At today’s board meeting the Reserve Bank left the cash rate unchanged at 1.50%. It has now been at the same level for 12 months!

The Big 4 banks have certainly been in the news this year. With such a dominant profile it’s understandable that many people believe all lenders are the same. You might be surprised!

Make sure you read this month’s article ‘More than the Big 4… What do YOU know about the Australian lender market?’ and explore YOUR options.

As your finance specialist, comparing loan products across a range of lenders is one of our key advantages. We take the hard work, time and confusion out of the search for better finance.

If you are wondering if we can negotiate a better finance arrangement for you then give us a call TODAY.

We look forward to hearing from you…

The ‘Big 4′ banks have maintained a dominant profile in the complex and ever-changing Australian finance market – just think about how often you read about them in the news! And it is this high profile in our everyday lives that has contributed to a perception that all lenders are the same.

Is that what you think? In fact, Australian consumers are spoilt for choice…

Did you know there are over 40 banks (plus multiple foreign bank branches) and around 60 credit unions and building societies in Australia¹ as well as a number of non-bank lenders?

Of course if you are receiving this email you would already know that one of the key advantages of using our services – as your finance specialist – is that we have access to a range of lenders when seeking a loan that may be suitable for your individual circumstances. We are not tied to just one lender and their available loan products.

So what IS the difference between lender types?

Banks

• Banks are authorised deposit taking institutions (ADIs) and can use their own funds to provide home loans.
  
  
• They provide integrated banking packages including savings, transaction accounts and credit cards.
  
  
• Wide branch networks provide additional service but also contribute significantly to overhead costs.

Second tier banks

• Second tier banks are those that are not part of the Big 4. They include a surprising number of household names such as ING Direct, Bank of Queensland, Macquarie Bank, Suncorp, ME Bank, Bendigo and Adelaide Bank, St George, Bankwest, Citibank and AMP Bank.
  
  
• While some are now owned by the big banks it is worth considering their competitive offerings.

Building societies and credit unions

• These non-profit cooperatives are owned by the people who use their services so each member is both a customer and a shareholder.
  
  
• Rates can be very competitive.
  
  
• Member deposits are used to fund loans.
  
  
• Like banks they offer a wide variety of banking facilities with a focus on customer service.
  
  
• They are regulated in the same way as banks.

Non bank lenders

• They do not hold an Australian banking licence so cannot accept deposits therefore they source wholesale funding via investors, financiers, trusts and even the ‘Big 4′ banks.
  
  
• They do not have the overheads of an extensive branch or ATM network.
  
  
• The appeal for customers has been competitive interest rates, more flexible lending criteria (eg for low doc or non-conforming loans) and higher loan to valuation ratios (LVRs). Low rates are however often balanced by higher fees.
  
  
• An emphasis on customer service, faster loan processing times and responsiveness are other selling points compared to the big banks.
  
  
• Tend to have limited products and services so they may not be suitable for all your financial needs.

So do we recommend the ‘Big 4′ to clients?

The Big 4 are strong competitors with broad product ranges so if they have a solution suitable for your individual circumstances then of course we do. However we may also recommend second tier banks or non-bank lenders if their product, pricing and services are ideal for you.

Most importantly, you will have the confidence of knowing we only recommend lenders that have provided a good personal experience for other clients.

Call our office today if you would like us to take the legwork out of your search for lenders.

At today’s board meeting the Reserve Bank left the cash rate unchanged at 1.50%. It has now been at the same level for 12 months!

Research shows about one fifth of retirees are currently spending their super at ‘unsustainable’ levels – and that percentage is expected to grow as more of us enter retirement!

Why are so many of us running out of money? Make sure you read this month’s article ’20% of retirees will run out of money!’ to find out!

Even if retirement SEEMS a long way off it’s NEVER too early to start planning…

Remember, we don’t just arrange loans – we can also help you financially structure your property investment according to your individual situation. We can calculate how much you could afford to borrow and explain how to use your home equity to help build a solid financial future. Give us a call TODAY.

