Archive for Finance

Stamp Duty axed for first home buyers!

On June 1st, NSW premier Gladys Berejiklian announced that first home buyers across the state will be exempt from paying stamp duty on existing and new homes up to $650,000. There will also be stamp duty concessions for properties between $650,000 and $800,000.

The changes, which will come into effect 1st July 2017, also include a $10,000 grant for builders of new homes up to $750,000, and purchasers of new properties worth up to $600,000. The previous $5000 New Home Grant Scheme will end.

As part of the reform to address housing affordability, the government has said that the stamp duty charged on lender’s mortgage insurance will also be abolished. For an individual with $50,000 in savings looking to purchase a $800,000 home, this could mean saving approximately $2900.

Foreign investment

In an effort to slow down the competition first home buyers face, foreign investors will now pay double the stamp duty surcharge – from 4% to 8% – and land tax will increase from 0.75% to 2%.

Investors

To decelerate investor competition for first home buyers in entering the market, the government will axe the ability for investors to defer paying stamp duty on residential off the plan purchases,

In addition, the State government has committed to increasing the supply of land as a means to tackle the current constraints, adding that $3 billion will be invested in infrastructure.

The exemption, is said to benefit about 25,000 first home buyers every year, with an average of $8000 worth of savings for new or existing homes.

Interest rates this Month unchanged. RBA kept it on hold

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Interest rate update from the RBA today

April 4, 2017

The RBA have decided to keep cash rates unchanged today.

april

The REIQ welcomes the RBA decision to leave cash rates on hold at the current historic low of 1.5 per cent.

REIQ CEO Antonia Mercorella said the housing market throughout Queensland, and most of the country, would benefit from continued low rates.

“Our economy in regional Queensland is far from strong and giving people access to affordable loans is a key part in strengthening the housing market, which underpins the broader regional economy,” she said.

Conditions in the global economy have improved over recent months. Both global trade and industrial production have picked up. Labour markets have tightened in many countries. Above-trend growth is expected in a number of advanced economies, although uncertainties remain. In China, growth is being supported by higher spending on infrastructure and property construction. This composition of growth and the rapid increase in borrowing mean that the medium-term risks to Chinese growth remain. The improvement in the global economy has contributed to higher commodity prices, which are providing a significant boost to Australia’s national income.

Headline inflation rates have moved higher in most countries, partly reflecting the higher commodity prices. Core inflation remains low. Long-term bond yields are higher than last year, although in a historical context they remain low. Interest rates have increased in the United States and there is no longer an expectation of additional monetary easing in other major economies. Financial markets have been functioning effectively.

The Australian economy is continuing its transition following the end of the mining investment boom. Recent data are consistent with ongoing moderate growth. Most measures of business confidence are at, or above, average and non-mining business investment has risen over the past year. At the same time, some indicators of conditions in the labour market have softened recently. In particular, the unemployment rate has moved a little higher and employment growth is modest. The various forward-looking indicators still point to continued growth in employment over the period ahead. Wage growth remains slow.

The outlook continues to be supported by the low level of interest rates. Lenders have recently announced increases in mortgage rates, particularly those paid by investors. Financial institutions remain in a good position to lend. The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment.

Inflation remains quite low. Headline inflation is expected to pick up over the course of 2017 to be above 2 per cent. The rise in underlying inflation is expected to be a bit more gradual with growth in labour costs remaining subdued.

Conditions in the housing market continue to vary considerably around the country. In some markets, conditions are strong and prices are rising briskly. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Growth in rents is the slowest for two decades.

Growth in household borrowing, largely to purchase housing, continues to outpace growth in household income. By reinforcing strong lending standards, the recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness. Lenders need to ensure that the serviceability metrics that they use are appropriate for current conditions. A reduced reliance on interest-only housing loans in the Australian market would also be a positive development.

Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

RBA Leaves Rates on Hold in March

The Reserve Bank of Australia (RBA) has announced it will hold the official cash rate at 2% in March.

