those hands dirty.
One of the fastest ways to instantly increase the 'wow' factor of your property is to give it a good manicure.
Trim any overgrown bushes, mow the yard, apply grass seeds where there are bare dirt patches, plant some new flowers and plants in the garden bed, and ensure the fence is looking top notch.
If you don't have the tools for the job, or you're simply more of an indoors person, consider hiring a landscaper to help out.
You can opt for a well known local professional out of the Yellow Pages, or save some coin by taking a punt on a young person looking to grow their reputation through Airtasker.
One of the best ways to make the interior of your house feel fresher and more lively is to decorate each room with a bit of greenery.
Pot plants are fantastic because they're low maintenance, make your place look great, and are great for your health.
Here's the real kicker though: rather than leave them behind, like most other things on this list, you can take them with you when you sell your property.
The same goes for artwork. It too can make your place stand out by giving it a bit of character, and it's not like you have to fork out thousands for an original Rembrandt or anything of the like.
There are thousands of talented local artists selling art at affordable prices – and remember, it's all subjective. Back yourself to pick out a good artist who appeals to you!
Nothing looks as dated as stained carpet, scuffed floorboards, or old and chipped tiles.
Having a fresh platform for a prospective buyer to stand upon can make a big difference when it comes to their mindset.
If the floor they're standing on is dirty and dated, they're very likely to wonder what's wrong with the aspects of the house that they can't see.
If it's within your budget, definitely consider giving this part of your property a makeover before inviting potential buyers inside.
The bathroom will attract about as much scrutiny from a prospective buyer as any other room in the house.
The last thing you want is for some grime, leakage or mould turning off someone who's happy with every other aspect of your property.
If your bathrooms are moderately new and not too dated, pay some professional cleaners to come in and get the place sparkling.
You don't need to rip the whole thing out and spend $15,000 on a complete retrofit either. A simple paint job is sometimes enough.
However if your bathroom is looking pretty dated – and your budget allows for it – consider installing just some of the essentials: perhaps install new sinks, updated countertops and cabinets.
Also, ensure the taps and shower head are shiny and not leaking, and the toilet is modern and not flushing money down the drain (indoors, the shower is typically the biggest contributer to water bills at 34%, followed by the toilet at 26%).
Not far behind the bathroom in terms of scrutiny is the kitchen.
Once again, there's no need to rip out the whole kitchen and fork out an arm and a leg.
Look at ways you can revitalise it on the cheap: you could replace old cupboards and pantry doors, upgrade the bench tops, and make sure the taps and electrical fittings are in tip top shape.
And don't forget that the kitchen appliances you have out in the open are also acting as decorations.
If they're old and outdated, they could bring the rest of the kitchen sagging down with them. Once again, if you have to buy new appliances, at least you can take them with you!
Remember that property improvement shouldn't cost you more than the value you're hoping it will add.
It also helps to think of some of the above ideas as adding to your investment – not an expense.
If you’re unsure where to start, or would like some extra tips, don’t hesitate to get in touch.
We understand precisely what buyers look for in a home and investment property respectively, and would be more than happy to help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
One of the biggest milestones you'll encounter on your climb up the property ladder is becoming a landlord. Which means that one big decision you'll face is whether to hire the services of a managing agent, or take on the responsibility yourself.
I want to preface this article by saying that there's no wrong or right answer here. Well, generally speaking there isn't.
Basically, it will boil down to your individual situation.
Do you have the time (and patience!) to manage the property? If so, you can probably save a good chunk of your rental income each year by managing it yourself.
However, if you've already got quite a few balls up in the air, then you're probably going to want to offload the 'managing the property' ball to someone else.
Now, there's a lot to weigh up here, so we thought we'd simplify it by breaking it down into two simple lists.
If you're the sort of person that likes to sit back and let someone else do all the hard work for you, then a managing agent will:
- Know exactly how to advertise the property to maximise the number of applicants.
- Help you determine an accurate amount you can charge in rent.
- Vet applicants through tenancy database checks, call references, and create a shortlist.
- Undertake regular property inspections on your behalf.
- Be across all the legal and legislative requirements that are in place. If you decide it's time to evict a tenant, knowing these legal requirements is crucial.
- Act as a middleman to resolve misunderstandings or disputes.
- Chase up any overdue rental payments.
- Inform the tenant if the property is not being kept to reasonable standards.
- Organise for a handyman, electrician or plumber to undertake necessary works on the building, and may have access to bulk discounted rates.
- Arrange all important documents, such as the lease agreement.
- Allow you to live in an area not near the property.
- Finally, time is money. And it can take a lot of time to manage a property yourself.
Don't forget, however, that there's a certain level of satisfaction and freedom of choice that comes with doing things yourself. Here are some advantages of the DIY approach:
- Most importantly, it's cheaper! You don't have to pay a property agent 7-10% commission, plus other fees such as a letting fee (one to two weeks' rent).
