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Juggling several debts can be stressful. If you’re struggling to keep on top of your debts or you simply want to save money on interest, we can help you solve the problem and get some peace of mind. Here are 3 ways your mortgage and finance broker can help you deal with your debts so you remain in control.

1) We can help you consolidate your debt

With debt consolidation, the idea is you take out a new low-interest loan and use it to pay off all your high-interest debts. We usually recommend one of two debt consolidation options.

Option 1: Refinance your home loan

In this scenario, you would refinance your mortgage and access some of your equity to pay off your debts.

Pros

  • Home loan interest rates are lower than those for most other types of credit.
  • One convenient repayment that’s easier to manage.
  • You can spread your repayments out over time to make them more affordable.
  • You may be able to make extra repayments and pay off your debt quicker, thereby saving money on interest.

Cons

  • Home loan terms can be 25 or 30 years. If you’re not careful, you may end up paying much more interest on your debts, even though the home loan interest rate is lower. Ask us to crunch the numbers for you.
  • If you use the equity in your home to pay off your debts, you will have less money when you sell your home.
  • If you turn all your unsecured debts (like credit cards) into secured debt (like your home loan), in a worst case scenario, you could lose your home if you get into debt again and can’t meet the repayments.

Option 2: Take out a personal loan

You could consolidate by taking out a personal loan with a competitive interest rate and using it to pay off all your other debts.

Pros

  • Interest rates for personal loans are generally lower than those on credit cards.
  • One convenient repayment.
  • Spread the repayments out over time to make them more manageable.
  • At the end of the loan term, all your debt will be paid off.

Cons

  • Personal loans come with higher interest rates than home loans (you may be better off by refinancing your home loan – ask us to crunch the numbers for you).
  • If you are struggling financially, it may be more difficult to secure a competitive interest rate.

2) We can compare interest rates on any kind of loan

We can help you find competitive interest rates on other kinds of loans, besides your home loan. Want us to compare interest rates on your personal loan? Not a problem. How about your car loan? We can access a wide variety of lenders to help with that too.

To help you manage your debts, we may be able to refinance your existing loans to a more competitive interest rate, or a longer loan term that reduces the size of your repayments. Bottom line is you have nothing to lose and everything to gain by checking in with us.

3) We can help you create a budget and savings plan 

Having a solid understanding of your income and expenses will help you remain in control of your finances. We can help you set up a budget to pay off your debts and create a savings plan to reach your goals. We’ll also give you tips, like how eliminating credit cards could save you money, or how budgeting apps work.

The last thing you want is for your debt to spiral out of control. As your mortgage and finance broker, we can explain whether debt consolidation is financially worthwhile, compare the market to find you the most competitive interest rates and help you find ways to budget and save. Please get in touch with us at Element Finance today.

This month, we saw important changes come into effect that could impact your ability to take out a home loan – or make it easier, depending on your credit history. In this article, we explain the new credit reporting changes and how they may affect you.

But first, let’s start with the basics – what is a credit report and why is it important? Remember, if you have any questions, your mortgage and finance broker is a great source of information.

What is a credit report?

Credit providers like banks, utility companies and telecommunications carriers provide details about your credit habits to credit reporting bodies. These agencies use this information to compile your credit report.

Among other details, your credit report contains your credit rating. This is a numerical value between zero and 1200 that represents your creditworthiness and how reliable you are as a borrower. The higher the score, the better.

What is your credit report used for?

When you apply for a home loan or another type of loan like a car loan, the lender will use your credit report to help them decide whether to approve the loan. They’ll consider details like your repayment history when assessing your ability to repay. Only licensed credit providers can access the repayment history information contained in your credit report.

Recent changes

From July 1, Comprehensive Credit Reporting (CCR) became mandatory for the big four banks. In the past, banks may have only shared negative financial information about you with other lenders, but under the new CCR regime, they’ll have to pass on positive information about you as well. Technically CCR has been in place since 2014, but the Australian Government recently made it compulsory for the big four banks to participate in the program to use credit reporting information to assess lending risks.

Here are some examples of the type of information that may now be shared:

Negative financial information:

  • Payment defaults
  • Overdue payments
  • Declined credit applications
  • Bankruptcy situations

How will the changes affect you?

The new credit reporting system will give lenders a more complete picture of your credit position. What that means is that they’ll have access to a more comprehensive set of data when assessing loan applications, so it will be easier for them to assess if you can afford to take on more debt.

If you have a positive financial track record, it’s likely your credit score will improve following the changes. Consequently, it may be easier for you to be approved for a home loan. You may even be able to negotiate a better deal (or have us do it for you).

