“I am in awe of what you do,” said Minister for Small Business Michael McCormack to a room full of brokers in Sydney yesterday (26 April).

At a breakfast event held by the Mortgage & Finance Association of Australia (MFAA), the minister spoke of the challenges and opportunities that brokers face each day from areas such as housing affordability, the banking sector, regulation & government, and innovation.

“I truly am in awe of what you do because I know. I ran my own small business for eight years,” he said.

“If you can’t trust your broker, who can you trust?” he asked.

“I know and my government knows and appreciates what you do, not just for the small business sector, but what you do for your customers & Home Owners… those people who need finance, those people who need good advice.”

The government acknowledges the importance of mortgage brokers and the service the industry provides to customers across Australia, he said, especially as banks reduce their footprint in regional areas.

“It’s for all those reasons why your industry is so strong and we as a government want to make it even stronger. In the past year, the industry has expanded by 4% and brokers now write more than 50% of all home loans.”

Talk to your Broker – Check that your finance arrangements are still sutiable – Do it Regularly

According to ATO statistics, SMSF investment in residential housing is estimated to be worth approximately $12 billion.

However, this represents approximately 0.18 per cent of the Australian housing market, which is worth approximately $6.43 trillion.

Peak bodies in the SMSF space, such as the SMSF Association, have come out swinging in defence of limited recourse borrowing arrangements, which is the structure that allows SMSFs to leverage their superannuation savings for property investment.

“SMSFs investing in residential property, whether through borrowing arrangements or not, should not be singled out from other investors when looking at policy solutions to improve housing affordability,” said the association’s chief executive, Andrea Slattery.

“The idea that SMSFs have plunged into property investment in recent times also is not borne out by the statistics, with SMSF residential property holdings (both geared and ungeared) being consistent between 4-6% of total SMSF assets in recent times,” she said.

“In addition, there is scant evidence to support the notion that the use of LRBAs by SMSFs pose a systemic risk to superannuation or the broader financial sector,” she said.

This is the latest in a string of suggestions put forward by both sides of government to address the housing affordability issues which are largely plaguing Sydney and Melbourne.

In particular, there has been a flurry of kite flying with a proposal to allow first home buyers to access their superannuation to fund a housing purchase.

The argument for this proposal, which crops up every two years or so at budget or election time, is that superannuation is being used to pay off mortgages in retirement anyway, and that owning a home should be considered in retirement income policy.

The argument against the proposal effectively note that the fundamental issues plaguing the housing market come back to supply restrictions in capital cities such as Sydney and Melbourne, and allowing investors to access more cash to fund a purchase will simply fuel the market if supply remains untouched.

If you want to get in before any changes affect you we can help organising a loan for your SMSF to purchase either a commercial or a residential property.

Just contact us and we will get back to you ASAP to work out the est strategy to help achieve your goals

Breaking up is hard to do.

On top of the emotional impact, there are practical ramifications as well.

When there’s a separation or divorce, debts you’ve accrued during the relationship unfortunately don’t go away. The longer a couple is together, the harder it can be to unravel all the financial connections.

It’s interesting that when our home or car insurance is due for renewal most of us invest time to shop around and check we’re still on a good deal.Yet we hesitate when it comes to reviewing our home loan!?!

With the RBA cash rate at an all-time low and lenders continually offering new rates and loan products we are often asked by clients WHEN and WHY they should review their loan. Gone are the days when we stayed with the same loan or lender for the full 25 or 30 year term of a home loan – the mortgage market is now very competitive.

Regardless of a changing landscape, any decision to refinance your loan should consider your individual circumstances, your current needs AND your future financial goals. As your finance specialist that’s where we can assist!

Q. When should I consider refinancing?

You might think refinancing is simply a good way of reducing your loan repayments. But there are also ‘life events’ that could be a worthwhile reason to review your finances.

These include:

• Increased equity in your home. Perhaps it’s time to consider an investment property?
• Children starting school. It’s not unusual for parents to spend between $10,000 and $19,000 on long day care. What will you do with your savings once you are no longer paying fees?
• Re-entering the workforce. With kids off to school maybe mum has gone back to work? Any increased income is a good reason to review your finances and perhaps even consider investing.
• Finally paying off your car loan. Before you buy a new car do you realise that the same amount you pay for your car loan each month could possibly give you the opportunity to enter the investment property market?
• Children finally leaving the nest. What a great time to ensure you are effectively planning your retirement income and lifestyle.

Q. What benefits may result from refinancing?

Lower rate = lower repayments Maybe. However any decision to refinance should not be based solely on a lower interest rate. Your long term goals as well as current needs should be considered. Switching to a lower rate while maintaining your current higher repayments could significantly reduce your loan term and total interest over the life of the loan. You should also consider the costs associated with refinancing to determine the overall benefit. As your finance specialist we will explore your personal circumstances to determine if refinancing is suitable for your particular situation.

