As lenders cut their rates in line with the official rates, those on variable rates should start to see some savings in the order of $250/year or $20/month per $100,000 borrowed.  As was widely reported in the media, CBA and Westpac moved to cut 0.25% from their rates effective a few days after the official rate cut and NAB was criticised for only cutting 0.20% (effective Nov 7).  Despite this, NAB still has the lowest SVR of the big four.  Are you concerned you’re not getting the best rate at your bank?  Are you thinking of buying a property, but have been previously told you can’t borrow enough?  The drop in rates and the prospect of further cuts may increase your borrowing capacity.  Contact me and I’ll ask one of my mortgage professionals to assess your situation for you.

Buying a property within your SMSF has just become more attractive with the ATO releasing a draft ruling allowing funds from your SMSF to be used to improve a property and conduct repairs to recently acquired property.  This will ultimately have the effect of broadening the the available properties that you can purchase within SMSF as the previous restriction essentially limited purchases to new properties that didn’t require any modification to offer a good rental return.  Find more information on the ATO ruling here>>. Download ruling SMSFR 2011/D1  from the ATO.

One commentator suggests these changes will have a major positive effect on the rental availability and affordability as investors  increasingly enter the property market as part of their SMSF investment strategy.

If you’d like more information on these changes and how to use a SMSF to improve your post retirement financial position, drop me a line!

Transfer stamp duty is paid to the government when a property is bought, or the title is transferred to a third party.  Currently, first home buyers are eligible for a full concession if the purchase price is below $505,000. The only change here is an increase in the concession threshold to purchases below $510,000 after 1 August.  The major change after 1 August is that home owners will no longer be eligible for a concession and investors will pay a lower rate. I’ll detail the changes with two examples within a price range expected in the current market.

Contracts signed from 1 August inclusive will be subject to the new rates.

The kicker for those buying a new home or building is the $10,000 will be available on contracts signed from 1 August only.  A double win for investors buying new, as the transfer duty drops and they get the boost.

Also, from 1 August eligible first home buyers building a new home still have access to the $7,000 FHOG and the $10,000 boost!

What constitutes a new building?

Obviously, a contract you enter into to build or buy off the plan results in a new building, which qualifies.  A vacant house being sold by a builder qualifies as long as no one has lived in it.  Some scenarios such as those involving extensive renovations or removal houses would need to be assessed by Office of State Revenue, but generally, an extensively renovated house that meets the other conditions, is eligible.  Please contact the OSR on 1300 300 734 for clarification.

Contract dates

To be eligible for the Building Boost Grant, a contract needs to be signed for the purchase of a new property between 1 August 2011 and 31 January 2012, no ifs or buts, no re-written contracts!  If you’re building, a construction contract must be signed within the above dates, building commenced within 26 weeks of the contract date AND building must be completed within 18 months of the contract date.  Someone must take residence at the address within 12 months of ownership.  Off-the-plan constructions need to be completed by 31 July 2013.

Remember, the boost ends on 31 January 2012.

Property value limits

The value of the property, including land must be less than $600,000 to qualify.

Can I claim more than one $10,000 grant?

Yes! Build or buy as many new houses, duplexes or townhouses as you can. The grant can only be claimed once for each property (i.e. not by the builder and the buyer).

Details of changes in stamp duty, boost and FFHOG grants and abolishment of the ambulance levy can be found here>>

FAQS on contract dates, occupancy requirements and eligibility can be found here>>

If you would like help calculating the effect of stamp duty changes and the boost grant on your next property purchase, give me a call.

The RBA has toned down its tightening rhetoric and this has been reflected in the market with many lenders reducing their 2 and 3 year fixed rates.  2 year rates under 7% are common and one major lender has a 3 year rate of 6.99% on offer for loans over $250,000.

If you’re interested in securing a consistent repayment, finding out about rates on offer and how to access these, give me a call on 0431 524 643.

The global economy is continuing its expansion, led by very strong growth in the Asian region, though the recent disaster in Japan is having a major impact on Japanese production, and significant effects on production of some manufactured products further afield. Commodity prices have generally softened a little of late, but they remain at very high levels, which is weighing on income and demand in major countries and also pushing up measures of consumer price inflation. In response, a number of the countries with stronger expansions have been moving to tighten their monetary policy settings over recent months. Overall, though, financial conditions for the global economy remain accommodative. Uncertainty over the prospects for resolution of the banking and sovereign debt problems in Europe has increased over the past couple of months, which has been adding to financial market volatility. read more>>

Retirement shouldn't mean you have to slow down!

Want to pay less tax?

Not satisfied with the performance of your superannuation fund?

Want to know how to buy property in your SMSF?

Hear from experts on:

• how to set up your own SMSF using your existing super
• the advantages of SMSF in tax minimisation and retirement planning
• how to borrow within your SMSF
• how investment property can work for you in your SMSF

Venue: Gympie Pines Golf Club

Time: 5:30 for 6pm, includes canapés (concludes at 7pm, stay later to talk with the experts if you like)

Date: Tuesday 7 June 2011

RSVP essential. Ring Jaimie on 0431 524 643

LIMIT 20 places

More information soon!

As seen on Brokernews.com.au

The follow up to The Gympie Woman Magazine April story.

There’s nothing sexy about finance!   I’m involved in finance because I love talking to people and finding out how I can help them achieve their goals through finance.

How I can help you will depend firstly on your goals and what your current situation is.

If your goals are to better your current situation, buy property, recover from an expensive divorce or build wealth for your retirement, I can help you by analysing your current situation and make suggestions on how to improve it or make the most of what you have.  This can be as simple as showing you what a lender requires, restructuring your existing debts or referring you to a financial planner, tax specialist or legal professional for further advice.

Your current situation consists of your employment, assets and liabilities.  As far as a lender is concerned,

1. Full time permanent employment is more desirable than part-time employment which in turn is more desirable than casual employment
2. Not all lenders will accept income from casual employment, but if that’s what you do, try to stick at the one job with the same employer for as long as you can.  Several lenders will take income from casual employment if you’ve been in the same job for over 12 months
3. The longer you are in any job and at the same address points to stability and a lower credit risk
4. The better your asset position the less likely it is you spend all your time down the pub!  Lenders look at asset for age. They expect older applicants to have more assets.  A young person with good assets and low liabilities such as personal loans looks good!

I’m going to outline a few steps you can take in advance to increase your success of getting a loan.

1. Save a deposit.  Obvious, but to show evidence of what the banks call “genuine savings” is the best way to increase your chances of success and reduce your Lenders Mortgage Insurance (LMI) premium.  LMI premiums are calculated at a higher rate for non-genuine savings.  Aim for 5% of the purchase price you’re looking at.  Genuine savings do not include the FHOG, tax refunds or gifts, amongst other things.  They do include savings from earnings, funds held in a savings account for > 3 months or equity in existing property. Genuine savings along with your income display your capacity to repay a loan.
2. Boost your perceived genuine savings.  If you’re renting, this expense will cease when your loan is settled, but in the meantime, pay your rent by direct debit so it shows on your bank statements.  Pay any other regular payments such as car and contents insurance this way as well.
3. Reduce the available limit on your credit card.  Credit cards attract high interest rates and adversely affect your capacity to repay a loan.  Alternatively, pay your credit card off totally each month.
4. Develop a personal budget to achieve steps 1-3 above.

If you can show a lender that you can achieve the above steps in any 3 month period, you’re way ahead of the pack!  Don’t worry if you’ve read this article and think you don’t fit the ideal borrower.  Ring me, and either I or my financial planner will set you on the path to achieve your goals!