According to the Reserve Bank, rising levels of household debt are a major concern. Its latest public statement has fuelled speculation that interest rates could be on the rise soon – especially if households keep borrowing at the current, very rapid rates.

For anyone planning to buy, that means now is a great time to lock in a fixed term contract at a low interest rate, and if you’ve got a variable home loan at the moment, it means it’s a smart time to talk to your professional mortgage broker to see how they can protect your loan at a great rate that lasts.

With newspapers around the country all reporting on the release of the minutes from the Reserve Bank’s August 1 meeting, it was revealed that the “need to balance the risks associated with high household debt in a low-inflation environment” was of prime importance on the minds of the nine-member board of the Reserve Bank.

In The Australian newspaper, ANZ analyst David Plank was quoted as saying: “The changes do elevate the focus on financial stability in a way that raises the risk of policy action at some point.” – Something that suggests the central bank might lift rates sooner than expected.

Although the news of the minutes didn’t deliver the same as the minutes from last month’s meeting, when the Australian dollar went soaring after the RBA seemed to pencil in a 3.5 per cent ‘‘neutral cash rate’’, the rise of the household debt, combined with the rising jobless rate and inflation has taken the nation’s economists by surprise.

Analysis of the figures shows that household debt, as a share of disposable income, climbed above 190 % in March. This record high has been driven by consistently high annual mortgage growth above 6% – despite regulatory crackdowns on investor lending and higher borrowing rates.

“Overall housing credit growth had continued to outpace the relatively slow growth in household incomes,” the minutes said.

How the local real estate market will react to the news is yet to be determined but with interest rates looking sure to change, it does make an ideal time for a home loan health check to understand your situation – and how you can improve it for long-term financial growth.

If you need advice for a home loanbusiness or commercial loanself-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.

Type ‘self-employed home loans’ or ‘finance for self-employed business people’ into Google and you’ll probably end up thinking that your lending choices are very limited.

But before locking in your next loan, make sure you do your research thoroughly and understand all the options open to you to help find the finance that benefits you the most.

Running your own business can be challenging at times and being made to jump through hoops when you are applying for finance can add to the stress.

The positive news is that business owners can find lenders who are more open to dealing with them and, by discussing your situation with a professional finance broker who understands the unique issues that self-employed people face, you can find finance solutions to help you.

Whether it’s a home loan, car loan, or personal loan – or a business loan to help you finance new equipment for your business growth – dealing with an experienced loan broker can mean the difference between getting your loan application turned down and getting the good news that your finance application has been approved.

As someone used to making your own way in the business world, you’ll know that success in business comes from getting the little details right.

Approaching your finance applications should be no different.

 

Proof of Income Is Important

The main issue that self-employed borrowers face is that it can be more difficult for a potential lender to work out whether you can afford to meet your repayment obligations.

In many cases, a PAYE borrower simply provides one or two pay slips to prove their income, while a self-employed person has a much more complicated financial situation. For self-employed business people, income is not consistent or guaranteed and the lender will need to examine profit and loss statements, and understand that these statements are often two years old and may not properly reflect the current success of the business – and its potential future growth.

The process can seem frustrating for small business people hungry for finance, but it is important to realise that a lender making sure a borrower can actually afford future repayment obligations is a legal responsibility that a lender must adhere to – and it is not just a case of them trying to make your life difficult.

To help you find finance that suits you, try these 7 tips for self-employed borrowers:

1. Look for the best possible offer

Before committing to any finance application, don’t simply go to the bank where you have your existing accounts.

Banks rely on the convenience they offer and they know that they don’t have to work hard – or offer great deals – to win your business. You can usually find a better deal elsewhere if you look.

 

2. Is your financial information up-to-date?

Be prepared with up-to-date and accurate financial statements, income tax returns and notice of assessments. (Banks rarely will accept financial statements that have not been lodged with the Australian Taxation Office).

