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Monday, August 31 2015

It is possible for accountants and lawyers to borrow up to 90% of a properties value without paying mortgage insurance. That means a saving of thousands of dollars in loan establishment costs.

Lending can be for your own home or for an investment property. This offers a number of potential benefits:

  • Retain more cash for other purposes whether buying your own home or investment
  • Release additional funds against your home or investment for improvements or further investment without substantial cost
  • Mimimise the amount of equity required to purchase an invsetment property

Borrowing can be in personal names or in a company or trust if for investment purposes.

A number of qualfying conditions apply so contact us for further details.

Posted by: Greg Carroll AT 07:19 am   |  Permalink   |  Email
Wednesday, August 26 2015

Westpac-Melbourne Institute Consumer Sentiment index released for August 2015 shows consumer sentiment increased by 7.8% to 99.5 index points. That’s a significant jump, and is good news for the property market, as a stronger consumer sentiment signals stronger consumer tendency or willingness to spend.

With spending going up, that means property buyers may be willing to spend more. That leads to an increase in property interest and, potentially, the price a seller will obtain.

Posted by: Greg Carroll AT 11:48 pm   |  Permalink   |  Email
Wednesday, August 26 2015

The lending market is going through a pretty big shake up and unless you are getting professional advice from someone who can assess your situation across a broad range of lenders then there's a pretty good chance you are paying too much and costing yourself thousands each year.

There's no such thing as who has the best rate anymore. And if you are still thinking that way you are way out of step with the market. 

There are now a multitude of factors that will affect your interest rate which are all based on your personal circumstances and requirements. And it will change from lender to lender. 

Just this week an analysis for a client revealed a difference in the interest rate on offer to them across a range of lenders including the major banks was 1.3%. That's thousands of dollars difference in repayments between the lowest and the highest. And the highest was actually major bank.

If you are only talking to your current lender you are definitely costing yourself. 

Here's what one of our recent clients said about our service

"Most friendly and one of the most professional financial advisers I dealt with in the past 10 years. Greg was fantastic, none of my questions were left unanswered, nothing was hard to for Greg to ensure I will be happy and the loans Greg founds for me are THE best. I am extremely happy with Greg's and the MTA services. Highly recommended".

FREE Professional service

If you talk to us you are talking to experienced professionals who have been involved in lending and investment for more than 25 years. We can assess your situation against the broader market, identify where you can save, manage the whole loan process for you...and not charge you a cent.

If you haven't looked at you home loan in a couple of years you should definately give us a call. Contact us for a FREE review 

Posted by: Greg Carroll AT 12:32 am   |  Permalink   |  Email
Tuesday, August 25 2015

By Shane Oliver

The global share market correction continued over the last week as worries intensified regarding emerging countries, their currency rout and the impact on global growth along with the ongoing fall in commodity prices. Even Greece and tensions between North and South Korea got a look in.

Messy profit results also didn’t help Australian shares. For the week US shares fell 5.8%, Eurozone shares lost 6.7%, Japanese shares fell 5.3%, Australian shares fell 2.7% and Chinese shares lost 11.5%. Reflecting investor nervousness, oil and metal prices remained under pressure and bonds benefitted from safe haven demand. Emerging market currencies fell further and weak Chinese economic data put renewed pressure on the $A.

From their highs earlier this year US shares have now lost 7.5%, Japanese shares are down 7%, Australian shares are down 13%, Eurozone shares are down 14%, Asian shares have lost 20% and Chinese shares are down 32%. With US shares only having just broken down technically they likely have more short term catch up ahead.

Is this 1997-98 all over again?

The past week has seen a further intensification of concerns regarding the emerging world with a range of general and country specific factors coming together including the ongoing plunge in commodity prices, more falls in emerging market currencies (with Vietnam devaluing and Kazakhstan abandoning its currency fix) as China's 3% devaluation continues to reverberate, the bombing in Thailand, a reference by the Fed to global weakness presumably mainly in emerging countries and worries about China with the explosion in Tianjin not helping.

Fears of a re-run of the 1997-98 Asian-emerging market crisis are building again. Such fears are of course not new - we saw similar worries early last year with talk of the fragile five - and emerging market (EM) currencies have been plunging since 2011 (now down 36% on average) and their share markets underperforming over the same period. The EM world is arguably much stronger than it was is 1997-98 with stronger current account balances, higher foreign exchange reserves and mostly floating as opposed to fixed exchange rates (which mean they don't have to be defended from speculative attacks). However, some of the emerging world is suffering from a return to populist policies and a reversal of economic reforms so the EM crisis could go on for a while yet.

