With the end of the financial year fast approaching, now is a great time to purchase a work vehicle or equipment for your business. The Federal Government passed legislation last year to extend and increase the instant asset tax write-off for small businesses. That means if your business is eligible, you could potentially make several purchases up to $30,000 each this financial year, then claim the expenses back on your next tax return – and get the tax-man to help you pay for it!

We’re happy to work with you and/or your accountant to maximise your business cash flow and tax advantages, whatever these may be. We have access to a very wide variety of lenders who offer multiple ways to finance the business items you need.

Here are some popular business equipment finance options to give you a general idea of how we can help.

Finance Lease

The great thing about leasing is that you can access the latest equipment and vehicles with no capital outlay. The lender retains ownership of the asset and you lease it back from them at a fixed monthly payment. Once the lease is up, you can choose to pay a ‘residual payment’ and buy the asset, then potentially trade it in and upgrade to a newer version. Another option is to refinance the residual and continue leasing.

Advantages:

• You’ll know what your payments are and can manage your cash flow accordingly.
• You may be able to claim the lease payments as a tax deduction (speak to your accountant).
• There could be other tax benefits, including potentially making advance lease payments for tax or cash flow purposes (again, it’s best to consult your accountant).
• You may be entitled to claim a GST credit for the GST included in each lease payment.
• There’s flexibility to reduce the size of your payments by increasing the residual amount at the end.
• You can keep your assets up-to-date and some equipment leases can potentially include a service contract.

In addition to finance leases, there are also operating lease agreements. This is when you don’t take on the obligation to pay the residual value at the end. The asset is simply handed back to the lender.

Hire purchase

Again, a hire purchase allows you to obtain the latest equipment and vehicles for your business, whilst preserving your cash flow. With this finance option, the lender purchases the equipment or vehicles you require, then hires it to your business for a specific period. It’s like a finance lease, but when the final payment is paid, your business immediately owns the asset.

Advantages:

• Won’t tie up your cash
• Generally, doesn’t require additional security
• Depreciation and interest on any lease repayments may be tax deductable (check with your accountant)
• You own it at the end of the hire period.

Chattel Mortgage

A chattel mortgage is another type of finance option that works well for businesses. The financier secures the loan using the “chattel”, or the vehicle or equipment you purchase. You take ownership of the asset, and the mortgage is registered with ASIC. Once the loan is paid off, the mortgage is removed, and the vehicle or equipment is officially yours.

Advantages:

• If you’re registered for GST on a cash basis, you may be able to claim the GST in your vehicle’s price up-front through your next Business Activity Statement (BAS), (check with your accountant).
• GST is not payable on your repayments
• You may be able to claim depreciation and the interest charges on your chattel mortgage as a tax deduction (again, consult your accountant)
• Lower interest rates generally apply as finance is secured against the asset
• You may be able to decrease your regular repayments by paying a deposit upfront, trading-in a vehicle, or opting for a balloon payment at the end of your loan term
• You can manage your business cash flow more effectively.

Loans and other finance options

In addition to these popular ways to finance vehicles, machinery and equipment for your business, we can also offer a wide variety of business loans – both secured and unsecured. These can be used for anything from equipment purchases to inventory control and cash flow management.

Whether your business finance needs are straightforward or more complex, we can help you find the right solution. Our business lender panel includes peer-to-peer lenders, private funders and major banks. Best of all, we offer fast turnaround times – we could potentially get your finance approved in as little as 48 hours*.

Remember, EOFY is sale time for vehicles, IT, machinery and equipment – so there may also be bargains to be had. Contact us today and we’ll get the ball rolling on your finance in plenty of time to make your purchases before June 30.

The busy Autumn selling season is in full swing, with many property bargains available as the housing market correction continues across the country. With the Federal Election looming this weekend, we can expect to see property market activity to slow a little too. Meanwhile, economists predict there may be good news on the horizon for home owners, with the possibility of an RBA rate cut increasing after the Federal Election is over.

Interest rate news
As expected, the Reserve Bank of Australia (RBA) decided to keep the official cash rate at 1.5% during its May meeting.  Early in April, many banks cut rates on Fixed Rate Home Loans in anticipation of RBA rate cuts later this year.

During the last week of April, the Australian Dollar went on a surprising slide below US$70c after the US Federal Reserve failed to cut interest rates, despite demands from President Donald Trump. Analysts predict the RBA is likely to cut rates in order to stimulate a continuation of this trend, as a lower Aussie Dollar will be great news for our economy.

Home value movements
During April, the housing market correction started to have a significant impact on homeowners. According to ANZ, almost 5% of households have slipped into negative equity on their home loan. (That’s where you owe more on your home loan than the current market value of your home).

The Housing Institute of Australia has also indicated that several hundred thousand new apartments and units are about to hit the market, which may cause home prices to fall even further.

