Q: As the importance of company culture is widely recognised for not only financial success, but also staff retention, job satisfaction, and productivity within the business, I’m wondering, what strategies have others found effective in building and promoting a positive and high-spirited team culture?
A: Hi Camille,
Good culture and morale is crucial for the success of any business. This is built a few ways I believe:
1. By empowering your team as a leader
2. Listen to your team members and allowing for their voice to be heard so that their opinions are valued too.
3. Finding out what is important to your staff / team members. If you can build a business that has a focus on taking your staff values into consideration then you build a culture where people are willing to support each other, collaborate and feel empowered. Every person motivation is different.
It can be hard to build but when you get the formula right, the business flows like magic and it makes you enjoy the business all the better.
Good Luck and Enjoy!
Q: Interested to get people’s opinion on how the banking royal commission and the stricter lending policies of the banks will have on the housing market in Australia?
A: Hi Peter,
It is a good question and something we are all keeping our eyes on.
there is no denying that borrowing capacity has dropped - however this is a result of over 18 months of policy reforms, not just influenced by the Royal Commission.
We are still settling many loans, if not we have actually never been busier but what is profoundlyl different is the time it takes to get your approval. What would be approved in 2-3 days on a worse case scenario, is often taking 2 weeks to get approved.
We had a loan settle last month that took 5 weeks to get approved - same lender just lots of going back and forth between client and lender due to the complexity if the situation. Patience is key at the moment, and when people are buying homes, being patient is quite difficult!
I do believe an area where there could be an impact is Off The Plan units. When credit was at its peak, many people exchanged with a 3-4 year settlement period. There is a huge risk here whereby clients exchange, are unable to get finance approval (of if they did, it does not mean anything today) and lending policy has tightened up and there will be a a proportion of people who will be unable to fulfill their obligations. This will be very interesting to see as they will not be able to sell for the same price they purchased for resulting in losses.
Hope this helps,
Q: Should financial literacy such as savings plans, credit scoring, personal finance, credit cards, interest rates, home loans, interest calculations, buying and selling and the value of money all form an important component of the high school curriculum?
A: Absolutely we need to have more education about finance literacy and money in schools.
Money is "invisible" these days. Its deposited into your account and you simply just tap your card / your phone / get card less cash from ATM to make ends meet. The real tangible value of money is gone especially with the younger generations as they have never had a physical pay packet.
I remember from my first pay packet in the yellow envelope and separating the $24.25c I was paid - I phsyically split it between savings and spending and put one in a jar and one in my wallet. This was valuable in setting up good habits as soon as I got paid.
Especially with credit reporting going the way it is, having education on our finance system is critical otherwise there will be a generation with late payments on their credit file and they will have no idea why and no one to bail them out.
How to boost your business profile - Mortgage Broker Nicole Cannon
Q: My brother, mother, and I want to purchase an investment property, but we were thinking to only take out the loan in mine and my brothers’ name. The plan was to occupy the property for 6 months so that we will be eligible for the first homebuyers grant (Mum would not be eligible as she has purchased property before). Can all three of our names still be on the deed for the property, if only 2 of our names are on the mortgage?
A: Hi there Jared,
This is a tricky one and a scenario that all of you need to think about.
Firstly, your mum can go on title but she can only have up to 5% ownership. This will then not have any impact on you obtaining the FHOG.
I recently did this where Dad gifted son money. He was on title of property 5% and son was able to get the full FHOG, despite Dad being a property owner. However there needs to be a reason as to why she would be going on title. (in this case was for protection due to the contribution he provided).
However once your mum is on title, she will also have to be on the mortgage documents - either as borrower or as a guarantor so this will have an impact on your mum and given the lending environment, a more thorough understanding of your familys' circumstances is critical. In my scenario above, Dad was a guarantor.
As there are more than one sibling in this scenario, this adds more complexity to the situation. As circumstances can change with siblings - marriage / divorce etc and this can then have an impact on the other two remaining parties so a detailed exit strategy would need to be considered.
In principal - it could work. Specifically for you, unable to tell until an assessment is done on your personal situation. An assessment would need to be done on your owner occupied scenario and also the investment scenario as we would need to see that affordability is evident on all scenarios given that this is your intentions.
Always happy to discuss this in further detail. Hope this information is of use,
Q: Is it possible to guarantee one of kids home loan without having to be on the loan or the property?