- You can get a Lease Pack from your local newsagent for $10-$20.
- If you are retired, or nearing retirement and working part time, the extra money you save might be crucial when it comes to your retirement.
- You get to decide how and where you advertise the property.
- You get to vet, shortlist and interview all applicants.
- No one knows your property as well as you do, so you can diligently inspect it for damage.
- A property manager doesn't just act on your behalf. They also represent the tenant's interests. You primarily act on your own behalf.
- If you find a great, low-maintenance, long-term tenant who you build mutual trust and understanding with, your required involvement can drop significantly.
Finally, it's worth noting that yes, it is your property. But don't forget it's also their home or office.
Therefore it's important you know how to tactfully liaise with a tenant if there's a misunderstanding or dispute. Emotions can easily become involved for both parties so you need to ensure your workload and mediation costs don't blow out as a result.
As you can see, there's a lot to weigh up.
In fact, there are also many other issues that you'll need to address, including landlord's insurance, whether to pay for a cheap managing agent or fork out for an expensive one, and reading through the managing agent's fine print to see exactly what they'll do to earn your commission.
So if you're still undecided, or simply want to know more about the pros and cons from a team that's done all this before, give us a call.
We'd be happy to discuss it with you so that you can pin down exactly what will suit your individual situation.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Asking how long it takes to get a loan approved is like asking how long a piece of string is. Every application is unique, so the time between your first contact with your bank or broker and approval can never be predetermined. There are, however, some things you can do to help hurry your application along.
Although very rare, same-day loan approvals are possible depending on the lender’s criteria, the complexity of the deal and turnaround time. “In my experience, this has been possible when the client’s lending position is fairly straightforward in terms of employment, asset and liability position,” says an MFAA accredited finance broker. “Also, if a valuation wasn’t required due to a low LVR and both parties were happy with the contract price.”
If you’re not prepared, it could take up to a month. The most common reason for a delay is a lender’s turnaround time to assessment, especially when some lenders have competitive offerings and experience larger application volumes, but a lack of preparation can cause this delay to snowball. “When there are such delays and then a lender must organise a valuation or request further information, this can lead to a lengthy process time,” the broker says.
A good finance broker will help you take all the necessary steps to ensure fast home loan approval, but there are simple ways you can help hurry the process along before your first meeting with your broker.
Disclose all information
To avoid back and forth requests, which can delay your application, ensure your lender has a thorough understanding of you as an applicant including appropriate identification of all borrowers. Provide all the supporting and necessary documents upfront to your broker, and convey as much detail as possible in relation to your requirements and objectives and have good, current information on your financial position. The broker will need to not only have your full financial details but will also need to take reasonable steps to verify it.
Skip the valuation queue
Not all applications require a valuation, depending on the property and lending institution, and forgoing this step can save a considerable amount of time. You can also save time by having a valuation completed prior to your application, as long as it’s accepted by your chosen lender – but check with your broker first.
To ensure your application avoids any unnecessary delays, speak to a Scarlett Financial broker today.
When selling one property and purchasing another, the funds from the sale may not be available in time to use for the purchase deposit. There are typically two options in this scenario: a bridging loan and a deposit bond.
Bridging loan
A bridging loan is a shortterm home loan designed to allow you to initiate the purchase of a property before you have sold your previous one.
Loan terms are often between six and 12 months and bridging loans generally have a higher interest rate than traditional home loans.
This can be a great option but carries some risk. It’s important to know that
you will be able to make the repayments even in a worst case scenario where your old house doesn’t sell as quickly as you’d hoped or where property values may change unexpectedly.
It’s important to talk to a broker and ensure that you have the capacity to service the loan for the period of time required.
Deposit bond
A deposit bond is a tool that, upon agreement with a vendor, can replace the requirement of a cash deposit when purchasing a property.
This can be a relatively cheap method of initiating the purchase of a property usually without the need to liquidate your other assets. The cost of a bond can vary depending on transaction complexity and the term being sought. In a simple transaction, it is likely to be approximately 1.3% of the amount of the deposit. For example, for a deposit guarantee to the value of 10% of a property price for an individual purchasing an established property in NSW and repaying that guarantee within 6 months on a $50k deposit for a property purchase of $500k, the fee will be about $650.*
A deposit bond is issued by an insurer to the vendor of the property for either the full or partial deposit required. At settlement, the purchaser must pay the full purchase price including the amount of deposit. At this point, the deposit bond becomes void.
If the purchaser fails to complete the purchase of the property, the vendor is able to give the deposit bond to the insurer who will provide them the entire value of the deposit bond.
The insurer will then seek reimbursement of the deposit bond from the purchaser.