What may be needed to end the negative feedback feeding through global currency and share markets at the moment though is a policy easing. This came in 1998 with Fed monetary easing. While it’s now looking unlikely the Fed will tighten in September, a circuit breaker policy easing this time around ideally needs to come from China – so keep an eye out for further Chinese stimulus measures. Expect China to cut its benchmark interest rate below 4% from 4.85% currently and step up fiscal stimulus.

Greece worries back again, but maybe not really.

With Greece’s third bailout program now in place, Greek PM Tsipras has called a new election, likely for September 20. Such a move was expected. With the bailout locked in Tsipras wants to take advantage of his popularity and purge Syriza of far left MPs who didn’t support the bailout. Most recent polls indicate he remains popular and that Syriza would be the first placed party with a comfortable margin. While it would likely need to form a coalition with other centre left parties it would be committed to the bailout. Alternatively the main opposition party is committed to the bailout anyway. So expect some more noise regarding Greece, but it’s unlikely to be a major threat.

The Australian June half profit reporting season is now almost two thirds done and overall the results have been a little disappointing. 43% of results have beaten expectations and 60% have seen their profits rise from a year ago which is okay, but it’s well down on what we have been seeing in the last few reporting seasons. Resources companies have remained under pressure, industrial profit margins have been weaker than expected and the banks have been mixed and guidance for the current financial year has been a bit downbeat.

As a result profits now look to have fallen by around 2% over the last financial year and expectations for the current financial year have been downgraded to around 2%. However, it’s not all doom and gloom. Profits are still growing outside the resources sector by around 7% with companies exposed to housing and NSW and Victoria generally doing well, the lower $A should provide and dividends are continuing to rise solidly. So there is a bit of light at the end of the tunnel. 

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Major global economic events and implications

US economic data was consistent with okay, but hardly booming growth. While the NAHB home builder's conditions index, housing starts and existing home sales all rose, a fall in the Markit manufacturing PMI for August and mixed regional business surveys indicate overall growth is not particularly strong. Meanwhile, CPI inflation in July was weaker than expected.

Fed backing away from a September hike. While the minutes from the Fed's last meeting recognised progress in terms of the labour market and economic activity there was a degree of wariness regarding downside risks to inflation and global economic weakness. In fact since the July meeting the downside risks to inflation have increased with further falls in commodity prices, still weak wages growth and increasing risks regarding China and emerging countries. I think the probability of a September hike is now less than 40% and it will likely slide further if the emerging market related turmoil intensifies.

Eurozone business conditions PMIs impressed in August, coming in better than expected with the composite index rising to a strong 54.1 reading which is around a 4 year high and points to improved growth in the current quarter.

Japanese June quarter GDP contracted but growth is likely to return in the current quarter. A further improvement in the August manufacturing conditions PMI to 51.9 also points up.

Chinese economic data was contradictory. While property prices rose again in July and the MNI business sentiment survey rose strongly in August, the closely watched Caixin manufacturing PMI fell to its lowest since March 2009. The latter likely reflects the difficult conditions in small and medium businesses and the need for further monetary easing.

Australian economic events and implications

The minutes from the RBA’s last meeting provided nothing new. Citing more positive economic data of late and lower unemployment than forecast the RBA looks to be in no hurry to ease. However, since then commodity prices have weakened further & uncertainty about the emerging world has increased. My view remains that the RBA will still have to cut again.

What to watch over the next week?

US economic data releases over the week ahead are expected to be positive. Expect to see further gains in home prices (Monday), a bounce back in both new home sales (Tuesday) and pending home sales (Thursday), a stronger reading for August consumer confidence (Tuesday), a further modest trend gain in underlying durable goods orders (Wednesday) and an upwards revision to June quarter GDP growth to around 3% annualised. Meanwhile, the core consumption deflator for July (Friday) is expected to show that inflation remains low at 1.3% year on year.

In the Eurozone, economic confidence indexes (Friday) will be watched to see if the solid levels of July have been sustained.

Japanese economic data for July (Friday) is expected to show continued strength in the labour market and an improvement in household spending but inflation remaining too low.

In Australia the focus will be on business investment. June quarter construction data (Wednesday) is likely to show a 2% decline with a rise in residential building being offset by the ongoing downturn in mining construction. June quarter capex (Thursday) is also likely to show a 2% decline with plans for the current financial year likely to show ongoing softness. All of which is likely to reinforce the case for a further interest rate cut and decline in the value of the $A.

The June half Australian profit reporting season will wrap up with around 80 major companies reporting including Lend Lease, BHP, Worley Parsons, Origin and Woolworths.