A: Hi Andrew,
By becoming guarantor to a loan you are, by default, party to this loan. Should the borrowers fail to meet their commitments then you could be liable for the portion that you have gone guarantor on. Depending on the Le der and structure you may be liable for the whole loan or just the limited portion you have guaranteed.
With the regards to the property, you are not on title of the property that your kids purchase. Your kids are also not on title of the property that is used as the guarantee.
It’s the loan which the guarantor is part of. You can also use a term deposit as security instead of property which could be an option too. You are still part of loan documents in this scenario too.
These types of loans are becoming increasingly popular and we are working on a couple at the moment. Please let me know if you would like more information
Hope this has helped
Nicole - Pink Finance :)
Best Customer Service individual: Nicole Cannon - Pink Finance
Why Pink Finance - Nicole Cannon
Q: Buying a new home … does anyone have a recommendation for a conveyancer?
A: I know a brilliant conveyancer - Jennie Tonner at Cremorne Conveyancing.
Q: Hi, we are looking for more room and a bigger yard for the kids so taking the plunge and looking at Suburbs around Turramurra. Would anyone recommend a Real estate agent we could start talking to?
A: Hi there Helen,
One of the Best Agents I know of in the area is Jill Smith of Savills Real Estate. She lives local and works local and has incredible knowledge of schools, public transport and other amenities in the area. Savills is one of the most successful agencies on the North shore.
Jill Smith's contact details are: email@example.com and you can call her on 0425 335 000
Profile interview with Mortgage Broker Nicole Cannon from Pink Finance
What is your occupation and what services do you provide?
I am a Finance and Mortgage Broker. Offering finance solutions for not just your home loan/ refinancing/debt consolidation ne ...
What is a Deposit Bond James?
So you have found a property you want to purchase, but you face a dilemma:
Your savings are locked in a term deposit or are tied up in the equity of your property.
How do I purchase a property when ...
Q: I have been wanting to refinance but for whatever reason didn’t get around to doing it – now I started a new job 2 weeks ago …. same profession but new company.
Could I still refinance … loan amount $630,000?
A: Hi Sammy,
Congrats on the new job!!
Whilst some lenders have a minimum employment term or you need to complete your probationary period, there are some lenders that do not have these restrictions. these lenders are also competitive which is good to know that you may not be compromising on rate. Having over 40 lenders on our panel enables us to be able to research these lenders and your requirements so that we can meet all your criteria.
More than happy to discuss your situation in more detail,
Nicole - Pink Finance
0414 633 793
Over 40, you still have time to build yourself a nest egg
So you have hit 40. You have yet to buy a property for yourself to live in and you think your long-term financial position is in financial ruin, right?
There are a number of ways you can accu ...
Q: Hi, We are with NAB and reasonably happy with their service but the interest rate on our loan is 4.39%. The loan is $560k and the value of the property is around $800k. Can we get a better rate and how much would it save us?
A: Hi Toni
I had accidentally put my response in comments and not Answer! Please see my Answer as per my comments.
Hi there Toni,
In short - yes there are better rates out there. We can get owner occupied rates down as low as 3.59% and 3.88% for investment - both rates mentioned are principal and interest variable rates.
We would absolutely need to do a preliminary assessment to ensure that you qualify for these rates.
We love helping our customers save on their monthly repayments and if you would life an obligation free review more than happy to help you.
Hope this helps,
Q: Hi, I am a first home buyer and want to start looking to buy a home, I have $80,000 deposit and earn $90,000 a year.. no other loan loans or credit cards – how much can I borrow?
A: Hi Liam, it’s exciting times ahead for you! Unfortunately it’s not that easy to say you can borrow “x”.
There are so many factors involved to determine your borrowing capacity.
Whilst you have no debts or credit cards there may be other factors we need to take into consideration such as HECS/HELP debt, living expenses (we need to categorise this) children/dependants too. We also need to know what your short/medium long term goals are.
I wish I could give you a more defined answer.
I’m more than happy to go through this with you specifically and we can then provide a report based on the information.
Q: We rent in Tamworth and like the idea of buying about 20 or 30 acres close by and would like to ask if interest rates on properties are higher than if we buy a house in town?
