3 Items To Check Before Refinancing

Refinancing a home loan can be a strategic move for Australians looking to optimize their financial situation.

However, this process comes with its own set of complexities and potential pitfalls. To ensure a successful and beneficial refinancing experience, Australians should exercise caution and pay close attention to three key factors.

Interest Rates and Hidden Costs:

One of the primary motivations for refinancing is often securing a lower interest rate, thereby reducing monthly payments and the overall cost of the loan.

However, it’s crucial for Australians to be aware of potential hidden costs associated with refinancing. Lenders may charge fees for closing the existing loan, application fees for the new loan, and various other administrative costs.

Additionally, there might be penalties for paying off the original loan early.

It’s imperative to scrutinize the terms and conditions thoroughly and calculate the total cost of refinancing, factoring in the visible fees and the long-term impact of the new interest rate. While a lower interest rate can be advantageous, ensuring that the overall financial benefit justifies the expenses associated with refinancing is essential.

Loan Term and Repayment Structure:

Refinancing offers an opportunity not only to secure a more favourable interest rate but also to adjust the loan term and repayment structure. Australians should be wary of extending the loan term simply to reduce monthly payments. While this might provide short-term relief, it could result in paying more interest over the life of the loan.

Careful consideration should be given to the desired loan term and how it aligns with financial goals. Shortening the loan term may lead to higher monthly payments but could save significant money on interest in the long run. Alternatively, lengthening the loan term might reduce immediate financial strain but may increase the total interest paid over time.

Understanding the implications of these decisions and choosing a loan term that aligns with both short-term and long-term financial goals is crucial.

Credit Implications and Financial Stability:

Refinancing can impact an individual’s credit score and financial stability. When applying for a new loan, lenders will conduct a credit check, which can temporarily lower the borrower’s credit score. Multiple credit inquiries within a short period may also raise red flags for lenders.

Australians should be cautious about the timing of refinancing, particularly if they have plans to make significant financial decisions, such as applying for a new credit card or seeking additional loans. Maintaining a stable financial profile during and after the refinancing process is essential to ensure access to favourable terms for future credit needs.

Refinancing a home loan is a financial strategy that can yield significant benefits when approached with caution and a thorough understanding of the associated risks. Australians should carefully assess interest rates, hidden costs, loan terms, and potential credit implications to make informed decisions that align with their financial goals. By navigating these factors diligently, homeowners can unlock the full potential of refinancing while avoiding common pitfalls.

Avoiding Cash Flow Issues With Effective Invoices

Taking care of invoice and billing payments can often be an onerous task for many small businesses.

However, very few things are more important in the business industry than getting paid on time since payment delays can seriously disrupt a business’s cash flow.

Business owners looking for best practice tips to get paid on time should remember that the most effective solutions are usually the simplest.

Owners should make sure that their invoices are accurate, easy to read and include information such as:

  • How to pay the invoice
  • A clear description of goods or services provided
  • The details of any discounts and how they were determined
  • Information about any outstanding payments
  • Delivery charges if applicable

If any queries arise about the invoice or payment, owners should handle them fairly and quickly.

Making only a few simple adjustments to invoices can speed up customer payments so owners can focus more on their business than on their bills.

Some techniques to speed up payments include:

  • Confirming the correct location and contact details so the invoices reach the right person.
  • Clearly stating on your invoice that you reserve the right to charge a set late fee for overdue invoices.
  • Contacting customers to tell them what corrections or adjustments are being made to their invoice before sending the amended invoice
  • Quoting any relevant customer reference number customers have provided.
  • Including a credit card or online payment option.
  • Consider switching to e-invoicing to make the transaction process quicker.

Breaking A Lease Is A Significant Decision…

Breaking a lease is a significant decision with legal and financial consequences.

A lease is a legally binding contract between a tenant and a landlord that outlines the terms and conditions of the rental agreement. Typically, leases are for a fixed period (often 12 months), and breaking such an agreement before its expiration can be challenging.

There are several reasons why someone might consider breaking a lease. Common reasons include job relocation, personal emergencies, changes in financial circumstances, or dissatisfaction with the rental property. Regardless of the reason, it’s essential to approach the process carefully to minimise potential negative consequences.