We look forward to hearing from you…

Research shows about 20% of retirees are spending their super at ‘unsustainable’ levels. What does that mean? It means about one-fifth of us will most likely outlive our retirement savings. And…

This percentage is predicted to rise as more of us enter retirement! Recent research shows 54% of pre-retirees (55 and over) are financially unprepared for retirement and only 8% are financially prepared.

So WHY are retirees running out of money?

• One of the primary reasons is simply because we are living longer. Australia is in the top 5 countries for life expectancy – if you’re aged 64 now you can expect to spend about 20 years in retirement.
  
  
• Medical advancements have also meant that many of us are more physically and socially active in retirement than previous generations. That’s a wonderful bonus for us but NOT so beneficial for our super balance!
  
  
• There has been a seismic shift in expectations of what ‘modern’ retirement entails – we now want a slice of the ‘good life’ after years of working. This is having a significant impact on how retirees use their savings.
  
  
• Lastly, it has been suggested that our cultural tendency towards a ‘she’ll be right mate’ attitude has lulled us into a false sense of security.

Minimum drawdown rates
The government mandates a minimum amount retirees should draw down from their superannuation pension each year. Data supplied from super funds shows that over the past decade 50% of these superannuation pensions are being drawn down at above these minimum rates. Interestingly, the balance ‘size’ did not appear to affect people’s decision on how much to withdraw.

So… Do you think YOUR super will go the distance?

What is the alternative?
We know you’ve heard this before BUT… the majority of retired Australians rely on the age pension. In 2017 that amounts to a maximum of $669.60 per fortnight each for couples and $888.30 per fortnight for singles.

You can certainly see that reliance on the pension as your sole source of income would probably mean your retirement may not look quite like what you had planned.

So what steps do you need to take NOW?
If you fall into the ‘pre-retiree’ category (and let’s face it, that’s ALL of us who haven’t yet retired – no matter WHAT age we are now) then planning is the key. The earlier you start, the better!

Depending on your current age this may involve a short, medium or long term strategy. Statistics show 44.5% of homeowners aged 55-64 had an outstanding mortgage debt in 2013-14 – almost triple the level of 1995-96! Clearly, paying down debt and maximising our retirement savings are key considerations for most of us when planning the lifestyle we want in retirement.

Remember, you are never too young to start thinking about your future. Time and capital growth don’t wait for anyone so the time to start thinking about your retirement is right NOW!

We would welcome the opportunity to discuss your financial future at any time – call us for an appointment TODAY.

There are many wealth creation options available to help fund your future retirement. The most effective option? Taking ACTION now is a good start!

At today’s board meeting the Reserve Bank left the cash rate unchanged at 1.50%. It has now been at the same level for 12 months!

With a constant flow of news about changes in the finance world, it’s little wonder that recent research showed many consumers are becoming ‘switched off’ about finance.

The problem is when your home loan is probably the biggest financial commitment you have, can you afford to be switched off? That lack of interest could be costing you money!

If you haven’t thought about reviewing your home loan for a while then make sure you read this month’s article “Your interest rate may not be what it seems…”

Remember, it is OUR JOB to keep abreast of industry changes and do the hard work for you. If you would like to explore your financial options then give us a call TODAY.

We look forward to hearing from you…

At a time of almost constant (even daily) changes in the finance world – and an absolute overload of information online – it’s easy to see why some consumers are becoming ‘switched off’.

A recent study about financial literacy found 57% of respondents didn’t know that banks determine actual interest rates – not the RBA. It also found 36% didn’t realise if they reduced the length of their loan they reduced the amount of interest they paid!

What does that tell us? Well…
It tells us there are potentially a LOT of people who could be enjoying savings on their home loan AND other loan products – if only they knew how.