A: Hi Matt,
As an owner of land near Oberon in the Central West, I have helped customers purchase land near Bathurst and recently settled on a 25 acre block of land which did not attract any higher interest rates than if you were purchasing in the suburbs. There are some limitations on the lenders to choose from but that does not necessarily compromise on rate. If you would like to discuss your specific scenario I am happy to discuss this with you further.
Q: I’m a lending manager for one of the major banks but thinking about becoming a mortgage broker. Can I ask about the challenges mortgage broker have at the moment, which aggregators you would recommend and what do I need to consider in relation to the commission structures?
A: Hi there Tina,
Good on you for considering this industry..... it's tough but it is so rewrding on so many different levels. With regards to challenges...... every business at every stage will always have challenges, but here are some of my thoughts on challenges / this to thing about for new comers:
1. What you will need to consider is will you be wanting to start your own business or working for someone and receiving a wage plus commissions.
2. Cash flow - (or the lack thereof!) is the biggest thing that you need to consider for the first 12 months at the least.
3. The accreditation process can take a few months too - from finding an aggregator / membership with MFAA/FBAA and then the individual accreditation..... THEN you are ready to go out and drum up business.
4. You will also need to have a mentor to assist you in your first 2 years in the industry - generally this will depend on the aggregator you go with. Some aggregators require you to use on of their preferred mentors
5. You then need to think how you will obtain business leads / clients. Friends and family are not always the best of lead sources so be mindful of that.
6. You will need to come under someones credit licence so will be a credit representative -this can be either under a brokers Credit Licence or the aggreators.
With regards to aggregators - they all have their strengths and point of differences. I am with AFG and am very very very happy with what they have to offer. There will be other brokers here who are raving fans of other aggregators and that is fine too!
Have a look at what the aggregator will provide to you with regards to software / websites / marketing solutions and support. Commission structure will all vary depending on your experience so this is very hard to answer.
Hope this enough for now though!! Good Luck!
0414 633 793
Q: I own a commercial terrace in Sydney with an office on the ground floor and a self-contained residential apartment on the two floors above (with its own access). The property is on the one title and isn't strata. I'm having a hard time finding a bank that wants to refinance the property and I'm not sure why - I have tons of equity in it. Can anyone suggest a good path to go down to get the property refinanced?
A: Hi Piers,
On the face of it - the security should not be an issue being mixed security.
As all three properties are on one title and one of these properties are a commercial property this will need to be dealt with commercial lenders and not with residential policy. I know you specified commercial but just checking that you have been dealing with the residential or commercial departments with the bank?
Other reasons could be servicing / borrowing capacity. You can have oooodles of equity but if there is no evidence to service the debt and other personal expenses this could be restricting you.
If you would like to discuss further I'm always happy to help.
Q: Hi, I'm 26 and looking at investing in the property market.
I recently just received a substantial inheritance which I was not expecting. As great as this is, I'm a carpenter and have zero financial literacy about me and I don't want to just piss it up the wall.
I'm looking at getting some solid advice about purchasing real estate, what I should be looking for, how the whole system works, etc
Honestly. Any advice would be great?
A: Hi Essh,
Congratulations for taking a good action and realising that this is a great opportunity for you to grow financially.
Knowing what to do and how it works, you need to have an A team that covers all areas. This would take pages and pages and pages of information to share here but as a very basic platform and whom you need to speak to, here would be four key people in my opinion that you should speak to:
1. Accountant & or Financial Planner to help you project your wealth and realise tax opportunities
2. A mortgage broker to help you with borrowing capacity / repayments / loan structures and to explain the property purchase process
3. Solicitor / conveyancer to provide you with legal advice on properties
4. Property Investment specialists / Buyers Agent who can help you search for a suitable property
40% of my portfolio is doing exactly this and I just love helping people achieve their dreams through investment property. If you would like to catch up to discuss your specific details then of course always happy to help.
Q: Are there lenders or other options available instead of having to pay mortgage insurance …we need to borrow about 84 -85% but the insurance is so expensive?
A: Hi Maddy,
There are a couple of products out there that have 85% no LMI (mortgage insurance) but these rates are often a little higher in rate so that you, in fact, pay a little more than the mortgage insurance in the long run (each case is different as you could understand).
84-85% bracket is a lower bracket which means the risk is much lower than a 95% loan. So it may not be as expensive as what you may think.
It's also a one off fee not an annual premium this is sometimes misunderstood. The mortgage insurance can also be added to the loan as well so it is not an additional expense you need to pay.