Outlook for markets

Share markets are likely to see a further correction in the next few months. We are still in a seasonally weak period of the year for shares, uncertainties regarding China and the emerging world are likely to intensify in the short term posing risks for global growth and the US share market has only really just joined in the correction. Worries regarding a Fed rate hike in the run up to its September meeting are certainly not helping. 

But beyond the near term, the cyclical bull market in shares is likely to resume: valuations against bonds are good and are now getting even better as bond yields fall and share market earnings yields rise; monetary conditions are set to remain easy with the latest global growth scare likely to drive further global monetary easing and see the Fed delay raising rates yet again; this in turn should help see the global economic recovery continue; and finally investor sentiment is deteriorating rapidly into the sort of pessimism that provides great buying opportunities.

As such, despite the current significant setback share markets are likely to remain in a broad rising trend. Given this I am reluctant to ditch my year-end target of 6000 for the ASX 200.

Low - and getting even lower - bond yields point to soft medium term returns from bonds.

The broad trend in the $A remains down as the Fed is still likely to raise rates sometime in the next six months despite ongoing delays whereas there is a good chance the RBA will cut rates again and the trend in commodity prices remains down. Our view remains that it is heading into the $US0.60s.

SHANE OLIVER is head of investment strategy and economics and chief economist at AMP Capital and is responsible for AMP Capital's diversified investment funds. 

Posted by: Greg Carroll AT 03:24 pm   |  Permalink   |  Email
Friday, August 21 2015

Banks are putting the brakes on lending to property investors but owner-occupiers are being offered some of the sharpest deals in the market.

Owner-occupiers who make prinipale and interest repayments are being targeted with lower advertised interest rates and cash-back offers, and as we have found there can be abaility to negotiate bigger discounts - but only for occupied lending. 

Banks are also offering "cash back" offers targeted at owner-occupiers.

We are seeing the same in the fixed rate market with different pricing between owner-occupied lending.

The reason is recent pressure applied to the banks by both APRA and ASIC to cool investment lending which has primarily built up in the Sydney market. But rather than take a targeted approach to the Sydney market APRA in particular has a dopted a broad brush approach.

My own view? The actions by APRA in particular are a bit late in the game. APRA have sat back for the last 2 years and let the Sydney market run riot and have only brought changes in at a time when Sydney is already showing signs of cooling. But no doubt they will pat themselves on the back for a job well done.

While their can be some good deals on offer chasing the cheapest rate can have plenty of pitfalls. There's a fair bit of change in the market at present and what looks like a good deal today might not be that great tomorrow. So it makes sense to get a proper review of your full situation to determine what is going to be the most appropriate structure for you and what the actual costs are.

Contact us to arrange a FREE finance review

Posted by: Greg Carroll AT 11:16 pm   |  Permalink   |  Email
Tuesday, August 11 2015
CBA targets first home buyers

First home buyers in Australia's growth areas are the next target of Commonwealth Bank of Australia's belt-tightening under a bank plan to curb loans on greenfield housing developments.

A CBA presentation to mortgage brokers, has outlined a plan to effectively delay the approval of finance for buyers of lots until the land is development-ready, with all preliminary work such as roads completed.

Developers said the change will limit land development, putting further pressure on the ability to increase housing supply.  

This move will restrict presales. Many developers have to secure presales of up to 50 per cent of all lots on a planned site before banks will lend funds for bulk earthworks and the installation of water, sewerage and electricity services that make it developable. 

The move, expected to become CBA policy in the next few weeks, will increase the pressure on developers already hamstrung by slow land release and title processes. It will slash development and send prices surging, developers said.

"If it's adopted by all banks, it will make it more difficult for all developers to fund construction of land for first home buyers and second home buyers," said David Payes, the managing director of developer Intrapac Projects and president of lobby group Urban Development Institute of Australia, Victoria. "We need to supply land to keep housing at affordable prices."

Under the new policy it will only accept valuations on lots – a crucial step in the mortgage approval process – after an external valuer has physically examined the site. 

"We believe a more accurate measurement in getting a valuation on unregistered land at an appropriate time should instead be based on the valuer having access to the estate and being able to physically identify the allotment," it said in the presentation. 

"This action directly targets the production of new housing stock; jobs, supply, prices and therefore the broader economy will feel the effects of the bank's action," UDIA Victoria chief executive Danni Addison said.

"It is simply neither justifiable nor understandable and could very well lead to a significant contraction in supply and a reduction in new housing options for buyers and renters."