Deposit bonds are generally a fair bit cheaper than a shortterm loan, but it’s important to talk to a mortgage broker to compare the two, taking into account your requirements and objectives and your financial situation.
Speak to a Scarlett Financial broker to discuss which option is right for you.
*this is an estimate
As you are likely aware, the last six months has seen a sharp rise in interest rates for Interest Only (IO) Loans. This has been particularly prominent for Investor loans, but there were also market increases in the Owner Occupied (O/O) market also. If you had an Investment / Interest Only loan you were doubly hit!
The regulators are trying to rebalance the books after growing concerns about Australians household debt levels.
At Scarlett Financial, for the best wealth accumulation strategy, we would normally recommend Investment Loans are Interest Only.
However, these recent rate rises have has had us reconsider this line of thinking.
In short, here’s the philosophy we are the recommending in our client scenarios (in the norm):
To assist, Scarlett Financial is offering a free review of your debt situation in regards to repayments methods to see if you would be best placed making a change to reflect the current market.
Please email our team at lending@scarlettfincial.com.au if this interest you and we will book in some time.
Just as every great movie is carried by a star performance, so too do most small businesses rely on a key performer. Here's how to protect your business from bombing at the box office with key person insurance.
As the name suggests, key person insurance covers a key worker – one who is incredibly important to your business.
This importance could be measured by the worker's depth of knowledge, contribution to profits, crucial skill or overall input.
In a small business, this person is often the owner or a partner and the insurance usually covers illness, disability or their death.
Basically, it allows the small business to offset both revenue losses and costs incurred due to the absence of the key person insured.
Policies vary depending on the size and scope of the business, with most policies allowing the coverage of several key people at once.
However, it's worth keeping in mind that there's usually a waiting period between 30 days and one year. It all depends on how much cover you want to take out.
Usually, the business owner or owners take out key person insurance. But it can cover employees who are integral to the business, too.
In the case of a partnership, partners can take out a policy on one another.
It's important to note that income protection isn't the same as key person insurance. While income protection covers an individual facing a loss of income, key person insurance covers the business' losses.
In other words, it covers revenue losses and costs related directly to the loss of the key person. That includes whether he or she is no longer able to work at all, or able to work in a limited capacity only.
The success of a small business often lies in the strength of just one – or a few – people.
Unlike big businesses, small businesses don't have scores of staff to fall back on.
By taking out key person insurance, you can protect your business against the sudden illness, injury or death of a key worker.
Usually, cover is available for between $5,000 and $60,000 per month.
With those funds you might decide to hire a temporary employee or retrain an existing one.
If you'd like a hand in setting up key person insurance for your business, then get in touch.
We'd love to help ensure your business continues to put on a blockbuster performance - regardless of whether you're missing your key performer.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
If you buy and sell an investment property, you may be required to pay capital gains tax (CGT) on that sale. It’s important to understanding this tax when buying or selling a home.
What is CGT?
This is a tax that you are required to pay on any capital gain earned on the sale of an asset such as a property. CGT applies to any asset obtained after 19 August 1985.
What is a capital gain?
Put simply, a capital gain is made when a profit is made from the sale of an investment, so when the sale price exceeds the original purchase price. If you sell an investment property for less money than the purchase price, you will have made a capital loss. An industry expert can help you work out your net capital gain or loss.
Calculating CGT
It’s really quite simple. For the sale of a single investment, take the selling price of the property then subtract the amount you originally paid for it, along with any associated costs such as stamp duty and legal fees. The amount remaining will be your capital gain. If you make a loss rather than a gain, you will not be taxed.
You may be eligible for a 50 per cent reduction of the CGT payable if you purchased the property after 21 September 1999 and owned it for at least one year before selling, and the property was purchased by an individual, trust or complying superannuation entity.
Exemptions
While any investment properties sold will be subject to CGT, you do not have to pay this tax on every property you buy and sell. Your main place of residence is exempt, as long as you have never rented it out.
You also are not required to pay this tax at the highest marginal tax rate. Any capital gain obtained will be added to your taxable income and then taxed at the relative margin.
Find an Scarlett Financial Broker who can help you finance your investment property purchase.
link: http://www.scarlettfinancial.com.au/finance
This article is for information only; please seek advice from a tax adviser before making any decisions.
While spring is renowned as the time that sellers dust off their properties and place them on the market, this doesn’t mean it is necessarily the best time for buyers to go shopping.
One of the biggest issues with shopping in spring is the flood of other buyers looking to snag their dream homes, which increases competition and housing prices.
“There is typically a seasonal uplift in buyer numbers over the last quarter of the year, which means the benefits of a higher number of options to choose from are offset by a higher number of prospective buyers,” explains CoreLogic RP Data’s Tim Lawless.
Buyers may be better off when there are fewer buyers around in the winter months, at least from the perspective of being able to negotiate hard on price.