How to keep your credit report healthy

Here are some tips to keep your credit report in check:

  • Pay your bills and make loan repayments on time
  • Pay your credit card off in full each month
  • Lower your credit card limits
  • Consider consolidating debt (speak to us about this)
  • Limit your credit enquiries, as frequent applications can look bad on your credit report
  • Remove your name from utility bills if you move
  • Be cautious about identity theft.

How to access your credit report

You can access a copy of your credit report for free once a year from credit reporting bodies. The main ones are Equifax, Dun and Bradstreet, Experian and Tasmanian Collection Service. Simply visit the ASIC MoneySmart website to find out more here.

Like to know more?

Your mortgage broker will be happy to explain how the changes to credit reporting may affect your eligibility for a home loan. Remember, for a lot of borrowers, mandatory CCR is likely to be a good thing, as it may improve your chances of being approved for a loan. It’s also expected to increase competition between lenders in future, which is a win for borrowers. Whatever your finance needs, we at Element Finance can assist, so please get in touch today.

Last year, important changes to tax deductions for property investors were announced. For some investors, the changes may have a significant impact on the annual deductions you can claim on your rental properties. As your mortgage broker, we like to keep you up to date. Here’s what you need to know about the changes when doing your tax this year.

Travel expense deduction scrapped

As of July 1, 2017, property investors can no longer claim a tax deduction for travel to maintain, inspect or collect rent for their rental property. Likewise, you can no longer claim travel expenses for preparing the property for new tenants, or for visiting a real estate agent to discuss your property.

Investors who own property interstate will probably be the most affected by this change. If these changes do affect you, perhaps consider employing a property manager to perform some of these tasks for you, as their costs are usually still tax deductible. Talk to your accountant to find out more.

Depreciation deductions tightened

Depreciation is the decline in value of an asset with a limited life expectancy. Depreciating assets include carpets, furniture and appliances like water heaters and cookers (also known as plant and equipment).

Residential property investors can now only claim depreciation deductions for plant and equipment expenses if they purchased them. Previously, investors could claim plant and equipment depreciation on assets that were installed by a previous owner.

This “integrity measure”, introduced in last year’s Budget, was intended to prevent multiple property owners from depreciating the same assets, exceeding their actual value. The changes apply to second-hand plant and equipment acquired after last year’s Budget night (May 9, 2017). You also can’t claim a deduction for plant and equipment installed on or after July 1, 2017 if you have ever used it for private purposes.

If you owned or entered into a contract to buy your investment property before May 9, 2017, you will not be affected by these changes. You can still claim deductions for depreciating plant and equipment assets that were in the rental property before that date.

Further reading

You can find more information about the expenses you can claim for residential rental properties on the ATO website, available here. You’ll find details about expenses that are deductible immediately, such as management, maintenance and interest; and expenses that are deductible over several years, such as capital works and borrowing costs.

Your tax time checklist

Here are some tips to prepare for tax time:

  • Update your Depreciation Schedule. You can find a Guide to depreciating assets 2018 here. If you’re confused, seek advice from your accountant. If it’s a new property investment, you may need to have a quantity surveyor prepare a Depreciation Schedule report.
  • Understand what you can claim (refer to the ATO website for clarification).
  • Get your documents together and organise your receipts.
  • Tally up your deductions. It’s a good idea to create a spreadsheet with all your income and expenses listed. That way, you can save on accounting fees (rather than giving them a shoe box of receipts to go through).
  • Book in with your accountant (they are flat out at tax time, so the sooner the better).

As your mortgage and finance broker, we’re happy to work with your accountant or financial planner on your investment property finance. And if you need a recommendation for a good accountant, we can help with that too. Good luck with your tax, and if we can assist in any way, please don’t hesitate to get in touch with us at Element Finance!

We hope you had an amazing Easter long weekend and the Easter Bunny was very generous! March was an exciting month in the property world. In the week prior to Easter, we saw the highest volume of auctions ever recorded across the combined capital cities, and by Melbourne individually. Meanwhile, most capital city home values are continuing their gradual decline, which could mean market conditions are finally turning in favour of buyers.

Interest Rate News

While the Reserve Bank of Australia decided to leave the cash rate on hold at 1.5% this month, lenders have been changing their interest rates outside of the RBA’s movements. Suncorp, for example, increased interest rates on all variable home loans in March, including those for owner-occupiers on principal and interest loans, quoting the rising costs of funding as the reason for the move.

Last month, we also saw the US Federal Reserve raise their official cash rate from 1.5% to 1.75% – the first time in 18 years the cash rate in the USA has been higher than Australia’s. The move has set chins wagging about whether the RBA will follow suit, but most economists don’t predict a cash rate rise for us just yet.

