Can you be saving bucketloads on your mortgage?

Hi Ivan The Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5% with the last rate move back in August 2016. I'd like to share today's rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision. With weak wages growth, continued low inflation and a lack of significant economic growth we can expect interest rates to remain where they are for the time being.

Even though rates are unchanged, my role as a broker remains the same. There may be different rates available from our lenders, so I'm always on hand to ensure you have the right financial solution for your current circumstances, and are receiving the most suitable rate available to you. Ivan, if you'd like to have a chat about what today's news means for you and your finances, please don't hesitate to get in touch. Kind Regards, Mark Riach Ark Finance

Mailing Address GPO Box 4013 Sydney NSW 2001 Contact details Tel: 02 9290 2777 | Mob: 0413 662 614 | Fax: 02 9262-5788 Email: mark@arkfinancegroup.com.au Web: www.arkfinance.com.au

Are we in a Property Bubble

image from www.theaustralian.com.au 

Interesting Article from Alex Lee of Ark Total Wealth www.arktotalwealth.com.au 

This would have to be one of the most debated financial topics at the moment, with every 'expert' from around the globe having their say.

Using facts, theories, gut instinct or economics you could mount a strong argument for either side. The following articles provide an interesting insight into some of the alternative views by respected commentators and economists.

Treasury Secretary John Fraser warns Sydney is 'unequivocally' in a housing bubble. 

ANZ's Chief Mike Smith doesn't believe we are in a housing bubble but we could be heading that way if we aren't careful. 

ABC's Alan Kohler writes that we are not in a bubble, but merely watching market forces taking place which means we may have over-valued property for a considerable amount of time. 

Domain executive editor, Stephen Nicholls has analysed the doomsday experts in his article today on Domain. 

Every expert will have their own opinion - what we believe is important is making efficient use of your resources, and managing risk regardless of the prevailing economic conditions.

To get you thinking, here are some ideas on that you can be doing right now;

1. Take advantage of the low interest rate environment - If you are a property owner, and hold debt, then almost certainly in the past you have been making repayments at a higher rate of interest. What are you doing with your extra cash flow? A low interest rate environment is a great opportunity for you to pay down additional debt to get ahead for when interest rates eventually increase.

In addition to making extra repayments, if you are worried about your cash flow moving forward now might also be a good time to fix your interest rates. There are a selection of lenders whose fixed interest rates are currently lower than their variable rates. This may be an additional opportunity to create some extra cash flow which can be used to repay debt or invest.

2. Be strategic on which lender you use - Whether we believe the property market is overheating or not, banks are being forced by APRA to tighten their lending - this means increasing their interest rates on investment properties and lowering acceptable loan to value ratio's. This tightening has created quite a large differential between lenders which means it is important to shop around to find the right loan for you. We have mentioned it before, but while a low interest rate is important it's also just as important to understand which product has the features and benefits that suit your specific situation.

3. Build your buffers - Property is a long term investment - it is not about picking the absolute bottom or selling at the top it is your ability to be able to hold the investment through good and bad times. To do this, you need to put in place the appropriate buffers to help you should times get tough. For example, do you have the following in place;

- 6 months' of interest payments in cash to get you through any cash flow shortfalls
- Income Protection to ensure you have a replacement income should you not be able to work due to injury, illness or sickness

We are not experts in picking the property cycle, however we strongly believe that regardless of what the market is doing there are strategies you can put in place to put yourself in a better position. If you have any questions, please don't hesitate to contact us on info@arktotalwealth.com.au or visit our website www.arktotalwealth.com.au for more information. 

Pay off your credit cards and refinance if you can

from Jim Ellis from Smartline

Do you have credit card or personal loan debts that stubbornly refuse to go away? We may have a solution.

Whilst a minimum monthly credit card repayment of 3% seems quite easy to handle at first glance, a $30,000 debt will require a $900 per month payment. A significant commitment.

Compare this with a current $30,000 home loan and the minimum repayment would be approximately $157 per month (see below).

