By Alexa Tran on www.financeandcoffee.com.au
These days lenders have been aggressively competing on market share by offering up to $4,000 cashback for new borrowers and refinancers. Cashback specials are nothing new. In fact they’ve been used by lenders for years as a clever marketing strategy to grab people's attention. You choose a loan with a different lender and they promise cold hard cash deposited into your bank account when the loan settles to cover switching costs. But is it your friend?
Why do people fall for it?
According to the Australian Finance Group (AFG), seven out of ten borrowers are ‘Upgraders’ seeking finance to improve their home or the location of it or ‘Refinancers’ who want to reduce household costs and take advantage of lower rates.
It seems the banks can see our blind spots to our relationship with money. A cashback reward program is hugely attractive to these customers who are looking for short-term gains or immediate cash flow, especially during an economic crisis triggered by COVID-19.
It works on the principle of urgency, cash backs are usually offered for a limited time, specifying that you have to apply by a certain date and have the loan settled by a certain date. Then your FOMO kicks in. That’s exactly why lenders capitalise on this behavioural phenomenon.
This marketing strategy encourages customers to take advantage of the “free money” and feel good about being a “smart consumer”. But most people aren’t prepared for the miserable trap that is paying off high interests and fees.
Do you know that it may cost you six times more than you actually save? An exclusive analysis shows that borrowers of $1 million who accept a cashback from the big four bank lenders could end up paying an additional $7,300 to $12,000 over the first three years of the loan.
Here’s a refinance with CBA on Canstar:
“Many borrowers taking the cashback are only getting the equivalent of one month’s mortgage repayment on a 30-year loan. They’ve got to remember there are another 359 months to go,” says Steve Mickenbecker, Canstar’s group executive for financial services.
You may not realise it can be a package loan so you also get a credit card, an offset account plus home insurance policy and other financial services. It will come with an extra 400 dollars annual fee. And in just five years, it will eat up the full $2000 cash back.
So, don’t get too caught up with these special offers. You always need to check whether the loan itself is a good deal regardless of the cash back. Ask yourself this question: “Would the loan product still be right for me if I take away the special offer?"
Without fail, a lower interest rate will always save you more than a cash back offer, in most circumstances. Other features like an offset account and flexible repayment options also help you save money.
Give me a call and I can do the hard work and compare loans for you. You could end up with a better rate and a better home loan package.
By Alexa Tran from Finance and Coffee
Do you know that almost 60% of Australians don’t go to the bank directly? This majority go to a mortgage broker instead because brokers are awesome at finding you the right loan and guiding you through the whole process.
We’ve picked up five solid reasons to let us all remember why you should go to a broker when you want to buy a home. Allow us to fill you in.
Brokers give you more options
OK, banks can only offer their own sets of products. This means your options are limited and you may be missing out on a better deal from another lender. There has to be a better way.
If you are in a unique situation, self-employed or have poor credit history, no worries. Brokers are flexible in matching you with a home loan that best fits your needs and financial situation.
Brokers have access to a wide range of products allowing you to compare interest rates, loan features, charges from various banks AND non-bank lenders. Total game-changer.
Brokers have strong negotiating power
Brokers can haggle a better deal for you. Considering there are more than 40 lenders in Australia and they all want brokers to refer customers to them so they are most willing to offer better deals to the brokers.
Brokers are your discount detectives when you think about it. They have access to special offers such as reduction in fees, discounts on rates, cashback offers across a large range of lenders. So yeah, at the end of the day, they help you save more of your hard-earned dosh.
Brokers are with you every step of the way
Buying a home can be an overwhelming experience, on top of everything else you’re dealing with in life. To make it less anxiety-inducing, seek out people who know their stuff and are happy to work with you on your specific case.
With the help of a broker, you can just relax and go through every step with ease. You will get expert help from a professional in the industry to break things down into plain ol’English and sort through all the jargon, paperwork and uncertainty from application to settlement. Seriously, it will save you a ton of time and hassle if you were to shop around for a home loan yourself.
Mortgage brokers are not paid by you
The best part, though: brokers work for you and usually don’t charge any fee. They instead earn a commission from lenders for signing you up for a home loan.
Brokers work in your best interest
This differentiate brokers significantly from the banks – a big part of the appeal for many people, too.
Brokers regularly review your mortgage to make sure you’re getting competitive rates because they’re obligated to do so. Brokers work under Best Interests Duty that came out of the Royal Commission’s recommendations when providing credit assistance to consumers. This however doesn’t apply to banks.
