Frequently Asked Questions

In short, yes and it is something to seriously consider.

Do you have an expensive SMSF Loan in place?

SMSF Lending for both Residential and Commercial properties are often expensive and provide minimal flexibility or functionality. It has often been noted that refinancing these debts is also complex or in many instances not beneficial as the rates amongst the lenders are often relatively similar.

This is why I am writing to provide you an update on one of our lenders who currently has a flexible SMSF Product available which:

• Allows refinance of both Commercial & Residential Security SMSF Loans
• Has the option of 100% Offset Account capability
• Rates from 4.89%! (With a very competitive fee structure)

If you or your clients have an SMSF Loan in place and would like  a review or are considering establishing a new SMSF Lending Facility, Schedule some time with the Home Loan Team or Business Loan Team to check your eligibility or reach out direct on my details below.

In-House Finance is a great way for you to keep a strong engagement with your potential clients. If you’re a business looking to establish your own In-House Finance, our Finance Teams would love to assist. We will work with you to tailor an In-House Finance solution without the need to hire unknown staff.

Offering an Internal Finance team can help you by:

• Allowing you to qualify your leads faster, resulting in higher customer satisfaction
• Improve conversion through access to multiple finance providers
• Customise your sales process without being reliant on external factors outside of your control

If you feel the ability to offer finance to your customers could assist your business to continue growing, reach out today to discuss how we can work together to establish your finance team.

The Car Loan Team specialises in vehicle finance for most purposes, makes, models and years. Some of the most common vehicles sold in 2019 with finance are noted below:

• Toyota HiLux Finance
• Ford Ranger Finance
• Toyota Corolla Finance
• Hyundai i30 Finance
• Mitsubishi Triton Finance
• Mazda CX-5 Finance
• Mazda 3 Finance
• Toyota RAV4 Finance
• Kia Cerato Finance
• Mitsubishi ASX Finance
• Nissan X-Trail Finance
• Toyota Prado Finance
• Hyundai Tucson Finance
• Mitsubishi Outlander Finance
• Holden Colorado Finance
• Isuzu D-Max Finance
• Toyota Camry Finance
• Subaru Forester Finance
• Mazda CX-3 Finance
• Volkswagen Golf Finance

Alongside the above vehicles, our team have financed many others and would love to help you compare car finance options before you commit to Dealership Finance which is commonly overpriced.

In short – if your income has been impacted then it is likely your lender will allow you a hold on repayments.

The longer consideration is whether placing repayments on hold during the Corona Virus pandemic is worthwhile given the impact it will have in the longer term, such as increased repayments, an extended loan term and/or larger interest charges over the life of your loan (due to compounding interest).

It is important to remember that:

• The lenders have largely agreed to assist those impacted by placing repayments on hold – not by freezing interest charges from accruing.
• Upon loan repayments commencing again in 3 – 6 months, some lenders will extend the loan term. This means you will be paying additional interest over the life of the loan which is more money out of your pocket.
• If a lender does not extend your loan term, the result will be the additional interest that is accrued during your repayment freeze needing to be paid in the standard loan term. This will require an increase in your regular repayment amount.

Ultimately if you can afford to continue making repayments this is still the best option. If you are unsure and would like to discuss options we are always available to chat.

Breaking up is hard to do. On top of the emotional impact, there are practical ramifications as well.

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

Here we outline some of the issues facing both de facto and married couples when dealing with what is usually their most significant debt: the mortgage. Used alongside professional legal and financial advice, it’s possible to make this difficult transition a little less stressful.

Get advice from the experts

The end of a relationship is one of life’s most stressful events. You don’t have to handle it alone – there’s emotional, legal and financial support out there.
Counselling

Visit a counsellor to work through the emotional weight of breaking up – it’s hard to make decisions when you’re angry or sad. You may want to access a Family Dispute Resolution (FDR) mediator to assess whether both parties are emotionally ready to negotiate on money matters, and to help resolve disputes.
Legal advice

Lawyers who specialise in family law can provide legal advice. Initially, they can advise whether you’re eligible for legal aid, and help with timelines and deadlines for your property settlement. Importantly, they should help you to set realistic expectations.
Financial advice

Talk to your lender or broker to understand the current state of your mortgage, and to learn what options are available regarding mortgage repayments. You may be able to defer payments, giving you time to get back on your feet. Your lender or broker can also help you review your finances before you decide whether you can refinance and take on the mortgage yourself. It’s a sad fact, but they’ve probably dealt with this situation before.

Sort out your living arrangements

Some separating couples are able to continue living in the same house, while for others that simply isn’t possible. If one of you needs to move, sort that out first, before turning your attention to the mortgage. Again, financial advisors, lawyers and brokers can help you plan a budget and figure out how your mortgage will be paid until you sell or settle.

Settle your finances

When you divorce or separate, your assets will be divided. To help you understand your financial situation, have all your documentation at hand – bank statements, tax returns, superannuation, and so on. With professional advice, you can figure out your assets and liabilities, what each person is entitled to, and whether one of you can afford to take on the mortgage alone, or if you have to sell.

