Lending 4 U
Lending 4 U


July - August Newsletter 2015

Mortgage broker originated loans are at a record high of 51.9 per cent and this is expected to keep rising as consumers continue to value their broker experience and lenders increase their engagement with brokers.

Some articles have predicted that in the near future there will soon be a time when 60 per cent of all home loans in Australia are written by mortgage brokers!

Have a look at the article below to find out more about how Australian consumers are being increasingly drawn to the choice, expertise and convenience offered by mortgage brokers.

In this issue of the newsletter we also take a look at what recent changes to investment lending mean for the future of interest-only loans (article 3).

Other topics we cover in this issue include the advantages of leasing for small business and how to take the stress out of moving for those of you selling up.

Enjoy this newsletter and feel free to pass it on to family and friends.

Kind Regards,

Justin Delanty
Managing Director - Lending 4 U
Justin Delanty Lending 4 U
PO Box 699
Devonport TAS 7310

Email: justin@lending4u.com.au
Website: http://www.lending4u.com.au
Tel: 03 6424 9166
Mob: 0458 031 569
Fax: 03 6424 9365
In This Issue
1. Brokers more popular than ever
2. Small Business Spending
3. The future of Interest only loans
4. Did you know?
5. Moving House
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Brokers more popular than ever

Mortgage brokers are now responsible for writing over half of Australia’s home loans and are valued for their choice, expertise and convenience, according to a new survey commissioned by the Mortgage and Finance Association of Australia (MFAA).

From a 49.9 per cent share of the market in the March 2014 quarter, total new home lending to mortgage brokers increased to 51.9 per cent in the March 2015 quarter.

Over this time there was a $44.2 billion increase in mortgage lending across Australia and brokers were responsible for 71 per cent of this increase, Australian Bureau of Statistics data reveals.

Brokers were also found to be proficient at matching the product to the customer’s needs. In fact 30.2 per cent of broker initiated home loans went to smaller lenders, demonstrating that brokers offer consumers real choice and have access to a wider range of mortgage products than banks or other financial organisations.

Investors in particular are convinced of the value of using a mortgage broker, with research showing that 40.5 per cent of broker originated loans are from investors. Owner-occupiers follow closely behind at 37 per cent of broker-originated loans, then first home buyers at 14 per cent and commercial borrowers at 6.0 per cent.

Lenders are also complimentary of the role of mortgage brokers. Those interviewed for the MFAA study said lenders were moving to a partnership model with brokers, whereby both work together to provide customers with the most appropriate proposition. Great news for customers! 

Small Business Spending

If you’re running a small business, now is the time to think big.

The Federal Government’s focus on small business in the May budget was designed to encourage small business growth through tax cuts as well as measures to reduce red tape, promote more start-ups and hire more employees.

Many business owners will be taking advantage of the opportunity to receive an immediate tax deduction on every asset they purchase valued up to $20,000. Cars, utes, tables, chairs, printers, photocopiers, tools, TVs, sound and security systems, computers, tablets and smartphones are just some of the assets that can be deducted until the end of June 2017.

Short on capital? Try Leasing

While these tax deductions are great news for many small businesses, what about those who don’t have the capital available to purchase assets?

If you are a small business in this situation, leasing may be your ideal ‘think big’ solution. Rather than buying machinery, equipment or cars, a lease enables you to rent them for a manageable monthly payment. At the end of the lease term, you have the flexibility to return, upgrade or continue to rent.

Leasing enables you to enjoy instant access to the tools you need to grow your business, while at the same time freeing up cash flow. Given lease payments are fixed, you can plan cash flow around a known cost, enabling you to stay ‘cash flow positive’.

Australia’s record low cash rate has made leasing a viable option for any business looking to acquire an asset, whether it’s new kitchen equipment if you run a café, new tools if you’re a tradie or a new computer if you have a home office. 

Leasing can be particularly useful if you need to update equipment but you’re not in a position to purchase, or your business relies on expensive equipment that goes out of date quickly.

There are also tax advantages to leasing. Under a leasing arrangement, the business does not own the equipment for tax purposes because the financier is the one who has bought the equipment and leased it to you. This means you do not have a depreciating asset on your books and do not need to pay GST on the purchase price of the equipment.

Lease repayments may be tax deductible and although GST is charged on these repayments, your tax agent or the Australian Taxation Office will be able to advise you of the possibility of claiming these via your company’s Business Activity Statement.

Want to know more about equipment leasing or Novated Leasing for motor vehicles? Your mortgage broker can point you in the right direction, call us today. 

The future of Interest only loans

It’s not as easy as it once was to apply for an interest-only loan. Over the last couple of months lending for this type of investment loan has been tightened in an effort to slow the pace of record growth in investment home loans.

Lenders are under pressure by government regulatory bodies to make it less attractive to take out interest-only loans, a strategy which is hoped will protect investors and achieve sustainable growth in the home loan market.

