Quick and easy equipment finance

Keeping your business equipment up-to-date is essential to ensure your business runs smoothly

and PCL Money one of Australia’s leading Finance Brokers will take the hassle out of your equipment

finance application – they understand how important it is to get quick access to finance at a competitive rate.

They provide quick and easy Equipment Finance such things as:

  • Industrial and Manufacturing Machinery
  • Office Equipment
  • Trucks and Earth Moving Equipment
  • Agricultural and Farm Equipment
  • Office and Commercial Fit-outs
  • Clubs and Hotels Gaming Equipment

and more

PCL Money offer a full range of industrial plant and business equipment financing options including Commercial Hire Purchase, Finance Lease and Chattel Mortgage.

Financing your equipment with PCL allows you to preserve cash flow, rather than outlaying large sums of capital.

Visit our website at pclmoney.com.au or call us 02 4226 9977 and one of our equipment finance experts will go through your application over the phone.

Quick and easy finance to support your expanding business can make the difference between you and your competitors

Posted in Uncategorized

APRA relaxes investor property loan ‘speed limit’ as boards made more accountable

Property auction in Balaclava, Melbourne, April 2018.

Despite conceding that risks in the property market remain “heightened”, the key bank regulator will remove the speed limit on investor lending.

Key points:

  • APRA is targeting the quality of home loan serviceability, ditching previous investor speed limits
  • Bank boards will be made more accountable for the quality and operation of mortgage lending
  • Westpac revealed as a ‘significant outlier’ in poor lending practices at the royal commission

The Australian Prudential Regulation Authority (APRA) is removing restrictions that keep investor credit growth under 10 per cent a year, replacing them with more permanent measures to strengthen lending standards.

APRA’s move to a more targeted approach was highlighted in recent submissions to the banking royal commission.

Targeted approach

While none of the banks came out of APRA’s targeted review of residential mortgage serviceability particularly well, Westpac was fingered as a “significant outlier”.

The review of 420 mortgages approved by Westpac — including the St George and RAMs businesses — found numerous failings in serviceability checks.

  • 29 per cent of minimum income verifications (e.g. payroll slips) were not completed
  • 66 per cent had no itemised living expenses collected
  • 30 per cent of borrowers’ financial positions were misrepresented
  • 9 per cent of loans in the sample would not have been approved if the “true financial information” was used in serviceability assessments.

UBS bank analyst Jonathan Mott said the royal commission was a game-changer for Australian financial services.

“In particular, its focus on ensuring the banks ‘obey’ the responsible lending laws, and with boards and management likely to be much more risk-adverse, further tightening of underwriting standards are highly likely across the industry,” Mr Mott said.

“This could potentially lead to a sharp reduction in credit availability.

“Combined with a weaker asset quality and questions over the enforceability of security in the event of irresponsible lending, we have a cautious view on Westpac and the broader Australian banking industry.”

Interest-only limits may be removed soon

The so-called investor lending speed limit was introduced in 2014 as property investors ploughed into the market, sending home prices soaring and sparking fears that the highly leveraged loans were ratcheting up risk in the banks and the broader economy.

An additional speed limit introduced by APRA last year, requiring banks to keep interest-only loans to less than 30 per cent of their mortgage portfolio, has been retained for the time being, but is also expected to be removed.

APRA said both measures were only ever intended to be temporary.

In a key development, APRA is placing the onus on bank boards to provide assurance on the quality and safety of lending standards.

APRA said for the 10 per cent speed limit not to apply, boards will be expected to confirm that:

  • Lending has been below the investor loan growth benchmark for at least the past 6 months;
  • Lending policies meet APRA’s guidance on serviceability
  • Lending practices will be strengthened where necessary.

Risks still heightened

APRA chairman Wayne Byres said the decision to remove the investor lending benchmark reflected an improvement in lending standards by the banks, but there was still more work to be done.

“The temporary benchmark on investor loan growth has served its purpose,” he said.

“Lending growth has moderated, standards have been lifted and oversight has improved.

“However, the environment remains one of heightened risk and there are still some practices that need to be further strengthened.”

Australia currently has one of the highest levels of household debt in the developed world, sitting at more than 190 per cent of household disposable income.

