We’ve seen interest rates bounce back up over the past three months, and most economists are predicting more increases to come. If you’re starting to worry about your finances, rest assured there are several steps you can take now to get on the front foot.

The days of ultra-low interest rates are officially over (it was nice while it lasted!).

And while all the talk of doom and gloom you see in the media about rapidly rising interest rates can be a bit spooky, now’s not the time to panic.

Check out this Reserve Bank of Australia (RBA) graph here, for example. It shows interest rates are currently lower (as of July 2022) than they ever were prior to May 2019.

So the current cash rate is nothing extraordinary – although it might come as a shock to newer borrowers, as we previously hadn’t had a cash rate hike since November 2010.

Still, there’s no denying that some households are starting to feel the squeeze, and if you put yourself in that category, now’s the time to consider implementing one or more of the below measures.

1. Start building up a buffer

There are no two ways about it – interest rates will go up over the next few months.

Currently, the RBA cash rate is at 1.35%.

Economists from the big four banks are predicting it could increase to anywhere between 2.60% (Commbank) and 3.35% (ANZ) by November.

That means it’s important to start planning ahead now, if you can, by building up a buffer.

This usually includes putting extra money into an offset account, redraw facility, or savings account – usually a facility that’s attached to your mortgage or easy to access.

2. Reduce expenses

Stan, Netflix, Spotify, Amazon, Audible, Apple TV, Disney, Paramount+, Kayo, Binge … the list goes on.

How much do you spend on subscriptions each month?

While they helped us get through lockdowns, these subscription services (that you might have forgotten to cancel) could be costing you a lot more than you realise.

In fact, the average Australian household spends $55/month on entertainment subscriptions.

Next on the hit list: takeaway coffees.

Six takeaway coffees a week costs about $27, which is about $120 a month, or $240 per couple.

Instead, you can brew your own (barista-quality) coffee at home for $30-$70 a month.

Then there’s Uber Eats, Menulog, DoorDash, Deliveroo – sure, takeaway dinner is great every now and then, but if you’re making a habit of it then it’ll really start to add up.

And the best part about home-cooked meals is the leftovers for lunch the next day – that’s two meals for the price of one.

3. Shop around

A recent Choice study found Aldi to be the cheapest grocery store. So that’s a start when it comes to your weekly food bill (which is also going up each month thanks to inflation).

Failing that, this ING survey found the average Australian family saves $114 a month simply by doing their grocery shopping online (must be because you spend less time in the choccy aisle, and more time buying just the essentials!)

But it’s not just your groceries that you can shop around for a lower price on.

Car insurance, home insurance, utilities, your phone bill, and your internet bill are other monthly expenses you can usually find a better deal on.

4. Refinance

While we’re on the subject of shopping around, it goes without saying that if you haven’t refinanced for a while, there’s a decent chance you could get a better rate on your home loan.

But why refinance now if interest rates will just keep rising anyway?
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Well, let’s say you refinance your variable rate home loan this month from 3.50% down to 3%.
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If the RBA raises the cash rate by 0.50% next month, and your bank follows suit, your interest rate will then be 3.50%. ⁣
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But if you choose not to refinance (and your bank follows the RBA’s lead) it’ll be 4%. ⁣

This 0.5% gap would remain for all subsequent upcoming interest rate rises – so long as the banks increase their interest rates in lockstep with the RBA.⁣

Another option you can consider is consolidating multiple loans – such as a car or personal loan – into your mortgage to reduce your monthly expenses.

Now, it’s important to note that if you do this you’ll pay more in interest on the car and/or personal loan over the lifetime of those loans, but if you need cash flow now, this could be a possible solution.

Similarly, you can also consider refinancing to extend the term of your mortgage, which could help reduce your monthly repayments.

Once again, you’ll end up paying more interest over the life of your loan with this option, but it can give you more breathing space if you need it.

5. Come and speak to us

Last but not least, if you’re concerned about what’s going on with interest rates, inflation and/or how you’ll meet your home loan repayments, please don’t hesitate to get in touch with us.

Everybody’s situation is different. And we understand many of the ideas we’ve listed above might not suit your financial and personal situation.

So if you’re worried about how you’ll meet your repayments in the months ahead, give us a call today. We’d love to sit down with you and help you work out a plan moving forward.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Seven in 10 homeowners have recently used the equity in their home to renovate, invest in property or shares, or boost their superannuation. Have you thought about how you could take advantage of last year’s property price spike?

You might have heard that property prices spiked 23.7% in 2021, yeah?

That’s quite the growth spurt!

So how do you take advantage of that growth without (or before) selling your home?

Well, one way to do so is to cash out equity while property prices are high (which we’ll explain in a little more detail below).

According to NAB research, three in 10 mortgage holders have recently done just that and have used the money to give their home a facelift by renovating.