Lenders have responded to the crack-down in different ways. Some now ask for larger deposits for investor loans or have scrapped discounts they previously offered. Others have begun to price loans with principal and interest repayments cheaper than interest only loans. Still others now offer better discounts on owner occupied loans or allow investors to borrow less than owner occupiers.

Which way to turn?

As these changes are not uniform across the industry, but vary from lender to lender, it has been difficult for investors to know which way to turn. We have had many clients come to us worried about whether the changes affect their existing loans or what they should do when they make a change or try to restructure their loan.

As your mortgage broker, we are in touch with latest changes occurring in the industry and can seek out the best options to suit your particular needs.

Should you take out an interest-only loan?

Interest-only loans can be a tax-effective way to invest in property, but they are most effective when accompanied by advice and tax planning.

Because the monthly repayments are minimal for a specified amount of time (usually between 1-5 years), it offers great way to save money and free up funds in the short term for other investments, renovations or to pay off non-tax deductible debt like credit cards and car finance.

However problems start when the interest only period ends and borrowers who haven’t planned their finances carefully are unable to pay off the principal amount, along with the interest. If property prices fall and you are forced to sell, you may end up selling for a loss.

The other drawback is that because you are only paying off interest, your original loan amount doesn’t reduce because you are not paying any of it back, which equates to a considerably higher cost over the full term of the loan.

Did you know?

Interest-only loans are a type of loan that allows you to repay just the interest on the principal loan amount. At the end of the interest only period, which is typically between 1 to 5 years, you have to pay off both the principal and interest.

Interest-only is popular among investors because the interest payments are tax deductible, which means you can make minimal loan repayments during the loan term and then sell the property or refinance the loan when you have to start paying principal and interest.

Moving House

Australians rank moving house second only to divorce and bereavement on the scale of life crises.

Broken and misplaced possessions, incompetent removalists, chaos and exhaustion are a few of the negative images we have come to associate with moving house.

Fortunately most of these nightmares can be avoided by anticipating problems and becoming organised well before moving day.

The first step is deciding how you prefer to approach the job of packing and moving your possessions. If you decide to economise and do the move yourself, check what your home contents insurance covers you for.

For bulky or fragile items your safest option is usually to hire a removalist but make sure the organisation you choose is a member of the Australian Furniture Removalists Association (AFRA).

The AFRA Code of Conduct ensures members provide paperwork for quotations, insurance, contracts and inventories. The contract should clearly state if fees are charged by the hour or by cubic volume, for example, or if a charge is incurred for the time the removalist spends travelling to and from the job.

Whether or not you decide to do your own packing, it might be a good idea to leave the mirrors, valuables and breakables for the removalists to professionally pack.

Remember to pack a survival box containing all your essential items such as toothbrush, toilet paper and kettle – they’re bound to come in handy at the end of what will undoubtedly be a long day.

Top 10 survival tips

  1. Get rid of clutter so you don’t end up packing items you don’t need
  2. Check in advance that furniture can fit through the doorway or up the stairs
  3. Label boxes clearly and fill them logically according to grouped items
  4. Prepare a floor plan to help decide where you need things placed
  5. Carry valuable documents, jewellery and passports yourself
  6. Check the manufacturer’s instructions for moving appliances
  7. Keep cleaning equipment separate so you can find it on arrival
  8. Notify gas, electricity, internet and other suppliers
  9. Change your address and redirect mail
  10. Update the address on your insurance policy 
Mortgage & Finance Association of Australia
Mortgage & Finance Association of Australia

Lending 4 U is a Full Member of the MFAA. This means they have recognised and proven qualifications and expertise in the mortgage industry, and are bound by a code of ethics to ensure the highest levels of service, integrity and professionalism.

Take a holistic approach to your financial needs. A Finance Broking Company who is on a 'mission' to achieve results for You, Your family and Your Business. Lending 4U, where it's not about them, it's all about U!We have access to over 30 Lenders and can source the most appropriate product for you that suits your particular circumstances.

  • Home Loans
  • Investment Loans
  • Loans for Business
  • Loans for Equipment
  • Refinancing
  • Commercial Property
  • Vehicle Finance

Managing Director - Justin Delanty: Justin has over 25 years experience in the finance industry at both a residential and corporate level. He holds a Diploma in Financial Services, a Diploma of Company Directorship and is a Fellow of the Mortgage and Finance Association of Australia. At Lending4U, he strives to ensure that we achieve your financial requirements with sound advice and a minimum of fuss.

Australian Credit Licence Number 381958


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Disclaimer: This newsletter is intended to provide general news and information only. Readers should rely on their own enquiries before making any decisions regarding their own interests. Please do not rely on any part of this newsletter as a substitute for specific legal or financial advice. All material is copyright 2015. ABN: 45 142 357 462 ACN: MFAA: 884

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