CFS Blog

CFS Blog is a dedicated content rich resource for people wanting to keep up to date on latest trends in the finance industry. We reveal tips and strategies that help you achieve your financial independence.

Strengthen your financial position through refinancing

- Sunday, August 02, 2009
Whether you’re looking to improve your property or reduce your mortgage repayments, refinancing may be an ideal strategy.

Your personal circumstances will change many times over your life, and as a result the mortgage that you have may no longer be the most appropriate.

Refinancing describes the process of changing from one home loan to another and is a fast and flexible strategy to help you adapt to these changes and ensure you’re not paying over the odds on your home loan.

Here are a number of ways refinancing can help you improve your financial position:

Secure a better interest rate.
All indicators suggest that we’re now at the bottom of this current rate cycle, and that any move to the official interest rate by the Reserve Bank of Australia is mostly likely to be up. For borrowers seeking certainty to mortgage repayments, refinancing your mortgage to a fixed rate product may be an effective strategy.

Unlocking the equity in your home.
Maybe you’d like to purchase an investment property but don’t want to spend years saving a large cash deposit? Refinancing can help you unlock the equity in your home, giving you the funds to act now. You can also refinance to unlock equity to renovate and add value to your home – a new kitchen or the addition of another story for example.

Debt consolidation.
If you’ve got a lot of unsecured debt mounting up, such as store and credit cards, refinancing these debts into your mortgage can help make managing your debt easier as well as potentially save you thousands in interest repayments.

Establishing which home loan fits your needs can be quick and relatively stress free. Once you’ve determined your financial goals, we can work with you to identify the most appropriate product to meet your needs as well as help you through the application process.

Just remember that while refinancing has a number of benefits there may be costs associated with switching home loans, such as break fees, new application fees, legal fees and mortgage insurance. We can work with you on highlighting associated costs and determining the best course of action.

<Disclaimer>

This article does not necessarily reflect the opinion of the author/s,  Carruthers Financial Services Pty Ltd or any of its employees or subsidiaries. It is intended to provide general news cand information only. While every care has been taken to ensure the accuracy of the information it contains, neither the author/s, Carruthers Financial Services Pty Ltd,'Carruthers Financial Services Pty Ltd's employees, or its subsidiaries, can be held liable for any inaccuracies, errors or omission. Copyright is reserved throughout. No part of this article can be reproduced or reprinted without the express permission of Carruthers Financial Services Pty Ltd expect for the use for which it was purchased for. All information is current as per the date of delivery and Carruthers Financial Services Pty Ltd will take no responsibility for any factors that may change thereafter. The purchaser of this article and all readers thereafter are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this article as a substitute for professional advice.




Fast track your property investment through co-ownership

- Sunday, August 02, 2009
Ownership of an investment property is the dream of most Australians but for some it may be too great an undertaking to manage alone.

That’s why a growing number of budding investors are looking to crack the market by pooling their resources and taking advantage of co-ownership opportunities.

Australian residential property has historically performed well, typically doubling on average in value every eight to 12 years, and it is this solid growth that has attracted investors over time.

In the past property investment was considered only an option for the wealthy, but today it can be within reach of most working Australians with the right approach.

Investors that don’t have the resources to make an outright purchase can club together with friends or family to increase their buying power.

There are a number of advantages associated with investing via co-ownership but there are also some pitfalls would-be investors should consider.

A joint purchase will mean that the burden of a deposit can be split, which can be a great advantage for buyers with limited savings.

There are other costs that can also be reduced through co-ownership. Stamp duty, land taxes, conveyancing costs and maintenance fees can all be essentially halved when buying with a partner.

While there are no doubt numerous advantages of co-ownership there are also some potentially negative points that should be considered.

It is essential that you pick you partner carefully, for example. Make sure that they are trustworthy and capable of meeting their commitment to the mortgage.

It is also important that a firm agreement is established regarding how long the property is held and under what conditions it is sold.

