Des Morgan

Mortgage Broker

Finance Achievers News

All the latest finance news

Retiring but dont want to downsize?

Retiring but dont want to downsize? Fund your golden years with a Reverse Mortgage

New research by Deloitte has demonstrated that reverse mortgages are back in vogue after the global financial crisis.

A significant 22% more Australians aged 63 and over have taken out reverse mortgages over the past two years, using the equity in their home to fund their retirement lifestyle.

It's proving an attractive option for retirees who are asset-rich but cash-poor, or who may be some time into their retirement and feel their accumulated savings are inadequate to see them comfortably through their remaining years.

Sydney-based finance broker and reverse mortgage consultant Bob Staley said more than 40,000 Australians currently hold reverse mortgages, which are also known as Seniors Finance Equity Release loans.

A reverse mortgage is a lifetime loan for between 11 to 45% of the value of the home, with full repayment of principal and accumulated interest required when the borrower/s, either permanently vacate the home, sell it or pass away. The title of the house remains unchanged and there are no monthly loan repayments to pay.

For home owners over age 60 there are few eligibility criteria to apply for the loan and you can use the cash equity for any purpose, including investments, holidays, to help you through a period of ill health or even to repay your current mortgage. While this may not be a need or issue for you at this stage, you may have elderly parents or relatives who own their home but have insufficient pension or savings income to enjoy a comfortable retirement. Cash released through a Reverse Mortgage does not effect pension entitlements and may greatly enhance retirement lifestyle options.

Reverse mortgages do attract a higher interest rate than traditional mortgages (on average about 2% more), so it’s important to get good advice if you’re considering this possibility for yourself or your loved one.

Start by taking a look at this site for more details on reverse mortgages and always feel free give me a call to discover the best options for you.

    

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Property investment advice from the ATO

Property investment advice from the ATO

If you’re a property investor, or about to invest in property, it’s often confusing what you can and can’t claim in deductions at tax time. To help the Australian Taxation Office (ATO) has offered some timely tips. Here are the basics:

What you can claim now:

• Interest on a loan to purchase a rental property or land to build a rental property. You can also claim loan interest from the purchase of a depreciating asset (e.g. an air conditioner) or the finance of renovations (e.g. a deck)

• Cost of repairs and maintenance

• Tenancy costs, including fees for preparing a lease agreement or the cost of evicting a tenant.

What you can claim over a number of years:

• The cost of depreciating assets such as stoves, kitchen cupboards, air conditioning and hot water systems

• The cost of building construction and structural improvements made by you or a previous owner

• Borrowing costs such as stamp duty charged on a mortgage, loan establishment fees and title search fees charged by your lender.

Things you can’t claim:

• Stamp duty charged by a state or territory government on the transfer of the property title

• Legal fees for the purchase of the property

• Deductions for rental properties that aren’t genuinely available for rent

• Borrowing expenses or interest on the portion of a loan you use for private purposes (e.g. buying a new car).

Visit www.ato.gov.au for more details.

Thinking about investing in property? Save time and money – Give me a call to talk you through all your options.

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What does Wayne Swans Budget Mean For You?

What does Wayne Swans Budget Mean For You?

Now that the dust has settled on Wayne Swan’s Budget, middle-income families are waiting to see how it will really affect them.

The bottom line.
There seems no doubt now that low- to middle-income families will receive a welcome boost to family tax benefits for July 1. This means you may be eligible to receive:

• $820 cash payment for each child in high school

• $410 cash payment for each child in primary school

• $600 per year extra for families with 2+ children with a combined income less than $78K

• $200 per year extra for 2+ children if your combined income is between $78K and $112K


Designed to address fears of rising living costs, this measure was aimed at Aussie battlers not enjoying “the benefits of the [mining] boom,” according to Families and Community Services Minister, Jenny Macklin.

But it’s not all beer and skittles.
From July 1, if your income is between $37,000 and $80,000 your tax rate will rise from 30% to 32.5%. And single income earners with no kids earning $80k a year will only be 6c better off under this year’s Budget.

Sadly the government didn’t remove stamp duty on property transactions, increase the First Home Owners Grant, or allow first homebuyers to access the superannuation to purchase property – initiatives the Real Estate Institute of Victoria had lobbied for in the lead up to the Budget.

There’s some good news for investment properties, however.
For investors, the Budget won’t impact your investment property. At this stage, for Australian tax residents with investment properties it’s business as usual.

The key concern that negative gearing benefits for property investors would be scrapped failed to eventuate, thankfully. And there was no increase in capital gains tax (CGT) on property investments or family homes.

Want to make the most of your property investment or arrange for a mortgage health check in light of the new Budget? Simply give me a call to discover how you can save.

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Negative gearing to be reviewed?

Negative gearing to be reviewed?

Details released by Australian Property Monitors (APM) have indicated that rents for properties dropped 1.1 per cent during the first three months of 2012 but reduction isn’t expected to last.

APM’s research suggests that ongoing shortages of accommodation, low levels of new supply and continued inactivity by investors will lead to upward pressure on rentals this year.

The ongoing tight rental situation has led to renewed calls from two observers for the Federal Government to take a fresh look at negative gearing.

Dr Chris Martin, a senior policy officer at the Tenants’ Union of NSW, suggests that negative gearing has an adverse effect on the market in that it distorts the rental market to the disadvantage of low-income renters.

He also believes many investors are more interested in selling the rental property to realise a capital gain or leverage up into properties of higher value.

The union has found backing in Saul Eslake, chief economist of Bank of America-Merrill Lynch Australia.

A follower of Australian real estate for 30 years, Mr Eslake said the fear is that if negative gearing were removed it would lead to a landlord strike and huge increases in rents.

However, Eslake isn’t just advocating the abolition of negative gearing on investment properties. As he rightly points out, that would be unfair when investors in shares or bonds or artworks or gold would still have the deductions available. His solution is that negative gearing should be abolished for everyone!

The most likely answer, if anything is done at all, is somewhere in the middle. A compromise solution that wouldn’t tear the heart out of the viability of small investors’ holding, yet still satisfy all sides of the argument.

This is and has always been a contentious debate. Maybe the upcoming Federal Budget on the 8th of May will shine some new light on the topic.

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Thinking about locking in your home interest rate?

 

The Reserve Bank of Australia left the Cash Rate steady again at 4.25% following their April meeting. In March we saw many lenders lift rates slightly, moving out of step with RBA, arguing that their “cost of funds” had and will continue to increase due to international factors.

In most cases it was a modest increase, but the question being asked by many is: “Should you consider a fixed interest rate?”

That question was posed in an online poll by one of Australia’s larger home loan brokers. The response was typical of the uncertainty and confusion about the direction of home loan interest rates, with 46 per cent saying they were definitely considering a fixed rate; 14 per cent said they might fix part of their home loan; 36 per cent said they would not fix’ and four per cent said they were unsure.

With the Euro debt crisis still unresolved and attractive fixed home loans still available, it might be tempting to seek the comfort of locking in a mortgage rate for a few years.

However, you need to ensure that you’re locking in for the right reasons. Many had locked in rates before the global financial crisis of 2008 only to watch the RBA cut the cash rate to three per cent.

What to do?

Give me a call and I’ll be happy to assist you fully consider the risks and benefits of Fixed versus Variable Rate mortgage loans. Don’t forget that as your broker, I’m just a phone call away.


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