Other popular options include using unlocked equity to buy an investment property (16% of homeowners), invest in shares (12%) and boost super balances (8%).

So how does ‘cashing out equity’ work?

It might sound complicated – but we promise it’s not.

Let’s say you bought an $800,000 house three years ago that, due to last year’s property price surge, is now worth $1 million.

And let’s also say you took out a $600,000 loan for that house, which you’ve managed to pay down to $500,000 (you little beauty!).

By refinancing that $500,000 loan into a $700,000 loan (70% of your property’s new market value), you can unlock $200,000 in equity to help fund a deposit for your renovations or to buy an investment property.

It’s also worth noting that banks will typically let you borrow up to 80% of a property’s market value.

So if you upped the ante and refinanced to an $800,000 loan, you’d be able to unlock $300,000 in equity.

Want to find out more about unlocking the equity in your home?

If it still all sounds a little confusing, don’t stress, we’d be more than happy to sit down with you and help you work out how much equity you can unlock.

And if you decide to proceed, the good news is part of the process can include refinancing your home loan.

Why’s that good news?

Well, just because interest rates are going up, doesn’t mean you can’t scope out a better deal on your mortgage. Competition amongst lenders remains fierce, particularly if you have a decent amount of equity and a strong track record of meeting your mortgage repayments.⁣

So if you’d like to explore your options when it comes to unlocking the equity potential in your home, get in touch today – we’d love to help you crunch the numbers.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Single Australians under 30 snare the lion’s share of spots in the federal government’s 5% deposit first home buyer scheme, according to new data. Here’s how to secure one of the highly coveted 35,000 scheme spots released on July 1.
Long gone are the days when you had to scrimp and save for a 20% deposit to buy your first home (that’s so 2019).

These days, you can crack the property market with just a 5% deposit and pay no lenders’ mortgage insurance (LMI), thanks to the federal government’s First Home Guarantee (FHG) scheme.

NAB – which is one of two major lenders (alongside dozens of non-majors) that provides finance under the scheme – recently released some pretty insightful data on just who is jagging the limited spots each year.

The data shows almost two-thirds of people (63%) who purchased a house under the scheme were single buyers – whereas for non-scheme purchases, single buyers only made up 49% of borrowers.

Of the single people snapping up First Home Guarantee spots, 59% were female and 41% were male.

Government data also shows that the median age of people using the scheme is 25 to 29 years old.

“People going at it alone shouldn’t be disadvantaged and we are seeing the scheme help them buy a property,” says NAB Executive Home Ownership, Andy Kerr.

How the scheme helped one homebuyer purchase 4 years sooner
First home buyers who use the scheme fast-track their property purchase by 4 to 4.5 years on average, because they don’t have to save the standard 20% deposit.

Better yet, not paying LMI can save you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.

This is exactly what helped car salesman Rihan Nasser purchase his villa unit last August.

Initially, Rihan had been crunching the numbers on what he’d need to do to save a 20% deposit, admitting “it would have taken him years”.

“The scheme fast-tracked the process by maybe two, three or four years and made it easier to come up with the deposit to buy,” says Rihan.

“Once I knew I needed 5%, I knuckled down on the saving. It took me about a year and a half. I would 100% recommend the scheme. It made it so much easier.”

How to get the ball rolling today
Ok, so here’s the catch: places in the First Home Guarantee scheme are generally allocated on a first-come, first-served basis.

And don’t let this year’s expansion to 35,000 spots lull you into a sense of complacency – they’ll get snapped up fairly quickly.

So if you’re a first home buyer looking to crack the property market sooner rather than later, get in touch today and we can explain the scheme to you in more detail, check if you’re eligible, and then help you apply through a participating lender.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Got your eye on a luxury car that’ll make your mates jealous? Or perhaps something that’s a little more fuel-efficient and environmentally friendly? Today we’ll run you through a new tax change that could help you buy something a little more la-de-da.
Have you heard about the luxury car tax (LCT) threshold?

Basically, if you buy an imported car with a GST-inclusive value that’s above the LCT thresholds, the tax man slugs you with an extra 33% tax on the exceeded amount (minus the GST component).

But the good news is the LCT thresholds have just been given a pretty decent boost – the third one in a row.
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From July 1, the threshold has been boosted by $5,257 to $84,916 for fuel-efficient vehicles, and by $2,697 to $71,849 for other regular vehicles (all inc. GST).

According to the ATO, a fuel-efficient vehicle is one with fuel consumption that doesn’t exceed 7.0L/100km on the combined cycle.

How does the LCT threshold work?
Ok, so this threshold boost isn’t just good for people wanting to buy a vehicle under the threshold.

It’ll also make cars above the threshold more affordable, too.

