7th February 2012 – The cash rate remains unchanged at 4.25 per cent.

Information becoming available since the December meeting confirms that economic conditions in Europe were weakening late last year, with risks still skewed to the downside. Reflecting this, most forecasters have lowered their forecasts for world GDP growth this year to a below trend pace. That said, recent data from the United States suggest a continuing moderate expansion after a soft patch in mid 2011.

Growth in China….read the full statement here

One of the biggest costs when buying real estate is Government Stamp Duty.  Not anymore… thanks to the Home Builders Bonus Scheme introduced by the NSW Government.

The best part about this Scheme is that it’s open to everyone, including Investors who purchase a new house or apartment.  The purchase can be made in your own name, or in the name of any entity, including a Company or Trust structure.

You will pay ZERO Stamp Duty for new homes up to $600,000 purchase price, or $400,000 for vacant land.  For homes already under construction, a 25% discount will be applied.

As an investor, there are innumerable benefits of buying ‘new property’ whether it be an ‘off-the-plan’ apartment or vacant land so long as construction of a house commences within 26 weeks of the land settlement date.

A new home is deemed to be a home that has not been previously occupied or sold as a place of residence, and includes a home that is a substantially renovated home.

To be eligible, you will need to have entered into the contract prior to 1 July 2012  (that’s less than 6 months away) and apply for the Home Builders Bonus exemption within 3 months of exchanging the contract.

If you have already entered into a contract of this nature, you may already be eligible so long as you entered into the contract after 1 July 2010 and apply within 3 months of the date of that contract.

Home Builders Bonus Fact Sheet

Home Builders Bonus_Application Form

For further information, check out the FAQ’s

If you have any questions contact us here

• Australians remain better placed to cope with their debt levels than borrowers in many other countries. 45% of Australian borrowers are overpaying their mortgage, compared to an eight-country average of 26% (across Canada, India, Ireland, Italy, Mexico, the UK and the US).

• The typical borrower in 2012 is expected to be refinancers and upgraders, with first homebuyers and investors remaining cautious.

• In the past year, WA has seen the largest growth in lending, then QLD, followed by VIC and NSW, with SA and TAS having seen a drop in home lending.

• Of the capital cities, Sydney stands out as a being on track for house price growth of between zero and 4 per cent by the end of 2012, factoring in no interest rate change.

The statistics show us it’s not all doom and gloom, with the health of the property market varying from suburb-to-suburb and state-to-state.

Our housing markets ended 2011 in a better position to where they started and John Edwards from Residex is confident that the year ahead will be better for residential property owners compared to last year.

Australians are much better placed than many other people in the world and the adjustment period we have recently seen, with a clear upswing in our markets in the last few months, means that there is a reasonable chance that our markets will advance positively, albeit by a relatively small amount, in the current year.

Additionally, in this situation there will be bargains for the astute house hunter along with quality growth in many suburbs.

The last year has seen many homebuyers and investors sit on the sidelines and property prices reduce with most concerned about the global financial markets. Although some industry experts predicted a property meltdown, our markets have remained intact and many savvy buyers have even been rewarded with good buying.

In these times, we continue to reinforce the importance of doing your research to buy good quality property that will stand the test of time. Nobody can predict the future markets with exact precision; however you can be sure to weather market movements with quality property.

As your mortgage broker we would be happy to speak with you about any lending issues and or property decisions you may be concerned about for the coming year.

There could be more rate cuts to come depending on the problematic situation in Europe .  Futures markets have priced in a drop in official rates to a low of 3.25 per cent by May.

read the full statement here

Proponents of buying ‘old’ argue that established dwellings are typically more affordable and can be renovated to create equity, whereas those buying ‘new’ argue that this is outperformed by the tax incentives that new properties deliver.

Confused? Here are the arguments for both sides of the debate, but remember there’s no ‘right or wrong’ answer, regardless of which corner you stand in! Old and new properties both have distinct, unique advantages and what counts as an investor is that your decision matches your individual strategy and goals.

Reasons to buy ‘New’

1.    Tax depreciation

If you’re an investor, one of the big advantages of buying a newly constructed property is that you can claim depreciation as a tax-deductible expense.  This includes the depreciation of assets in the buildings and the cost of the building itself, as well as for wear and tear on fixtures and fittings in the property. The newer the property, the higher the level of depreciation.

2.    Better quality tenant

Brand new properties tend to attract a better quality tenant, which means a higher rental income and fewer headaches for the landlord!

3.    Less maintenance

Unlike new homes that require little maintenance, owners of second-hand properties are often faced with immediate maintenance issues. The costs of repair in older homes can significantly inflate ongoing expenses.

4.    Warranty

As a purchaser of a new property you are protected for a number of years against major building defects by home warranty insurance, which all builders of new homes in Australia are required to carry.

Reasons to buy ‘Old’

1.    Equity

There is little opportunity to add value to a new home, whereas the investment made in an old home can grow in the future should you choose to renovate or extend.

2.    Affordable

It’s often said that you get more house for less dollars buying a second-hand home than when buying a new one. For entry-level investors, old properties can have the advantage of an affordable price tag.

3.     Unique appeal

Older homes often have great features that can’t be replicated in new homes. A well-maintained period-style home, for example, will reap rewards in capital growth down the track

4.    Established sales history

There’s less guesswork in buying an established property because you’ll be able to trace back the property’s appreciation and find out how the suburb has performed. This can help give you the assurance you need that you’re buying a good property.

While there is much disagreement about when the rate cut will happen and by how much, the majority agree the Reserve will at least keep rates on hold until the new year.