Nevertheless, analysts are still saying home values should start to recover in 2020, so the current market conditions are only likely to affect homeowners wanting to sell this year. Meanwhile, it’s a great opportunity for those looking to get onto the property ladder – particularly for first home buyers looking for bargains at the lower end of the market.

Property market activity
Despite the housing market correction, the Autumn property market has been very active, with more homes now being sold via private sales than auctions. The table below shows property market activity as at May 6, 2019.

If you’re in the market for a bargain, see us about a pre-approval!
Just a reminder that bank lending criteria have tightened over the past 6 months, so it’s important to see us to check your borrowing power and to get a pre-approval on a home loan if you’re in the market to buy property.

Please call us today to find out more.

Sincerely,
Mike & the Element Finance Team

Laws have been introduced to make it harder for landlords to refuse requests by tenants to keep pets, in most states. However, allowing pets to live in your investment property can be a double-edged sword. On the one hand, you’ll have a wider pool of prospective tenants, potentially increasing your rental returns and helping you to retain tenants longer. On the other hand, there is also the potential for pets to cause damage. So, what can you do to protect your investment?

Catering for pets in your investment property could help your tenants prevent their pets from causing any serious damage. Here are some great tips for catering for ‘fur-children’ in your investment property!

Modify the property to make it pet-friendly

Since you may not be able to avoid renting to tenants with pets, you may like to add pet-friendly features to reduce the risk of damage to the interior of the property. Providing facilities to help your tenants keep their pets outdoors will minimise the time they spend inside the house, which may save you money in the long-run on maintenance and repairs.

For example, a secure cat or dog door will make it easier for small pets to get out. This will reduce the need for litter trays and discourage them from doing their business inside. It will also eliminate the tendency to scratch at a door or flyscreen when they want to go out.

Include some outdoor features for pets

One necessity for pet owners is a well-maintained fence to keep their fur-children safe when outdoors. Ensure there are no gaps where a pet can easily escape. The risk of a pet getting out is likely to cause your tenants to leave their pets inside the house, rather than in the yard and over time, this is likely to cause the kind of damage you want to prevent.

Another great idea is to provide a pet enclosure or pen in the garden, with a covered area where pets can take shelter from the sun and rain. If your tenant has a large dog, they will think this is a great option and may even pay more to rent your property. Cat lovers will also appreciate a secure enclosure where their cats can enjoy the sunshine and fresh air without being left to run loose – many councils make it illegal to leave a cat outdoors after dark, and busy roads are always a worry.

Additionally, it may be a good idea to modify the garden to make it low-maintenance and suitable for pets. Rather than worry about the pets digging up your expensive landscaping, keep things simple with grassy areas and plenty of bushes and shrubs for shade.

Avoid expensive carpets

With an investment property, it’s best to choose flooring that will be durable and easy to keep clean in the long-run. Carpets are never a great option as they breed dust mites and are a hazard for asthma sufferers – but throw a pet into the mix and things can get smelly! Hard flooring – like tiles or laminate – is likely to be a better option, as it wears better than carpets over time, and is much more resilient to those little accidents which often occur with even the best trained house pets.

If your property already has hard wood floors, simply take up the carpets and get them sanded and polished. Alternatively, there are some great inexpensive vinyl flooring options that look fantastic and are extremely easy to clean and maintain.

Consider taking out landlord insurance

Before tenants with pets move in, it’s a good idea to consider taking out landlord insurance. Importantly, make sure your policy covers damage caused by a domestic pet or animal residing in your property. This is not always the case, so be sure to read the fine print.

Pet-friendly rental properties are often in high demand, and as an investor, it may work to your advantage to allow pets into your property. It will certainly give you access to a wider market of renters, some of whom may be willing to sign longer leases and/or pay higher rents for your property if you cater for their pets the right way.

If you’re in the market for an investment property, or you already own one but are considering renovating or refinancing, we can help you obtain the right loan for your needs. Please get in touch today!

Which home loan is right for you? How can you tell when there’s so many different lenders, loan types and features to choose from? How can you compare loans properly when you’re not sure what you should be comparing?

Finding the right home loan for your situation is a process that can be confusing, particularly for first-timers. In this article, we give you a basic guide for making home loan comparisons and tell you more about the features you may need with your home loan.

Interest rates and comparison rates

Interest rates are one of the factors which determine the cost of your mortgage and how much your repayments will be. Even a small difference in interest rates can make a significant impact on the amount of interest you’ll have to pay over the term of the loan. However, the loan with the lowest interest rate may not necessarily be the cheapest, as there could be additional fees to factor in. This is where the comparison rate comes in.