In terms of household debt to the size of the economy, Australia ranks only behind Switzerland with a debt-to-GDP ratio of 120 per cent.

Speed limit redundant

JP Morgan economist Henry St John said the move was not surprising given the 10 per cent level had become largely redundant.

Investor credit, relating to banks’ entire mortgage book, is growing at less than 3 per cent, down from the peak of well above 10 per cent two years ago.

The annual rate of investor lending, as opposed to overall growth in the total mortgage book, is shrinking at close to 10 per cent.

“We see this as a move by APRA to be less prescriptive to the banks about who they should lend to, and rather concentrate on controlling overall household leverage,” Mr St John said.

APRA’s revised plan requires banks to develop internal portfolio limits on the proportion of new lending at very high debt-to-income levels, and policy limits on maximum debt-to-income levels for individual borrowers.

“This provides a simple backstop to complement the more complex and detailed serviceability calculation for individual borrowers, and takes into account the total borrowings of an applicant, rather than just the specific loan being applied for,” APRA said.

APRA’s current loan affordability tests, set in 2014, require proof a new borrower could repay mortgages at least 2 per cent above the loan product rate, and a floor lending rate of at least 7 per cent.

Posted in Uncategorized

FPA was preoccupied with protecting Sam Henderson’s reputation

The Financial Planning Association of Australia sought to keep the identity of a member facing disciplinary action, Sam Henderson, out of the banking royal commission to protect his reputation.

The FPA claims to have strict codes of conduct and robust disciplinary processes.

Mr Henderson has been facing disciplinary action by the FPA for the past year after he gave advice that would have wiped $500,000 from a client’s superannuation benefit.

But it emerged on Thursday that the FPA may have been more preoccupied with preserving Mr Henderson’s reputation and staying on good terms with members.

John Bacon, the head of professionalism at the FPA, wrote to the royal commission on April 28 to ask that Mr Henderson’s matter be “treated confidentially”.

Mr Bacon was also concerned that naming Mr Henderson would render the FPA’s disciplinary process “worthless”.

This is because, unlike organisations representing doctors and lawyers, for example, there is nothing to compel FPA members to participate in the disciplinary process or to abide by any sanctions imposed.

The royal commission is examining the disciplinary powers and processes of peak industry bodies, the Financial Planning Association of Australia and Association of Financial Advisers.

Dante De Gori, chief executive of the FPA agreed the organisation's greatest "leverage" was to be able to name publicly ...
Dante De Gori, chief executive of the FPA agreed the organisation’s greatest “leverage” was to be able to name publicly the outcomes of disciplinary proceedings and sanctions. Sasha Woolley

Appearing at the banking royal commission on Thursday, Dante De Gori, chief executive of the FPA agreed the organisation’s greatest “leverage” was to be able to name publicly the outcomes of disciplinary proceedings and sanctions.

Yet in many cases where investigations result in adverse findings, the names are kept confidential. Of 18 recent determinations, seven names have been kept confidential.

“I am not aware of why those have not been published,” Mr De Gori said.

Australia has about 20,000 financial planners and more than half are FPA members.

 The FPA operates on the $8 million it receives in membership fees each year.

Since January 1, 2013, the FPA has expelled six members.

The FPA investigation into Mr Henderson found that “in all circumstances there is a strong and reasonable inference that the member’s conduct stemmed from a lack of objectivity or a conscious decision to place his own interests before the client …”

The commission heard the FPA was very keen to come to a negotiated outcome with Mr Henderson, which meant his name would not be published.

 Mr Henderson has a strong media profile, including a television show on Sky News and contributing general superannuation advice in AFR Weekend.

He has been dumped by both.

The commission also heard how the budget for the salaries of Mr De Gori and one other staff member, plus a staff bonus pool, is $1 million. That’s about what the FPA spends on professional standards.

AFA chief executive Philip Kewin also appeared before the commission.

 He said since 2013, the AFA had received 15 complaints about its members.

But in the case of Darren Tindall, who was banned from giving advice by the Australian Securities and Investments Commission for five years in February 2017 and expelled and fined by the FPA, the AFA had so far declined to terminate his membership, the commission heard.