You can rest assured knowing that your broker is legally required to act in your best interests and put your priorities first.
So next time you’re planning to buy a home or refinance a home, you know where to look to score big. Make sure you choose your broker carefully – those with good credentials, ask them to break down their recommendations and justify why it’s a good deal. You can also do your own research to compare together with your broker.
Call me on 0411 849 804 if you'd like to chat more!
The Australian Government has announced new increased property price caps for the First Home Loan Deposit Scheme (FHLDS) and the Family Home Guarantee, which apply from 1 July 2021.
If you are eligible, these schemes allow you to buy a home with as little as 2% deposit (for the Family Home Guarantee) or 5% deposit for the FHLDS. No Lenders Mortgage Insurance is payable as the Governement is the Guarantor. For more information click here
10,000 First Home Loan Deposit Scheme places will be available to eligible first home buyers for the 2021-22 financial year, while the New Home Guarantee has been extended with additional 10,000 places available from 1 July 2021 to 30 June 2022 for eligible first home buyers purchasing a new home.
The New Home Guarantee will now have a construction commencement timeframe of 12 months.
In the 2021-2022 Federal Budget, the Family Home Guarantee was announced to support single parents with dependants. 10,000 Family Home Guarantees will be made available over four financial years from July 1, subject to the passage of legislation.
These are the new increased price caps in each region:
Further information and scheme fact sheets are available on the NHFIC website or call Catherine on 0411 849 804 and she can walk you through your options.
If you have more than one form of debt i.e. personal loans or Credit Cards, it may sound like a good idea to roll them into one consolidated loan. Debt consolidation (or refinancing) can make it easier to manage your repayments. But it may cost you more if the interest rate or fees (or both) are higher than before. You could also get deeper into debt if you get more credit, as it may tempt you to spend more.
Here are some things to consider before deciding to consolidate or refinance.
If you're having trouble making repayments, there is help available. Contact your lender and talk to them about applying for financial hardship.
Avoid companies that make unrealistic promises. Some companies advertise that they can get you out of debt no matter how much you owe. This is unrealistic.
Don’t trust a company that:
Check the company is on ASIC Connect's Professional Registers.
If they're not listed on one of these three lists, they're operating illegally:
Make sure you will be paying less
Compare the interest rate for the new loan — as well as the fees and other costs — against your current loans. Make sure you can afford the new repayments. If the new loan will be more expensive than your current loans, it may not be worth it. Use our mortgage switching calculator
Compare the interest and fees on a new loan with your current loans.
Remember to check for other costs, such as:
Beware of switching to a loan with a longer term. The interest rate may be lower, but you could pay more in interest and fees in the long run.
Protect your home or other assets
To get a lower interest rate, you might be considering turning your unsecured debts (such as credit cards or personal loans) into a single secured debt. For a secured debt, you put up an asset (such as your home or car) as security.
This means that if you can't pay off the new loan, the home or car that you put up as security may be at risk. The lender can sell it to get back the money you borrowed.
Consider all your other options before using your home or other assets as security.
Consider your other options first
Before you pay a company to help you consolidate or refinance your debts:
1. Talk to your mortgage provider
If you're struggling to pay your mortgage, talk to your mortgage provider (lender) as soon as possible. All lenders have programs to help you in tough times. Ask to speak to their hardship team about a hardship variation. They may be able to change your loan terms, or reduce or pause your repayments for a while.
2. Consider switching home loans
A different home loan could save you money in interest and fees. But make sure it really is a better deal. See switching home loans.
3. Talk to your credit providers
If you have credit card debt or other loans, ask your credit provider if they can change your repayments or extend your loan. The National Debt Helpline website has information about how to negotiate payment terms.
4. Consider a credit card balance transfer
A balance transfer may be a good way to get on top of your debts. But it can also create more problems. See credit card balance transfers to help you choose wisely.
5. Get free professional adviceThere's free help available to help you get back on track. Financial counsellors can help you make a plan and negotiate with your mortgage or credit providers.
Free legal advice is available at community legal centres and Legal Aid offices across Australia. If you're facing legal action, contact them straight away.
You are also always welcome to call me on 0411849804 and see if I can help in any way.
With thanks to moneysmart.gov.au for the article
There are multiple Government Grants available to First Home Buyers and some Grants are also available regardless of whether it is your first property or subsequent property you have purchased. All have eligibility criteria and dates that you need to apply by and these must be strictly followed to receive these grants.