Lenders all have different premiums too, for example on a purchase of $800,000 at 85% lend I have mortgage insurance ranging from $5,500 to $13,000 so it pays to look at this too.
Always happy to give you any personal and specific information if you require.
Hope this helps!
Q: I am working in a tax free country as an Aussie Expat.
Buying a house back in Perth seems to still be in the too hard basket.
What is the best method to get into the market from outside the country as a non-tax paying Australian citizen?
A: Hi there WB,
Will need a little more detail here - such as work occupation, country where you are working, evidence of income and how long you have been with your employer but in essence if all of these stack up, being an Ausssie Citizen working overseas you CAN still do something. We are limited with the lenders to use these days but we certainly have options that are competitive for you.
Basically what will happen is that the banks will convert your income to AUD. We then apply this as your gross income (and Aussie tax taken out) we can then use 70-80% of your NET income depending on the lender and country you are working.
I am currently doing two now - one as a refinance and one as a purchase. Some lenders my need for you to have a Power of Attorney, and you will need to have ID signed and certified by a government consulate. So a few extra steps to take, but certainly doable.
The steps to take would be to get all your ducks in a row first:
1. Determine your borrowing capacity
2. Get all your documents including ID all certified
3. Obtain Pre-approval
4. Start your property search
Let me know if I can be of assistance, always happy to help,
Nicole Cannon :)
Q: Why is it that I could get about a 0.50% lower rate on my home loan with my bank if I was a new customer? Shouldn't existing customers be getting a lower rate for loyalty? Is this just happening at my bank or with other banks as well? Seems unfair!
A: Hi Steve,
As per everyone else's response you are certainly not alone with this issue and this is consistent with every bank.
There are always a few factors that determine pricing. Cost of funds at time of your loan was drawn down, cost of funds at the time of enquiry, how long your loan has been transacting for, the balance of your loan etc
Your broker will be able to negotiate for you and will be able to provide comparable rates to your bank to try and get your rate down. If there is no luck then they can get you an alternative solution so you can receive the interest rates you deserve.
Hope this sheds some light in the situation.
Always happy to answer any more questions you may have.
Q: What are the benefits (if any) of paying your mortgage repayments weekly over monthly?
A: Hi Bill,
Great question. If paying fortnightly or weekly was the only thing you did with your home loan you can take 5-6 years off your home loan. (Loan amount and rate obviously has an impact here)
The reason being is that there are twelve months in the year but there are thirteen four week cycles. When you pay fortnightly or weekly you in effect are paying 13 months off a year on your home loan
The difference from fortnightly to monthly is not as significant due to the same number of fortnights to weeks.
Another reason why paying weekly may work better for you is that you are paid weekly this simply helps your cashflow having your loan repayments in cycle with your pay.
Hope this helps you!
Q: I want to get into the property market but can’t seem to save enough to buy in Sydney. I’ve saved $20k and was thinking if I should use the money to buy an investment property in the country?
A: Hi Greg,
It's so tough saving for that deposit I agree and good on you for looking at alternatives.
I am actually doing a loan for someone right now for a property in regional Australia that has $30,000. It's a 92% lend BUT it's getting them into the market which is what they wanted to do
There are some areas where this can be achieved and with some reasonable rent returns. You would also need to ensure that you can afford the loan above your existing commitments. The banks will take into consideration 70-80% of proposed rental income. This will be the first thing that needs to be covered off before exploring this option further.
If you would like more information don't hesitate to get in touch. I'd love to assist you in achieving your dream!
Have a great day
Q: I am a franchisor. New franchisees need to pay between $20k and $35k to join the group. What's the best way to arrange to finance this fee as a new franchisee?
A: Hi Jonathon,
Exciting times for you!! Generally to be able to obtain finance for your upcoming venture you would need to have some sort of equity. This would be in property or in a cash deposit.
We can take out a line of credit / business loan in order to do this depending on the options available to you.
You will need to show evidence of servicing the loan with the reduced income in the initial stages of your business so that is something to keep in mind too.
Business loans will always have a few variables that come into the equation such as industry history, historical income (if buying from someone else) projected income etc.
Always happy to discuss your personal situation further - good luck in your new venture!
Q: How much of a deposit do I need for a home loan in Sydney for a property around 650k to 700k?
A: Hi Effie,
Chris is completely correct with his answer.