The AFA found Mr Tindall, of Orange in NSW, should be suspended rather than terminated because the allegations about him amounted to “hearsay” and an appeal was on foot.

Posted in Uncategorized

APRA just relaxed lending quotas for Australian housing investors

  • APRA has announced it will remove the 10% annual cap on investor housing credit growth for some lenders.
  • It expects ADIs to develop internal limits on lending at very high debt-to-income levels, and policy limits on maximum debt-to-income levels for individual borrowers.
  • Restrictions on interest-only mortgage lending introduced in March last year will also remain in place.

The Australian Prudential Regulation Authority (APRA) has announced that it’s 10% annual cap on investor housing credit growth, introduced in December 2014, is no longer required given an improvement in lending standards over the past few years.

“In recent years, authorised deposit-taking institutions (ADIs) have taken steps to improve the quality of lending, raise standards and increase capital resilience,” APRA said in a statement released this morning.

“APRA has written to ADIs today to advise that it is now prepared to remove the investor growth benchmark, where the board of an ADI is able to provide assurance on the strength of their lending standards.”

Wayne Byres, APRA Chairman, said the announcement reflects improvements that ADIs have made to lending standards.

“The temporary benchmark on investor loan growth has served its purpose,” he said. “Lending growth has moderated, standards have been lifted and oversight has improved.”

According to data released by the Reserve Bank of Australia (RBA), annual growth in investor housing credit stood at just 2.8% in February, down from 10.8% shortly after the 10% limit was introduced.

However, Byres cautioned that the current environment remains one of heightened risk, noting that there are still some practices that need to be further strengthened.

“There is more to do to strengthen the assessment of borrower expenses and existing debt commitments, and the oversight of lending outside of policy,” he said.

“APRA is therefore seeking assurances from ADI Boards that they will maintain a firm grip on the prudence of both policies and practices.”

In order for the 10% annual cap to be removed, APRA said individual lenders had to show that lending has been below the investor loan growth benchmark for at least the past 6 months. It also said that lending policies need to meet APRA’s guidance on serviceability with lending practices “strengthened where necessary”.

For those ADIs that do not meet the APRA guidelines, it said the investor loan growth benchmark will continue to apply.

However, fitting with the view that some lending practices still need to be strengthened further, APRA said that it expects lenders to develop internal portfolio limits on the proportion of new lending at very high debt-to-income levels, and policy limits on maximum debt-to-income levels for individual borrowers.

“This provides a simple backstop to complement the more complex and detailed serviceability calculation for individual borrowers, and takes into account the total borrowings of an applicant, rather than just the specific loan being applied for,” it said.

While the decision to remove the 10% cap on annual investor housing credit growth for some lenders was expected given recent commentary from Byres, he said limits on interest-only lending introduced in March last year — capping them to 30% of total new housing loans — would remain in place.

“In the current environment, APRA supervisors will continue to closely monitor any changes in lending standards. The benchmark on interest-only lending will also continue to apply,” he said.

“APRA will consider the need for further changes to its approach as conditions evolve, in consultation with the other members of the Council of Financial Regulators.”
Read more at https://www.businessinsider.com.au/apra-australia-housing-investor-home-loan-2018-4#0iIMZyZvwvMZ7OEB.99

Posted in Uncategorized

Westpac shares slide after UBS flags lending risk concerns

Westpac shares have slumped in midday trade after UBS downgraded the stock this morning.

Analysts Jonathon Mott and Rachel Bentvelzen ascribed a target valuation of $26.05 on Westpac (WBC) shares — down from this morning’s opening price of $29.18.

Westpac shares fell by more than 4% in afternoon trade before closing 3.79% lower:

The pair cited revelations from the ongoing bank royal commission — which they called a “game-changer” — as the basis for their downgrade.

It followed the release at the commission of the results from a ‘Targeted Review’ of the big four banks, carried out by APRA in the first half of 2017.

It showed APRA chairman Wayne Byres described Westpac as a “significant outlier”, due to higher levels of interest-only lending and a larger proportion of riskier loans with high loan-to-value ratios.

The Targeted Review revealed that just one out of Westpac’s 10 lending controls required by APRA were working effectively.