Some of these Grants are administered at State level and therefore can vary from State to State. Others are at Federal level and are the same for everyone throughout Australia. In most cases you need to be an Australian Permanent Resident to take advantage of these Grants. In some cases you need also to be an Australian Citizen.
How you apply for each of these Grants also differs for each one. It is no wonder it gets confusing!
I have put together a summary of each of these Grants, the eligibility criteria, timings and how you apply. This is a very much abbreviated version and just provides a high level summary. For more information I have listed the links to the State or Federal website where it goes into more detail.
The criteria and what is available also do change regularly so you should reference these sites to get the most up to date information.
I am also always more than happy to answer any questions you may have.
1. Stamp Duty Exemption Stamp Duty Exemptions are State based. Therefore the Stamp Duty payable varies depending on where you live in Australia. State Governments update these costs often, depending on state budgets and tax policy.
Each state and territory has its own conditions but there are some common aspects to each and they are as follows:
Stamp Duty Exemptions are organised through your Conveyancer.
Stamp duty is waived for first home buyers on homes worth up to $600,000. Discounts on duty are available on a sliding scale on first homes costing between $600,001 and $750,000.
In addition a land transfer (stamp) duty waiver of up to 50% on purchases of residential property in Victoria with a dutiable value of up to $1 million applies to contracts entered into on or after 25 November 2020 and before 1 July 2021. This applies to all property purchases not just FHBs.
Australian Capital Territory
There are concessions available on stamp duty, which are tied to income thresholds and number of dependants.
To be eligible to pay no duty, the total gross income of all home buyers and their partners (if any) over the full financial year before the transaction date must be less than or equal to the thresholds below.
Your partner’s income must be included, even if they won't be owner of the home.
Nbr dependent children Total gross income threshold
5 or more $176,650
New South Wales
Under the NSW Government’s Affordability Package, first home buyers pay zero stamp duty for new or established first homes priced up to $800,000.
Stamp duty concessions of up to $18,601 may be available to eligible first home buyers of an established home.
Queensland has first home concessions for FHB’s and home concessions which apply to all this purchasing a property as long as it meets the eligibility criteria (i.e. you do not have to be a FHB)
Stamp duty discounts are available on both new and established homes. The maximum concession of $8,750 applies to homes valued up to $504,999, falling to $875 for a home costing $549,999. First home buyers planning to buy land now and build later pay no duty on vacant land costing $400,000 or less.
There are three types of concessions and they are:
The home concession rate applies to the first $350,000 of the consideration or value of the residence, and the general transfer duty rates then apply to the balance.
You can claim a home concession for transfer duty when acquiring a residence, as long as you meet certain requirements. If you are eligible, you will pay a reduced amount, saving you up to $7,175.
Unlike the first home concession, you can claim the home concession even when you have owned a home before.
First home concession
The first home concession only applies to a home valued under $550,000 and can save you up to $15,925. The home concession may still apply for a home valued over $550,000.
You can claim a first home concession for transfer duty when acquiring your first residence if you meet certain requirements.
You do not have to be an Australian citizen or permanent resident to claim either of these two concessions, but you must meet the eligibility criteria. Additional foreign acquirer duty may apply if you are a foreigner.
South Australia currently offers no stamp duty concessions or exemptions for first home buyers. Additionally, since 1 July 2018, there is no concession or exemption for buyers who purchase property off-the-plan.
Tasmania does not offer concessions or exemptions on transfer duty to pensioners or first home buyers.
WA first home buyers are exempt from stamp duty when they buy a new or established home worth up to $430,000 or vacant land costing up to $300,000. A discount on duty applies to vacant land or a home costing up to $400,000 and $530,000 respectively.
2. First Home Owner Grant (FHOG) The First Home Owner’s Grant (FHOG) scheme is a state governments’ initiative to help first home owners purchase their first home.
The First Home Owner Grant (FHOG) scheme was introduced on 1 July 2000 to offset the effect of the GST on home ownership. It is a national scheme funded by the states and territories and administered under their own legislation.
Under the scheme, a one-off grant is payable to first home owners that satisfy all the eligibility criteria.
The property needs to be a new property you have bought or are building. There are caps on the maximum value and this varies by State.
Again each state and territory has its own conditions but eligibility is similar to that of the Stamp Duty concessions mentioned above.
