MAP Finance, 156 Boundary Street Suite #1020, South Brisbane (2026)

17/08/2024

Will a new vehicle jump-start your earnings?

It�s always important to take stock and consider whether the purchase of new assets or equipment will benefit your business. Asset finance is often the answer.

Financing new equipment, instead of purchasing it outright, can be a good way to preserve cash flow and working capital while adding an asset that can begin to generate immediate income.
And, of course, there may be potential tax advantages that could also come your way.

14/08/2024

One size doesn't fit all when it comes to home loans. Make sure you choose a loan with the features and benefits that are right for you.

Here's a guide to common loan features and benefits.

1) Interest only repayments

You only pay the interest on the loan, not the principal, usually for the first one to five years although some lenders offer longer terms.

Many lenders give borrowers the option of a further interest-only period. Because you're not paying off the principal, your monthly repayments are lower.

These loans are especially popular with investors who pay off the principal when the property is sold, having achieved capital growth.

2) Extra repayments

If you pay more than the required regular repayment, the extra amount is deducted from the principal. This not only reduces the amount you owe but lowers the amount of interest you repay.

Making extra repayments regularly, even small ones, is the best way to pay off your home loan quicker and save on interest charges.

3) Weekly or fortnightly repayments

Instead of a regular monthly repayment, you pay off your home loan weekly or fortnightly. This can suit people who are paid on a weekly or fortnightly basis, and will save you money because you end up making more payments in a year, cutting the life of the loan.

4) Redraw facility

This allows you to access any extra repayments you have made. Knowing you have access to funds can provide peace of mind. Be aware lenders may charge a redraw fee and have a minimum redraw amount.

5) Repayment holiday

You can take a complete break from repayments, or make reduced repayments, for an agreed period of time. This can be useful for travel, maternity leave or a career change.

6) Offset account

This is a savings account linked to your home loan. Any money paid into the savings account is deducted from the balance of your home loan before interest is calculated. The more money you save, the lower your regular home loan repayments.

You can access your savings in the usual way, by EFTPOS and ATMs. This is a great way to reduce your loan interest, as well as eliminate the tax bill on your savings. Lenders provide partial as well as 100% offset accounts.

Be aware the account may have higher monthly fees or require a minimum balance.

7) Direct debit

Your lender automatically draws repayments from a chosen bank account. Apart from ensuring there is enough cash in the account, you don't have to worry about making repayments.

8) All in one home loan

This combines a home loan with a cheque, savings and credit card account. You can have your salary paid into it directly. By keeping cash in the account for as long as possible each month you can reduce the principal and interest charges.

Used with discipline, the all-in-one feature offers both flexibility and interest savings. Interest rates charged to these loans can be higher.

9) Professional package

Home loans over a certain value are offered at a discounted rate, combined with discounted fees on other banking services.

These can be attractively priced, but if you don't use the banking services you may be better off with a basic variable loan.

10) Portable loans

If you sell your current property and buy somewhere else you can take your home loan with you. This can save time and set-up fees, but you may incur other charges.

11/08/2024

Can you live as One Big Happy Family?

More Australian families are moving in with parents or in-laws in a bid to stake their claim in the property market and save everyone a bundle along the way.

Multi-generational housing has risen by more than 60 per cent over the past three decades, according to a 2013 report by the University of NSW City Futures Research Centre.

With property prices escalating and new land at a premium in most major capital cities, more families are deciding to pool their resources and take up digs together.

While not for every family, there are clear benefits to kids, parents and grandparents bunking in, not least of them being big savings.

Already more young adults are living at home longer to stave off the increasingly high costs of independent living, save for travel or squirrel away a deposit to buy their own place.

And while that arrangement probably suits the adult child more than mum and dad, the concept of multi-generational living tends to have more mutual perks.

The oldest generation, for example, might be looking to down-size and make their superannuation go further without compromising their lifestyle, while their children might want to step up to a bigger property in a better location.

Together, they are able to meet their financial and lifestyle goals.

Advantages:

Savings for all
One of the most obvious benefits of families sharing a property is greater buying power.

Naturally the property needs to be big enough to cater to a large number of people (and they can be difficult to come by) but once economies of scale kick in, families who combine their funds can usually pick up a higher calibre of property than if they were on their own.

Sharing families who can�t find the home they need may choose to build their own or renovate an existing one. Some are opting for a duplex-style arrangement where a wall splits the home in two to create entirely separate living areas with separate entrances.

Designed properly, the property can maintain its Residential A zoning without attracting all of the red tape and costs associated with developing a proper duplex.

Check with your local council what rules apply for your property.

Whether you build or buy, the savings can stack up in terms of loan repayments and rates and utilities, providing there are sound agreements in place for splitting expenses (see tips).

Extra care
Another advantage of multigenerational living is built-in childcare, providing it is mutually agreeable.

Grandparents are often willing to help out with children, which can help tally up further savings or create greater flexibility for busy working parents.

Even if children don�t require fulltime day care, having a grandparent on hand for school pick-ups or extra-curricular activities can help ease stress on the family dynamic. And it may not be just children who require the care.

Some families choose to live together to provide emotional or physical support to an aging parent who may be struggling to maintain their independence.

Fringe benefits
Although probably not top-of-mind for co-located families, there are plenty of incidental benefits when generations reside together:

There is someone on hand to care for plants and pets when one family goes away.

Senior residents can attract discounts on home insurance and improve security if home most of the time.

Old and new skills can be passed between generations � for example, grandkids can teach grandparents about technology, while grandparents might teach grandkids how to cook an old- fashioned favourite.