The commission also released the list of loans that were assessed as part of the review. They included 420 mortgages approved by Westpac or Westpac subsdiaries between July 2015 and August 2016 that were reviewed by accounting firm PWC.

Among the findings from a preliminary review of the sample by UBS, 35% of borrowers had debt-to-income (DIR) ratios of at least 7 times income, while 12% in the sample had DIRs of more than 10%.

Source: UBS

Total debt-to-income is seen as a better indicator of borrowers’ credit worthiness than the ratio of loan-to-income.

In addition, “the majority of WBC borrowers sampled were assessed to have living expenses between 11-30% of their income”, the analysts said. Just 1% of borrowers reported living expenses of above 50%.

UBS said the findings mean Westpac is more exposed than its peers in the event of a significant housing downturn.

And with Westpac now required to tighten its lending approval process, it’s likely that will lead to a deterioration in credit growth.

In response to the downgrade, Westpac released a statement to the market this afternoon.

The bank said it has reassessed 38 loans which PWC believed would fail APRA’s standards, and “on this basis, all the loans would have been approved, apart from one loan (this loan is currently ahead
of its repayments)”.

“Westpac’s mortgage book continues to perform well as outlined in our most recent Pillar 3 disclosures for 31 December 2017,” said Peter King, Westpac’s Chief Financial Officer.

“Our mortgage delinquencies and losses remain low both relative to historical and industry averages.”

Posted in Uncategorized

How to quickly know how much house you can afford

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Rules of thumb for home affordability
There are several easy rough estimates for how much you can spend on a home.

Choose a total payment that is close to what you spend now for rent
Select your maximum home price at three times your annual income
Choose a total housing payment that does not exceed one-third of your before-tax income
These “quick and dirty” calculations take about 5 seconds to complete. But our home affordability calculator helps you work this out either from a payment or income standpoint and gets you a much more accurate answer.

Verify your new rate (Apr 25th, 2018)
Rules of thumb are just guesses
Rough estimates to know how much house you can afford are fairly easy to determine. But there are lender guidelines that can help you make a pretty accurate guess regarding what’s affordable and what isn’t.

You need to look at the DTI, aka debt-to-income ratio. This is a measure that lenders use to get a basic idea of how much home you can afford. It compares your recurring monthly debts with your gross monthly income — your income before taxes.

There are actually two of these — a front-end (or top-end) ratio and a back-end (or bottom-end) ratio.

Rough estimates and the front ratio
The front ratio is the amount of money you will spend for housing costs, divided by your gross (before tax) monthly income. “Housing costs” includes mortgage principal, mortgage interest, property taxes, and property insurance. The shorthand for housing costs is PITI.

How much home can you afford?

In some cases, the basic PITI calculation can also include homeowner association (HOA) fees, flood insurance, mortgage insurance, or rare items like PACE payments.

If you have a property where the insurance cost is $150 a month and property taxes are $300 a month, that’s a total of $450. If you want to borrow $250,000 over 30 years at 4.5 percent interest, the principal and interest (P & I) are $1,267 a month. Add $450 to that $1,267 and the PITI is $1,717 a month.

Ratios vary by program
What does $1,717 mean in terms of affordability? It depends on what loan program you get. With the FHA, you might be allowed a 31 percent front ratio but 33 percent if you apply for an energy-efficient mortgage. For a conforming mortgage — a loan that meets Fannie Mae and Freddie Mac standards — figure 28 percent.

For VA financing, the news is even better — there is no front ratio.

Understand, also, that lenders may be more forgiving of high front-end ratios if you have what is called “compensating factors.” For instance, your overall use of credit is low and you don’t have much debt.

Your credit score might be very high. Or you’re in a profession with increasing future earnings (congrats — you just graduated medical school). In most cases, lenders care more about your credit and total expenses than they di your front-end ratio.

The back-end ratio
We’ve looked at housing costs, but when lenders think of monthly expenses they also want to know about your other accounts, too. In particular, they’re interested in car loans, student debt, and credit card payments. (Note that ordinary living expenses like food and utilities don’t go into this calculation.)

Your back-end ratio is all the items of the front-end ratio, plus monthly payments for your car, credit cards, student debt, etc., divided by your gross monthly income.