Although there is a lot more to look at during spring, there isn’t necessarily more to choose from, depending on your individual circumstances and finances.
It may be just as beneficial for buyers to look around during slower months, as this will give them more time to consider properties, more time to negotiate and more time to organise their loans.
“Seasonal factors will always play a part in the dynamic of the housing market, but so too do other factors that are harder to anticipate such as changes in the regulatory framework that might make obtaining finance easier or harder, changes to economic circumstances or other things that can be absolutely unexpected,” Lawless says.
Taking all of this into consideration, the best times to buy are as varied as the people looking. It is a good idea to assess what’s most important to you before following the crowd.
“Buyers are probably best positioned to use the timing that works best for them and their budgets rather than waiting for a particular time of the season where conditions might be more or less favourable,” Lawless says.
Before you hit the open home circuit, speak to Scarlett Financial Consultant about how to finance your property purchase.
We all want what's best for our children. So while investing in their name from an early stage might sound like a great idea, you need to tread as carefully as you would around an abandoned lego construction site.
Some people invest in their child's name as a way of engaging with them and encouraging them to invest in their future from an early age.
That said, there actually aren't that many pros to putting money away on their behalf.
As it stands, minors can earn up to $416 per year tax-free before high tax rates kick in.
This means the pros are most likely outweighed by the cons when it comes to investing in your child's name.
The first downside of investing in your child's name is the difficulty involved.
Most fund managers won't accept direct applications from minors due to the potential legal implications, while some companies prohibit shares from being purchased by anyone under the age of 18.
Additionally, a few decades ago the Australian government closed a loophole which was thought to allow wealthy parents to escape tax responsibilities by investing money in the name of a minor.
This means once a child's unearned income has exceeded $416 a year tax rates of up to 66% now apply.
There are a number of alternatives to investing which could result in a higher return, including investment bonds.
If your family pays a higher rate of tax – particularly if both parents are working – investment bonds could be a more effective way to invest and save on tax. That's because earnings are taxed at 30% within the bond.
Investment bonds are also handy when it comes to your kids because they're designed for the long-term. Usually 10 years or more.
They can then be transferred when the child comes of age.
You could also benefit from investing in the name of an adult spouse with a lower income.
However, if you're looking to invest in stocks and shares or an exchange-traded fund (ETF) semi-regularly, bear in mind you'll need to put away larger sums to make the brokerage costs worthwhile.
If you'd like help investing in both your child's name and their future, then don't hesitate to get in touch.
That way the only costly misstep you'll have to worry about is that of the scattered lego kind.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
For most Australian's buying your home is the biggest investment you will make that is why is it is paramount you structure things the right way which could end up saving you thousands.
It can be an overwhelming experience, especially when it comes to finding the right loan at the right rate with the right structure. There are so many options for you to consider including your personal circumstances, your financial status, how much can you borrow, what are your goals in the next few years.
These factors are all very important when it comes to the type of structure you have in your loan, some of you may want to think about what will happen if you take time out from work to raise a family, others may want to use this home as a stepping stone and move into a larger property.
Your circumstances are all different that is why we have put together this article to help you make smart choices when it comes to your biggest investment after all knowledge is power.
1 Think about why you want to buy a home
Do you want to live in it or will it be an investment property. This can help determine the kind of loan you apply for and home you buy, depending on your short and long-term plans. Are you looking to buy this home for maximum growth purely as an investment or are you buying this property because you love it and it is a forever home.
2 Research potential properties and loans
Knowing the market is crucial, so do some research on the areas you are targeting, check out auction clearance rates and recent sales, as well as price trends in the area. Once you are aware of what you are looking for and the approximate price, the next step is saving a deposit. If you are not sure investing in the help of a buyers agent can have you thousands in the long run because they often have insights into growth areas, they understand your long term goals and are excellent negotiators helping you secure a property faster. As you know with such a hot property market it is crucial that you get into the market sooner as the longer you wait the higher the prices climb. Many first home buyer find this a hurdle to get into the market.
It is important to get your finances in check some lenders will offer loans if you have saved less than the usual 20 per cent deposit it is essential the you can show the lenders a record of good saving habits will aid in getting your loan approved.
Then, when you talk to your local MFAA Approved Finance Broker about applying for pre-approval on the right type of loan, ask for their help to work out what you can afford in terms of repayments.
3 Factor in other costs involved
Depending on the property, there can be a number of additional costs, so ask your finance broker what other payments you will face. This can include, but isn’t limited to, stamp duty, loan establishment fees, legal and conveyance services, utilities, property insurance, maintenance and lenders mortgage insurance. Your broker can help you find ways to minimise your costs helping you get that loan and property faster. Having a broker on your side can often mean the difference between not getting the loan and securing a loan.
