Coronavirus SME Guarantee Scheme is being expanded

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If you’re a small or medium-sized business owner in need of an affordable loan then we’ve got good news: the federal government is expanding the Coronavirus SME Guarantee Scheme to allow businesses to borrow more and for a wider range of purposes.

The scheme, which is in phase one until September 30, allows lenders to provide eligible SMEs unsecured loans of up to $250,000 for up to three-year terms.

It’s got pretty good traction too, with more than 15,600 businesses accepting loans worth $1.5 billion to date.

As such, phase two has just been announced to further assist Australia’s economic recovery from coronavirus.

Hold up. What’s this scheme all about?

The Coronavirus SME Guarantee Scheme basically involves the government guaranteeing 50% of each new loan issued to SMEs by eligible lenders.

This allows lenders to offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association (ABA).

What’s changing?

In a nutshell: SME Guarantee loans will soon be larger, longer-term and for a wider range of purposes.

The second phase of the scheme will kick off on 1 October 2020 and will be available until 30 June 2021. Here are the key changes taking place:

– Loans can be for a wider range of investment, beyond working capital
– Secured lending now permitted (excludes commercial or residential property)
– Maximum loan size increased to $1 million (up from $250,000 per borrower)
– Maximum loan term now five years (up from three years)
– Lenders can now offer a repayment deferral period.

How do I apply?

This is where it can get a little confusing: the federal government has approved 44 lenders to participate in the scheme, which is a lot to choose from.

Fortunately, we can sit down with you and look at your business’s financing needs to help make your decision easier.

So if you’d like to discuss your eligibility and any other details of the scheme, get in touch today – we’re here to help you work through it.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Homeowners refinancing in record-high numbers: explore your options

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Homeowners in record-high numbers are taking advantage of reduced interest rates and competitive refinancing offers. Are you ready to take the leap? 

When times are tough, the belt gets tightened.

And we’ve seen that play out across the country in a big way recently, with the number of Australian families who refinanced their mortgage in May the highest on record, according to the latest figures from the Australian Bureau of Statistics (ABS).

In fact, 33,712 Australians refinanced a whopping $15 billion worth of mortgages in May.

To put that into context, before COVID-19 struck, that monthly figure floated around the $10 billion to $11 billion mark.

Anecdotally speaking, the recent 50% increase in refinancing sounds about right to us.

We’ve been flat chat over the past few months helping families refinance their home loans and save thousands of dollars in annual interest repayments.

Why are so many people refinancing?

First and foremost, the economic squeeze brought on by COVID-19 has made people stop and take stock of where they can make savings in their family budget.

And one possible way to do that is by refinancing, as Australian home loan rates have never been lower.

That’s because, on top of the Reserve Bank of Australia (RBA) dropping the cash rate to a record low, lenders are currently competing hard for your business by offering never seen before interest rates.

ABS Chief Economist Bruce Hockman further explains: “The value of existing owner-occupier loans refinanced with a different bank [in May] was by far the highest on record as borrowers responded to reduced interest rates and refinancing offers.”

So how much can you save by refinancing?

Well, that’ll depend on your individual circumstances and a number of other factors, including how big and old your loan is.

But to give you a lower-end-of-the-scale example, a recent RBA study found that for loans written four years ago, borrowers are charged an average of 40 basis points higher interest than new loans.

“For a loan balance of $250,000, this difference implies an extra $1,000 of interest payments per year,” explains the RBA.

And if your loan amount is higher than the above example – or if your loan is older – then there’s a decent chance that refinancing could save you even more than $1000 in interest payments each year.

What’s your next step?

That’s the easy part – get in touch today.

There’s a reason tens of thousands of families are currently refinancing their home loans: now’s a good time to do so as competition among lenders is running hot. And the longer you put it off, the longer you’ll keep paying your current rate.

So if you’d like to refinance your home loan, give us a call and we can run you through your options and get the ball rolling.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Bank loyalty can cost existing borrowers: ACCC report

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Loyalty is an admiral trait when it comes to our friends, family and loved ones. But if you’re extending that virtue to the banks, then there’s a good chance it’s costing you thousands of dollars.

That’s the takeout from the ACCC’s latest Home Loan Price Inquiry interim report.

It shows that although interest rates charged by the big four banks on home loans fell during 2019, existing customers were stung by higher interest rates compared to newer customers, in no small part due to a lack of price transparency.

Price comparison confusion

The report found that the big banks’ home loan pricing practices make it pretty darn difficult for borrowers to compare different mortgage products.

That’s because the headline rates you see when you do your initial research don’t accurately reflect the price most big four bank customers actually pay for their home loans.

Indeed, the ACCC found there’s little difference in the headline variable rates of the big four banks, which on face value quickly deters borrowers from switching it up and refinancing to a lower rate.

But in reality, close to 90% of big four banks home loan customers receive discounts off the headline variable rate. And many of those receive non-transparent discretionary discounts.

So how big are the discounts?

We’re talking pretty big differences here, especially compared to advertised rates.

For example, a borrower with an average-sized principal and interest mortgage of $386,000 could save about $5000 on interest payments in the first year if they went from having no discount to receiving the big four banks’ average discount of 128 basis points.

The report also found the big four bank customers whose principal and interest loans were greater than five years old were paying an average 40 basis points more than those with similar new loans.

That means for a loan of around $200,000 (the average size of a loan more than five years old), a borrower who refinances could save around $850 in interest in the first year.