Let us explain.

Say you want to buy a Tesla Model 3 Performance, which has a GST-inclusive price of $93,325.

Under last financial year’s LCT threshold of $79,659 for fuel-efficient vehicles, you would have paid a LCT tax of $4,100 (exceeds LCT threshold by $13,666, subtract GST component paid, multiply by 33% = $4,100 LCT).

But now that the LCT threshold for fuel-efficient vehicles has been boosted to $84,916, you would only pay LCT of $2522 ($8,409 – GST component paid x 33% = $2522).

And if you wanted to avoid paying the LCT altogether, you could instead purchase a Model 3 Long Range, which has a GST-inclusive price of $81,725.

That means this financial year, it’s below the LCT threshold, but last year you would have been slugged with a LCT of $620.

Get in touch today to explore your finance options
If you’ve got your eye on a particular vehicle – luxury or not – and you’d like to explore some finance options to help purchase it, give us a call today.

We can help you find the right loan for your circumstances, depending on whether the vehicle is for business, personal use, or a mix of both!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Pictures of varying shapes are located here

Original image URL located here

High-resolution image download here

Social media teaser. Got your eye on a luxury car that’ll make your mates jealous? Or perhaps something that’s a little more fuel-efficient and environmentally friendly? Today we’ll run you through a new tax change that could help you buy something a little more la-de-da.👇

The Reserve Bank of Australia (RBA) has increased the official cash rate by another 50 basis points to 1.35% amid continuing inflation pressures. How much will this third consecutive rate hike increase your monthly mortgage repayments?
At the beginning of May, the cash rate was 0.10%.

Today, it was increased by the RBA to 1.35% – the second double-barrel 0.50% hike in a row.

RBA Governor Philip Lowe said in a statement that the cash rate rise was the result of high inflation, both in Australia and around the world.

“Global factors account for much of the increase in inflation in Australia, but domestic factors are also playing a role,” said Governor Lowe.

“Strong demand, a tight labour market and capacity constraints in some sectors are contributing to the upward pressure on prices. The floods are also affecting some prices.”

How much more will this latest rate rise cost each month?
Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.

Let’s say you’re an owner-occupier with a 25-year loan of $500,000 (paying principal and interest).

This month’s 50 basis point increase means your monthly repayments could increase by about $137 a month.

If you have a $750,000 loan, repayments will likely increase by about $205 a month, while a $1 million loan is expected to cost an extra $273 a month.

But that’s just factoring in this month’s latest cash rate hike.

Let’s take a look at how much more you can expect to pay moving forward, compared to when the cash rate was 0.10% in April.

For a $500,000 loan, you’ll likely be paying an extra $67 (May hike), $133 (June hike) and $137 (July hike) = $337 per month in interest repayments.

For a $750,000 loan, you’ll likely be paying an extra $100 (May hike), $200 (June hike) and $205 (July hike) = $505 per month in interest repayments.

For a $1,000,000 loan, you’ll likely be paying an extra $133 (May hike), $265 (June hike) and $273 (July hike) = $673 per month in interest repayments.

If you’re worried about your monthly repayments, get in touch
As you can see, unless you’re on a fixed rate, your monthly mortgage repayments will likely have gone up quite a bit since the end of April.

And it’s likely that we’ll see a couple more RBA cash rate hikes before the year is out.

So if you’re starting to feel the pinch and are worried about what interest rate rises might mean for your monthly budget, feel free to contact us today.

Some options we can help you explore include refinancing (which could include increasing the length of your loan to decrease monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.

We’re just days away from 35,000 first home buyer scheme spots becoming available on July 1. If you’re keen to snare a place in the scheme – and buy your first home sooner – here’s how to get ahead of the pack.
Have you heard about the federal government’s Home Guarantee Scheme? (previously called the First Home Loan Deposit Scheme).

It allows you to buy your first home with just a 5% deposit and pay no lenders’ mortgage insurance (LMI)

First home buyers who use the scheme fast-track their property purchase by 4 to 4.5 years on average, because they don’t have to save the standard 20% deposit.

Better yet, not paying LMI can save you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.

But once July 1 arrives, competition for the 35,000 spots will be fierce, so here’s how to give yourself the best possible chance of securing a place.

Get the jump on the competition
End-of-financial-year: it’s a phrase that usually sends a shiver up your spine.

But getting your 2021/22 tax return in order asap can give you the inside lane when it comes to jagging one of those 35,000 FHB spots come July 1.

That’s because lenders require your most recent financial information when assessing your home loan application, and that will most likely include your latest tax return.

So now is the time to:

1. Speak to your employer to make sure they’ll provide your PAYG summary in a timely fashion.

2. Book an appointment with your accountant in July (before availability fills up).

3. Start compiling all your work-related expenses.

How we can help
Getting your tax return completed is just one (important) step in the process.