With the right approach co-ownership can make the dream of property investment a reality years earlier than many would-be buyers could hope for should they purchase on their own – no wonder this is a fast growing segment of the market.

<Disclaimer>

This article does not necessarily reflect the opinion of the author/s,  Carruthers Financial Services Pty Ltd or any of its employees or subsidiaries. It is intended to provide general news cand information only. While every care has been taken to ensure the accuracy of the information it contains, neither the author/s, Carruthers Financial Services Pty Ltd,'Carruthers Financial Services Pty Ltd's employees, or its subsidiaries, can be held liable for any inaccuracies, errors or omission. Copyright is reserved throughout. No part of this article can be reproduced or reprinted without the express permission of Carruthers Financial Services Pty Ltd expect for the use for which it was purchased for. All information is current as per the date of delivery and Carruthers Financial Services Pty Ltd will take no responsibility for any factors that may change thereafter. The purchaser of this article and all readers thereafter are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this article as a substitute for professional advice.




10-day housing and renovation approvals commenced!

- Tuesday, July 07, 2009
10-day housing and renovation approvals commenced!

by Anthony Whealy

From 27 February 2009, the NSW Government’s new Housing Code will commence, enabling a broad range of new homes and home renovations to be approved in only 10 days, without the need for any DA or council involvement at all. The reforms aim to slash “red tape”, provide certainty to landowners, encourage investment in new or renovated homes, and to free up council resources. Coupled with record-low interest rates for homeowners and increased homeowner grants, these reforms may well assist in encouraging landowners to invest in their properties, creating a stimulus for the development industry, at a time when building approvals have now slumped for the sixth consecutive month in a row.

Overview

The new codes (contained within the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (SEPP) and the NSW Housing Code – Guide to Complying Development for Detached Housing) provide a set of clear and reasonably generous design criteria such as allowable heights, building setbacks, landscaped areas and the like. Rather than a council typically taking several months or more to assess whether a DA is acceptable (the average time in metropolitan NSW is 121 days), applicants will instead be able to take their design directly to a private certifier (or to the council, if they wish), who must then adopt a “tick the box” type check on whether the design meets the pre-set criteria within the Code. If it does, a certificate of approval must be issued within 10 days. Importantly, there will be no discretion or subjectivity allowed in the decision. The assessment is purely a factual assessment of whether the design meets the pre-set criteria. Similarly, neighbours will not be given any right or opportunity to object to the application. They will be notified after the approval is issued.

The Government is aiming to achieve a situation in NSW where within four years, 50% of all housing and renovation approvals will be approved under the Code, rather than through a Council DA assessment process. Moreover, although the new Code is reasonably generous, the Government has indicated clearly that it will continue to revise the Code (perhaps biannually) to ensure that this 50% target is met. This means that if the new Code is not effective at enabling homeowners to avoid the DA process, the Code will likely be amended to be more generous to landowners/developers. In good news for developers in NSW, the Government believes that this Code will apply to approximately 80% of all project homes in NSW.

We note however that at this stage, the Code has some limitations in its application, which has caused many councils to boast that the Code will not have much effect in their council areas. In particular, the part of the Code dealing with Complying Development (new homes and significant renovations to homes) only applies at this stage to allotments greater than 450sqm and having a width/frontage of at least 12m. It does not yet assist for smaller or narrower allotments. Similarly these sections of the Code do not apply to Heritage Items or Heritage Conservation Areas, and do not apply in some land zones and to some environmentally sensitive sites/areas. Nevertheless some of these exclusions will likely be captured by subsequent versions of the Code.

At a time when significant economic stimulus is required to encourage investment and to create jobs in NSW, these reforms are gladly welcomed by the building industry and by home owners who want to undertake simple improvements but have baulked at or been discouraged by the seemingly endless red tape imposed by some councils to date.

A Closer Look

The SEPP

The SEPP - which creates categories for both exempt development (where no approval at all is needed) and complying development (where a certificate of approval is needed but no DA is needed) - has State-wide application. It will apply throughout the entire State as of 27 February 2009, subject to a number of specific exemptions as touched upon in this newsletter. The Housing Code is really only a guide to the SEPP. It is the SEPP which has legal force and standing.