Many families report increased respect and understanding between generations.

Tips for multi-generational living

Although there are many advantages to multiple generations living under one roof, the arrangement is not without its challenges.

Prior planning and plenty of ongoing, respectful discussion are often required to help things run smoothly.

Here are some tips on what to consider to help ensure the situation doesn�t get too close for comfort.

Discuss what each party expects to get out of the situation so there�s agreement from the outset.

Get legal and financial advice and ensure there are agreements in place to avoid any grey areas over who pays for what when establishing the home � buying or building � and for all ongoing expenses, such as groceries and household bills.

Be clear about responsibilities so each family member understands what jobs are expected of them.
Establish a routine for meals � who cooks, when the family eats and whether everyone eats together.

Set up rules for privacy to instil boundaries if needed � grandkids, for example, might be asked to give a grandparent some time out after dinner.

Consider whether holidays and outings involve all family members or just some, and try to make plans well in advance so there are no surprises, clashes or confusion.

Grandparents should be clear from the get-go about how much they wish to be involved in caring for grandchildren.
Make time to discuss how the situation is tracking for everyone involved so any grievances can be aired productively.

08/08/2024

If you're like me, you've read the occasional newspaper over the past 12 months, and you probably couldn't help noticing that home loans and real estate have been the subject of some serious changes.

So if you think about it, it's possible that your home loan could benefit from a slight update as well. Nothing too serious, but it's probably worth having a look.

You see, you may have a home loan with a lender who has a new or better product. Now they are unlikely to call you and let you know about this, aren't they? Or you may have a fixed rate loan that you can now justify converting back to a variable rate.

So if you're not exactly sure where you stand with your current home loan, why not give me a call and I'll check it out for you.

You can jump on my website and test our debt consolidation calculator to see how much you could save each month just by refinancing or consolidating some of your debt.

It doesn't cost anything to find out if everything is still OK and it usually only takes a few minutes. The least I can do is point you in the right direction, and the privacy act ensures our conversation is entirely confidential.

What do you think?

02/08/2024

Australia has once again become a nation of savers. No longer is debt de rigeur. In this post-GFC era we prefer to play it safe with lower levels of debt and are looking for ways to be debt-free faster.

Savvy savers are making the most of low interest rates and their savings by maximising offset accounts. An offset account is essentially a savings account that is linked to a loan account. Instead of earning interest on your savings deposit, the funds are used to offset the loan account.

Your loan repayment remains the same, but more of it is used to pay off the principal, reducing the life of your loan and slashing the amount of interest paid.

How offset accounts work

Lenders generally offer two types of offset accounts: full offset or partial offset.

A full offset account offers you the same interest rate on your savings as what is charged on your home loan. For example, if you have a $100,000 home loan with interest charged at 6%, plus $10,000 in an offset account earning 6%, the lender will offset your loan balance with your offset account balance and only calculate interest on $90,000.

A partial offset account only offers you a standard savings rate, which is lower than the interest charged on your home loan, so one does not completely offset the other. Using the same example as above, a partial offset account might charge the same 6% on the loan but only offer 4% on the savings. Instead of one lot of interest completely offsetting the other, you would pay a reduced interest rate of 2% (the difference between 6% and 4%) on $10,000 of your loan.

Many borrowers opt for a 100% offset account to take full advantage of this feature, but speak to your broker for more information about this type of account.

Benefits

An offset account still allows you to make extra payments on the loan. However, instead of paying more into your actual mortgage, you maintain as high a balance as possible in your savings. This reduces the interest and life span on your loan but gives you all the access and flexibility of a regular savings account, should you need it.

Some lenders even allow you to set up an offset account with a fixed rate loan, giving you certainty around your payments plus the opportunity to get ahead of the debt.

There is also the added benefit of a tax incentive. Because the interest is essentially not earned, you don't have to include it in your taxable income.

Still in the nest

The key to maximising an offset account is to maintain as high a savings balance as possible. The first step to flesh out your finances is to have your salary paid directly into your savings account. Then it's a matter of keeping your money in the savings account for as long as possible.

One of the most effective tools is a credit card with a generous interest-free period. Look for a lender offering 55 days interest free. While it may seem strange to use credit to save, putting as many costs as possible on a card with a long interest-free period can be an effective loan buster.

The interest-free period allows you to squirrel away as much of your pay, and any other earnings, for as long as possible to maximise your interest earnings. You just need to make sure you pay off your credit card debt in full before the interest-free period runs out.

What you should consider

An offset account can be a very effective strategy to stay one step ahead of your home loan, providing your spending does not outstrip your savings and you leave your funds to grow over time.

You also need savings to start an offset account. The whole concept fails if you don't have any savings to leverage in the first instance. You then need to ensure you can maintain surplus cashflow, especially if taking advantage of a credit card with an extended interest-free period. If that's the case, you will need to be disciplined with expenses, payments and timing. If tempted to put too much on the plastic, the credit card tactic may become a debt trap.

Similarly, if you don't want to be tempted to overspend, you may be better off injecting any spare funds straight into your loan repayments instead of turning to an offset account.

Look for an offset account that still gives you the standard benefits of a regular savings account: ATM, EFTPOS and telephone and internet banking. Although the aim is to maximise your savings, you still want to be able to access and use your funds as you would with any regular savings account.

Lenders also often charge a higher home loan rate for an offset account. Ask your broker to help you shop around for the most competitive option to suit your circumstances.

If you are still paying off your home or an investment property, but also managing to sock away some savings, an offset account could help you be debt-free faster. Talk to your broker about your circumstances to find out which options may work best for you.

MAP Finance

17/08/2024

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