4 Think about your future
Just because your current situation allows you to get a home loan, that doesn’t automatically guarantee that you will still be able to service it in five years’ time. Is there a possibility your role at work will change? Are you considering going back to study and reducing your working hours?
5 Get professional help
Just like you hire a mechanic to service your car, an accountant to do your taxes and a hairdresser to cut your hair having the support of an expert makes all the difference. With so many things to consider, getting professional help is highly recommended.
There are many experts in the industry and it is in your best interest to use them for tasks such as property checks, pest checks and any other legal queries. Going it alone can prove costly. Avoid nasty surprises down the track by getting the right people to do the appropriate checks for you from the beginning.
Find an Scarlett Financial Wealth Consultant, Finance Broker or Property Buyers Agent for the best expert advice about buying your first home.
We all experience times in life when we just can't wait to get our hands on that shiny new item. But as the old saying goes: good things come to those who wait.
Afterpay is the largest buy now, pay later scheme in Australia.
In fact, Afterpay had more than $1.45 billion pass through its platform in the first three-quarters of last financial year.
It boasts more than 1.8 million customers, who mostly use it for online apparel shopping, and 14,000 retailers under its wing.
The reason for Afterpay's rapid rise is its interest-free, instant purchase business model.
To qualify, all a customer needs is a debit card, enough money for the first instalment and no proof of income. Customers then pay the final three instalments a fortnight apart.
Interest-free. Instant. Too good to be true?
Here's the thing. As you can make many purchases with Afterpay without proof of income, before you know it you could adopt bad spending habits and may fall into debt.
Now, late payment penalties are capped at $17. But if you've made multiple purchases and you're defaulting on all of them, the debt and fees rack up.
Afterpay, and its competitors such as ZipPay, are still credit liabilities and need to be disclosed when applying for a home loan.
And the banks are getting very stringent on who they lend money to these days due to the regulator crackdown.
In the current tightening lending market this could hamper your efforts to obtain a home loan if you've racked up quite the Afterpay bill. Especially if it's obvious that you're struggling to pay it off.
Additionally, the Terms of Service on the Afterpay website state:
“Afterpay reserves the right to report any negative activity on your Afterpay Account (including late payments, missed payments, defaults or chargebacks) to credit reporting agencies.”
This means that your credit score may be affected if you fail to meet repayments.
And last year alone Afterpay netted $11 million in late payment penalties.
Financial independence is not about racking up debt for shopping.
It is about saving money for a rainy day, rewarding yourself with purchases when you hit savings targets, and protecting your borrowing capacity for appreciating assets – not depreciating items.
Additionally, you never know when you will need money to pay for an emergency or capitalise on an opportunity.
You or a family member may become sick, or you might want to expand your property portfolio.
For all these things it helps to have extra cash on hand.
So if you can't afford it, don't buy it. Sure it's hard, but short term pain is long term gain.
Enforcing good spending habits isn't something you can just start doing overnight.
Often it takes a guiding hand to help you work out a plan, not to mention someone who can hold you accountable – just like a personal trainer.
If you'd like to know more about how you can start implementing good spending habits that will set you on a path to financial independence, get in touch. We'd love to help out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Breaks for first homes buyers
To make the task of saving for their first home easier, eligible buyers will be able to divert their pre-tax income towards a special savings account. This will mean that saving a deposit will become a little bit easier.
How can I benefit from this scheme?
From 1 July 2017, individuals can make voluntary contributions of up to $15,000 per year and $30,000 in total, to their superannuation account to purchase a first home. These contributions, which are taxed at 15 per cent, along with deemed earnings, can be withdrawn for a deposit. Withdrawals will be taxed at marginal tax rates less a 30 per cent offset and allowed from 1 July 2018.
For most people, the First Home Super Saver Scheme could boost the savings they can put towards a deposit by at least 30 per cent compared with saving through a standard deposit account. This is due to the concessional tax treatment and the higher rate of earnings often realised within superannuation.
Many employees will be able to take advantage of salary sacrifice arrangements to make pre-tax contributions.
Negative Gearing
Negative gearing remains however some rules have been tightened around what can be claimed, specifically travel expenses and depreciation deductions.
What does this mean to my investment deductions?
Under new rules coming into effect from 1 July 2017, depreciation deductions for plant and equipment items such as washing machines and ceiling fans will only be allowed if the investor actually bought them.
The "integrity measure", which is intended to address concerns that such items are being claimed as tax write-offs by successive investors in excess of their actual value, is tipped to claw back $260 million over the next four years. The changes will apply to any items purchased after budget night, but existing investments will be grandfathered.
Meanwhile, investors will no longer be able to claim tax deductions for travel expenses "related to inspecting, maintaining or collecting rent for a residential rental property" from 1 July 2017.