The first step when contemplating breaking a lease is to thoroughly review the lease agreement itself. Lease agreements usually contain clauses that specify the conditions under which a lease can be terminated early. These conditions could include giving advance notice, paying a penalty or a portion of the remaining rent, and returning the property in its original condition.

Communicating with the landlord or property manager is crucial. It’s advisable to have an open and honest conversation with them about the situation. In some cases, landlords may be understanding and willing to negotiate an early termination agreement, especially if you can help find a suitable replacement tenant.

Finding a replacement tenant is often the most effective way to break a lease without incurring significant financial penalties. If you can locate a responsible tenant who meets the landlord’s criteria, you could transfer the lease to them. However, this typically requires the landlord’s approval.

If negotiations with the landlord fail, and you decide to move out without their consent, you may be held responsible for paying the rent until the end of the lease term. Landlords also have an obligation to mitigate their losses by making reasonable efforts to re-rent the property, but you may still be responsible for any rent shortfall during the process.

In some cases, the law may provide tenants with additional rights and protections when breaking a lease, such as domestic violence situations or uninhabitable living conditions. It’s essential to research and understand these laws to ensure you are acting within your legal rights.

Breaking a lease is a significant decision that should be approached with caution and careful consideration of the lease terms and local laws. Open communication with the landlord, exploring options like finding a replacement tenant, and understanding the potential financial implications are crucial.

Legal advice or consulting with a tenant’s rights organisation can also provide valuable guidance in navigating the complexities of breaking a lease.

Sharing Too Much Personal Information Could Put You At Risk Of Identity Crime

In our increasingly digital world, protecting financial information from identity crimes is paramount. Identity theft, fraud, and cyberattacks pose significant risks to your financial well-being.

To safeguard your assets and personal information, it’s crucial to be proactive and adopt robust security measures. Here are some essential steps to protect yourself from identity crimes that exploit financial information:

Secure Your Personal Information

Start by safeguarding your personal information. Store important documents, such as passports, Social Security cards, and financial statements, in a secure and locked location. Be cautious about sharing sensitive information online or over the phone, especially with unknown individuals or entities.

Use Strong Passwords and Authentication

Create strong, unique passwords for your online accounts, including financial institutions, email, and social media. Consider using a reputable password manager to generate and store complex passwords securely. Enable two-factor authentication whenever possible to add an extra layer of protection.

Monitor Your Financial Accounts

Regularly review your bank statements, credit card statements, and investment accounts for unauthorised transactions or discrepancies. Early detection of unusual activity can prevent further financial damage.

Protect Your Devices

Ensure your computer, smartphone, and other devices are equipped with up-to-date antivirus and anti-malware software. Regularly update your operating system and applications to patch security vulnerabilities.

Beware of Phishing Scams

Be cautious about unsolicited emails, messages, or phone calls requesting personal or financial information. Phishing scams often impersonate reputable organisations. Verify the authenticity of any communication before sharing sensitive data.

Shred Financial Documents

Dispose of financial documents and statements securely by shredding them before disposal. Dumpster diving is a common method identity thieves use to access personal information.

Use a Secure Wi-Fi Connection

Avoid conducting financial transactions or accessing sensitive accounts over public Wi-Fi networks, as they may not be secure. Instead, use a virtual private network (VPN) or your mobile data connection when accessing financial information on the go.

Educate Yourself

Stay informed about the latest identity theft and fraud schemes. Familiarise yourself with common tactics used by cybercriminals to protect yourself from falling victim to their scams.

Identity crimes that target financial information can have devastating consequences, including significant financial losses and damage to your credit.

By protecting your personal and financial data, you can reduce the risk of becoming a victim of identity theft and ensure your financial well-being remains secure.

Figuring Out What To Eat For Lunch? Bringing It From Home Could Save You $1,000/Year…

As workers return to the office, the amount of money reported as being spent on food outside the home is rising.

This is in spite of the fact that a survey earlier this year found that nearly half of Australians are reducing the amount of money spent on eating out as cost-of-living pressures rise.