So how important is financial literacy?
Let’s face it, many of us find the ever-changing world of finance and banking complex. And yes… pretty dull. But a lack of interest in educating ourselves about our home loan – usually the BIGGEST financial commitment we have – is often costing us money!

It’s interesting that the same survey found 74% of us don’t know what a comparison rate is…

Do you? And what SHOULD you know?

Comparison rates
Lenders are legally required to display a comparison rate when advertising most loans. This is a tool to help identify the true cost of a loan by combining all components into a single percentage rate*. It includes:

• the loan amount
• the loan term
• the repayment frequency
• the interest rate, and
• the fees and charges connected with the loan**

For example, at the time of writing this article, one lender was advertising an interest rate of 3.78%. Sounds good, doesn’t it? But the comparison rate was 4.36%. Now that’s a difference of $580 interest each year for every $100,000 of borrowing you have. That is a little over $2,000 per annum on the average Australian loan.

The mandatory comparison rate was initially introduced to stop lenders advertising very low-interest rates that lured borrowers into loans that actually ended up costing more than they expected. A low rate may look attractive at first glance but it doesn’t always mean it is the lowest rate.

While the comparison rate can be used as a guide it is also important to consider the features of the loan and how these may benefit your particular circumstances and future goals. The rate alone should NOT be your sole consideration when obtaining finance.

Remember, whether you are looking to buy your first home, upgrade, downsize, refinance, invest in property or even buying a new car, as your finance specialist it is our job to do the research for you to determine the loan product most suitable for your circumstances.

Mortgage brokers now account for more than 50% of the home loan market. There is a good reason for that! We have to constantly adapt with the times, the policies and the changing finance market to provide more than just a loan service.

We are your finance concierge, educator, confidant and specialist working for YOUR best finance options without the trickery of advertising low-interest rates as a lure for your business.

If you are thinking of reviewing your current loan – DON’T do it alone!

Our role as your finance specialist is to help you make the best financial decision for your personal situation. We consider such factors as:

• how long you are planning on having the loan
• your employment status, age, and financial position
• what job/personal circumstances may be happening in your future
• your family situation and potential future financial expenses (known and unforeseen)

AND we look at more than one lender for your solution.

At today’s board meeting the Reserve Bank decided to leave the cash rate unchanged at 1.50%.

Studies show about HALF of older working Australians will retire with debt. That’s a worrying trend!

Did you also know there are changes to our superannuation system from 1 July? Will they affect you? Or your future plans?

Make sure you read this month’s article ‘Change is coming 1 July. Super!’

Regardless of your age – or stage of life – decisions about retirement affect all of us eventually. The earlier we start planning the easier some of those decisions may be…

As your finance specialist we are here to help guide you through every financial stage of your life. Want to explore your future options? Give us a call TODAY.

We look forward to hearing from you…

Okay, so maybe you’re thinking that retirement for you is a long way off? Should you be worried?

A recent study found up to 50% of older working Australians are expected to retire with debt and around 20% are expected to retire with a mortgage.

So what do you think is one of the primary reasons for this level of debt? It’s the sandwich!

The trend has largely been attributed to our current older generation being the first ‘sandwich’ generation. Many over the 50s are under financial pressure from intergenerational dependency resulting in almost $200 billion being contributed to both their parents and children in their lifetime.

The study estimated around 72% of this is going towards education, home deposits and other expenses for adult children over 18.

Interestingly, mortgage debt has been identified as a significant contributor to financial stress during retirement.

So do you think this trend will continue for the NEXT generation of retirees? Well…

Probably – unless we learn from it!

So how DO YOU plan for a successful financial future?

Of course, there is always our superannuation – but super is just ONE component of planning for future retirement. The path to wealth creation can take many forms.

As your finance specialist, we can assist you to explore options suitable to your particular circumstances. We can also introduce other specialists in the finance industry to support your path to wealth creation.

Did you also know there are upcoming changes to Australia’s superannuation system as of 1 July?