Property Market News

Over the month to March 31, the combined capital city home value average dropped -0.19%. Sydney saw the highest decline of -0.29%, while Melbourne saw prices drop -0.24%. In Adelaide, home dwelling values were down -0.26% over the month. However in Brisbane, home values increased by 0.07%, in Darwin they were up by 0.98%, Canberra 0.24%, Perth saw 0.31% growth and Hobart recorded the highest growth in dwelling values for the month at 1.68%.

Auction activity was through the roof in the week prior to Easter. CoreLogic recorded the highest level of auctions over the year-to-date as at March 25, as well as the highest volume of auctions ever recorded across the combined capital cities. Overall, 3,967 auctions were held (the previous record was 3,908 for the week ending November 30, 2014), with a preliminary clearance rate of 65.5%.

Melbourne led the way with a record busy week in which 2,078 properties went to auction, and 67% sold. Sydney held 1,359 auctions and achieved a clearance rate of 66.2%. In Brisbane, there were 194 auctions and almost half of the properties went under the hammer (49.2%). Adelaide held 143 auctions, and cleared 67.3% of stock. In Canberra, there were 129 auctions and 73.8% of properties sold. Perth held 57 auctions (achieving a 24% clearance rate) and Tasmania had seven auctions (66.7% of properties sold).

With interest rates remaining low, record levels of properties going to auction and prices coming down, now could be a fantastic opportunity to make your next property purchase! Speak to us about your finance options, and we’ll find you a loan that ties in with your financial situation and goals. And if your existing home loan interest rate rose in March and you’d like us to compare the market for a more competitive option, please don’t hesitate to give us a call at Element Finance Fremantle and Joondalup.

Christmas is just over the horizon and decorations are already starting to appear at the local shops. It’s a time of year where it’s almost common practice to splurge! Marketers are all working hard to encourage you to buy, buy, buy and you may have already picked up a few things for yourself and to put under the tree for family and friends.

It’s easy to resort to “retail therapy” when you need a bit of a pick-me-up, and it’s also easy to overspend on gifts amidst all the excitement of Christmas. But what will really give you a thrill and a sense of satisfaction is reaching your savings goals and using the money to buy an asset that will help you grow your nest egg even further (like a house). Here are our tips for beating the urge to splurge this Christmas.

Establish a budget

The most valuable thing you can do for your bank balance this silly season is to create a budget and stick to it. This is especially important if you are buying Christmas gifts.

Write down all of your income and expenses and set an amount for regular savings. Once you have a budget in place, you’ll know your spending limits, and how much you can afford to spend on things like Christmas presents or summer holidays. You’ll also be able to establish good savings habits – something that’s vitally important when the time comes to apply for a home loan. When creating your budget, set yourself short-term savings goals to stay motivated, plus long-term goals to set your sights on where you want to be financially.

There are plenty of online tools to help you create a budget. You could use a simple Excel spreadsheet or a budgeting app. Wally, for example, allows you to manually log your expenses and store pictures of receipts in a virtual budget journal. The app alerts you when you hit your savings goals or when a bill is due. TrackMyGOALSallows you to set, plan, track and manage your savings goals (we’re thinking a new home could be a goodie!).

Think outside the box

If you want to avoid splurging, you need to think outside the box and make a fun game out of finding ways to save money. The key is to challenge yourself to find ways to feel good without buying stuff you don’t really need. If you’re feeling blue and needing some “retail therapy”, do some exercise instead or head to your local park. The endorphins and fresh air will do you a world of good!

When it comes to Christmas gifts, simple home-made presents can potentially save you a load of cash. Get creative! Make some yummy treats and jazz them up with some pretty wrapping. Get a professional photo done and buy some frames in bulk at wholesale prices. Don’t be shy about ‘re-gifting’ anything you don’t need, just give it to someone else who may enjoy it. The options are endless!

Avoid temptation

It’s important to know your spending triggers and to keep them in check to avoid impulse shopping. If you’re a fan of online shopping and find yourself gravitating towards those advertisements on Facebook, perhaps take a hiatus from social media during the silly season and ‘unlike’ your favourite shopping sites.

Similarly, if you find yourself being tempted to buy things for yourself when you’re out and about buying Christmas presents for your family, it’s wise to avoid shopping centres. After all, if you don’t see those killer shoes in the shop window, you won’t know what you’re missing out on. If you have to go out to buy Christmas gifts or essentials like groceries, write yourself a shopping list and take cash with you. By keeping your credit cards safe from yourself (and locked in a drawer at home), you’ll spare yourself a spending hangover.

If you’d like to explore your home loan options, we’d love to hear from you. Even if you don’t have a huge deposit saved, we may still be able to help you, so please don’t hesitate to get in touch. Remember, you’ll need a good savings history if you are planning to buy a property, so resist the urge to splurge this Christmas! Make some savings goals, change your spending habits and set the wheels in motion for a splurge-free future today!How to beat the urge to splurge


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