And, from July 1, with debt to the ATO now listed on your credit history, lodging your taxation-related paperwork can have an impact so it’s best to be prepared and plan your finance application properly, to ensure you tick all the right boxes for financing success.

 

3. Are you self-employed?

Before applying for any finance, it’s smart to check if you really are considered to be self-employed. If the more accurate description of your role is a contractor or sub-contractor, in some cases lenders may view you as an employee.

 

4. What are your claimable business expenses?

The most expenses you can claim, the more your income increases – and this can be the difference you need to help a lender determine if you can afford a loan.

Some claimable expenses include:

 

5. Quarantine your loan structure

If you’re self-employed, you are more likely to be able to claim some of your interest as a tax deduction, so to help you maximize that opportunity, it’s important to have the correct loan structure from the start.

The best person to talk to for this type of advice is your accountant.

 

6. Make your cash flow work

Making your cash flow work can save you interest. Try setting up a high-interest yielding account where you are rewarded for deposits and no withdrawals for specific periods. Use this to park your GST, for future payments to the ATO.

 

Remember:

By thinking about your future and assessing how your financial needs are likely to change, you can save yourself the worry of having to re-structure your loan in the near future. Getting the right advice from an experienced loan broker can set you on the right path. Always do your best to protect your credit history, because if this credit history is compromised with late bill payments, you can impact your ability to access a variety of loan options and it can be limiting.

Finance can be a great thing for small business people and by choosing the finance that suits you, you can help build your business and personal assets in a way that helps set you up for a healthy financial future.

 

If you need advice for a home loanbusiness or commercial loanself-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.

 

 

 

 

 

 

 

According to their local newspaper, residents in the relatively quiet streets of leafy Elsternwick reportedly are dealing with a few local traffic hiccups now that popular property renovation TV show, The Block, is filming its latest season in the family-friendly suburb.

Already, the word on the street is that the completed project is set to be the most expensive in the show’s history, with the educated guesses predicting that 5 period-style homes are the most likely end result for the 2989-square metre block at 46 Regent Street – one of the area’s central and sought-after locations. 

Faith in The Real Estate Market

The show’s producers put their trust in a vibrant real estate market on the line by paying around $4 million more than the previous most expensive site for the show, with land title documents revealing that $10.34 million was spent on the vacant block that settled back in January, 2017. Once the program’s production costs, and renovation costs, are met, it’s expected that the producers will be hoping for a $7million-plus profit – a figure that would match the profit The Block producers made when their purchase of an old soap factory in Port Melbourne for about $5 million saw the creation of five luxury apartments return about $12.05 million at auction.

Because Regent Street sits within Elsternwick’s Heritage overlay area, previous plans to develop the vacant land – including one plan to build a private boys’ school campus on the site – were abandoned after community complaints that the school would change the neighbourly atmosphere of the prized street. 

Property Investment is Serious Business

For keen property investors who love the idea of owning a part of television history, the sensible advice is to tuck your emotion out of your buying decision and do your proper research – just as you should with any major property purchase.

Before you decide if a property is worthy of your commitment to a mortgage – even when you can access a great interest rate – it’s important to research recent sales and the changing demographic of the suburb to ensure you make the right decision that suits your budget and your lifestyle.

Becoming the owner of a property fresh from a TV show renovation might seem like a lot of fun but if the media frenzy means you’ve paid more than it was really worth, it might be a property decision you’ll regret – long after the TV ratings wins have been forgotten.

Choosing the Property That’s Right For You

To select the best property to suit your needs, you first need to be realistic about what those needs actually are. If you’re a family person with children who need to access quality schools, you need to see what’s around the area you have your eye on, what zoning restrictions might be in place and what parks and recreational sporting places are handy for weekend and after-school fun.

Local shopping – preferably within walking distance – might also be important.

If that property you love ticks all the boxes that matter to you, your next step should be talking to a mortgage broker to secure the finance you need – and whether it’s been shown on television or not, remember that your best possible property will be the one that feels like home.

 

If you need advice for a home loanbusiness or commercial loanself-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.