Retirees downsizing inceptives
In addition to the first home buyers savings benefit, retirees will be encouraged to downsize, increasing the available supply of housing via preferred treatment under superannuation limits.
Older Australians will be encouraged to downsize and free up housing stock. These homeowners will be given greater flexibility to contribute the proceeds of the sale of their home into superannuation. Downsizing frees up larger homes for younger families.
From 1 July 2018, people aged 65 and older will be able to make a non-concessional contributions of up to $300,000 to their superannuation after selling their home. This will be in addition to any other contributions they are eligible to make.
Incentives for the building and development of social housing
The Government is taking action to encourage investment in new and existing affordable rental housing by increasing the Capital Gains Tax discount from 50 per cent to 60 per cent for qualifying affordable housing. To qualify for the higher discount, housing must be provided to tenants on low to moderate incomes, with rent charged at a discount below the private rental market rate. The affordable housing must be managed through a registered community housing provider and the investment held for a minimum period of three years.
Changes in Education funding also features
Increased funding for Child Care
The Child Care Subsidy will ensure families on low to middle incomes of $185,710 or less (in 2017-18 terms) that need to use more child care will not face an annual cap. An annual cap of $10,000 will apply to families earning more than $185,710 (in 2017-18 terms).
Impact for Interest Rates, Exchange Rates and Growth
What does this mean to interest rates?
The Reserve bank cash rate is likely to remain relatively stable
Current movement are in relation to pressure form ASIC and APRA to restore better balance to between the owner occupied and Investors markets. This is the main driver of changes at present.
Speak to a Finance or Wealth Consultant at Scarlett Financial to discuss further
Most people would prefer to get into the property market sooner rather than later, and for good reason. Investing in property is like investing in anything else – the longer it takes to get in, the less financial reward you reap.
The sustained rise of property prices most notably in Australia’s capital cities, has continued to stretch home buyer’s affordability parameters and has led to this modern property investment strategy.
Saving the full 20% deposit for a home loan is no easy feat, so we’ve compiled some strategies available to consumers who want to get into the market sooner rather than later..
Rentvesting refers to the strategy of investors purchasing a property in more affordable parts of the city or in regional areas and rent that property out whilst remaining as tenants in their current location and maintaining their current lifestyle.
This strategy allows the investors to the property market sooner by reducing the initial savings and borrowings required to enter the property market. At the same time its provides comfort in maintaining their currently living arrangement and lifestyle whilst gaining access to the investment property market.
Seeing as the debt is for investment purposes, the interest repayments are an allowable tax deduction, against owner-occupier mortgage the debt is personal and non-deductible
This strategy allows ability to build equity in an investment property which can later be used to purchase an owner-occupied house in their desired location.
A family guarantee means using the equity in a property as security for your another family members home loan (usually parent to child relationship). It can help a first-home buyer to secure finance for a property they can afford, but may not have a large enough deposit for, and to avoid the added cost of lenders mortgage insurance.
The guarantor allows the equity in his or her own property to be used as additional security for the loan. The primary security for the loan will still be the purchased property, but the lender will also take a mortgage over your guarantor’s property also. This mortgage will not support the loan directly but will be used to support a guarantee from your guarantor.
There are other advantages as well. “By guaranteeing a loan, you’re helping your child enter the property market sooner,” Justin Mcilveen, Director at Scarlett Financial explains. “Also, your child may be able to buy in a more desirable location and a home that better suits their needs. If they did it on their own, they may need to go further out of the city or perhaps settle for fewer bedrooms.”
There are shortcoming to consider though. Guarantors are generally limited to immediate family members. Normally, this would be a parent but guarantors can include siblings and grandparents. Some lenders will allow extended family members and even ex-spouses to be a guarantor to a loan, but this varies depending on the lender.
What are the implications for the guarantor if the borrower cannot pay back the loan?
If you're unable to pay back the loan according to the terms of your contract, the lender can take legal action against you, and in some circumstances, your guarantor. Your guarantor will be liable for the amount specified in the guarantee. Anyone who is considering being a guarantor for a property loan should seek independent legal and financial advice before accepting the role. Most lenders will insist on this, prior to accepting a guarantee.
It is also important to note that a guarantor’s ability to borrow will be reduced after they have agreed to act as a guarantor.
Property Share allows you to split the cost of buying a home with family and friends, while retaining individual control of your finances. Each borrower is set up with their own loan and access a range of features including redraw facilities, mortgage offset accounts and lines of credit – that they need without affecting the other borrowers on the property
This allows you to Pool your money with friends or family to buy your first home, or enter the market as a property investor, as well as buy the property you want, rather than settling for a cheaper option.
Property Share allows you to Split the costs of your home any way you like and let each borrower decide how they want to manage their loan repayments
Each borrower must must prove servicing for their own loan facility and must always guarantee each other’s loan(s) (security support only), should one borrower be unable to repay.