In a recent survey of 20 economists by the Australian Financial Review, the most popular prediction for the next six months is that the Reserve Bank will leave rates untouched (9 out of 20). Five said they expect rates to be cut by the end of the year, while five tip rates to rise over the next six months.

The Reserve Bank’s next move is anyone’s guess, but the progression of Europe’s debt crisis and America’s economic slowdown may have a part to play. In the meantime a number of lenders are cutting their fixed mortgage rates, so if you are considering taking advantage of the lower rates on offer, call us and we would be happy to talk you through the process.

The federal government’s ban on exit fees was passed into law on 23 March and will apply to loans taken up after 1 July 2011. The change won’t include existing home loans, fixed rate mortgages or discharge fees.

While the removal of exit fees may not provide sufficient reason alone to switch mortgages, it may prompt consumers to shop around for what else is available in the marketplace. When it comes to refinancing to consolidate debt, purchase an investment property, find a home, undertake renovations or minimise mortgage repayments, consumers now have the flexibility to find a product to suit their changing needs.

Keep in mind that exit fees actually make up a very small proportion of the 25-year cost of a home loan and it is still interest rates that really dictate how much your loan will cost over the long term.

For this reason it pays to do your research and not be too influenced by the abolition of exit fees. More than ever mortgage brokers will play an important role in analysing the options that best suit your individual set of circumstances.

It may be that your current loan provides the best choice or that by switching to another product you can achieve savings. Whichever the case we can inform you of the current state of the market and help steer you through the confusion of comparing multiple home loan products.

Start by keeping a time-diary to monitor where the hours in the day actually go. You can then decide if this is the best way for you to spend your time, and develop a set of priorities that will allow you to postpone unimportant tasks and delegate others. There will always be tasks that cannot be delegated, but if you look you can usually find opportunities to ease up your daily routine.

Put your health and happiness first with these four strategies for achieving a successful work life balance.

1.  Work smarter not harder

Ask yourself whether you are doing things in the quickest, most efficient manner? Once you have worked out what tasks you can delegate and what you can’t, consider how to go about working smarter, not harder. ‘Smart strategies’ include prioritising your workload, using technology, asking for help and setting yourself time limits and boundaries.

2.  Be tech savvy

Don’t neglect the convenience of technology, whether it’s paying bills online or using apps on your iPod. It might seem daunting or time consuming to take on new technology but investing the effort up-front is worth the time-savings it will bring you down the track.

3.  No screen time

Take plenty of ‘no screen’ time during evenings and weekends – with no emails, internet, phones or laptop. To prevent work spilling over to your personal life you need to set boundaries with staff and colleagues so they know when they can and can’t contact you.

4.  Schedule hobbies

Chances are you will never get around to your hobbies and interests if you don’t schedule them into your day. Whether it’s attending a gym class or learning a language, you need to put aside the time and treat it as you would any other important commitment.

1.   Open an offset account

A mortgage offset account allows you to minimise your tax on interest earned on savings. It is an account that is tied to your loan account and allows you to use your saving account balance to reduce the amount owed towards your loan.

The interest earned on your savings is put towards the amount payable on the loan, enabling you to reduce how much you owe by cutting the time it takes to pay off your home loan.

There are two types of offset accounts: a 100% offset and a partial offset. A 100% offset means that the same interest is earned in the savings account as is paid in the mortgage account, whereas a partial offset means that a lower interest is earned than is paid.

Contact us to find out more about opening an offset account.

2.  Consider salary sacrificing

There are tax advantages in salary sacrificing items instead of purchasing them yourself.  Under a salary sacrifice arrangement (also known as salary packaging), you agree to forgo part of your future entitlement to salary or wages in return for your employer providing you with benefits of a similar value. The type of benefits might include cars, property, home loan repayments, superannuation, mobile phones, computers and child care fees.

You only pay income tax on your reduced salary, but you receive the reduced salary plus the benefits.  You can also make employee contributions out of your after-tax income towards the cost of the benefits and reduce any reportable fringe benefits tax.

To be eligible, first check with your employer regarding their fringe benefit tax policy and items you can salary package as there may be existing policies in place.

3.   Check your deductions

Make sure you are claiming all the deductions you can for your specific occupation. There’s a useful guide on the ATO website that shows allowable deductions for 20 different occupations. Go to www.ato.gov.au and search for ‘deductions you may be able to claim’.

4.   Claim income insurance

The ATO allows you to claim income protection insurance as a work-related expense. It is insurance worth considering for anyone in the workforce as it pays a portion of your salary for a while if you’re temporarily unable to work because of sickness or injury.

The top 4 tips for managing your mindset:

1. Change your money beliefs
We learn our money beliefs predominately from our parents.  We were often told that you must ‘work hard for your money’ and that ‘money doesn’t grow on trees’.   This type of talk does nothing for our mentalities and therefore you must learn how to identify these limiting beliefs and replace them with powerful positive ones.

2. Change your attitude towards debt
We are taught that debt is bad and something to fear. While ‘bad debt’ debt used for consumables such as cars, clothes, holidays etc. is something we want to minimise; borrowing money to purchase growth and/or income producing assets is a powerful strategy to grow your net wealth.  This is considered ‘good debt’.

3. Build up your knowledge Read as much as you can. This is the cheapest way to learn.

4. Surround yourself with likeminded people
Influence, or be influenced.  The people we surround ourselves with shapes us into who we are.  We can’t choose our family, but we can choose our friends and social circles.  You just need to mention the word property and all of a suddent everyone’s an expert. Ask them what their experience and success stories are before taking their free advice.Join a mentoring group or mix with people who are actively investing .  This can make a huge difference to your mindset and overall success.