But it’s far from the only one.

When assessing your application, lenders require you to provide them with an accurate picture of your monthly expenses and discretionary spending, which can take a little time to put together.

And that’s where we come in.

Not only can we help you calculate your monthly budget – which includes your income and expenses – but we can help you crunch those numbers to give you an idea of your borrowing capacity, and therefore, what you can afford to buy.

This is especially important if you want a spot in the Home Guarantee Scheme because it has borrowing caps depending on where you want to buy.

And lenders these days are increasingly strict when it comes to your debt-to-income ratio and home loan serviceability – both of which contribute to your borrowing capacity.

Last but not least, you might have heard that interest rates are almost certain to increase over the next 12 months – so it’s also important to factor in a little buffer if needed.

Get the ball rolling today
Places in the Home Guarantee Scheme are generally allocated on a first-come, first-served basis.

And don’t let this year’s expansion to 35,000 spots lull you into a sense of complacency – they’ll get snapped up fairly quickly.

So if you’re a first home buyer looking to crack into the property market sooner rather than later, get in touch today and we can explain the scheme to you in more detail, help check if you’re eligible, and take steps to get the ball rolling.

Then when spots become available on July 1, we’ll be ready to help you apply through a participating lender.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Pictures of varying shapes are located here

Original image URL located here

High-resolution image download here

Social media teaser. We’re just days away from 35,000 first home buyer scheme spots becoming available on July 1. If you’re keen to snare a place in the scheme – and buy your first home sooner – here’s how to get ahead of the pack. 👇

With interest rates on the way back up, there’s no doubt some households around the country are starting to do it a bit tough. Coincidentally, some big changes kick in on July 1 when it comes to recording financial hardship arrangements.
In the past, if you were unable to meet your loan repayments, you could enter into a financial hardship arrangement with your lender and it couldn’t be reported in official credit reporting systems.

In many cases, the repayment history in your credit report would show a blank month or possibly a missed payment during the hardship arrangement period.

Neither of these two approaches told the full story about your credit history and that a financial arrangement had been agreed upon with your lender.

So what’s changed from 1 July 2022?
Ok, so from July 1, the credit reporting system will introduce financial hardship information into credit reports.

This means that if you enter into a financial hardship arrangement that reduces your monthly loan repayments, then for the next 12 months your credit report will show:

– that you were current and up to date with your payments for that hardship month, provided you made your reduced payments on time; and

– a flag alongside your repayment history information for the hardship month, indicating a special payment arrangement was in place.

The flag in the credit report will be referred to as ‘financial hardship information’ and can take two forms (A or V) depending on the type of arrangement:

A indicates there was an arrangement for the month that temporarily deferred your repayments (which will need to be repaid later or be subject to a further arrangement).

V on the other hand means the loan was varied that month to reduce your repayments.

The good news is that the financial hardship information flag will only stay on your credit report for 12 months, whereas regular repayment history information stays for 24 months.

So is all this good or bad news?
Well, like most changes in life, it comes with pros and cons.

The changes are intended to give you the ability to ‘protect’ your credit report if you experience financial hardship – in no way are they designed to exclude you from applying for credit.

However, a financial hardship arrangement flag may prompt prospective lenders to make further inquiries to better understand your situation.

If, for example, the hardship arose because of a temporary reduction in your work hours, but you’re now back in stable employment, in most cases it shouldn’t cause any major issues for your loan application – especially if we can provide proof to your prospective lender.

Additionally, hardship arrangements can stem from a natural disaster that’s completely outside your control, such as a flood or bushfire, which can be explained to a lender.

Importantly, the financial hardship information cannot be used by a credit reporting body to calculate your credit score, whereas regular repayments that are missed outside a hardship arrangement will impact your credit score.

Having trouble meeting your repayments? Get in touch
As you’ve probably noticed, the Reserve Bank of Australia has been aggressively raising the official cash rate in recent months, which means your monthly repayments would most certainly have gone up if you’re on a variable loan rate.

And if you’re on a fixed loan rate, you also need to think ahead to what your monthly repayments might be when the fixed-rate period ends and reverts to a variable rate.

So if you think more rate rises may soon strain your monthly budget, now is a good time to start putting extra money away into an offset or savings account to build up a buffer.

Other options we can help out with are refinancing and debt consolidation, both of which can help reduce your monthly repayments.

Whatever your circumstances, we’re here to support you however we can over the period ahead.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Pictures of varying shapes are located here

Original image URL located here

High-resolution image download here

Social media teaser. With interest rates on the way back up, there’s no doubt some households around the country are starting to do it a bit tough.

Coincidentally, some big changes kick in on July 1 when it comes to recording financial hardship arrangements.👇