Here is how you can make eating away from home a little cheaper, particularly during your work day:

Plan Your Week Of Meals

Spending some time planning your meals at the start of the week can make packing work lunches far easier. By planning your meals in advance and taking them to the office, you can prevent costly trips out for lunch and save up to $1,000 per year.

Start by looking at what days and meals you’ll need to prepare. Will you have breakfast at home or bring a morning snack to work, too?

Drink The Coffee In The Office

With small coffees costing upwards of $4.50 in some parts of the country, a coffee every morning bought at your local cafe before work can start to add up.

Purchasing one small coffee (at $4.50) every morning for your workday week (Monday to Friday) over a year (averaging 25 days per month) could cost you $1350. This doesn’t consider any additional costs, such as alternative types of milk.

If provided by your office, drinking the brew on offer is an easy way to save that money.

Budget Appropriately

Saving money doesn’t have to be at the cost of being able to treat yourself. You can still enjoy the occasional meal out without breaking the bank by being sensible about the amount spent. You can find an appropriate balance that suits your needs by budgeting out your meals, groceries and eating out.

Can You DIY Your Rental Management, Or Is It Better With A Professional?

Real estate agent fees are one of the main expenses of owning an investment property.

Investors who manage their own property might be able to save thousands per year, but is it worth it?

Depending on your state, agent management fees generally range between 5-12% of your weekly rent income. In Tasmania, 43% of investors are self-managing, with agent fees reaching up to 12% of weekly rent. In New South Wales, agent fees average to be about 7% of rent and less than a quarter of investors choose to self-manage.

Being a self-managing landlord can save you a lot of money, but before rushing to fire your agent, consider whether the obligations of being self-managed will be sustainable for you.

Managing your own rental property takes up a considerable amount of time. You’ll have to deal with repairs and maintenance, cleaning, negotiating, advertising and sourcing tenants, which you’ll have to do quickly not to lose rent.

Property managers also deal with complex issues like disputes and breach notices, which can be stressful. Sometimes tenants also prefer dealing with agents as they are often perceived to be more experienced and knowledgeable in all areas of leasing.

Whether self-managing your property or hiring an agent is right for you also depends on how many investment properties you have and your lifestyle.

If you have multiple properties and work full-time, finding the time to manage them can be challenging. If you go on holiday regularly, you may not want to be disturbed by something that needs repairing in the middle of your trip.

Some self-managing landlords choose not to hire an agent to save on fees and to have more control over their property and interaction with their tenants. You can consider which option is best for you based on your abilities, time and values.

Lenders Look At These 5 Things When You Apply For A Loan…

The current economic landscape has placed hundreds of thousands of people in harsh financial conditions, impacted by the current cost-of-living crisis. This may affect their ability to obtain financial support, mainly via loans.

There are 5 key things lenders will consider when determining whether to give you a loan and what the amount may be.

Ability To Repay The Loan: 

A lender will check that the borrower has complied with previous repayment obligations. They will also enquire into whether there are other pending loans that may prevent the payee from making repayments.

Security For The Loan 

The lender will require security for the loan they provide to ensure that in the case that the borrower is unable to repay them, they can acquire some money from their investment.

Employment Status

A lender will regard continuous employment highly. A borrower who has been working for a consistent period is more likely to be offered a loan.

Character

Although this may not play a significant role, a lender may ask the borrower personal questions to determine whether they are suitable to provide a loan to.

General Conditions

A lender may consider the economic conditions when the loan is being given (although this may be more applicable to businesses).

If you find yourself in a situation or predicament involving a loan, you may want to speak with your lender or with a licensed professional who specialises in your loan type, such as a mortgage broker).

Business Budgeting As Easy As 1, 2, 3

Budgeting is the most important tool in your arsenal when it comes to your business. It is how you organise your company and plan for possible future circumstances.

It forecasts all cash sources and expenditures and can greatly enhance your success by helping you estimate your future needs and plan profits, spending and overall cash flow.

As part of a business plan, a budget can help you decide whether you have enough money to achieve your business goals. Furthermore, a budget can help convince a loan officer that you know your business and have anticipated its needs.