If you didn't have the 20% plus stamp duty available you can acquire the property with as little as 5% of the purchase price and stamp duty.
Whilst this gets you in with a lower deposit you will have a higher interest that would be required to pay. So you need to weigh up your options, pros and cons based on your specific situation and circumstances.
If you did not have the ideal 20%, then the deposit required would be:
For a $650,000 purchase this would be $57,600
For a $700,000 purchase this would be $62,400 (rounded up to nearest $100
Mortgage Insurance, again as Chris mentioned, will be applicable. If you qualify there are a couple of lenders where you can add the entire lenders mortgage insurance (LMI) to the loan. (This is known as LMI Capitalisation). Other lenders will cover some of the LMI and other lenders you will need to pay for all of the LMI. It is difficult to quote the LMI as it depends on the lender, loan amount, the deposit you have available and if this is an investment or owner occupied purchase.
There are also family guarantee options too if this is unable to be achieved where property guarantees and term deposits can be used as equity to help you get in the market.
All of these options require thorough discussions as they will have different lender policies to consider but once an understanding of your personal situation is discovered you can see what options are best for you.
I hope this helps and more than happy to discuss further with you if you wish.
Have a great evening
Q: If the RBA doesn't move rates how can the banks. Would now be a good time to go for a fixed rate?
A: Hi Jacob.
It's always a topic of great conversation this one.
The interest rates set by a bank is not solely governed by the RBA alone.
Variable rates and fixed rates are influenced by different factors.
In very basic terms your variable rate starts with the RBA cash rate.
The banks then set their base rate which is a slightly above the RBA Cash rate. Each bank has a slightly different base rate. The banks then have a margin on top of that which determines what your rate will be.
There are other many factors that influence what the variable rate will be. Loan amounts, lending ratio and size of the property all come into play here. It's all about the risk.
Then there are other external factors
For example in 2015 the government Insisted the banks have more cash reserves for investment lending and interest only lending too.
This was an influence that increased rates that were outside of the RBA movements as well as a restriction on the amount of investment lending a lender was to do.
Fixed rates are determined by short to medium term bond rates. They are very low at the
Moment and provide a great peace of mine that you know what your repayments will be for that fixed term.
There are some great fixed rates out there in always happy to share more information if you
Would like. I hope this provides some clarification for you.
Q: I took out an investment loan in 2011 and soon after moved in 2012, I recently realized that my loan type did not change to home owner loan, so therefore I have been paying a higher interest rate, am I entitled to a rebate or refund for the past 4 years ?
A: Hi Theo,
Different interest rates depending on loan purpose (ie investment or owner occupied) only came into effect last year so four years of different interest would not be applicable for that whole period of time.
Did you receive a letter from the lender notifying you of this increase? As your lender would have been obliged to notify you last year regarding the increases to your interest rate based on the fact the loan is an investment property. This would have prompted the call to the bank so if you didn't receive this letter then I would say you definitely have grounds to claim the interest for the last few months.
I love to put these cases to the banks and getting customers refunds so happy to pursue further for you if you wish.
Have a great evening!
Q: There are some great questions here.
Problem is I can't seem to be able to read some of the responses. I also have some queries about smsf as I have just established mine.
A: Hi Paul,
So great to see the interest you have with Eccho!
If you have set up your SMSF and are looking for information regarding the loan side of things I am more tha happy to answer any questions you have. If it is to do with anything else but the lending through your SMSF your accountant or financial planner will certainly be able to help you.
Hope to see you around here more!
Q: We have had a few issues that have affected our credit rating but things have turned around and we now have around 20% deposit for a new home. Will our credit rating stop us from getting a new loan and what options do we have?
A: Hi Robyn,
Congratulations for getting things back on track, to refocus and achieve this milestone is huge!!
The good news is that there will be options that you can consider - despite your credit rating history. The key thing would be what your credit rating is looking like right now.
There are a number of lenders (I generally have three on my panel) that will look at customers with bad credit history (defaults, discharged bankrupts etc) They will simply assess your situation and then risk it accordingly.
The most important thing here will be to get a copy of your credit file before an application is submitted. This will help you and your broker place your loan where it needs to go.
If your credit file is clear then you have all the mainstream lenders to select from (subject to an income assessment of course).
If there is some historical information showing up then this is where the specialist lenders will come in.
I can help you with obtaining your credit file if you need and if you would like more information I'm always happy to help.