More information by state or territory please refer to http://www.firsthome.gov.au/
The FHOG is applied for through your lender or broker. These funds can be used as funds to complete the purchase but please note that these are not usually enough to cover what is required to cover the costs of buying your first home.
A $10,000 First Home Owner Grant (FHOG) is available in Victoria when you buy or build your first new home.
The FHOG is $20,000 for new homes built in regional Victoria, for contracts signed from 1 July 2017 to 30 June 2021.
Australian Capital Territory
From 1 July 2019 the FHOG will change. Eligible applicants who enter into a transaction with a commencement date on or after 1 July 2019 will not be entitled to the FHOG payment.
New South Wales
As a first home buyer in NSW, you may be eligible for $10,000 under the first home-owner grant which applies to new homes only.
If you're building or buying a new home in the Northern Territory (NT), you may be eligible for the Build Bonus grant.
Build Bonus was introduced in February 2019 to help Territorians fulfil their dream of building their new home.
If you are buying or building a new home you can apply for a grant of $20,000. The Build Bonus grant is available to Territorians regardless of prior ownership. However, this grant is limited to the first 600 applications.
Queensland First Home Owners’ Grant
The Queensland First Home Owners’ Grant provides first time home buyers, if eligible, $15,000 towards buying or building your new home.
In additional there is the Regional Home Building Boost Grant. If eligible, you’ll also get $5,000 on the completion of your purchase or the construction of your brand-new house, unit or townhouse valued at less than $750,000.
The FHOG is currently $15,000 in South Australia for eligible home buyers purchasing a new only residential property.
The first home owners grant: A one-off payment of $20,000 for Tasmanians. Essentially, the Tasmanian FHOG provides first home buyers with a one-off payment of $20,000. However, to be entitled to it, you first need to meet certain criteria. You must be buying or building a new home.
The First Home Owner Grant in WA is worth $10,000 for the purchase or construction of a new home.
3. First Home Super Saver Scheme (FHSSS)
It’s not easy to save the 5% minimum deposit needed to purchase a property. This scheme is designed to allow FHBs to save money inside their superannuation fund for a deposit toward a first home.
It works by using superannuation’s tax breaks to give your deposit a boost. You can make voluntary contributions to a maximum of $15,000 in any one financial year, and up to a maximum total of $30,000. You can salary sacrifice these contributions into your super account so they come from your pre-tax income. This means you’ll avoid being taxed for making deposits.
You might even earn a higher return on the deposit money as the return on a super account is generally higher than a regular savings account.
You then withdraw this extra amount, plus earnings, less tax when you are ready to buy. When you withdraw funds, you’ll be taxed at a marginal rate less a 30% offset.
Because you’re saving through super, you pay less tax than saving outside of super, meaning you can save your deposit quicker. The maximum that can be released from your Superannuation for this purpose is $30k.
More information about this scheme can be found on the ATO website www.ato.gov.au
4. First Home Loan Deposit Scheme (FHLDS) and New Home Guarantee – Federal Government Scheme
The First Home Loan Deposit Scheme (FHLDS) is an Australian Government initiative to support eligible first home buyers to build or purchase a new home sooner. It aims to help buyers gain access to finance without saving a 20% deposit.
Currently, if you do not have 20% deposit to purchase your home, you will be hit with Lender Mortgage Insurance (LMI), which can be very expensive (e.g. if you only have 5% and want to buy a $500k house, LMI would cost you >$15k)
You are eligible if your income is below $125,000 for singles or $200,000 for couples.
20,000 spots have been allocated for the 2020-21 Financial Year.
Under the FHLDS (New Home Guarantee), first home buyers can build or purchase a new home, including:
For more information on any of these offers by state or territory please refer to http://www.firsthome.gov.au/
Or refer to each individual State website as listed.
Find the latest first home owner information on Victoria's State Revenue Office website.
Australian Capital Territory
Find the latest first home owner information on the Revenue ACT website.
New South Wales
Find the latest first home owner information on the Revenue NSW website.
Find the latest first home owner information on the Northern Territory Government website.
Find the latest first home owner information on the Queensland Government website.
For the latest first home owner information please refer to the Revenue SA website.
Find the latest first home owner information on Tasmania's State Revenue Office website.
Find the latest first home owner information on the Western Australian Government website.
5. Home Builders Grant and Home Builder Program – Federal Government Scheme
$25k Home Builder Grant – up until 31 December 2020.
