If you haven’t caught up with the latest news from the world of credit reporting, it’s important to note that, from July 1, 2017, the
Australian Taxation Office (ATO) will inform credit rating agencies of any businesses that have outstanding tax debts.
Given the reality that 65.2% (worth around $12.5 billion) of these late payers are local small businesses, it’s a move that will put some serious pressure on business owners to place a priority on tax debt – ahead of other debts.
The move was announced in the Mid-Year Economic and Fiscal Outlook (MYEFO) and the plan means that the ATO will soon disclose the tax debt information of businesses that are not actively engaged in debt management solutions with the ATO.
If you are in the market for a loan or mortgage and you run a business that has tax debt more than $10,000, the ruling will have a direct impact on your ability to obtain credit.
Any bad report on your credit rating is a serous business that is difficult – and time-consuming – to repair.
The first potential issue that this new ruling raises is that, once something like this has been listed on your credit rating, it is a difficult thing to remove.
The second potential problem is the accuracy of the ATO’s tax debt claim – and if they do make a mistake, how will this impact on the repair of your credit file?
It’s important to realise that the initiative will, initially, only apply to businesses with Australian Business Numbers and tax debt of more than $10,000 that is at least 90 days overdue.
As time goes on, though, the ATO may extend the ruling to include other tax debts.
If you have an outstanding tax debt, taking positive action to contact the ATO – or get your accountant to do it on your behalf – is critical. With only a few weeks up your sleeve before the ATO has the powers to list any business debt, working out a repayment arrangement now could be the difference between securing a mortgage or finance application with a good deal, or being penalised by having limited access to a full range of lenders.
If you have any concerns, acting sooner, rather than later is recommended. While an experienced mortgage broker can often still help people with shaky credit ratings find finance they need, the more options you have available to you means more opportunities to find a competitive interest rate that could save you thousands of dollars from your home loan over the life of your mortgage – a reality that is worth making an effort to manage a positive credit rating for your future financial wellbeing.
If you need advice for a home loan, business or commercial loan, self-managed super fund loan, or an investment home loan, speak to a broker at Lending Specialists. We have a wealth of experience under our belt and a robust network to connect you to the right industry professional for the loan you need
So, you’ve secured your loan for your fantastic new home or property investment and now settlement date is getting closer. To ensure your big day goes off without a hitch, try these practical tips for property settlement success.
1. Understand your settlement
Property settlement is the name given to the process of property ownership business that is conducted between your legal representative (your lawyer or conveyancer), your financial representatives (your lender or mortgage broker) and the representatives of the vendor.
It’s the all-important moment when the ownership of the property officially transfers from the seller to you – and you must pay the balance of the agreed price.
At the time the contract of the sale is drawn up, the property settlement period is determined – a time-frame that generally sits between 30-90 days. When you arrange your finance through an individual lender or mortgage broker, they ensure that the balance of the payment is available to be processed and transferred on this agreed settlement day – making you the legal owner of the property.
2. Undertake a final inspection
In the week leading up to your settlement date, you have the right to arrange a final inspection. Contact the agent who sold you the property to arrange it. Sometimes, your conveyancer will do this for you.
The purpose of this final inspection is to make sure that the vendor hands the property over to you in the same condition it was when you bought it.
A good conveyancer will check that all items listed in the contract as part of the house sale are there and in the appropriate condition.
3. Arrange insurance
Taking out building and contents insurance is usually recommended by your lender (and is smart to do). This insurance protects the lender’s interest in the property but it also protects your own interest. Make sure the policy is effective from the settlement date, to ensure that insurance cover is in place at all times.
A professional insurance broker can help you find the best possible deal and will help you insure the property for the right amount.
4. Check the boundaries
Got a good conveyancer? They will double-check that the boundaries of your property match the boundaries listed on the Certificate of Title. You can do it yourself if you know what you’re doing but make sure you don’t make a mistake – this is one of the biggest purchases of your life.
5. Be clear about your costs
From stamp duty to other outgoings – the cost of buying a property is more than just the agreed price you bid at auction. Make sure you’ve understood every cent of associated costs before settlement day. If you fall short and can’t find the missing funds you need urgently, you could find yourself in a lot of financial difficulty.
6. Collect the keys to your new property
Settlement all taken care of? Collecting the keys from your real estate agent is the final step towards enjoying the benefits of your new property. That could mean moving in and putting your personal touches on your new home, or taking it to the rental market for your new life as a landlord. Good luck. Owning a property is a positive way to build wealth for your secure financial future. To find out how you can do it all again, schedule a future appointment to talk to your mortgage broker about equity – and how you can use it to get your foot even further in the property ownership door.
Settlement day should be one of the proudest and happiest of your life. By following the basic steps to settlement success, you will be on your way to creating a property investment portfolio to last a lifetime.
If you need advice for a home loan, business or commercial loan, self-managed super fund loan, or an investment home loan, speak to a broker at Lending Specialists. We have a wealth of experience under our belt and a robust network to connect you to the right industry professional for the loan you need.