Q: Is there a lender out there who will lend on lvr up to 70% with low short term income? I have high asset but 2 to 3 income flow will be low so can't get loan value to that ratio.
A: Hi John,
This is tricky to answer as it's quite specific to your personal situation. Some lenders only require one payslip with an employer if we have lending under at 80%. So this may answer your short term income concern.
If your income and expenses allow for servicing then this can be considered but equity alone without evidence of being able to service the proposed debt is not possible under NCCP Guidelines.
I hope this sheds some light on the situation for you. Of course I'm happy to discuss this further if you would like.
Q: When my fixed rate loan period ends - do I just automatically switch back to variable with the same lender without having to bother with paperwork etc?
A: Hi Trevor,
In most cases the loan will automatically revert to the standard variable rate (plus the applicable discount you would be entitled too). However sometimes it doesn't work as smoothly as intended.
The following can occur:
1. Loan was set up for the fixed term ONLY and you need to obtain finance with a new lender altogether (typically a construction or specialist lending scenario)
2. The variable rate goes to the standard variable rate and not the discounted rate that you are entitled too
3. The loan may switch to principal and interest repayments and not interest only. This is relevant if you had your fixed term as interest only
These can all cause some alarm for clients so it's certainly best to discuss with your broker your loan and the structure and how it will proceed to variable to ensure it all goes smoothly. You may also want to re- fix the loan so is a great opportunity to re-assess and see where you are at.
If you want to discuss your loan or compare I'm only too happy to help! Have a great day.
Nicole Cannon :)
Q: We are looking to buy a new home to live - can you provide some advice as to how we should go about it as we will need to sell our existing home - should we sell before we buy?
A: Hi Matt,
Always so hard to know what to do as there are a few ways you can approach this. All options have different degrees of risk and it is a matter of which option you are most comfortable with.
If you sell before you buy, request a longer settlement term such as 12 weeks. If you have a pre approval based on your property selling for "X" and your proposed loan after sale would be "Y" least you know you are covered for your anticipated purchase. This gives you good time to find a property that suits you and your families needs.
Secondly, if you have enough equity in your current home, you can look at bridging finance. Bridging finance enables you to purchase now and sell later. You hold the finance for both properties initially - known as peak debt - and then once your current property is sold and you pay down the peak debt, you are left with your end debt. The interest rates are not loaded with a premium like they used to be but the cost is more that the interest on the loans for both properties is accumulated to the loan and if your property takes a few months to sell - this can add up. You can opt to make repayments throughout this time too so this can reduce the long term cost.
Thirdly if you have the borrowing capacity, deposit and equity to hold both properties and sell once you have moved into your new home you could have a loan for both properties. This has a higher responsibility and risk on you and can be stressful if your loan is a significant amount of debt to cover.
In order to work out the best option and solution for you, have a chat to your broker who will be able to discuss the pros and cons of the available options.
Good luck with it and if you need any help or have further questions, I'm only too happy to help!
Q: Is it right the banks are offering different rates for interest only loans compared to principal and interest on investment loans?
A: Hi Joseph,
Great question! In short, yes they do have different rates. However it's not just as simple as that.
These days rates are now dependant on a number of factors. Each bank is a little different but will be dependant if it's
1. Owner Occupied
3. Principal and Interest
4. Interest Only
Depending on your situation, your broker can go through all the possible lenders and determine the lender and product that would be most suitable to you.
Always happy to help if you need!
Q: Is there an ideal time to refinance a home loan?
A: Hi Justin,
There are many different situations that may trigger the need to refinance. Every loan, every person and every circumstance is different all of which generates a different "ideal" time to refinance.
It doesn't hurt to have a look at your home loan situation every two to three years. Just because you have a look at your home loan to compare doesn't mean that you will necessarily switch lenders but it's good to keep check that you still are on to a good thing.
Other ideal times to refinance may be when a fixed rate period expires, if an interest only term expires, if your equity position changes (ie you now have 20% equity so can get a cheaper rate) also when there is a period of change with rates. Last year there was a huge readjustment of rates for investment properties and it was great to compare our customers loan with what their rate was and what we could get elsewhere.
What I do know is that there is never a bad time to have a quick chat to compare your loan to the market. If you wanted to discuss your situation I'm more than happy to do so.
Have a great evening!
Q: What are the advantages of a self managed superannuation fund and is it easy to do?