The Australian Government’s Home Builder program provides eligible owner-occupiers, including first home buyers, with a grant of $25,000 to build a new home or substantially renovate an existing home.
For more details refer to:
HomeBuilder grants for eligible owner-occupiers | State Revenue Office (sro.vic.gov.au)
For the $25k Home Builder Grant you apply directly for the grant with the state or territory that you live in or plan to live in. For Victoria you apply through this link https://www.firsthome.gov.au/homebuilder/vic/
There is a two-step process.
- Apply after you’ve entered into an eligible HomeBuilder contract. The application must be submitted no later than 31 December 2020.
- Once construction begins, the supporting documents must be uploaded via their online portal.
Applicants for Home Builder Grant in Victoria will then have 6 months to commence construction from when the HomeBuilder contract is signed. In all other states you have three months to commence construction.
$15k Home Builder Program – up until 31 March 2021.
After 31 December, the extended Home Builder Program will replace the Home Builder Grant.
This will provide a $15,000 grant for building contracts (new builds and substantial renovations) signed between 1 January 2021 and 31 March 2021, inclusive.
There has also been an increase to the property price cap for new build contracts in NSW and Victoria. These are rising to $950,000 and $850,000, respectively.
However, this only applies to the second iteration – where the contract is signed between 1 January 2021 and 31 March 2021.
An extended deadline for all applications to be submitted, including those applying for the $25,000 grant and the new $15,000 grant. Applications can now be submitted up until 14 April 2021 (inclusive). This will apply to all eligible contracts signed on or after 4 June 2020.
More information in the recent changes and can be accessed at https://treasury.gov.au/coronavirus/homebuilder :
As always please feel free to give me a call if you would like to discuss a Home Loan for a new or existing property - with or without one of these grants. I'd love to hear from you!
Catherine Thompson, Principal - Volare Home Loans
Please note: This material is provided for general information and educative purposes only. The content does not constitute legal advice or recommendations and should not be relied upon as such.
While every care has been taken in the preparation of this material, Volare Home Loans cannot accept responsibility for any errors, including those caused by negligence, in the material. Volare Home Loans makes no statements, representations or warranties about the accuracy or completeness of the information and you should not rely on it. You are advised to make your own independent inquiries regarding the accuracy of any information provided.
Catherine Thompson is a credit representative 508141 of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237).
Buying your first home is very exciting. It is a big step and a huge financial commitment, so you want to get it right.
Without a doubt the question I get asked the most from First Home Buyers is how much do I need to save?
Everyone's situation is completely different and I am always happy to chat to you over Zoom or the Phone and discuss your unique situation. I can do some calculations for you based on how much you earn and your existing debt and expenses.
But in the meantime, as a summary, here are some of the more important things to consider when saving to buying your first home:
1. You will need at least 5% of the price of the property in savings.
On a $500k property that will mean you need to have at least $25k in savings.
2. Your savings need to be in your bank account for three months minimum.
Savings cannot be a lump sum or gift, it needs to be gradual savings that you have had in your account for at least 3 months when you apply. This shows the lender that you can save and therefore could repay a loan. Some lenders may allow you to show rental history as quasi ‘savings’.
3. Have enough additional funds to cover fees
On top of the 5% you need there will be all sorts of fees – Government registration fees, title searches, bank application or package fees and Conveyancer fees. There may also be valuation fees and settlement fees.
4. The killer is LMI
The big fees are for Lenders Mortgage Insurance (LMI). If you borrow over 80% of the value of the property you have to pay this. Some lenders will allow you to capitalise (add this amount to the loan) but your interest rate will be higher.
The only way to avoid this is by having a Guarantor (maybe a parent has a property they can use as security?).
There has also been a recent Government initiative whereby the Government becomes the ‘Guarantor’ and LMI was not require. This was called the First Home Loan Deposit Scheme (FHLDS) – unfortunately this has finished for 2020, there were 20,000 spots allocated. They may run this program again next year, it's hard to know. I can keep you informed in you are interested as this scheme provided substantial savings as you will see in the Calculations below.
Here is an example of what you need to purchase a $500k home in Victoria.
So all up to buy a $500k property you will need from $47k to over $69k (if you are not a First Home Buyer). As you can see the FHLDS is a significant saving.
Also worth noting is that the more you contribute the cheaper the interest rates will be.
Repayments on $475k at 3% (estimate) are approx. $2,003 per month or $462 per week. Rates can range from 1.99% (Fixed Rate P&I) to 4.62% (Variable 98% lend P&I) so interest rates can vary hugely depending on your situation.