If you want an FHA-backed mortgage, we already know that the front ratio limit is 31 percent in most cases. The back ratio ranges between 43 and about 50 percent.

10 ways to qualify for a mortgage (even if you think you can’t)

Many lenders impose 31/43 ratios. That means a maximum 31 percent front-end and 43 percent back-end.

If you have $5,939 a month in gross earnings, 43 percent of that amount will be $2,554. Subtract housing costs – $1,717 in this example – and $837 remains for other debts within the guidelines.

If $837 enough to cover car loans, student debt, and credit card payments? For some households yes, for others no. If the answer is no, then there are some steps borrowers can take to get their mortgage application passed.

Mortgage rates affect ratios
Because your monthly payment is a big part of your debt-to-income ratio, and because mortgage rates obviously affect that amount, your ability to buy depends somewhat on mortgage rates. the chart below shows how rates affect a family with $6,000 a month income and $300 a month in other payments.

rates-and-affordability

(Calculations performed by The Mortgage Reports Affordability Calculator)

home affordability rough estimate calculator

How to increase your home buying power
First, cut your monthly bills. See how each debt can be reduced or paid off. That leaves you more money for housing and probably improves your credit rating too.

Second, look for loans allowing higher DTIs — some allow up to 50 percent. A caution: These programs may look attractive, but they suggest a lot of monthly debt. That can be a problem if you lose a job or hours are cut.

Third, watch out for overlays. To avoid having to buy loans back if the borrower defaults, lenders may add stricter guidelines than the program requires.

How to buy a home with low income in 2018

A Fannie Mae loan might list 31/43 maximum ratios in its guidelines, but your lender might accept only 30/42. This means a borrower might not qualify with a conservative lender but might be okay elsewhere. If that’s a concern, ask upfront.

Fourth, if you’re VA qualified, there is just one ratio – 41 percent. In other words, there is no front ratio. Your housing can use 41 percent of your gross monthly income if you have no recurring debts.

Fifth, one of the easiest ways to reduce DTI ratios is to buy a less expensive property and borrow less.

Sixth, you can sometimes overcome DTI limits with compensating factors or exceptions. For details speak with loan officers regarding specific programs.

Don’t be “all thumbs”
Rules of thumb are fine when you’re buying thumbs. But you can do better by starting with our calculator and then connecting with a qualified mortgage professional.

by PETER MILLER

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What You Need to Know about Mortgages and Equity

Ah, springtime: when “for sale” signs start popping up with the daffodils and crocuses! Before you call your real estate agent, you might want to read up on some of the more technical aspects of homebuying—like exactly what homeownership can mean for your bottom line.

Mortgage basics

The majority of families that buy a home do so by taking out a loan—a mortgage—that covers at least some of the purchase price. Here are some words and phrases you might hear when shopping for a home loan:

  • Term: The duration of the loan. The most common term for home purchase loans is 30 years, but shorter-term loans also are available.
  • Down payment: A certain amount of money (usually a percentage of the purchase price) that borrowers must provide up front. Most mortgage lenders require this payment, which is applied to the purchase price of the home.
  • Interest rate: The cost of borrowing the money. Lenders charge borrowers a percentage of the mortgage amount in exchange for the loan. Borrowers with good credit can be eligible for lower rates. The rate can be fixed or adjustable, which means that it either stays the same throughout the loan term or changes at specified intervals.
  • Payment frequency and amount: How often you’ll make payments (generally monthly) and how much you pay. Fixed- and adjustable-rate mortgages generally have fully amortizing payment schedules—that is, the regularly scheduled payments will fully pay off the principal and interest over the loan term, with the amounts allocated to reducing principal and interest changing over time.

Figure 1: Example of the Allocation of Monthly Mortgage Payment to Interest and Principal, for a Selected 30-Year Fixed-Rate MortgageIn addition, homeowners can take advantage of tax deductions to help lower their taxable income; the recent tax law made some changes to these deductions. Homeowners who itemize deductions on their tax returns may deduct qualified interest they pay on their first and second mortgages of up to $750,000 for homes purchased after 12/15/2017 (for homes purchased on or before this date, taxpayers can deduct interest on the total mortgage, generally for debt up to $1 million). For taxable years beginning after 12/31/2025, homeowners may deduct interest on up to $1 million, regardless of when homeowners took on a mortgage. Relatedly, homeowners generally may deduct up to $10,000 for state and local taxes, including property taxes paid.