Most changes to the super system initially announced in the May 2016 budget commence from 1 July 2017. The changes will potentially affect our super contributions and the way super and retirement income is taxed.

You may not be affected, however, it certainly pays to find out IF and HOW the changes could affect YOU – whether that be now or further down the track. After all, your super is YOUR money!

Here is a general overview of some of the changes and who they may affect:

Low-income earners (earning less than $40,000 pa)

• Change to spouse tax offset
• New low-income super tax offset (LISTO)
• New ability to ‘carry forward’ your super cap
• Change to government super co-contributions

Retirees or people approaching retirement

• Earnings on transition to retirement (TTR) pensions taxed up to 15% (currently NOT taxed)
• For the first time, there will be a limit on how much super can be transferred to a tax-free account-based super pension

High-income earners (earning more than $250,000)

• Division 293 tax threshold reduced from $300,000 to $250,000 affecting more higher income earners

There is also a reduction to before and after tax contribution limits that may affect all income levels.

Financial commentators generally agree the new super rules can be complex. Ultimately, the impact of changes will depend on your financial situation and stage of life.

There are strict rules in place as to who can give you financial advice so you should always seek independent financial advice to determine how these changes may apply to your individual circumstances.

Remember! It’s NEVER too early to start planning for a debt free retirement but it can certainly be TOO LATE!

And should you help your kids before you help yourself? Ask us that question when we next chat.

If you have not had a finance review for over 18 months, we recommend you call us ASAP to ensure you have the right finance arrangement heading into the new financial year.

Australia’s historically low-interest rates are still very much in the news but there are OTHER home loan features that could potentially save you many thousands over the life of your loan.

Worryingly, recent research shows a lot of us lack an understanding of some basic home loan features – and how to use them most effectively TO SAVE US MONEY.

Why not try our quick quiz to test how much YOU know about YOUR home loan?

How much do you know about YOUR home loan?

Take this quick quiz (answer YES or NO). Do you know:

• Your current interest rate?
• If your rate is fixed, variable or split between the two?
• The remaining term of your home loan?
• If you have a ‘no frills’ home loan or is it packaged with other finance products?
• If you have an offset account?
• The purpose of an offset account?
• If you have a redraw facility? If so, do you use it?
• If your loan attracts a break fee
  
  

How many times did you answer ‘yes’?

Research conducted last year found that many Australian consumers don’t know or understand the basic features of their own home loan. That’s a bit of a worry when some common home loan features could potentially save you money!

If you are not using your home loan features effectively you could be missing out on the many benefits that were set up for you when we established your finance.

As your finance specialist, this is one area where we really come to the fore. WE can impartially answer all of those home loan questions you might have that apply to YOU and your individual circumstances.

With so much media hype about having to get the lowest interest rate it is easy to overlook other facilities that could deliver benefits and savings over the life of your home loan.

Research tells us that we all want to pay off our home loans quicker!

Another recent survey found Australians are trying to reduce their mortgages as quickly as possible – in fact, the survey found 60% of homeowners make extra loan repayments. 40% of respondents made more frequent payments, eg fortnightly or weekly instead of monthly, and 34% used a linked offset account to fast track their home loan repayments.

In Australia close to 50% of home loans these days have a linked offset account. We find the biggest mistake most people make is not utilising their offset account wisely – they forget that we are here to help with the ongoing use and understanding of your finance education.

If you don’t know or have forgotten what features your home loan includes and are not confident you are using them effectively then you need to reach out to us!

If you haven’t revisited your loan features for a while – or if your circumstances have changed since you last reviewed your loan package – then it’s time to give us a call to help you start using it properly. It may even be that we can assist you with a new structure or package.

We’d be happy to book a time for a finance review if you would like to check your current loan features

1.Apra.gov.au/QAPES/Dec 2015

*Disclaimer: This article is generic in nature. All investment decisions should be considered wisely and based on your personal and financial circumstances. Seek proper advice before committing to any course of investment action. This is not deemed as advice.