Posted by: Greg Carroll AT 03:26 pm   |  Permalink   |  Email
Tuesday, August 11 2015
McGrath says SEQ the hottest market

McGrath Real Estate chief executive John McGrath has declared the Sydney property market "close to peak".

"I'd be concerned if Sydney sees another double-digit growth. I'm predicting 3 to 5 per cent more and then I think it's going to be plateauing. Melbourne is probably about the same," he said in Melbourne on Monday.

"The rest of Australia … much of it is preparing for its next growth cycle. South-east Queensland is going to be the hottest market for the next three years. Perth is just totally depending on resources.

Mirvac boss Susan Lloyd-Hurwitz said: "We certainly are pedalling as hard as we can right now. But it is cyclical, so we do recognise that there are cycles and certainly the Sydney market has to be towards the top of its cycle by any measure that you would care to look at."

Posted by: Greg Carroll AT 02:50 pm   |  Permalink   |  Email
Friday, August 07 2015

There may be situations where not all your expenses are deductible and you need to work out the deductible portion. To do this you subtract any non-deductible expenses from the total amount you have for each category of expense; what remains is your deductible expense. 

Situations where you will need to apportion your expenses include:

- your property is available for rent for only part of the year

- only part of your property is used to earn rent, or

- you rent your property at non-commercial rates.

Property available for part-year rental

If you use your property for both private and assessable income-producing purposes, you cannot claim a deduction for the portion of any expenditure that relates to your private use. Holidays homes and time share units are common examples.

In cases such as these you cannot claim a deduction for any expenditure incurred for those periods when the home or unit was used by you, your relatives or your friends for private purposes. In some circumstances, it may be easy to decide which expenditure is private in nature. For example, council rates paid for a full year would need to be apportioned on a time basis according to private use and assessable income producing use where a property is used for both purposes during the year.

In other circumstances, where you are not able to specifically identify the direct cost, your expenses will need to be apportioned on a reasonable basis.

Only part of your property is used to earn rent

If only part of your property is used to earn rent, you can claim only that part of the expenses that relates to the rental income.

As a general guide, apportionment should be made on a floor area basis - that is, by reference to the floor area of that part of the residence solely occupied by the tenant, together with a reasonable figure for tenant access to the general living areas, including garage and outdoor areas.

Apportionment of travel expenses

Where travel related to your rental property is combined with a holiday or other private activities, you may need to apportion the expenses. If you travel to inspect your rental property and combine this with a holiday, you need to take into account the reasons for your trip.

If the main purpose of your trip is to have a holiday and the inspection of the property is incidental to that main purpose, you cannot claim a deduction for the cost of the travel. However, you may be able to claim local expenses directly related to the property inspection and a proportion of accommodation expenses.

What opportunities are you missing?
Are there ways to improve your current cashflow that you are not currently doing? Are your finances correctly structured to build a property portfolio or are they holding you back? Do you have a plan of attack of how to build a portfolio? Are your finances set up to ensure you can acquire property without negatively impacting your lifestyle? Are there things you are missing that you should or could be doing that could have a significant impact on your wealth creation plans?

Contact us for an initial discussion.

What are the secrets you need to know before you start investing?
Sign up for FREE Online Investor Bootcamp to start receiving information straight way

Posted by: Greg Carroll AT 10:50 am   |  Permalink   |  Email
Friday, August 07 2015

The landscape for investment lending is changing and like most things there will ultimately be winners and losers. The key to coming out on the right side of the equation is to seek advice and get a solid understanding of your options. Contact us for an obligation free asessment.

If you adopt the she'll be right approach and stick your head in the sand then you could find yourself in trouble. The changes occuring are as significant as those during the GFC. Some of the key changes we have seen so far are as follows:

  • A number of lenders including AMP pulling out of investment lending altogether
  • Lenders only financing up to 80% for investment property
  • Lenders increasing interest rates for investment and interest only lending
  • Increased restrictions for SMSF lending
  • Increase restrictions to overseas and foreigh investors
  • Increased restrictions on development funding

As we have mentioned previously those most at risk are off the plan unit purchasers, partcularly those with small deposits or little in the way of equity.

But of course changing conditions also present opportunities both in terms of opportunities to imrpove your finance structure and opportunities to invest.

We expect improved interest rate pricing for home lending and some opportunities to imrprove overall pricing with the correct structure.

Contact us for an obligation free assessment. 

and how to structure your finance  

Posted by: Greg Carroll AT 09:52 am   |  Permalink   |  Email
Friday, August 07 2015

While there are changes afoot with investor lending the flip side of this is lenders will be keener than ever to chase owner occupied business. This means we are likely to see some pretty sharp offers in the coming months. 