Exempt development

To be exempt development, and therefore not require any form of approval (i.e. works can be carried out immediately), the development must:

be a type of development identified in Part 2 of the SEPP and comply with the specific standards contained in the SEPP

comply with the BCA or if not applicable, be structurally adequate

not be carried out on land that contains any Heritage Item.

be installed according to the manufacturer’s specifications, and

not involve the removal or pruning of a tree or other vegetation that requires an approval

Unlike complying development, the exempt provisions apply regardless of the lot size and in a welcome departure from previous provisions, there has been a relaxation on the ability for many of these types of development to occur in conservation areas. One notable exception is cement-rendering of homes, which may not be carried out on homes within a conservation area.

There are 41 types of exempt development listed in the SEPP ranging from balconies, decks, patios, pergolas, terraces and verandahs, to carports and retaining walls. Importantly, each type of exempt development has its own specific development standards that need to be checked and complied with.

Complying development

The complying development provisions are contained in Part 3 of the SEPP. Development that is listed as complying development includes:

New single storey and two storey dwelling houses on a lot that has an area of at least 450 square metres, and a frontage width of at least 12m, and is in a residential zone (Zones R1 - R4). However the erection of a basement level is not allowed.

Alterations and additions to an existing single storey or two storey dwelling house or addition of a second storey to an existing single dwelling house, on a lot that has an area of at least 450 square metres, and a frontage width of at least 12m, and is in Zone R1 – R5 or RU1 – RU5 (residential zones as well as some types of rural zones).

The erection of new ancillary development such as swimming pools or cabanas (or alts and adds to existing ancillary development) on a lot that has an area of at least 450 square metres, and a frontage width of at least 12m, and is in Zone R1 – R5 or RU1 – RU5; and

The demolition or removal of an existing single storey or two storey dwelling house or ancillary development on a lot that has an area of at least 450 square metres, and a frontage width of at least 12m, and is in Zone R1 – R5 or RU1 – RU5.

The SEPP then sets out specific detailed development standards for complying development under the SEPP. For example:

at the completion of the development all lots can only have 1 dwelling

building heights for dwelling houses are limited to 8.5m above existing ground level

side setbacks depend on the height of the building and the lot size, but would typically be around 2m for a two-storey house on lots up to 900sqm, or more for larger lots.

front setbacks are to be the same as the average of adjoining homes or, where there are no adjoining homes within 40m, front setbacks are typically to be 4.5m

landscaped area (permeable area capable of growing plants and grasses) must be 20% for lots up to 600sqm or 25% for lots up to 900 sqm, and a minimum width of 2.5m

site coverage of the dwelling house and all ancillary development under the complying provisions in the SEPP must not be more than 50% of the area of the lot if the lot has an area between 450 and 900 square metres, but less for larger allotments

swimming pools must be located behind the setback area from a primary road or in the rear yard and decking/coping must not be more than 600mm above existing ground level (but can be up to 1.4m high if it is of limited width)

stormwater/drainage can be via a charged system or an inter-allotment system. The ability to utilise a charged system should overcome the bureaucratic policies of many councils who refuse to allow charged systems and instead require owners to spend months or years attempting to obtain drainage easements over neighbouring properties

the maximum allowable depth of excavation and height of fill are 1m. This will typically make the Code unavailable for sloping sites, and may need to be amended in future

at least one off-street parking space is to be provided for new homes.

Complying development will not apply in certain specific areas, such as:

land that comprises a heritage item or a draft heritage item

land within a heritage conservation area or a draft heritage conservation area

land that is bushfire prone or a flood control lot, and

land that is identified as environmentally sensitive land.

Importantly, where a landowner cannot or does not wish to design their house or renovations in a way that is covered by the new Housing Code, the usual DA process is still available, but of course is subject to far more council discretion and neighbour involvement.

gadens lawyers believe that developer contributions are likely to be payable for complying development under the Code, even though no DA will be required. This scenario is allowed for under s.94EC of the Environmental Planning and Assessment Act.