So what’s the next step?

That’s easy: you owe the bank nothing – in terms of loyalty – so it’s time to see what your options are.

And we can help because we know what rates lenders are really offering – despite what their “headline” rates say.

So if you’re keen to find ways to save interest on your home loan, please get in touch. We’re happy to walk you through your refinancing options any time.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

4 ways we can make your life easier right now

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You don’t need us to tell you how much the world has changed – there’s been no shortage of news bulletins updating you on that. So rather than telling you about more changes, today we’re going to explain how we can help.

While we can’t babysit your child so they stop shouting out and interrupting that important call you’re trying to make in your new home office, we might be able to reduce the number of important calls you need to make instead.

Here are four ways we can take a load off your shoulders right now.

1. We can help you stay inside (and sane)

As you’re probably aware, many bank branches around the country have recently closed temporarily.

And the ones that are open? Well, it’s not really a great time to visit them in-person about your mortgage or business loan.

Bank call centres aren’t much help either – they’re inundated. A whopping three-hours on hold is pretty much the standard wait time at the moment (that’s enough elevator music to drive anyone crazy!).

Now – we’re not huge fans of on-hold music either – but we’re more than happy to jump on the phone to your lender to help sort out any matters relating to your loan at this time.

2. Need to refinance or consolidate your loans?

When was the last time you did a home loan review?

If it was more than a year ago, now’s a good time because the finance and lending landscape has undergone several big changes over the past 12 months – including five RBA cash rate cuts.

So if you’re having trouble meeting your monthly repayments reach out to us and we can discuss some of your refinancing options.

And don’t forget to consider consolidating your debts – including your credit card, car loans or personal loans – so you have fewer debts to keep track of each month.

3. Need to pause your loan repayments due to hardship?

If COVID-19 has impacted your income to the point where you may need to pause your loan repayments, then we can help break down your lender’s deferral policy and support package policy for you.

Six-month loan repayment deferrals are available for both business loans and mortgages (but it may depend on your lender’s hardship policy for the latter).

We can also talk you through some of the other options that might be available to you to reduce your home loan repayments each month.

4. Want a pretend work colleague for a few minutes?

This one is a little left-of-field, but no less important in the current climate.

For many people, this is their first time working from home and we brokers know better than most that making that transition can be a tough gig.

So, if isolation is getting you down and you just want to chat to someone friendly for a few minutes, feel free to pick up the phone and give us a call.

Not only can we share some tips with you when it comes to nailing work/life balance in a home setting, we promise not to put you on hold for three hours beforehand.

And hey, it’s all good with us if the kids are running amuck in the background!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

5 reasons it’s a good time to refinance

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Found yourself with extra time on your hands? Slightly worried about meeting your home loan repayments? Want to make use of those back-to-back rate cuts? While the world has changed significantly over the past month, it’s possible to use some changes to your advantage. 

Before we go any further though, we want to say we understand there’s no shortage of Aussie families doing it tough right now. And we want to reassure you that we’re here to help you any way we possibly can – including helping you apply for support packages with your lender.

So where does refinancing fit in?

Well, the many social and financial changes that have been thrust upon us recently have combined to make it a good time to consider refinancing your home loan.

Here are five reasons why you may want to consider doing so.

1. Payment relief

When was the last time you refinanced your home loan?

If your answer was ‘one year ago’ (or longer), the finance and lending landscape has changed dramatically since then and it might be time to catch up.

There have been five RBA cash rate cuts since then since June 2019 – including two last month.

And while we’re on the RBA, a recent study of theirs found that borrowers who refinance with another lender, or negotiate a better deal with their existing lender, do in fact achieve interest savings.

So if you or your partner have recently had your work hours cut back and you’re starting to worry about how you’ll meet your monthly mortgage repayments, refinancing could be a more suitable option than applying for a hardship variation on your loan.

2. Consolidate your debts

Refinancing can also help you consolidate your other debts – including your credit card, car loans or personal loans – by combining them into a refinanced mortgage.

Not only will this give you one simple repayment to make each month (reducing the risk of forgetting payments and being slugged with a late fee), but all your debts will be charged at your home loan interest rate – which is usually much lower than credit card rates, for example.

3. Low interest rates: time to lock one in?

Fixed rates have recently experienced a big drop.

In fact, Domain’s David Hyman has described the current batch of fixed interest rate loans as “staggeringly cheap”.

“Only a couple of months ago the cheapest headline rate started with a three. If you look back to this time last year rates were in the high threes,” Hyman explains.

“For someone with a half a million dollar mortgage, that is well in excess of $10,000 a year in savings. It’s never been a better time to refinance quite frankly.”

And with the official RBA cash rate now at a record low 0.25%, there isn’t a great deal of room for it to go much lower.

4. Time on your hands

One of the more common reasons home owners give for not refinancing is that they simply don’t have the time do so.

But, without pointing out the obvious, I think it’s fair to say that we have far fewer social commitments taking up our time at present.

So, if you’ve compiled a list of things to do to keep busy at home, consider adding refinancing to the list.

Once you get the ball rolling on it and get in touch with us you’ll be surprised how little you actually have to do – after all, that’s our job, right?

5. We’re available to help you, whenever you need us

Finally, rest assured that we’re available and here to help you any way we can.

During trying times like these we know that we need to support each other now, more than ever.

So if you’d like us to help you explore your refinancing, hardship variation, or support package options then please get in touch – we’re ready to jump into action and make it happen for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.