Trade-offs of building home equity more quickly

Home equity is the difference between the market value of a home and the amount owed on the mortgage. Home equity can be a way to build wealth, can be a cushion in times of hardship, and can also be used to pay for other things, like education. However, if a home’s market value falls and the homeowner owes more than their house is worth (or is “underwater”), home equity becomes negative.

The most common type of mortgage—the 30-year, fixed-rate—builds equity more slowly over time. There are ways to build equity more quickly, but there can be some trade-offs. For example:

  • Shorter loan terms: Homebuyers or homeowners refinancing their mortgages can choose a 15- or 20-year mortgage rather than a 30-year mortgage. These mortgages build equity more quickly and can also help the homeowner save on interest paid over the life of the loan. For example, for a $250,000 fixed-rate mortgage at 2017 interest rates, a homeowner would pay about $168,000 in interest for a 30-year mortgage, but only about $62,000 in interest for a 15-year mortgage. But shorter-term loans also require higher monthly mortgage payments—payments on a 15-year mortgage could be as much as 40% more than a 30-year mortgage, depending on the rates. That could mean that you wouldn’t be able to afford the same house you could with a 30-year mortgage.
  • Extra payments: Homeowners can make extra mortgage payments to further reduce the principal balance. For example, making an extra monthly payment of $100 on a 30-year fixed-rate mortgage of $225,000 would accelerate equity-building and reduce the mortgage term by more than 4 years.

Figure 2: Example of Home Equity Built over Time for a $225,000, 30-year Fixed-Rate Mortgage: Required Payment versus Additional $100 Payment Each Month

  • Refinancing: Homeowners can refinance their mortgages to take advantage of lower rates, shorter terms, or both, which can help build equity faster. When refinancing, some homeowners also can extract home equity as cash, but this reduces the amount of equity built. Refinance loans (similar to purchase loans) incur transaction costs, usually through fees (like tax recording and appraisal). Also, a homeowner who refinances to a lower interest rate could still pay more interest over the loan term if the refinancing extends the term past the prior mortgage’s.
Posted in Uncategorized

FACT SHEET: ROYAL COMMISSION

With the second round of the ROYAL COMMISSION INTO FINANCIAL SERVICES public hearings due to commence on 16th April, it is important to be mindful of the issues already raised.

Much of the media reporting so far has been on the role of the mortgage broker. In the eyes of the public (and some of your clients), the distinction between a resi-mortgage broker and a commercial finance broker is often not well made, if at all.

The focus of the Commission has been on consumer loans and the mortgage broker, not commercial finance.

This has caused some commercial brokers to field questions from their clients, as perceptions from the Hearings have created uncertainty in the minds of clients.

There are a number of important facts to be aware of, so here is a fact sheet hat may answer some of the concerns.

Click here: https://pclmoney.com.au/pdf/CAFBA_Fact_Sheet.pdf

Posted in Uncategorized

13 Ways to Start Powerfully as a Property Investor

1. Know why you’re investing in property
Get clear about your reasons for choosing to invest in property instead of other asset classes such as shares.

Most investors know why they want to invest in property but some do it for the wrong reasons, such as trying to keep up with their neighbours or friends who are investing.

Property investing is not a competition. To buy an investment property just to trump a friend or have something to brag about is not wise.

2. Understand the risks of investing in property
Just because prices have been growing consistently for a number of years doesn’t mean they’ll go on indefinitely.

The truth is, growth in value is rarely consistent and linear. Some years you get growth spurts. Other times it’s stuck in the mud. In short, capital growth is hard to predict.

You could also face vacancies or tenants that default and destroy your property. While there are ways to reduce these risks, they remain a part of investing in property.

If the area is in high demand, discounts are virtually non-existent as vendors know they could get the price they want.

3. Be prepared to stick it out over the long term
Even if you bought in the right area and picked the right property, there’s no guarantee that you’d see growth quickly.

While some areas may experience rare short-term surges, the majority of suburbs go through periods of slow to no growth before values rise.