Summary


These significant reforms to the planning system in NSW should enable many residential-dwelling developments to avoid the need for council approval altogether, by either enabling small development to be carried out immediately (as exempt development) or by enabling a private certifier to issue a complying development certificate within only 10 days for larger projects. This should enable homeowners and housing developers to commence work quickly and cheaply and with a real level of certainty, avoiding expensive and protracted disputes with neighbours and councils. Although the reforms will undoubtedly be unpopular with some affected owners who will be deprived of the ability to object to development proposals, these reforms are considered necessary and sensible, and come at a time when there is urgent need for investment in the building and construction industry in NSW.

This publication is provided to clients and correspondents for their information on a complimentary basis. It represents a brief summary of the law applicable as at the date of publication and should not be relied on as a definitive or complete statement of the relevant laws



Cut your credit card debt

- Tuesday, June 30, 2009

It may be no surprise to learn that according to a recent Dun & Bradstreet survey 39 per cent of all working Australians have very little cash saved... and for most, why would we?

One of the main reasons is that for some time now many of us pay our way through daily life with our credit cards.

However the current economic climate has prompted many Australians to reassess their financial stability, which means rethinking the credit card.

Essentially there’s the real danger that you end up spending money that you don’t have, and if you are unable to produce the minimum payments outlined by your lender each month then your debt – and the interest you’re charged – continues to climb.

The following tips coupled with a little willpower will help you rein in the plastic and reduce your debt.

  1. Consolidate. By channelling all of your loans into one you can make a dramatic reduction to the interest you’re charged while making the debt easier to manage.
  2. Prioritise. Pay off the credit card that has the highest interest rate first then work your way down to the card with the lowest rate.
  3. Negotiate with your creditor. Don’t hide from your card provider if you’re in trouble – the chances are they will work with you to help reduce your debt and even your interest rate.
  4. Cut your outgoings. Avoid extravagances such as expensive dinners and boozy nights out – a DVD and a takeaway can be a cheaper alternative when trying to save a buck.
  5. Sell assets. Painful though it may be, in dire circumstances it may be worth liquidating investments such as stocks and shares, or items such as cars and boats, to pay off spiralling debts.
  6. Swap cash for card. The most effective way to ensure you’re reducing your debt is to remove the perpetrator. Cut the card and only purchase what you can afford.

 

 

<Disclaimer>

This article does not necessarily reflect the opinion of the author/s,  Carruthers Financial Services Pty Ltd or any of its employees or subsidiaries. It is intended to provide general news cand information only. While every care has been taken to ensure the accuracy of the information it contains, neither the author/s, Carruthers Financial Services Pty Ltd,'Carruthers Financial Services Pty Ltd's employees, or its subsidiaries, can be held liable for any inaccuracies, errors or omission. Copyright is reserved throughout. No part of this article can be reproduced or reprinted without the express permission of Carruthers Financial Services Pty Ltd expect for the use for which it was purchased for. All information is current as per the date of delivery and Carruthers Financial Services Pty Ltd will take no responsibility for any factors that may change thereafter. The purchaser of this article and all readers thereafter are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this article as a substitute for professional advice.





How to find the right tenant for your investment property

- Monday, June 29, 2009

A growing number of Australians are expected to invest in the property market as low interest rates and rising rental values promise to deliver some attractive returns.

Location, price and the type of property can all play a major factor in determining how your investment will perform, however there is another important factor that some investors neglect to consider: the tenant.

While capital growth is a major goal for most investors, strong cash flow is also an essential consideration for a sound investment – and this will be generated by the rental income.

Good tenants are therefore an essential ingredient in an overall sound property investment, so how should landlords go about attracting them?

Landlords essentially have two options when it comes to finding tenants. The first is to engage a professional to manage the property on your behalf – and that service includes finding suitable tenants.

Hiring a professional can be a smart move but their services do come at a cost – usually around 7.5 per cent of the rental value.