A: Hi Emma,
The advantages of a Self Managed Super Fund (SMSF) is that you manage where your super goes. As mentioned above you can invest in a variety of things. This can be time consuming as its about generating a balance of property, shares, art etc.
Another advantage is that it is a tool to expand on your property portfolio without you having to tip in extra as your super fund makes the home loan repayments. (You may, however, need to tip in extra to superannuation to ensure the repayments are met)
There is a bit of paper work to do to set this up but an accountant / financial planner does all this for you. As there are SMSF trusts and then bare trusts if you wanted to lend against the SMSF.
SMSF is not for everyone. The costs per annum can be high and it may not be as effective as other strategies. That's where getting advice from a financial planner can help you.
Whilst some lenders only required enough in your SMSF to cover 20-30% of a purchase price plus purchase costs such as stamp duty etc having a buffer in there is better for you to cover for costs the property may incur as well as any vacancy for rent.
It's great to research the pros and cons.
Hope this has helped!
Q: I am a small business owner. I need a cash injection of about 20k to expand my business? What is the best way of doing this, redraw on my home loan? Take out a new business loan? What are the various costs and implications? Thxs
A: Hi Stephanie,
It's tough being a small business owner so well done you!!! I hope business is going well for you.
The cheapest way is to use the redraw on your home loan. Depending on the home loan you have now, you may be able to create a $20,000 split. t's easy then for accounting purposes to differentiate between the business and home loan. Home loan rates are under 5% at the moment. If you stayed with your current lender costs would be minimal. Under $500.
Other business options include an overdraft and a business loan. There is not one clear answer on rates for commercial and business loans. Banks calculate a different rate depending on various factors: if the loan was secured against anything (term deposit, property) time in business, asset position, cash flow, business financials and actual loan amount etc but in most cases for commercial you would be starting from at the very least 5.5% and above. Costs will include valuation fee, legal fee, application fee and again this varies from lender to lender
Some commercial lenders do have specials at the moment (I have had a quote recently for mid $400's) but as each scenario for commercial is so unique it's more difficult to give you a definitive answer.
Hope this helps in any case!!
Enjoy your Saturday.
Q: How do interest only periods work, if I've been putting money into an offset account, when the interest only period is over do they just charge you principle and interest on the difference between what's in your offset account and the loan amount?
A: Hi Zoe,
Are you referring to interest only loans? As home loans (unfortunately!) don't have any interest free period. It would be nice though!!
If you were referring to interest only loans, then once the interest only period is expired then it automatically switches to principal and interest.
If you had money in your offset account, during the interest only period the repayment will be based on the loan balance. (ie $300,000 loan, $100,000 in offset, interest charged on $200,000)
Once the interest only period has expired, your repayments will automatically increase to Principal and Interest of the original loan amount.
I hope this clarifies and answers your question.
Q: Can you give me an idea of what you think interest rates will do over the next 12 months or so and do you think is a good time to fix?
A: Hi John,
I have read recently some economists are generally saying that not much rate activity to occur in 2016 and not at least until towards the end of this year. However as we saw last year the banks changed rates (due to changes made by APRA) outside any RBA meeting so please keep that in mind.
Fixed rates are very competitive and low at the present time and it all depends on what your goals are to determine when is the time to fix.
If you want to pay down the loan then perhaps fixing not the best for you but if you simply want peace of mind the repayments are not going to change then fixing is your thing. (And sometimes a little bit of A and a little bit of B!)
Every situation is different and am more than happy to go through your situation to determine the best solutions for you.
Hope this helps.
Q: With the banks raising rates out of cycle (independently of the RBA), are we likely to see, or are we already seeing rates for commercial loans or say commercial property (office, industrial, retail etc) loan margins increase also ?
A: Hi Matt,
Thanks for your question. Commercial and Residential loans are priced very differently.
Whilst we have had on residential loan changes to policy due to interest only and investment lending (due to government regulations) commercial lending is more focused on 90 day bill rate plus a margin.
This margin is determined by a number of factors - industry segment / loan amount / lending ratio and is priced per application in many cases.
Currently there are some commercial lenders who are being very aggressive in the market and I have not seen any immediate increase but certainly could happen especially when the US Start increasing their cash rate.
It's not a definitive answer - if only we had a crystal ball - but I hope this helps in any case!
Have a great day,
Q: If a financial institution calculates interest daily, is it only business days? Is this the same for deposits as loans?