The decision comes as global economic indicators continue to deteriorate. In January, the commodity price index dropped to a 10 year low of 83.1. The International Monetary Fund (IMF) expects a downgraded forecast for economic growth in 2016, to 3.4%.

Source: RBA Leaves Rates on Hold in March

3 ways to help prepare for interest rate rises

The latest news that all of the big four banks have lifted their interest rates on owner occupier home loans, and a number of non-major banks following suit, will see many Australians will now be facing an increase in mortgage repayments.

This will no doubt impact a lot of household budgets and to help you prepare here are three things you can do;

1. Do the Numbers

First work out how much your additional payments will be. Knowing exactly how much extra you will pay each month and year will help you prepare your budget.

To help you do the sums; you can use our mortgage calculator by inputting your exact mortgage details or speaking with your mortgage broker – they can run the numbers for you.

2. Set a new Budget Plan

There’s not a lot of point of working out how much extra you have to pay on your home loan if you don’t apply it to your household budget.

Write a new budget plan with your new mortgage repayments and assess how comfortably you can meet it. You may find that you are going to struggle financially, so take the time to look for areas where you can save money. It may be necessary to change your spending habits in order to adjust to the increased repayments.

The important thing is to plan straight away to avoid any nasty surprises down the track.

3. Consider your Options

An interest rate rise is something you need to prepare for, do your research and make the right, sometimes difficult choices.

Doing the numbers and setting a plan are two parts of the puzzle but in the end you still need to make your payments.

Have you looked into changing the frequency of your repayments? It might be easier to manage and less of a burden paying weekly or fortnightly repayments rather than monthly – or vice versa.

Maybe you have some savings and are able to make a lump sum payment? A lump sum payment could make a dent in your mortgage and could even help offset an interest rate rise by putting you ahead.

Is refinancing or fixing your interest rate an option? This is probably the hardest question to answer and requires a lot of research.

To get help you make the right choices with the research done for you, my advice would be to see your mortgage broker or let me know and I can put you in touch with my mortgage Guru!

How To Value Your Sorrento Property For Sale, Insurance and Remortgage

Sorrento property owners should evaluate its market price and replacement cost periodically because knowing the current market rates and trends will help them in different circumstances – like, selling their home or insuring or remortgaging it.  Let’s discuss each case in detail:

VALUATION FOR SALE OF PROPERTY

Every Sorrento property owner who’s out to sell his home desires the best possible price. This is but natural – sellers expect high rates while buyers dream of bargain prices. The deal is actually struck somewhere in between or close to the edges depending how ready or desperate the buyer or seller is.

If you are out to sell your home, then you should first arrive at its true market value. Here’s how you do that:

1.       Start by figuring out where the market’s at. You need to know whether buyers outnumber sellers or whether things are in reverse. You will be surprised to learn that despite the slowdown and the oversupply of homes in Perth, there are suburbs where listed properties have almost dried up. You also must figure out the average number of days it will take before your house is sold.

For example, it takes about 74 and 88 days for a Sorrento house and unit to sell, respectively. The median sale price is $1 million for houses and $440k for units. House prices have appreciated by 5% year on year, while unit prices have jumped 12% for the same period. This data tells us that the number of properties in Sorrento is limited and that the market values will either hold or move up slowly depending on the demand.

You also should check auction clearances.  The recent clearances in Western Australia were just 30% implying low sales and many passed-in properties. This percentage strictly does not imply that the demand for Sorrento homes is on the decline – Western Australia contains many areas and therefore interpreting the aggregate percentage could send the wrong signals to sellers based in Sorrento.

Your best source of information is your real estate agent. And hey, I’m assuming you are working with a professional with many years of experience.

If you are still left unsure, hire a licensed valuer. He will charge you money, but you will get an unbiased opinion.

These moves will help you arrive at the true current market value of your house or unit. Remember that knowledge is power, once you understand the market, no fancy sales talk or rumor on earth will make you budge from your asking price.

2.       Research the sold section on Sorrento-focused real estate sites. That will give you an idea of the current prices.