If you engage a professional real estate or property management agent they will not only find and screen suitable tenants, they will also manage your property on your behalf, which includes rental collection, maintenance and tenant liaisons.

If you decide that you have the time to manage your own investment you’ll need to find your own tenants.

When finding your own tenants it’s important that you advertise in the most effective media channels and use the right messages to attract the type of tenant you seek.

For example, for a suburban property renting families are a more likely target market, so local papers are usually a good vehicle for communicating with them. If in the inner city, your target may be students or singles – which you can connect with online.

When selecting a tenant you’ll need to be rigorous with your reference and rental history checks as well as determining their employment status and current family situation.

Also ensure that your tenants sign a rental agreement, which can be purchased on the internet for as little as $40.

Remember, good tenants are essential to a successful investment. Should they not look after your property you may incur excessive maintenance and damage costs – so be selective.

If you’re unsure about how to find an agency to manage your property, or to discuss how tenants may impact your mortgage, please feel free to get in touch.

Considering investing in Property, then please contact to discuss all your options. We can help guide you through the whole process from locating a property to securing your finance. Lets help you create your investment property portfolio.

Email us today.

<Disclaimer>

This article does not necessarily reflect the opinion of the author/s,  Carruthers Financial Services Pty Ltd or any of its employees or subsidiaries. It is intended to provide general news cand information only. While every care has been taken to ensure the accuracy of the information it contains, neither the author/s, Carruthers Financial Services Pty Ltd,'Carruthers Financial Services Pty Ltd's employees, or its subsidiaries, can be held liable for any inaccuracies, errors or omission. Copyright is reserved throughout. No part of this article can be reproduced or reprinted without the express permission of Carruthers Financial Services Pty Ltd expect for the use for which it was purchased for. All information is current as per the date of delivery and Carruthers Financial Services Pty Ltd will take no responsibility for any factors that may change thereafter. The purchaser of this article and all readers thereafter are advised to contact their financial adviser, broker or accountant before making any investment decisions and should not rely on this article as a substitute for professional advice.






Is it Time to Fix Your Home Loan?

- Wednesday, June 03, 2009

Fixing your mortgage interest rate can offer certainty around repayments, but it can come with some restrictions

Interest rates began to fall sharply in September 2008 as the Reserve Bank of Australia (RBA) moved to tackle the worsening economic crisis. The official cash rate now sits at just 3 per cent.

While there are forecasts that the cash rate could fall as low as 2 per cent by the end of the year the RBA has put further cuts on hold over the last couple of months while it assesses the economic situation.

The question is, with the cash rate nearing the end of its downward cycle should borrowers fix their interest now or hold out for a lower rate; on the other hand should they just stick with a variable rate?

It is notoriously hard to pick the absolute bottom of any market cycle and borrowers considering fixing their rate should first weigh up the pros and cons of locking in a fixed rate.

A fixed rate essentially gives borrowers the security of knowing exactly what their monthly repayments will be for a set period of time. Fixed rate terms are typically between one and five years with the rule of thumb that the longer the period, the higher the rate.

The key benefit of a fixed rate mortgage is that should interest rates start to climb fixed rate borrowers are shielded from any increases for the duration of their fixed rate term.

However fixed rate loans do have some restrictions and are less flexible than variable rate mortgages – for example, if you sold your house within the agreed fixed rate period you may be liable for a penalty for breaking the fixed rate term.

Remember that while a fixed rate will protect you from any rate increases, should rates fall further you’ll be stuck paying a higher rate. What’s more, breaking a fixed rate term can prove very expensive so consider the term that you agree to with your lender carefully.

For borrowers who’d like the best of both worlds it is possible to split your loan between fixed and variable. You can decide what proportion you’d like to fix depending on how confident you feel about future rate movements.