Improved loan features If you’ve had your home loan for a few years refinancing may provide new loan features that will allow more flexibility such as: Repayment flexibility – the ability to make extra payments could also result in a reduction of the loan term and interest payable.

Redraw facility – allowing you to redraw from your extra payments when required.

Flexible rates – switching between a variable and fixed rate or splitting your loan between the two may assist you to manage your mortgage in line with interest rate movements.

Portability – taking your loan with you if you move could save on fees.

Eliminate features you don’t need Perhaps you no longer require some features of your current home loan? If so it may be worth talking to us to explore loan products more suitable for your current situation. A loan with extra features will generally attract a higher interest rate and a ‘no frills’ loan will have a lower rate. Suitability will depend on your individual financial situation and the overall benefit provided by a product. Is it worth paying extra for features you don’t require?

Q. How often should I review?

We recommend an annual home loan check-up. Sometimes we will be able to improve your financial position and sometimes you will already be in an appropriate loan for your situation.

A quick call will allow us to give you comfort that all is still good (or not) with your finance.

Wouldn’t you like the reassurance of knowing?

Call our office on 1300 855 244 and we will be happy to start your review TODAY

Here are 8 smart strategies that could improve your chances of winning:

1.Obtain a Pre-approval

When you buy at auction you commit to the purchase then and there. This means that you need to be certain about having access to the money in time for settlement.

Purchasing at Auction without either the cash already in the bank or a finance pre-approval can be finanical suicide.

if you’re unsure how to go about this contact us now.

2.Don’t show your hand

Revealing your maximum bid limit to the agent before the auction could encourage them to push you a little further.

For example, during the auction the agent might indicate you’re close to meeting the vendor’s expectations, to try to persuade you to bid above your limit. It’s in their interest because they’re usually earning a commission based on the sale price.

3.Ask if the reserve has been met

Bids must reach the vendor’s reserve price before the property is officially ‘on the market’ and then sold to the highest bidder. If the property doesn’t meet the reserve it will be ‘passed in’.

The reserve price is usually set on the day of the auction, or the day before. The auctioneer often doesn’t know the reserve until just before the auction begins, and they don’t have to reveal it to bidders – but you can still ask. If you discover the reserve, you can wait to bid until it’s reached. This tactic might even persuade the vendor to lower the reserve during the auction if they’re not getting enough bids. If you’re the highest bidder for a passed-in property, you may be invited to negotiate with the selling agent.

Be wary of high-pressure sales tactics here, and remember that cooling-off periods don’t apply to contracts signed on auction day.

4.Ask questions (but know the rules)

You can talk to the auctioneer during the auction to find out information that may be helpful in winning.

For example, Consumer Affairs says you can ask the auctioneer a ‘reasonable’ number of questions, and you can ask them to identify who has made a bid. You can also ask whether the property is ‘on the market’ yet (has it met the reserve price?). Be visible and within earshot of the auctioneer to avoid miscommunication.

Make sure you know the rules, as it’s illegal to disrupt an auction. The auction rules are generally made available at least 30 minutes before the auction, and the auctioneer should also announce the rules before bidding starts.

5.Bid like a pro

Bid with confidence and state the full price to let your rivals know you’re serious.

A confident call of ‘$500,500’ (as opposed to a quiet ‘500’) will remind the room of how much is at stake. You can also try ‘knockout’ bids and offer well above the last bid or the auctioneer’s suggested figure, to intimidate less-confident buyers. If bids are being made quickly you might want to try to slow things down by bidding in smaller increments than the auctioneer suggests.

Pre-auction tip: Ask the selling agent how many people have requested property reports.

This will give you an idea of the number of serious bidders.

6.Employ a professional

You can enlist a buyer’s agent to bid for you.

They’ll have no emotional attachment to the property and should only bid what they believe it’s worth (within your limit). They should also have plenty of auction experience and know the tricks of the trade. The Real Estate Buyer’s Agents Association of Australia offers some tips for choosing a buyer’s agent.

You could also ask a friend or family member with auction experience to bid for you. But remember that you’re the one who has to pay, even if they win by exceeding your limit.

7.Be prepared to cut your losses

Accept property reports and legal fees as sunk costs that are part of the auction process. You’re better off spending a few hundred dollars checking a property than bidding hundreds of thousands without doing the pre-auction groundwork.

8.Know your limit

On auction day, if you hit your limit, walk away to avoid temptation. Auctions can be challenging, especially when there are emotions involved.