Therefore, be prepared to hold your property for at least one cycle (around 7 years) if you want to make a solid gain.

This means ensuring you have a solid cash flow to maintain your property to avoid selling prematurely.

4. Learn everything you can
While you’re building your deposit, learn everything you can about property investing. Buy a few books from a range of authors to get a variety of opinions. Once you start hearing the same things over and over, you know you’re ready.

“Be cautious of expensive courses with ‘high hope’ marketing tactics,” warns Jeremy Sheppard, creator of DSRdata.com.au. “Whatever you can learn in a weekend course is not worth thousands of dollars.”

5. Get your finances sorted ASAP
Create a budget so you live well within your means. However, make sure your investment doesn’t stretch you too far.

“Remember that property investing is a long-term game. Don’t plan to tough it out for the first year, because that first year might stretch out to five,” says Sheppard.

6. Start with buy and hold
Capital growth is the ant’s pants of property investing. It’s also the easiest strategy if you know what to look for.

“Start off with this basic strategy,” advises Sheppard. “Once you can nail this, you may never need any other strategy. But even if you stretch into others, they’ll all benefit from having underlying growth.”

7. Identify vested interests
The most noise in the property investment industry comes from people trying to sell you something.

Not all of them are sinister. You’ll find plenty of well-meaning individuals who are simply badly mistaken.

Each council website is different, but most will have a page where you can view development applications.

“You won’t know who to believe sometimes. But if you can recognise when someone has something to gain by the conclusions they can get you to draw, then that’s a good start to protecting yourself,” says Sheppard.

8. Buy the best property country-wide
Plan to buy outside your own backyard. Plan to jump on a plane one weekend and go wherever the best property market is that fits your budget.

“You must learn how to read a property market from its supply and demand qualities, not from your past experience with the neighbourhood,” says Sheppard.

9. Buy existing properties
As a general rule, don’t buy new. New properties come at a premium and like driving a car out of the showroom, can drop in value soon after purchase.

10. Target character houses
If you can get an old period or character house, they usually make great long-term investments. But make sure it is in good condition.

11. Get close to the CBD
The closer to the CBD, the more convenient the property will be for tenants. Proximity to amenities that cities provide is a huge demand drawcard.

12. Development potential
Aim for a decent block of land that at least allows for a duplex to be built at some point in the distant future. A 300 square metre block is way too small – look for 550 square metres or more.

13. Get your head around supply and demand
Prices rise when demand exceeds supply. You want the highest demand to supply ratio (DSR). Sheppard points out that all your research for growth markets should be based on this philosophy. All your interpretation of data should be aimed at gauging supply and demand.

The bottom line
If you start early enough, you can make a number of mistakes and still end up not needing a pension at retirement age. That’s the magical thing about compound growth.

“Property investing is one of the surest ways to set yourself up for early retirement. You’ll never be a billionaire, but you only need to be a millionaire anyway,” says Sheppard.

 

Source: Propertymarketinsider.com.au

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Key changes to pricing and offers in the last month in Australian consumer banking

Click here to see a summary of the key changes to pricing and offers in the last month in Australian consumer banking.

http://pclmoney.com.au/bnk/bnk_feb.pdf

Note that the deposit rates on offer continuing their downward trend

Key changes:

  • ANZ’s​ Progress Saver has had its ongoing bonus rate reduced by 10bp to
    1.71%.
  • Bankwest​ cut the base rate of its TeleNet Saver product from 1.50% to 1.25%.
    The 2.7% introductory rate holds steady at its current value.
  • Commonwealth Bank ​adjusted the $250,000 to $1,000,000 ongoing bonus
    rate tier on its GoalSaver account from 2.50% to 2.30%
  • ING​ reduced the base rate on its savings products from 1.35% to 1.15%. This
    change affects the ≤$50,000 tier on its Savings Accelerator product, in
    addition to its Savings Maximiser rate if the required everyday transactions
    to access the special rate are not made. The special Savings Maximiser rate
    remains unchanged at 2.80%
  • ME Bank ​decreased the bonus rate on its competitive Online Savings
    Account by 10 basis points (now 2.85%).
  • Westpac​ added a $50 cashback offer for eligible students opening a new
    Choice Account.
Posted in Uncategorized
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