There’s no right or wrong when it comes to choosing between fixed or variable rates – it’s really down to whether you want to have certainty over your repayments. Before making any decision it is well worth considering your short- to medium-term plans; give us a call and we can discuss the pros and cons of a fixed rate loan and which option is right for you




With the Tightening of Credit Policy - Banks are now requiring Genuine Savings

- Thursday, April 30, 2009
Definition of Genuine Savings 

Genuine savings is demonstrated where supporting records in the name of the applicant(s); confirm the applicant(s) has accumulated a minimum of 5% of the purchase price (3% for first home buyers) by way of progressive and regular savings over a period of not less than 3 months prior to the time of application. 

Any lump sums / large deposits are excluded unless they can be clearly shown via documentary evidence to come from the sale of an appreciating asset (e.g. shares or real estate) that had been held prior to their disposal for a minimum of 6 months. 

If the 3% / 5% minimum savings was already held 3 months prior to the application, and there has been no subsequent progressive and regular savings since, the customer must be able to demonstrate that the savings have been existent for 6 months prior to the application. 

Gifts from any source are excluded from genuine savings, as gifts do not in any way demonstrate the ability of an applicant to accumulate assets. If family support is evident (historically via a gift), then a Deposit KickStart (Family Equity Loan) loan should be considered in the first instance. 

Whilst the FHOG remains as an acceptable source of borrower’s contribution, it does not qualify as genuine savings.

Other exclusions from genuine savings:

  • Advances on wages/commission from an employer
  • Inheritance
  • Financing of a deposit 
  • Builder discount/finance
  • Vendor discount/finance
  • Proceeds from sale of motor vehicles
  • Windfall gains
  • One-off government payments (e.g. baby bonus, stimulus package payments)

If genuine savings cannot be demonstrated as per the above, the LVR must be less than 90% + lenders mortgage insurance.

Should you wish to discuss your own situation in applying for finance please do not hesitate to contact us.






12 Tax Tips for Business Owners

- Friday, June 27, 2008
12 Tax Tips for End of Financial Year 2008

What will YOU do differently this End of Financial Year?

The end of the 2007/08 Financial Year is around the corner!! Many of us feel frustrated and overwhelmed during the period just before the 30th of June – there is so much to do.

Well, to make the most of Pre-Tax Time, Business Flair spoke to Daina into giving us her expert guidance to help you prepare your business’s financial assessment.

1. Tax Planning - before the end of the Financial Year, review your position – look at where you are business-wise. Consider allocating funds to Superannuation? Can you prepay expenses? Have a look at your income projections and expenses so you can work out your estimated taxable income.

2. Consider moving any allocating funds into your superannuation fund before the end of the financial year – this can reduce your tax debt.

3. Prepay interest on your loans or investments.

4. Plan for any staff bonuses – if you decide to pay staff bonuses, now is the best time to plan and implement this.

5. Think about acquiring the services of an accountant who knows tax law and can assist you with a variety of ways to legitimately reduce your tax liabilities.

6. Do you have stock in your business? If so, you’ll need to do a stocktake and have a closing stock figure.

7. Make sure you have your bookkeeping up to date – this ensures you will obtain a true picture of the financial position of your business (that means open all the mail, even though bills will be included, you’ll need to face the music)

8. Work with an accountant closely to get them to explain everything you need to know about the finances of your business – this is one of the most underestimated skills of business owners – it is critical to the understanding of exactly where your business is placed.

9. Cash flow assessment –knowing exactly where your business stands ensures you have a better control of business cash-flow. Remember, it is illegal to trade as insolvent which means you cannot pay the bills when they are due!

10. Separate business from personal finances – often small business owners make the mistake of going into business as a sole trader by mixing business with personal finance – you cannot really gauge a true cash flow idea of your business using this practice.

11. Look at any capital loss or gains that can be offset against each other for the previous years.

12. Finally, look at ways you can be better at bookkeeping which means obtaining good financial advice; you might require a cash injection for the business or an overdraft or credit card – get appropriate finance where you need it - remember, the interest is tax deductible.





 
David Carruthers is a credit representative (Credit Representative Number [400226]) of BLSSA Pty Ltd (Australian Credit Licence No. 391237).