If none of the above options are viable to you, you should still investigate other investment options.
A Scarlett Financial planner can steer you into alterative investment options – direct share, managed funds - which can help build your wealth in the meantime.. Shares and securities are a cheaper and easier way to get into investing; available at any price point you; and allow you to buy and sell your stock (and obtain your funds) anytime you like.
Investing in these products allows you start to build an investment portfolio that can support a house deposit once grown. With interest rates at record lows, bank interests on savings accounts are providing returns less than CPI, so you are actually losing money by relying on these for wealth creation.
Would you like to buy a property but sometimes thinks it’s out of reach?
Do you want to enter the property market and still maintain a lifestyle you enjoy?
Do you feel like you can’t save your property deposit at the same pace that the property market is rising?
To begin by using an analogy from a great Australian sport in conjunction with the great Australian dream – The goal posts to owning your home are changing.
The sustained rise of property prices most notably in Australia’s capital cities, continues to stretch home buyer’s affordability parameters and has led to the modern property investment strategy known as ‘Rentvesting’.
The coined investment phenomenon ‘Rentvesting’ has become increasingly prevalent as an innovative means of property ownership, especially in capital cities.
Property prices in capital cities have appreciated significantly and savings for home deposits have been unable to keep up. Consequently, first home buyers are pursuing other avenues of entering the property market without having to forego their current lifestyle.
Rentvestors’ purchase an investment property in more affordable parts of the city or in regional areas and rent that property out whilst remaining as tenants in their current location and maintaining their current lifestyle.
The traditional strategy of entering property as a first home buyer has shifted and the modern strategy is instead becoming ‘Rentvestors’.
If you’d like to find out more about how you can start growing your property investment portfolio.
First things first...understand your financial goals and needs.
Then, you can choose someone who can meet your goals and needs. For example, if you want your planner to provide investment advice, choose someone who is registered with their securities regulator. If insurance is a priority, look for someone who has an insurance license.
At Scarlett Finacial, we can assist in ALL areas of personal and business finance.
1. Check qualifications: Licenses, credentials or other certifications
Of the four main types of financial advisors, the certified financial planner (CFP) designation is harder to achieve than Chartered Financial Consultant (ChFC), because the former requires a comprehensive board exam; the latter, however, uses the same core curriculum. If you want someone to manage your money, then look for a registered investment advisor (RIA). If you have a high income or a small business owner, you’ll probably want a certified public account (CPA), who can offer you advance tax planning. The personal financial specialist (PSF) certification is usually obtained by CPAs who want to demonstrate they can help clients with comprehensive financial planning.
Have questions for our team of finance experts? We have the answers.
2. Shop Around - Interview 1 more planner
Whether you are looking for an individual or an automated system, explore a few options before making a commitment. A lot of people choose an advisor based on a referral. Certainly, a friend’s recommendation is a good sign, but you should not set aside your own judgment. The first person you meet, or the first system you try, might seem great – but the second or third might be even better. Especially if you are new to investing, you should check out a couple of different options so you can compare approaches.
Make sure you feel comfortable discussing your finances with the people you interview. Find out if they provide the services you want. Ask each person about:
Have questions for our team of finance experts? We have the answers.
3. Compare fees: Ask how much do they charge for their services
If you didn’t see this information on the planner’s website, ask whether there’s an initial planning fee, whether they charge a percentage of assets under management, or whether they make money from selling you a specific product. Not only should you know how much the service will cost you, but it can help you determine whether they have an incentive to sell you things.
4. Planners can be paid in several ways:
5. Ask for sample financial plan
There is no one set structure for a financial plan, which means there is wide variation. “Some people might give you 50 pages of stuff you don’t understand like charts and graphs, and another planner might provide a five-page snapshot of your financial situation,” says Bera. “With a sample, you can say, ‘I really want that in-depth analysis,’ or ‘I don’t understand that.’”
6. Always find a person who has a good character
“Does he or she talk 90% of the time?” says Wacks. “If it’s more like 60/40 and he has asked you how he or she can help you, that’s really important. Financial planning about looking at the person’s individual circumstance instead of punching in some numbers — it’s based on the client’s goals, financial background, what they believe about money, etc.”
Have questions for our team of finance experts? We have the answers.
7. References
Ask for references from clients with similar needs to yours. Find out if the planner works with any other experts, such as lawyers, accountants or insurance agents. Ask for references from these individuals.
8. Understand any conflicts
If your planner is also qualified to buy and sell investments, understand how they choose investments for you. Do they recommend a wide range of investments? Or do they only recommend certain products such as mutual funds from certain companies or only products that their firm sells? Will they make more money if they recommend one investment over another? Do they make money from sales fees every time you buy and sell?