3.       Analyze the current interest rates. RBA’s (Australia’s Central Bank) current official cash rate is pegged at 2%. Mortgage loans are typically available at 2%-2.5% higher than RBA’s cash rate. Therefore, current home finance rates can vary between 4%-5.5% depending on borrower’s credit score and the financing institution.

Low rates induce people to borrow and invest in homes. Right now, the rates are low and therefore this seems like a good time to buy considering the fact that the market is sluggish.

Researching these factors will help you arrive at the fair market valuation. Next, you should set the lowest price you are willing to go down to and make a steely resolve not to go below that number.

VALUATION FOR REMORTGAGE

Remortgaging involves paying off your existing mortgage by obtaining a mortgage from another lender. It makes sense in the following circumstances:

1.       When interest rates have dropped dramatically over a period of time. For example, let’s assume you had obtained a mortgage in 2011 @ 7.5%. The rate these days is about 4%. If you remortgage now, you can save 3.5% which could save you 1000s of dollars in real terms.

It could turn out to be a bonanza if you get a low introductory rate for the first few years.

2.       Remortgaging also makes sense if your home’s market price has appreciated considerably. You can borrow extra and use the excess funds to fulfill other pressing needs too. Follow the guide contained in the last section to know how to determine the fair and current market value of your home.

3.       You also can consider a remortgage when you figure that interest rates will shoot up or when your current mortgage is about to end or when your lender refuses to accept an overpayment.

Before you decide to remortgage, know that there are costs involved. Mortgage closing costs can include prepaid charges (like loan originating fee), insurance, sales tax, stamps, other fees (underwriting, legal, courier, credit fee, and more), early closure fees, etc. Work these all out and ensure that you are getting into a winning situation before opting for a remortgage.

HOME VALUATION FOR INSURANCE

Home insurance at replacement cost valuation is extremely important. You must value your home at replacement cost and then insure it because underinsurance can place your finances at risk if something unforeseen does happen. Consider the following factors:

1.       Home building costs do not remain static or fall – they keep rising.

2.       Homes surrounded by a lot of fencing, or homes that are built on slopes are more expensive to rebuild.

3.       Replacement costs can also significantly vary depending on the contents and the quality of furnishings in your home.

4.       Every time you add to your home, you must re-evaluate its insurance.

You don’t need to arrive at the home’s selling price – all you need to do is determine its replacement value. If anything happens, the sum you receive from the insurance company will help you restore or rebuild your home back to its original state.

Here’s Help

Talk to us if you would like an appraisal on your Sorrento home for sale, mortgage or insurance purposes. Not only can we help you arrive at the fair selling price and fill you in with market data, we also can put you in touch with experienced and professional valuers, and recommend insurance companies.

Happy New Financial Year for 2015/2016

I would like to wish you a very happy and fortuitous new financial year. We hope the 2014 Financial Year was prosperous for each of you and hope that you enjoy plenty of success in 2015.

Like the calendar new year, July is a good time to set New Year’s resolutions for your business and personal financial prosperity.

Planning to spend time on your business rather than in your business is critical to achieving sustainable business success.   Why not consider;

  • Preparing, reviewing, or updating your business plan
  • Review how your achievements in FY14 measured up against your goals and determine what you need to do differently in FY15 to get a better outcome?
  • Consider your business succession plan (it’s never too early to start)
  • Review your finances – can you get a better deal on your general insurances, home loan, business loan, equipment leases?
  • Have you considered salary packaging to increase your take home pay and benefits?
  • Future finances – How will you support yourself in retirement – who should you consult?
  • Estate planning – establish or review your Will and speak to your family about it so they are aware of your wishes.

Call your accountant to help you with your tax planning.

RBA Announcement – June 2015

The Reserve Bank of Australia has made the decision to leave the cash rate on hold at 2.0% for June 2015.

As predicted by the majority of leading economists, the Reserve Bank of Australia has made the decision to leave the cash rate on hold at 2.0% for June 2015.