A budget will indicate

  1. The cash required for necessary labour and /or materials
  2. Total start-up costs
  3. Day-to-day maintenance costs
  4. Revenues needed to support business operations

After assessing these factors, you can adjust your plans accordingly. If more money is required, you could start by:

  • Reducing expenditures: hiring fewer employees, purchasing less expensive furniture, installing energy-efficient appliances etc.
  • Expanding sales: selling additional products or services in relation to your business (like coffee with a bookstore for example) conducting an extensive marketing campaign, etc.
  • Lowering profit expectations: you company will need time to develop both in branding and strategy. This is obviously the least desirable option but is usually only short-term.

Every business should budget before investing money into assets or signing leases.

To ensure your goals can be reached, or to foresee areas of weakness that must be dealt with, putting all the numbers down on paper first, is safer than actual dollars

For further advice on budgeting as a business, don’t forget to speak with your trusted business advisor – we are always here to help.

A Change Is Coming To The Child Care Subsidy

Childcare is of the most critical and potentially debilitating costs that can affect families in Australia.

In the new financial year (commencing this month, July 2023), changes are coming to family payments that could greatly aid your particular situation/circumstances.

From 10 July 2023, if your family earns under $530,000 (combined income of two parents), you will get an increased Child Care Subsidy (CCS). The income limit is rising from the previous $356,756.

The CCS percentage you’re entitled to depend on your family’s income.

The income limit to get the maximum CCS is increasing. Families earning up to $80,000 will get an increased maximum CCS amount from 85% to 90%. If you earn over $80,000, you may get a subsidy starting from 90%. This will decrease by 1% for each $5,000 of your family’s income. You’ll either get more assistance or have no change to your entitlement.

If you have more than one child aged 5 or under, you can still get a higher rate for one or more of your children.

The low-income limit for Additional Child Care Subsidy Transition to Work will also increase to $80,000.

From 10 July 2023, there are changes to Child Care Subsidy for Aboriginal and Torres Strait Islander children. The changes mean they can get at least 36 hours of subsidy per fortnight, regardless of the amount of recognised activity they do.

If you are unsure about how this change might affect you, you may need to contact Services NSW directly for more information.

Is Your Home Loan Still Right For You?

For many, a home loan is a purchase already made, a regular expense that will stick with them for up to 30 years (depending on the home loan conditions set out at the time of agreement). But don’t expect to simply set and forget your home loan.

Your circumstances may change, and the home loan you once thought was the perfect deal might not be so anymore. By running a few checks, you can figure out whether or not your home loan is still the right fit for you.

Bonus Features To Your Home Loan – Are They A Trap?

Find out all of the home loan features that your current home loan may have. These features may seem confusing to the untrained eye, but there are benefits and disadvantages to a home loan containing them.

For example, some home loans may come with redraw facilities, which can be a handy home loan feature if you’ve made extra repayments in the past and need to access that cash for an unexpected expense. Other home loans may instead have an offset account, which is a bank account linked to the loan in which any cash in the account is offset daily against the home loan principal.

These features may sound good but can attract additional fees. Compare the benefits of the feature with what you are actually paying overall to see if it’s worth the cost.

Interest Vs Comparison Rates: Do You Understand The Difference?

Interest can seem like the silent assassin to many a home loan, but it’s important to not be lured into a new agreement by a rate that seems (at first glance) to be lower than it actually is. You should consider two rates when re-evaluating the interest payable on your loan – interest rate and comparison rate.

Interest rate is the annual interest cost for borrowing money but does not consider any fees. The comparison rate incorporates the annual interest rate, as well as most upfront and ongoing fees.

It’s a good idea to use comparison rates as your base for looking at alternative home loans, as they provide a clearer picture of how much money you may actually end up paying.

Ask To Reduce Your Home Loan Interest Rate

It might seem that a lower interest rate on the market is the perfect opportunity to switch home loans – but wait! You can also contact your current lender and inform them that you are considering making a switch and (if you have a good credit rating and more than 20% equity in your home) you may be able to negotiate with the lender from a better position, about your interest rate

Want advice on how you could improve your home loan, or about the repayments to your home loan? Speaking with a mortgage broker or a professional lender may be the best path to take, as they have the expertise to assist you.