One option: Sell the property

You might decide to sell your property, divide any assets and move on. The first step is to have your property appraised so you know the market value. From there you can figure out your total equity. For example, if your house is appraised at $800,000 and you owe $200,000 on the mortgage, your equity is $600,000.
Things can become complicated if there’s a disagreement about how and when to split your assets and liabilities. Legal expertise or a mediator may be needed.

Another option: Sell to your partner, or buy them out

If one of you wants to remain in the house, it might be possible for that person to refinance the mortgage and take it on alone, depending on their income and other assets. This is sometimes the preferred option if there are children involved.

Again, agreement must be reached on the value of the property and whether it’s a 50-50 split. Professional property valuers, financial advisors and lawyers are all able to provide advice and information.

It’s difficult figuring out who gets what and when, but getting the right legal and financial advice can help you both break up the mortgage and move on with your lives.

Relationships Australia’s A Fair Share provides a good summary of your options and of the Family Dispute Resolution process. You can also get great information on the legal process from the Family Court of Australia.

© Advantedge Financial Services Holdings Pty Ltd ABN 57 095 300 502. This article provides general information only and may not reflect the publisher’s opinion. None of the authors, the publisher or their employees are liable for any inaccuracies, errors or omissions in the publication or any change to information in the publication. This publication or any part of it may be reproduced only with the publisher’s prior permission. It was prepared without taking into account your objectives, financial situation or needs. Please consult your financial adviser, broker or accountant before acting on information in this publication.

New government regulations mean interest-only loans are on the decline. Given the changes, it may be time to reconsider your own loan structure.
Rewind a few years and many people would have confidently assured you that an interest-only loan – a home loan on which you only have to make interest payments for a set period of time – was the way to go. Its benefits were clear to many owner-occupiers and investors.

For those buying their first home, for instance, it provided an opportunity to get on top of the initial costs of buying a place before they were hit with the full force of principal and interest (P&I) repayments. For those investing in property, it was a great chance to get a tax break, without tying up all their funds in the one asset.

Interest-only on the wane

In early 2017, however, the Australian Prudential Regulation Authority (APRA) put a cap on the number of interest-only home loans banks could offer, down to 30 per cent* of all new mortgage lending. As a result, competition intensified and interest-only rates jumped well past P&I rates.

Since then, far fewer people have taken up interest-only loans while a growing number have made the switch to P&I mortgages – whether or not their interest-only period had officially ended.

As a result, the stock of interest-only loans in total housing credit declined noticeably over the past year, from close to 40 per cent of all loans to almost 30 per cent. This represented a $75 billion reduction in interest-only loans from about $600 billion in late 2016**.

Doing the sums

It’s not surprising that a significant portion of the Australian population has swapped from interest-only loans given the interest rate differential. But it’s not the only reason to rethink your options.

In fact there are a number of reasons to rethink your interest-only loan, once you sit down and do the sums.

Your total interest bill: It’s worth considering the interest you’ll pay over the life of the loan. The longer you wait to chip away at that principal, the more interest you’ll be paying in the long run. For instance, a $450,000 loan over 25 years with an interest rate of 5 per cent could see you paying an extra $36,055 in interest if you took out an interest-only loan for the first five years.

Go for low: Today’s interest rates are very low – for now. Why not take the opportunity to reduce your mortgage before it’s hit by higher rates?

Build equity: If the housing market takes a dip, you risk being left with little to no equity in your home. That leaves you vulnerable to losing your family home.

Know your budget: Can you afford your repayments over the long term? Inevitably the interest-only period will end and you’ll be faced with paying the principal and interest. Plus, with less time to pay it off, your repayments are likely to be quite a bit higher.

Save today: It may be that you’ve got used to having the additional cash, spending it on a mix of day-to-day necessities and luxuries instead of investing it or paying down debt. That might leave you ill-equipped to handle higher repayments and worse off in the long run.

Avoid a fire sale: Come 2020, about two-thirds of interest-only loans are due to expire. While the Reserve Bank of Australia plays down the effect this will have on Australia’s economy , it does acknowledge that some of these borrowers may experience genuine difficulties in meeting their higher repayments and as a result will be forced to sell. That’s not a situation any owner-occupier wants to be in – especially as a good number of other people will be forced to sell at the same time.
*https://www.apra.gov.au/sites/default/files/Further-measures-to-reinforce-sound-residential-mortgage-lending-practices.pdf

**https://www.rba.gov.au/speeches/2018/sp-ag-2018-04-24.html

© Advantedge Financial Services Holdings Pty Ltd ABN 57 095 300 502. This article provides general information only and may not reflect the publisher’s opinion. None of the authors, the publisher or their employees are liable for any inaccuracies, errors or omissions in the publication or any change to information in the publication. This publication or any part of it may be reproduced only with the publisher’s prior permission. It was prepared without taking into account your objectives, financial situation or needs. Please consult your financial adviser, broker or accountant before acting on information in this publication.