This decision follows rate cuts in February and May this year which have lowered the cash rate to an all-time low for Australia.

The decision follows pressure on the Reserve Bank to help boost economic growth whilst also keeping house prices in Sydney and Melbourne under control.

With the cash rate at an all-time low, and interest rates also extremely low, now is the time to review your home loan to make sure you are using the most suitable financial solution for your personal circumstances.

Reserve Bank cuts interest rates to fresh record low of 2 per cent

At its 5th May meeting, the RBA decided to lower the cash rate to 2 per cent. With interest rates continuing to fall, it’s an ideal time to review your loan. Talk to your bank if you’d like to look at what new options are available.

Three of the big four banks have kept some of the Reserve Bank’s 0.25 per cent rate cut to themselves, with both NAB and Commonwealth Bank reducing their standard variable mortgage rate by 0.2 per cent and Westpac by 0.22 per cent.

But Westpac and CBA have raised some of their deposit rates. Term deposit rates on CBA’s eight month and Westpac’s nine month term deposits have risen to 3.05 per cent. CBA also raised rates on its “GoalSaver” account to 3.05 per cent.

All three have passed on the full 0.25 per cent cut to business customers, a further signal that fierce competition for mortgages and regulator pressure to curb home lending to investors is causing the banks to shift their growth plans to business.

Three of the big four banks kept some of the RBA’s rate cut for themselves, with two raising deposit rates, NAB will cut its standard variable rate to 5.43 per cent, its lowest level in 37 years, on May 13.

 

Do you believe in Real Estate as an Investment with the new Interest Rate low?

At its meeting on 3 February 2015, the Board of the Reserve Bank of Australia decided to lower the cash rate by 25 basis points to 2.25 per cent, effective 4 February 2015 which is a new 60 year low.

TWO of the Big Four banks, Commonwealth Bank and Westpac have already cut their rates as well as smaller banks such as Bank of Queensland, ING Direct and ME Bank all cutting the full 25 basis points following the RBA’s move.

The pressure is now on for the other two big banks, ANZ and NAB, to pass on the full rate to its customers. ANZ said it will announce a decision by Friday 6th February.

What does this mean to you? Will you look at getting a loan to purchase a property and lock in these lower interest rates? Is now the perfect time to purchase new equipment for your business?

Perhaps now you can look at selling your current property and look at upgrading?

NOW is when you need to take advantage!

Are you paying high rates on your mortgage? Talk to my Guru and save buckets of money!

Every time I learn something new I do some research on it and when I am sure of all the facts I like to share my knowledge and help everyone.

I am a slow learner… Even though I buy investment properties, I had always trusted someone else to look after me with my mortgage rates as I was too busy selling real estate… until not too long ago!

Just by accident, speaking with someone about rates I discovered that I could go directly to my bank and ask them “what can you do about dropping the interest rate that I am currently paying” And guess what? They did!

After more research I found out that I could ask my bank if they could drop to 4,65% as another “mob” was offering me that rate  and guess what? Yep, they did! Gosh! That was amazing!

So I told a friend of mine to do the same with her bank but her bank was not able to offer what mine did for me. Even when she asked them how much it will cost to discharge her mortgage so she could go elsewhere, her mortgage officer did not try to retain her by offering a better rate.

I cannot assure you that you can get 4.65% rate or better but I can direct you to the right person to find out how much you can be offered.

It will cost you nothing to ask. Its never too late! I learned now, still in time to get the benefit of what I learnt.

Call me and I will redirect you to my “Guru” to help you to save “buckets of money” like me!

Financing for better rates. Is it possible?

I have been selling real estate for a long time now and sometimes I advise my clients to go to a Broker to get their finance when they have not approached anyone else.

Talking to a lot of people I have found out that they just accept whatever the Banks are offering and also discovered that many of them are not aware that you can ask for discounts on the rates they are offered.

I came across a fantastic contact that has offered me and my clients an opportunity to get better rates that are being offered.

So if you are interested in having a chat let me know.