A: Hi Rob,
Interest is calculated every calendar day and not just business days. This is the same regardless if it is a loan or a savings account.
Hope that helps!
Q: What is the best interest rate I could possibly expect to negotiate if I refinance my home loan?
A: Hi there Laina,
It certainly depends on your specific situation as to what interest rates to negotiate.
Factors that influence the rate include:
1. loan amount
2. Lending ratio (lending up to 80% of the value of the property means you have access to cheaper rates)
3. principal and interest repayments or interest only repayments will also influence the rate.
Without knowing your personal situation and to give you an idea
Non bank / non major lenders can provide you with rates under 4.10% (and some products under 4%!) and major lenders you can get in the high 4% range.
Your personal situation and the products that are important for you will determine your rate so if you would like to discuss in more detail always happy to help.
Hope this has given you a good idea in any case.
Have a great afternoon
Q: Coming right out of school and heading into the job market, is now a reasonable time to start a line of credit?
A: Hi Kayla,
Great that you are being mindful of your finances so early on in your career! Awesome stuff!!
A "line of credit" is typically secured against a property. There are a couple of lenders that have a credit card facility titled line of credit.
Whilst I am unable to give advice as to what would be the best financial decision for you, personally if you don't need a credit card or any credit then don't get into any bad habits early.
If you are disciplined with money and can pay your credit card monthly and pay no interest then you can make a credit card work for you with frequent flyer points but that shouldn't be the main reason to have a credit card.
Just be mindful to see if you really do need to get yourself into debt.
I hope that helps you in some way!
Q: They say changing lenders is easy and you should look for a better price and service - but how often should I do this?
A: Hi Jimmy,
The average person looks at their home loan every four years to see if they are on a good product and they have a competitive interest rate that is matched towards your goals.
However doing a review to keep check of your home loan annually is wise to do. This ensures you are on the most suitable product and rate for you. It can also provide piece of mind knowing that you are on a good thing.
Always happy to compare your current loan if you require.
Q: Do you think that the federal government will abolish the tax concessions that encourage negative gearing? If so, under which conditions or scenarios do you think they would do so?
A: WOW. Great question Lewis!!
If only we had a crystal ball to predict what will happen.
Negative Gearing is in place to attract investors into the market.
Abolishing this will have an impact in a negative way on the investor and property market. I read a report today stated that investment lending is down 6%. So perhaps with this market now slowing they may not do anything?
As I am not an accountant I am not privy to information that may be more relevant or current behind the scenes but it will be interesting to see what happens that's for sure!
No definitive answer but hope this gives a little insight?
Q: How can I look at a broad range of home loans to work out which is best for me? I really want to compare more than just the interest rate ?
A: Hi Rob,
It's so important to look at the different types of products and home loans out there and not just focus on rate. It's great that you are acknowledging that.
Most of the comparison websites do focus on rate primarily such as infochoice.com.au and Mozo.com.au The website iselect.com.au will ask for more specific personal information and provide comparisons that are not just focused on rate. You will most certainly get a few phone calls from them once you have entered their details. I learnt this from health insurance last year!!
Your local broker can provide you all of this information you are seeking. They will speak with you personally and show you a range of products based on your specific goals, circumstances and needs. This is what brokers do best. We love to help find the most suitable product for our customers and more than happy to help you too!
Hope this helps.
Q: We have strong equity in our home and a smallish mortgage. We want to renovate and remortgage but without increasing the repayment amounts or duration of the loan. Can this be done?
A: Hi there MJ Z
Congratulations on having strong equity in your home! Generally when you increase your loan amount your repayments will naturally increase.
However when looking at specific circumstances there are a number of factors that would need to be considered to see if what you are trying to achieve is possible.
Firstly the actual increase required will certainly determine if it is indeed possible but below are factors that can certainly help you reduce the increased cost and perhaps cover them all together.
If you are making voluntary additional repayments above and beyond your current minimum loan amount then this additional repayment could cover the cost of your renovation instead of accelerating your current home loan.
Comparing your current interest rate to what else is out there in the marketplace. A reduction of interest rate on your current loan can mean the savings made can go towards the renovations.
Thirdly if you have personal loans or other debts with a higher interest rate that could be consolidated onto your mortgage this will help your cashflow and the savings made will go towards the renovations.
I hope this answers your question.