Sensible, practical strategies can give you the best chance of being the last person standing – or at least stop you from overcommitting – on auction day.

Over half of Australians lived in middle-income households

This demographic includes families earning between $42,000 and $125,000.

Australia’s middle class – the avearage – includes teachers, firefighters, and plumbers, but also engineers, construction managers, and chefs — workers from all over the economy. The middle class provides and consumes the bulk of services that keep society afloat, driving economic growth and investment with each purchase they make.

But when it comes to money, the Australian middle class faces a range of unique challenges. Wages have stagnated for a fair while, and rising costs of essentials like housing and healthcare have put a squeeze on the average budget. Most middle-class families don’t have nearly enough saved to pay for university or to retire at age 65.

But, are all of our money issues the result of economic issues? Not quite!

Just like every other group of earners in Australia, we don’t always make the smartest decisions with our money. If we hope to build a financially viable future, it’s up to us to make the best decisions we can, no matter what’s happening with the economy at large.

Here are eight money mistakes the middle class needs to stop making to turn things around:

1. Accumulating too much debt

According to a recent study, 65% of credit card users carry a balance. In other words, most Australians are okay carrying credit card debt from month to month and paying interest on it – some out of sheer necessity, but some by choice.

For those trying to get ahead financially, this can be a costly mistake. Indeed, the average credit card interest rate is now over 15%!

Everyone is better off if they avoid ‘Bad debt’ like the plague. You don’t derive a single benefit from carrying credit card debt – only added costs, debt, and stress.

2. Not having a Financial Buffer

Nearly half (46%) of us would struggle to cover a $400 emergency. The figure is skewed by the fact that 81% of people making $100,000 or more said they could easily cover the cost, while only 34% of those making $40,000 or less could.

Still, our lack of emergency savings is a problem. When you don’t have the cash to cover emergencies — which will inevitably occur — it’s far easier to let your finances spin out of control or get caught in a cycle of debt.

Many financial advisers suggest keeping an emergency fund stocked with three to six months’ worth of expenses, but nearly any amount you can stash away will help. With some cash stored “out of sight and out of mind,” you’ll have a buffer should you face surprise health issues, home or car repair costs, or other expenses you couldn’t predict. This could be done as advnce payments on your mortgage in redraw or theough an offset account even.

3. Not giving your retirement a raise when you get one

Retiring on time requires patience and persistence, along with the discipline to invest regularly for up to 40 years. But if you hope to grow your nest egg, it’s important to boost your retirement contributions as your income grows. If you don’t, it can take a lot longer to build up enough cash to retire.

If you save $500 per month and get a 4% raise, for example, you should boost your savings plan proportionately and increase your savinsg to $520. By saving a percentage of your income every year (instead of a specified dollar amount), your retirement contributions will increase automatically as your earnings grow. IF you still have a mortgage then these savings could be directed to paying it off quicker; and once this is done you could start some extra voluntary contribution to your Super fund or invest in shares or property.

4. Relying entirely on employer paid Super

The convenience of relying on your employer-sponsored super contributions can’t be understated, but using only this one strategy for retirement may not be enough. Not only could you come up short by the time you reach retirement, but there are definite risks in relying onle on one strategy and putting all your eggs in one basket.

One way around this is to invest enough in shares and/ore property inside or outside your super.

5. Delaying retirement savings

A frequent mistake is to delay saving for retirement while focusing on other financial priorities of life

For many of us, it’s far too easy to believe you’ll start saving for retirement after you pay off your Hecs debt, buy a house, or fund your children’s education. While these are all worthy goals, life happens, and it’s easy to put retirement savings on the back burner until it’s too late.

If you’re middle-income earner especially, you need time for your retirement funds to grow. We recommend saving for retirement as early as possible to put the magic of compound interest on your side.

“A small amount saved consistently takes advantage of compound interest and can have a significant impact at retirement,”

6. Forgetting to update your Will & life insurance policy

Do you really want to leave your life insurance proceeds to your ex-wife? How about gifting her your Super balance? This is the type of thing that happens when you don’t update beneficiaries and you pass away.

Marriage, divorce, or any changes in your family situation are reasons to revisit your beneficiaries – whose name is on the form will receive the asset.

This happens more often than people realize: No one thinks they’ll die young, yet it happens all the time. And when these documents aren’t updated, huge sums of money can wind up in the wrong hands.

7. Spending too much on depreciating assets

The average car payment in Australia is $506 per month and 68 months long! That represents a huge chunk of cash for Australians who are already struggling to save. But the worst part is that these payments are mostly “sunk costs.”

The fact cars depreciate rapidly makes them a poor way to spend an extra $500 each month

This is one of the common money drains and comes from the this need of impressing others with our vehicles, but that often means overspending by thousands of dollars each year.

