22nd January 2010

Why Use a Mortgage Broker?

I got talking to a friend of a friend of mine today who has just got conditional approval on finance for an investment property.

Old mate has walked into a local bank branch and the home lending officer has put them into a very large line of credit (LOC) for the purchase of the property. A LOC, depending on the lender has an interest rate between 0.1% and 0.15% above the standard variable rate (SVR).  The loans officer has structured the loan with the LOC covering about 83% of the purchase price. The balance of funds were to come from the client’s savings.

If the client had come to me first I would have recommended:

• a smaller line of credit secured against his existing property for deposit and fees, to bring the purchase loan down to 80% of the purchase price
• and the purchase loan as a discounted SVR at a lower rate than the LOC

This would have saved the client at least $8000 in mortgage insurance and about $600 a year in repayments and still maintained a bit of flexibility he was requiring by setting up a smaller LOC.

What would you do with $8,600 this year if you didn’t have to pay it to a bank?

Remember – if you walk in off the street every bank will tell you they can get you into a loan, but no bank will tell you that you might get a better deal elsewhere and no bank employee will ever admit that they may not be the best person to help you get the best that the lender has to offer (rather than the best deal for the bank).

10th November 2009

Business Investment Allowance Set to End – 31 December 09

This significant tax incentive is set to end on the 31^st of December, 2009.

This additional allowance applies to small businesses, with a turnover of less than $2m, any eligible asset¹ purchased between the 13^th December 2008 and the 31^st of December 2009.  Please note that the equipment must be delivered/installed and in use before the 31^st of December 2010. The asset must be brand new, not second hand and cannot include trading stock, land or buildings.

I’d recommend anyone who is considering the purchase of equipment to take advantage of this limited opportunity before it ends².

Should you wish to take advantage of this opportunity please call me to arrange finance for a new business vehicle, earthmoving equipment, office equipment including computers and printers (minimum spend required of $5000)³ for eligible business customers⁴.

I can arrange repayment terms and amounts to suit your budget and cash-flow situation.

Don’t have enough time to shop for your new car or van?

Ask me about the JIVVE vehicle purchasing program-the dealer comes to you!

Thank you for your continued support of my business and I look forward to assisting you.

1. Assets must be >$1000 in value, purchased before 31 Dec 2009 and installed prior to 31 Dec 2010.
2. Please seek professional accounting advice as to the suitability of an asset purchase to your needs under the incentive scheme.
3. Small ticket assets $5,000-$35,000 must be purchased through a recognized dealer. Finance for near new vehicles can be arranged (second hand assets not eligible for incentive)
4. Minimum 2 years financials, good credit history/references, other terms and condition may apply.

3rd November 2009

Reserve Bank Lifts Rates by 0.25% to 3.5%

The RBA has today announced the cash rate will be lifted by 0.25% (effective 4 Nov).

A statement by Glenn Stevens, Governor of the Reserve Bank, cites the following reasons:

• the prospects for Australia’s Asian trading partners appear to be noticeably better
• sentiment in global financial markets is much better than earlier in the year
• housing credit growth has been solid and dwelling prices have risen appreciably this year
• the exchange rate is likely to constrain output in the tradeables sector and dampen price pressures

To Summarise, he said,”..the Board’s view is that it is prudent to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker. The adjustments at the October and November meetings will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead”.

A full transcript of Glenn Steven’s statements is available here>>

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