My services are free as I am paid through the lender. So don't be afraid to ask me lots of questions. It is complicated so I am here to help.
I can also take your through the various Government initiatives for First Home Buyers, some of which can save you a lot of money. There are First Home Buyer Grants, Home Builder Grants, First Home Loan Deposit Schemes and Stamp Duty Exemptions and Concessions. Some are Federally but most are State based and different for each state. I can guide you through these as well as the eligibility criteria.
No question is a silly one but I do hope this give you a little insight into what or how much is required. Next time I will cover off on how much you can I borrow - the second most asked question I get!
In the meantime let us work together to help you make your home ownership dreams come true.
Principal, Volare Home Loans
Mobile: 0411 849 804
If you are a small or medium business owner, you probably aren’t in meaningful regular contact with your accountant. Instead, your relationship is occasional, and any communication will be limited to your accountant providing the latest financial statements for your business. The balance sheet and profit and loss statements will be given a glance, but you won’t delve into them any more in-depth than you need to – that is the accountant’s job, and you are busy running your business. This is a common scenario that plagues small business. It may very well mean you lack the financial insights to steer your company in the right direction.
If you understand the importance of being on top of your finances in achieving business success, the first step to making a change is to develop an understanding of your financial statements. Once you have analysed the statements your accountant provides to the best of your ability, it is a great idea to set up a conversation with them to follow up with some key questions. Understanding these eight essential questions will go a long way in cementing your knowledge of your company’s financial position.
1. What is my gross profit margin? The gross profit margin is an important metric to measure how much profit you are making from each sale you make. Gross profit subtracts the cost of goods sold from your topline sales number. Dividing your gross profit by sales produces the gross profit margin. A higher margin is usually better as it indicates you are making more money per dollar of sales. Keep in mind that it does not take into account any other costs. However, it does give you a baseline metric to measure any efforts to boost your income.
2. What is the business’ breakeven point? One of the most important pieces of financial information you need to identify is your break-even point. This is the point where your business is not running at a loss, yet not turning a profit either. Ideally, you will always stay above this point (profitability). The first step to consistently being profitable is understanding where the break-even point is and then taking action to achieve, and then exceed it.
3. How can I boost my business’ cashflow? Cashflow is much more important than many business owners realise. Even if you achieve profitability, it does not mean you are in the clear. Unless you have the cash to meet your bills when they fall due, pay your staff when they’re owed or take advantage of growth opportunities when they arise then your business will not be able to achieve its full potential.
“Discuss your cashflow position – it’s more important than you realise”
Discuss your cashflow position with your accountant. If you have a lot of unpaid invoices on your books or a history of late-paying customers, you may need to make some changes. They might also recommend a service such as invoice financing to help unlock cash from your account receivable ledger.
4. What is our net profit, and what does that tell us? Once you understand your sales, gross profit margin and break-even point, diving deeper into your net profit figure numbers are useful. Net profit takes your revenue and subtracts all the other costs involved in running your business, including staff, rent and taxes. Net profit is a holistic measure to assess how economical your business is over a specified period. It’s a great tool to establish opportunities for improvement.
For example, if your gross profit margin is industry-leading, yet your net profit is negative, then it may be a sign you are carrying too many unnecessary operating expenses. The benchmark level of net profitability varies depending on your industry, so check this with your accountant also.
5. Which areas of the business are most profitable? If you have multiple products or service lines, you’ll know that some perform better than others. The products you generate the most revenue from are not necessarily the most profitable. Once you identify which areas of your business are the most profitable, you can begin to develop a plan to boost sales of the right products or services. The insights your accountant can deliver here may make a significant difference to the strategy and direction of your business.
6. I want to cut expenses, where should I cut? As we have seen recently, there will be times when we need to cut costs urgently. When this occurs, it can often be challenging to know where to prioritise. Your accountant will be able to give you insights into where you can save the most bang for buck. They will be able to benchmark your expenses to your competitors, helping you identify opportunities.
7. How long can we survive if things go bad (again)? In addition to cutting costs, it helps to know how well your business would be able to weather the storm. Will you still be profitable if sales were to fall 50% (or more)? Your accountant can help you identify financial risks and advise you of funding options that would be appropriate for your company, helping you find solutions to survive a tough period.