Most would be better off driving older cars and investing their extra cash instead – but where is the fun i that right?

Morningstar has outlined the likely action APRA will take to curb investor lending after the impact of its initial efforts to cool the market appear to be fading.

In a research report on Commonwealth Bank of Australia (CBA) late last week, Morningstar analyst David Ellis explored the potential impact of further regulatory action on Australia’s largest mortgage provider.

Morningstar warned that APRA could raise the minimum serviceability buffer

“Increasing concerns of an overheating housing market are likely to prompt the Australian Prudential Regulation Authority, or APRA, to act to slow the rate of growth of residential investor home loans,” Mr Ellis warned.

Morningstar warned that APRA could raise the minimum serviceability buffer “to 3 per cent from 2 per cent” and lift the risk-weighted capital floor for new residential investor borrowers holding multiple properties to 75-100 per cent.

The report noted that CBA applied the “higher rate” of 2.25 per cent above the current customer rate (or 7.25 per cent) for new mortgage applications to determine serviceability.

While APRA does not publicly disclose individual bank capital requirements, Mr Ellis said the regulator could impose tougher measures on individual banks if investor lending grows at levels considered “too risky”.

We expect tighter residential criteria for investor lending across the lending industry despite the banks opinion or lending appetite.

What does this mean for your existing and proposed portfolio? We’re happy to assess your situation and help you put a plan in place – Contact us Now

A series of lenders have moved on rates in the past few days, with increases from AMP, CBA, ANZ, NAB, Homeloans, Bendigo Bank, St.George and Westpac ranging from 0.07% to 1.17%.

Commenting on the banks’ moves, AMP Capital chief economist Shane Oliver told Mortgage Business: “What they’ve done is entirely rational, they’ve covered their funding cost increases over the last six months, they’re responding to the regulators – APRA & ASIC, and also responding to the strong demand from investors for loans by putting rates up.”

Investor lending in APRA’s crosshairs

Many of the banks cited APRA’s macroprudential measures as one of the reasons for hiking their rates.

AMP’s Mr Oliver explained that currently APRA seem to be providing guidance to banks & issuing orders behind the scenes, however they are likely to make a public announcement in the near future.

“I think ultimately just to reinforce the point they probably will be more public at some point, and I suspect that an element of that will be a reduction in the speed limit for lending to property investors. I suspect that it will be lowered to 5 or 7 per cent or something like that, with probably some other measures as well.

His comments come after Morningstar outlined the likely action APRA will take to curb investor lending as the impact of its initial efforts to cool the market appear to be fading.

“Increasing concerns of an overheating housing market are likely to prompt APRA to act to slow the rate of growth of residential investor home loans,” Morningstar analyst David Ellis warned.

What does it mean for borrowers? and especially for investors looking to increase their portfolio?

Raising capital can be a long process and it needs to be done right depending which stage your business is at. Often it it must be done in stages and grow with the bsuiness over time.

So what are your options?

If you’re a small to medium business then you will usually find that angel investors, small private equity groups & venture capiutal groups are out of reach just yet. To accees some of this type of capital you need to bring your turnover passed the $5 Million mark.

Below this $5 Million level debt funding will usually be more suitable to unlock your business growth.

Raising capital through debt facilites can be done is so many ways depending on the type of business you do, your cashflow, your assets & your track record. The funding can be unsecured, secured against Brick & mortar or your creditors/Debtors

Here are some options available to you:

• Small business loan or Line of Credit – this type of loan is the first one that comes to mind for most small business owners. It is can be on a short-term and long-term basis and offer a lump sum of funds to help you start or grow your business. It can be unsecured or secured by various forms of security including residential, commercial or rural property, business assets, or a combination of these.
• Overdraft facility – is either a secured or unsecured line of credit designed to cover short-term cash flow shortfalls.
• Invoice Factoring/Debtor finance – This would be for instance a line of credit linked to and secured by your outstanding accounts receivable. If your business supplies products or services to other businesses on standard trade credit terms, Debtor Finance can help access the cash from your sales immediately rather than wait for your debtors to pay their account.
• Trade Facility – This type fo facility suits import/export businesses and consists in the financing of cross-border, import/export transactions. For an importer it means receiving funding in order to pay a supplier and allow time for the goods to be received, sold and turned into cash. For an exporter it provides working capital until the overseas customer pays for the goods or services that have been delivered.

Which one is best for my business?

Making the right choice is important to help your business grow at the right time and in the right way. And sometimes reviewing your existing arrangements help greatly as well

This is where we come in – if you want help in determining what the best option is; or you want to review your existing arrangements we are happy to meet, have a look at your business and analyse your options

Contact us now for a free consultation