9. Access to experts
No one person, however well trained, has the encyclopedic knowledge required to deal in depth with all the problems that can affect an individual's financial affairs. Instead, a planner should be able to demonstrate that he or she consults regularly with experts in a variety of fields.
10. Think about risk. Do not be seduced by big numbers.
Take some time to think through your tolerance for risk on your own. The risk is a complicated, abstract concept, so try thinking about what would keep you up at night. For example, would it bother you if the markets are shaky over the next year, and a year from now, your account is down 5 percent? What if two years pass and your account are still down 5 percent? Five years from now, if your account is flat, will you be upset?
Have questions for our team of finance experts? We have the answers.
Look around online for questionnaires that are designed to test your risk tolerance. Take a few of them so you get a feel for the typical allocation your answers suggest. That way, if you get an off-the-wall suggestion, you will recognize it as such. You are not necessarily looking for the same cookie-cutter answer as the allocation you would get anywhere else, but you do want to know an outlier when you see one.
The standard boilerplate language on investment company advertisements says, “Past performance is no guarantee of future results.” It is legalese, but it is also true. Beating the market is nearly impossible to do consistently. Do not look for the system with the best five-year returns; look for a system you can understand and that you feel comfortable with. If you are looking for an individual advisor, you want someone you can speak openly with and who can explain things in a way that makes sense to you.
One key question to ask any advisor is how tactical or strategic they are.
Being “strategic” tends to mean choosing an allocation and sticking with it over the long term. When advisors make “tactical” bets, they move in and out of investments based on their view of what is happening in the market from week to week. Keep in mind that timing the market is very difficult, and research shows that most active managers do not outperform enough to justify their higher fees.
Have questions for our team of finance experts? We have the answers.
Scarlett Financial is a smart financial services group designed to maximise your financial wellbeing.
We created Scarlett Financial to help people, just like you, make smart investment decisions earlier so that you can experience financial security and enjoy the lifestyle of your dreams.
Your business needs more than a P&L report. Make your business Financially secure the Scarlett Financial way. Book a call today - we look forward to speaking with you!
Risk is part of running a business. If you find yourself unexpectedly further in debt than you'd like, don't panic! Speak with a Finacial Planner.
There are options available but they require action and knowledge. The worst thing you can do is sit back and do nothing. So take action. Manage what you owe before it becomes unmanageable.
Here are some useful tips to help you take control of your debts.
If you’re facing increasing debt, take action instead of hoping for the best.
If you fail to make payments on your debts, the consequences can be disastrous. They can include loss of employees, seizure of stock and costly court cases brought by your creditors. Nobody needs this stress and it doesn't have to be this way. Speak with a Finacial Planner first!
Stay sharp and aware of your situation. Align yourself with a Finacial Planner that understands where your business is NOW and where you want your business to be in the future! Good quality accounting software is also a necessity.
After that, your priorities will depend on the type of business you run. The following payment priorities are suggestions, but the actual order is for your Finacial Planner and you to decide:
An experienced Financial Planner is vital. Without the correct advice, structure and systems in place, you'll have little idea on how successful the business is operating and how much you stand to win or lose, financially.
Talking to us about your Finances won't cost you a cent! (not getting a second opinion might cost you a lot).
Book a call at http://meet.scarlettfinancial.com.au/
Scarlett Finacial - Smart Money Management Experts
At Scarlett Financial we take care of absolutely everything when it comes smart financial management. In fact, you can think of us as the only, all in one financial solution for your finances and your assets.
Here's why:
Every single one of Scarlett financial consultant is a tried and tested expert. Through years of in-depth case studies and hands-on experience, our team have developed exceptional knowledge of their specialist areas - from wealth creation and property investment to mortgage broking and insurance.
Book You Free Consultation HERE
Where many financial advice companies focus on a singular area (such as property or shares) we focus on the most profitable outcome for you. So, in developing a tailored strategy in response to your specific needs, as well as market conditions, we consider all asset classes, including property, shares and managed funds. You can rest assured that no stone is left unturned and no potential is left untapped.
As the old saying goes, two heads are better than one. Our clients get the benefit, not just of one financial advisor, but the combined powers of all our specialist consultants. When devising a strategy for you, our experts work as a team, drawing together their knowledge across a range of fields for optimum results.
Most of our clients come to us with one important question: how can I make the most of my finances in the least possible time? That's where our all on one, collaborative approach comes in. Rather than wasting time, working with a variety of companies, you can rely on us and us alone. What's more, our consolidated reports will keep you informed, every step of the way - you'll never be left in the dark.
Book You Free Consultation HERE
Scarlett only employs the most dedicated, passionate and genuine consultants. We're simply not interested in anything else. When you make the decision to let us take care of you, you get access to professional and approachable staff consultants with proven track records of excellence.
Would you like to find out more about the future of financial management? Why wait?
Book You Free Consultation HERE
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