Given the right set of circumstances, we can sometimes alleviate this type of cash flow burden by consolidating credit cards and personal loans into a residentially secured loan.

However, if this option is not possible or desirable, there is one very effective long term solution.

"Cut it up and pay it off."

"Cut it up" - This part of the solution is often seen as too difficult because shopping with a credit card is so convenient, however, the credit card organisations such as Visa and MasterCard now offer debit card facilities which give people all of the efficiencies of using a credit card without the temptation of using the credit.

“Pay it off" – This part of the solution can be made easier too. Most credit card providers have a direct debit system that will allow customers to make automatic fixed repayments (similar to a personal loan) on their credit card.

We believe that long term debt should only be used for buying assets that have a reasonable chance of appreciating. Holidays, cars, LCD screens and boats generally head the other way and should only be financed over a shorter term. There is nothing worse than a big debt with nothing to show for it.

This is a sensitive issue to bring up with people but if you know of anyone that would like to talk to us about getting their credit cards or personal loans in order, we would be more than happy to assist with some confidential and useful advice.

2013/14 Australian Federal Budget: how it affects me!

The recently announced Budget delivered no real surprises after the majority of the proposed changes had been drip-fed to the market in previous months. Wayne Swan blamed a stubbornly high Australian dollar and lower commodity prices for a dramatic fall of some $17 billion in forecasted tax receipts, leading to an estimated budget deficit for 2012/13 of $18 billion. And that was why there wasn’t the $1.5b surplus promised. He knew there was a high dollar and lower commodity prices a year ago... why did he not make appropriate changes then? Or tell us then that there would not be a surplus? If I gave this excuse to my board, I would be fired on the spot!

Government Funding: Are you getting all the help you can?

10X in conjunction with Business Strategies International (BSI) is presenting a critical 2-hour seminar for Melbourne based business owners to discover:

How to grow your business and how to access Government Grants to do so …

Right now, through the Federal and Victorian State Governments there is quite literally millions of dollars available to growing businesses, potentially, like yours. Many of us fall into the trap of working hard, with head down and the proverbial up, so to speak, rarely taking time to see what else might be out there to help us achieve our goals.

Super Changes

The government recently announced some changes to superannuation. All of these announcements still need to proceed through the normal political process before becoming law, thus there may still be amendments. I have outlined the most salient points and the possible implications.

Investments need TLC too!

Regular care and attention are vital to keep your investment engine purring.

Buying an investment is like buying a car. You do the shopping around, look at the ads, talk to your friends, have debates about whether or not you can afford it, and finally make the big decision.

A 4-Step Guide To Financial Security

It’s a sobering thought that during our working lifetime, many of us will earn a million dollars or more - but will only manage to keep a small fraction of it for ourselves. Instead of accumulating part of our hard-earned income for the future, it’s all too easy to spend it on luxuries and unnecessary items. In a strange twist of logic, ‘saving for the future’ is something we always put off until later.

Protecting Your Business

At any given time, your business will face a number of potential risks that could affect the profitability or viability of the business.

Some of these could be:

• Costs increase, taxation, suppliers etc
• Increased competition, and product innovation from competitors
• A staff member is injured at work
• Skilled staff leave
• A natural disaster affects your business
• Death, injury or illness of a business owner/ partner, or key staff member

Need A New Car?

As car manufacturers are constantly competing for market share, they have taken this fight to the next level by offering cut price finance deals. Recently,  we had Toyota offering 0% finance, VW offering 1.5% and Ford offering 2.9% - and so it goes on.

At face value, these finance rates are very cheap, in fact, cheaper than what you will be paying on your mortgage. So how do they do it you may ask? To qualify for the cheaper finance, the general catch is that you will be paying the full Recommended Retail Price for the vehicle, with no discounts. Hence, the profit margin on the vehicle sale will more than compensate for the loss on the finance transaction. I will give you a little example, an experience I had with a car yard in Sydney.