There are already some excellent offers out there that can strip thousands of dollars a year off repayments. If it has been a few years since you have review your home loan now is a good time to contact us for a review of your options.

Even with investment lending there are savings to be had if things are structured the right way.

Contact us now for an initial review

Posted by: Greg Carroll AT 09:44 am   |  Permalink   |  Email
Friday, August 07 2015

If you are an off the plan unit buyer Contact us to discuss your finance options


Property investors caught with off-the-plan apartments delivering lower rents and capital growth than predicted at purchase need to shop around for the best rates to meet bigger repayments.

Real estate agents and developers are warning that many investors with off-the-plan apartments coming up to completion could face shortfalls of more than 20 per cent in both rental income and valuations.

"The investment lending landscape is rapidly changing," says Chris Foster-Ramsay, managing director of Capital Home Loans.  "The banks are capping loan-to-value ratios to 80 per cent, increasing interest rates for investment lending and/or interest-only loans by up to 25 basis points [and some are] completely pulling out of the investment lending market."

The good news is that competition for the owner-occupier market is expected to intensify, particularly principal and interest loans.


"Those who make additional principal and interest repayments over and above the minimum required by the bank and can present a history to their lender will benefit by potentially being able to negotiate better discounts, essentially because they are lower risk," adds Foster-Ramsay.

Mortgage brokers estimate there are 90,000 apartments being constructed in Australia that have been sold off the plan but not yet settled. The purchasers of about 20 per cent of these, or 18,000, have paid a deposit of just 10 per cent of the full purchase price, according to analysis of investor statistics from CoreLogic.

As little as 10 per cent of the purchase price has been required to secure an apartment and buyers typically arrange finance ahead of settlement as the apartment nears completion – often years later.


A real-life example has been provided by Beller, a diversified property group with offices in Australia and China. The owner's name and address of the property have been withheld.

An off-the-plan apartment was purchased for $485,000 on a 10 per cent deposit ($48,500), which meant 90 per cent, or $400,000, equity was required.

The bank valuation at completion of the apartment was $400,000, a 17.5 per cent discount on the purchase price. In addition, bank borrowing has been reduced to 80 per cent of the valuation, which is 80 per cent of $400,000 ($320,000).


That means the purchaser has to come up with an extra $116,500.

The expected rent for the apartment at the time of sale was $460 a week, which is a net gross rental return of about 5 per cent on the original $485,000 purchase price.

The actual rent is $360 a week – that's a return of 3.85, which is 21 per cent discount on the original estimates.

National Australia Bank and Australia and New Zealand Banking Group have capped their loan-to-value ratios at 90 per cent.

Westpac has announced investors will be required to have a minimum of 20 per cent deposit for investment loans.

Decisions by ING and AMP to tighten, or even cease, new lending reflects their concerns about being swamped by borrowers turned away by major banks.

Barry Marshall, principal of Barry Marshall Real Estate, a boutique Melbourne-based agency, says thousands of investors who have purchased off-the-plan apartments on higher loan-to-value ratios and lower interest rates than currently on offer from the major lenders will be seeking alternatives.

"Investors have to get the money from somewhere," Marshall adds.


Investors facing a funding squeeze on an off-the-plan property in their self-managed superannuation fund need to clear several more hurdles created by contribution caps and legal restrictions on their trust.

A super fund trustee has entered a legal contract with the seller that is fully enforceable. A trustee cannot walk away from the agreement without serious legal repercussions. 

"You can top up any shortfalls with super contributions to your concessional cap or non-concessional caps,"  says Aaron Dunn, managing director of The SMSF Academy. 

But if the concessional contributions cap are exceeded these amounts may be subject to excess contributions tax or refunded and reassessed by the Australian Taxation Office to include the amount within your personal tax returns, along with an interest charge, he says. 

Some lawyers suggest a new contract outside of the fund.

"I have seen circumstances where the vendor will allow for a new contract to be drawn up," says Dunn.  "In such an instance, you would expect the original deposit to refunded and the new purchaser pay a deposit  the new deal," he says.

Those considering this need expert legal and tax guidance to ensure it does not create contract and tax problems.  

Other options might be to seek a top-up loan for the shortfall from a related party, such as another member of the fund.

"This can create potential problems in the ranking of the mortgage if there is a default or bankruptcy," says Dunn. "The related party will rank behind the bank in the event of default."

There will also be additional costs in drawing up a related-party loan agreement.

Posted by: Greg Carroll AT 09:19 am   |  Permalink   |  Email