The comparison rate is an indication of the true cost of a loan, once the interest rate and fees are included. It’s usually expressed as a percentage, which makes it easier for you to compare the real cost of different loan products. When choosing a home loan, it’s important to look at both the comparison rate and the features that come with the loan.

Loan Types

Principal and Interest

This type of home loan requires you to make repayments that cover both the principal (or the amount you borrowed) and the interest at the same time. People buying their own home usually use a principal and interest loan, as you pay down your loan with every repayment until you eventually own the property.

Interest-only

An interest-only loan allows you to only pay the interest you owe on the loan for a fixed period – usually from one-to five years – so the monthly repayment is lower than it would be under a principal and interest loan. At the end of the fixed period, the loan usually reverts to a principal and interest loan, but it is possible to refinance to another interest-only period. People buying an investment property often start off with an interest-only loan because the interest (and therefore the entire repayment) is tax deductible for them. However, they are not considered ideal if you are buying your own home to live in as you will likely end up paying more in interest over the term of the loan and your repayments don’t pay off the original loan amount.

Variable Home Loan

With a variable rate home loan, the amount of interest you pay may go up or down in response to changes in interest rates. This can be a good thing if interest rates go down, as the interest you pay will be less and your repayments will decrease. Another positive is that you can often make extra repayments on a variable home loan, which may help you to pay off your home loan sooner and save some interest over the term of the loan.

Fixed Home Loan

A fixed rate home loan lets you lock in your interest rate for a period (usually 1 to 5 years). The benefit is that you know exactly how much your repayments will be during that time, which can be beneficial if you’re on a tight budget or a fixed income. You’ll also escape any interest rate rises that may happen during the fixed period.

However, if interest rates fall, you won’t be cracking open the bubbly because your home loan interest rate will stay the same and so will your repayments. There may also be restrictions on making additional repayments with a fixed rate home loan.

Split Home Loan

One option that appeals to some homeowners is to fix the interest rate on a portion of their loan and keep the rest variable. This offers the certainty of knowing what your repayments will be on the fixed part of the loan, while you can make extra repayments and enjoy any interest rate drops on the variable part of the loan. It’s a way to get the best of both worlds!

Loan Features

Offset Account

An offset account is a transaction account that’s attached to your home loan. It can save you money on the interest on your home loan and help you pay off your loan sooner because the money in your transaction account is offset daily against your loan balance, and you only pay interest on the difference. For example, if you owe $300,000 on your home loan and there’s $50,000 in your offset account, you’ll only pay interest on $250,000.

Redraw Facility

A redraw facility allows you to make extra repayments on your home loan and then take out the extra repayments you’ve made later if you need to use the money for a different purpose.

What’s right for you?

The right home loan choice is different for everyone. It all depends on your personal financial circumstances and goals. We’re here to help you decide what is right for you and will make recommendations based on what you tell us about your situation and what you want to achieve. Then we’ll compare the choices from the different lenders and offer you a selection of cost-effective options.

Don’t wait to find out what’s right for you. Call us today for a chat about your plans.

Autumn is usually the busiest time of year for property auctions around the country. But this year, many more sellers seem to be preferring private sales to auctions. While the number of auctions may be down, there are still many great homes up for sale and you may have more power to negotiate the price!

Interest rate news
The Reserve Bank of Australia (RBA) decided to keep the official cash rate at 1.5% during its April meeting – taking a ‘wait and see’ attitude before the Federal Budget was released. The measures that were announced in the Budget to support economic growth are likely to influence the RBAs decisions in coming months. Many analysts are still calling for cash rate cuts, however this is probably a situation the RBA would rather avoid.

Meanwhile, last month some lenders cut rates on fixed rate home loan products. These are highly competitive at present and may be worth considering if you’re in the market for a loan.

Home value movements
Stephen Anthony, Chief Economist with Industry Super Australia was recently quoted as saying: “The housing price correction is really scaring the horses…” But despite this and similar commentary in the media, home value falls have slowed considerably over the past month. The ACT and Tasmania have even been enjoying home value increases in recent months.

A market correction is quite normal following a lengthy period of steady gains. This property market correction may be considered great news by those who have been waiting for a better time to get on the property ladder. Some areas are holding value better than others, so it pays to do your research before putting down a deposit.

Property market activity
The number of auctions and clearance rate figures continue to decrease as private sales numbers rise. The table below provides a snapshot of last month’s property market and home value changes during the last week of March, (according to CoreLogic on April 1).
Pre-approvals are more important than ever
In today’s market, it is very important to see us to get a pre-approval on your loan before you start shopping for a home. Don’t be tempted to put down a deposit before you see us – your borrowing capacity may have been affected by the more stringent lending criteria that have been put in place following the Royal Commission enquiries.

Remember, we have many lenders to choose from and are well placed to help you find the right home loan option for your needs. Please call us today to find out more.

Sincerely,
Mike & the Element Finance Team