At today’s board meeting the Reserve Bank decided to leave the cash rate unchanged at the all-time low rate of 1.50%.

Even though the RBA cash rate – and home loan interest rates – are at historically low levels it’s interesting that a recent survey revealed 41% of Australians have credit card debt. Of those, nearly 4 million can’t afford to repay it!

February can often be the time of year when our festive season excesses stare us in the face – all in black and white on our credit card statement! That can be a bit scary when we all know that a key component of getting ahead financially involves managing our debt.

If credit card debt is on YOUR mind make sure you read ‘Debt got you down? Then take action now!’ Then give us a call!

We just may be able to help you get started on kicking the RIGHT financial goals this year!

A recent survey revealed 41% of Australians have credit card debt and of those nearly 4 million cannot afford to repay it! In addition:

• The average Australian household has a debt of around 185% of their annual disposable income1.
• Australian households have the fifth highest debt levels in the world with household debt increasing fourfold since 19882.
• Average debt levels are $12,643 for personal loans, $3,114 for credit card balances and $16,320 for car loans.

So what does this mean for the ‘average’ Australian?

Did you know if you are a prospective home buyer and have these ‘average’ levels of accumulated debt it could affect your borrowing power by almost $100,000?

With the median Australian house price at $623,0003 what impact might this have on your home ownership dreams?

Perhaps ask yourself these questions…

• Is your debt growing faster than your assets?
• Are you concerned about your debt situation?
• Are you struggling to make your monthly repayments?
• Does it always seem like your bills amount to more than your wages?

If you answered yes to one or more of these questions, then perhaps it’s time to look at a solution for your debt condition NOW – before it’s too late.

Why do so many of us have debt problems?

Some people fail to recognise that using credit to purchase items for use TODAY means they are spending their future earnings before they have even received them.

With debt levels increasing the government is currently assessing credit card rules – there is a push for lenders to assess suitability based on a consumer’s ability to repay within a reasonable period. However in the past lenders have offered credit cards, with pre-approved limits, without thoroughly checking credit histories or capacity to repay.

How have times changed? In the past we saved up or used the lay-by method, ie we used money we already HAD for items we wanted. Now, as an ‘instant gratification’ society with an abundance of credit at our finger tips we are tempted to use it without considering future consequences. Little wonder many people experience high levels of debt.

What are the first signs of trouble?

• You think it is unlikely you will be able to repay your existing debt with your foreseeable future income.
• You have multiple credit cards.
• You are no longer paying the balance of your debt each month – you just pay the minimum amount.
• You arranged for more credit cards (or a personal loan) to help pay off the other cards.
• You added a store card(s) because there was no room left on the credit cards…

Eventually your repayments start to approach – or even exceed – your income.

What is the solution?

We all know that good budgeting and discretionary spending discipline is the real answer, but sometimes it doesn’t matter how well you budget there’s just not enough money to make ends meet.

One solution (and this is NOT for everyone) may be debt consolidation.

For some of us it may be too late for budgeting because the debt level is already greater than your income and there is nothing that can be done. In this instance, debt consolidation may be the option for you.

What is debt consolidation?

This is when you take multiple debts (where the majority of the debt has a much higher interest rate) and consolidate the debt into one loan with a lower average interest rate. Generally most people opt for refinancing against their home (using existing equity) as it has the lowest interest rate. For example, your home loan rate may be 5.5% as opposed to a personal loan that might be 10.95% or higher (definitely lower than most credit cards).

How can we help?

1. If your debt levels are a concern and you think you may be experiencing the first signs of trouble CALL US NOW before it is too late. We don’t judge. We are here to help.

2. Ask us for our debt consolidation spreadsheet to see how much we can potentially save you each month to go towards the payment of your debt. You may be surprised.

3. Even if you are managing your current debt, it never hurts to review your finances to see how your cash flow can be impacted favourably.

4. If you have friends or family who you think could benefit from reading this article, please forward it to them.