5 Steps To Great Cashflow Forecasting

The Christmas season is in full swing and for many businesses that means one thing - cashflow will be tight.  Although Christmas is peak trading season for retailers, they have already spent plenty of cash building up stock levels in preparation for the end-of-year sales surge. In non-retail industries, many businesses find that sales are lower and there is less cash coming in as customers go on holiday. But the bills don’t stop and cash keeps rolling out the door.  

Just as the same cashflow cycles show up year after year, we keep seeing companies falling into the same cashflow hole.  The good news is that there is a better way! A well-prepared cashflow forecast is an early warning system that lets you spot signs of cash trouble months, or even years in advance system.  More importantly, it provides the time and space for businesses to take action to avoid a cash crunch.

Common Threads

Having worked with thousands of small and medium enterprises over the last 21 years, I’ve had the opportunity to observe and study highly successful businesses and what they do from a financial perspective.

Sadly, I’ve also had the opportunity to observe what struggling businesses do, or more to the point, what they don’t do. The impact on the owners, the team members, the customers, the suppliers and their respective loved ones is huge. These are businesses that have great fundamentals but do not understand how finances work. The pain it causes is as undeniable as it is unnecessary.

Inheritance And The Loss Of A Loved One

Changing of the guard

Australia is on the cusp of the biggest intergenerational transfer of wealth it has ever seen, with assets held now by the so-called ‘builders’ or over 65s, plus assets held by the younger baby boomers, amounting to more than 60 per cent of the nation’s private wealth.

Award winning financial planner, CEO & business success coach –Steve Salvia says however that “behind these simple statistics are personal stories and sadness, as inheritance often follows the loss of someone close. It should be no surprise that an inheritance can trigger a range of emotions, making it harder to make good decisions about personal goals, and about the best use of any windfall”.

What Is Financial Planning

What is a financial plan?

It is a series of sensible steps which over a period of time will allow you to achieve a financial goal. 

Do I need one?

Perhaps not, but it is much more likely that you will achieve your goals if you are clear on what they are and the steps needed to achieve them. Furthermore, if you have someone to hold you accountable, your chances of succeeding are likely to be higher again.

Jargon Busting

Ever had a conversation with a bank employee (or a mortgage broker) and it sounded like they were talking a different language??  You’re not alone – it happens all the time.  It is because their vocabulary is littered with Jargon – which it shouldn’t be.  So here is the first of some helpful Jargon-busters … I hope you find this helpful  – remember, get a mortgage broker to help you – they are on YOUR side, not the banks.

10 Reasons Why You Should Use a Mortgage Broker

Whether you're buying a new home, upgrading your existing home, or downsizing into something more manageable, there are many factors to consider when buying a home:

A Fresh Approach to Currency Hedging (P.3)

Over the last two issues we have covered both a strategy that involves zero hedging (with no protection) and one with complete protection (but no opportunity). We have seen the inherent problems with both. Today we are looking at simple Options, that aim to tackle the problems of each strategy by giving 100% protection while enabling 100% opportunity simultaneously. But before you jump on the phone to call your dealer about this little silver bullet, let’s take a closer look…

Are You Considering a SMSF?

Issues to ponder

Self Managed Super funds are becoming increasingly popular, and make up a large portion of the overall superannuation pie. The reasons why you might set one up are commonly discussed but it is worth going through again.

Having a Plan Around Aged Care

It is no secret the country’s population is getting older, with the proportion of people aged over 65 years still rising. Current projections say that over the next forty years the number of Australians aged 65 to 84 years will more than double, and the number of people 85 and over will more than quadruple.

While the preference for many people will be to age gracefully at home and remain financially self-supporting, the reality is this may not happen. According to Federal Government figures, one third of all men and half of all women aged 65 and over can expect to go into permanent residential care at some time later in their lives, with 82 being the average age on entry for both men and women.

How To: Buy Property with your Super

Traditionally, purchasing an investment property inside of your superannuation was considered a strategy for the wealthy. This all changed in 2007, when legislation was passed to allow members of their own superannuation fund to borrow against an asset, not just direct property.