8. How am I doing compared to my competitors? If you want to compete effectively, you need to understand how you are performing relative to your competitors. If you are underperforming across multiple metrics, you need to investigate why – there is almost always an opportunity for improvement. Ask your accountant what they think you can do to catch up and move ahead of other businesses in your industry.
Once you understand your financial position, you’ll be better placed to take advantage of growth opportunities and take your business to the next level. Don’t let a lack of cash flow hold your business back.
Speak to me, your broker and let me assist you with any of your funding needs.
One-eighth of all first home buyers who purchased a home between March and June 2020 did so using the First Home Loan Deposit Scheme, a new report shows.
Roughly 12.5% of all homes purchased by first home buyers during the pandemic's peak months were done so utilising the scheme, according to the scheme's administrator the National Housing Finance and Investment Corporation (NHFIC).
The first home loan deposit scheme (FHLDS) was launched on January 1 2020 by the Federal Government to help first home buyers secure a home loan with a deposit as little as 5% while avoiding the high cost of Lenders Mortgage Insurance (LMI).
A new report by the NHFIC said the scheme has supported many younger buyers, but also some older cohorts.
"The Scheme has had broad geographical reach supporting first home buyers across the country with strong interest from buyers in outer metropolitan and regional areas," the report said.
"First time buyers have been able to bring forward their home purchases in line with the objectives of the Scheme. FHLDS has now cemented itself as part of the first home buyer support policy architecture."
The scheme may have helped increase first home buyers' share of the market, with CoreLogic's head of research Eliza Owen last week reporting first home buyers made up 29.5% of all owner-occupier commitments in June, far above the 23.2% decade average.
"The expansion of the first home loan deposit scheme and other first home buyer incentives announced over June and July is likely to see a boost in first home buyer participation over the second half of 2020," Ms Owen said.
Article by William Jolly on August 31, 2020
What do you wish you knew before you bought your first property? Money magazine asked members of the Money team what they wished they know. It wasn't a list of boom suburbs, but a better understanding of just how mortgages and the cost of home-ownership work.
As a mortgage broker looking after your best interests, I'm always available to answer any questions you may have. Just give me a call.
Here's what the Money team had to say:
Pay it down
I wish I knew more about the mechanics of paying my home loan faster before I bought my first property.
I think I'm one of the lucky ones who bought my first property when I was only 21 years old but not by design, my dad forced me into it! He said I should get myself a mortgage as soon as possible and use time to my advantage.
But I wish someone sat me down back then and explained to me how interest rates worked and the benefits of paying more than my minimum monthly mortgage payments. I would have budgeted more towards it.
I think we all need to read publications like Money magazine earlier in life. - Michelle Baltazar, editor-in-chief
Commit to the reno
Before buying my first property I was all about saving what I could and not taking a loan to include the renovations I wanted to do.
In retrospect, the cost of renovations is always going to rise, so once you've bitten the bullet to buy the house you may as well get on with as many renovations you can afford early in the piece, that's if you know what you want to do.
If you're not sure what needs to be done, then put the renovations on hold, but make sure the money is ready for when you are. I bought the home and put in all the money I had.
I had budgeted for a new bathroom as that was a necessity but I couldn't even paint the house until I had worked extra jobs to afford the paint. Luckily I had family around to actually do the painting! - Julia Newbould, editor-at-large
Find a way in
Negative gearing can be a tax-effective way to maximise the capital appreciation of a property, as the net loss from the shortfall between rental income and mortgage repayments can be deducted from your taxable income.
It also gave me entry into the property market earlier than I would've had otherwise. But it still means you need to find money to plug the difference each month, and that has at times been a serious strain to my cashflow.
That said, the current low-rate environment has gone a long way to alleviating this pain, and goes to show how important it is to refinance as rates fall. I don't look forward to the day when rates rise and my fixed-rate expires. - David Thornton, staff writer
Understand the interest
I wish I knew what the interest on your home loan actually costs you (even at low rates and with a smallish offset). We pay our mortgage fortnightly and the interest is charged monthly.
In the first month we were charged interest that equalled almost two-thirds of our repayments - so initially it seemed we were on a hiding to nothing.
Thankfully over the course of three years this has come down significantly. This is because we now pay more than the minimum fortnightly repayment and have boosted the offset.- Darren Snyder, managing editor
Thank you to Money magazine for these thoughts.
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Message from CAtherine
Occasionally I come across an interesting article to do with Home Loans. I thought I'd share some of these with you here.