What the cash rate cuts mean for other areas of your finance

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Whenever the Reserve Bank of Australia (RBA) changes the official cash rate we all hear about how it will impact home loans. But it affects many other areas of finance and the economy, which we’ll look into today.

The RBA has cut the official cash rate to a new record low of 1%, just one month after lowering it to 1.25% – which was the first rate cut in almost three years (since August 2016).

Now, whenever this happens we all hear about what it will mean for mortgage-holders.

But it also has a flow-on effect for many other areas of finance, which we’ll look into below.

If you’re saving for a first home deposit

If you’ve got a large chunk of your money in a savings account and you’re trying to save for a first home deposit, the latest two RBA rate cuts probably aren’t the best news for you.

That’s because you want your savings account to have the highest interest rate possible and a cut in the official cash rate will likely mean a reduction in interest you earn on your savings.

If you are worried interest rates are going to be cut further, and you want to lock in a rate for a particular length in time, you can look into a term deposit account.

Alternatively, if you think now is a good time to jump into the property market, feel free to give us a call and we can run you through your financing options.

Car finance

If the RBA cuts the official cash rate, the interest rates on car loans generally go down too.

The bad news is that if you have already taken out a car loan it usually has a fixed interest rate for the period of your loan term.

The good news is with interest rates at an all-time low, if you’re thinking about buying a new car or refinancing an existing car loan, now might be the time to lock a rate in.

The many other types of loans

Changes to the cash rate affect interest rates on all kinds of loans, including commercial and business loans, asset and equipment finance, investment loans.

If you’re thinking about taking out any type of loan, or weighing up the pros and cons of refinancing, give us a call and we can give you the lowdown on the new landscape.

Credit cards

Yep, the official cash rate generally has an effect on the interest rate on credit cards too.

That’s because lowering the interest rate is meant to encourage people to spend more – including on plastic – which in turn can give the economy a boost.

If you’re someone who has been guilty of spending a little too much on your credit card, however, get in touch – we can help you look into consolidating it with other debts that are ripe for refinancing now.

Get in touch

Basically, it comes down to this: if you have an existing or prospective debt and you want to see how it all stacks up on the back of the two consecutive RBA rate cuts, then get in touch.

We’re following the market closely and can tell which lenders are passing on the rate cuts to their customers, which lenders aren’t, and present you with refinancing options.

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.

Granny flat could boost your property value by 30%

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Backyard cricket pitch not getting much of a workout these days? Sick of your weekends being taken up with mowing and gardening? Installing a granny flat could be a lucrative solution – boosting the value of your home by 30% and adding around 27% to rental income.

That’s according to a combined analysis by CoreLogic and Archistar, which shows more than half a million east coast homeowners have enough free yard space to build a granny flat at least 60sqm in size.

Constructing a two bedroom granny flat would require an initial investment of up to $200,000, while the outlay for a one bedroom dwelling would be approximately $120,000. The full report is here.

The benefits of a granny flat

The report found that for a house worth $500,000, building a granny flat could add around $150,000 to the value of the property.

It also found that building a two bedroom self-contained granny flat apartment could add an additional 27% in rent each week.

CoreLogic head of research Tim Lawless says building a granny flat is becoming an increasingly compelling proposition for homeowners in a relatively lacklustre market.

“Many properties identified as suitable for a granny flat are in densely populated and traditionally expensive areas,” says Lawless.

Archistar co-founder Robert Coorey says many home-owners “are sitting on a pot of gold” in the form of excess land.

“The family benefits of a secondary residency can’t be overlooked, whether that’s giving adult children more privacy while they save for a mortgage, keeping loved ones close as they become more reliant on care or having additional accommodation for overseas visitors,” Coorey says.

How to assess your property’s granny flat potential

Got a big backyard and want to see what you can do with it?

Granny flats can’t be built just anywhere. The property must have appropriate town planning rules, the land area needs to be large enough, and the existing property must be located in a position that allows for the development.

As it happens, Archistar has developed a platform that can help you view in 3D the potential to add a granny flat on your property.

“Archistar’s platform helps home-owners by instantly assessing thousands of zoning and planning laws and producing a report, so it’s worth taking this step and consulting a local planning expert before you proceed,” says Coorey.

Last but not least – finance!

If you’re interested in ripping up the backyard cricket pitch and adding a granny flat to your property, feel free to get in touch.

As discussed, granny flats require an initial investment of $120,000 to $200,000. So if you’d like to run through your financing options, you know where to find us!

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.

Getting hounded by ATO impersonators? Don’t get scammed this tax season

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Tax time is just around the corner, which means ATO impersonators are pulling out their bag of tricks to try and scam you. Here are the main scams currently doing the rounds.

It’s fair to say that no one likes getting on the wrong side of the ATO. And this is one of the main reasons why ATO tax scams are so effective.

The other main reason is that these scams are becoming increasingly sophisticated and tech-savvy.

Not only do they look more convincing, but they’re also reaching more people through a wider number of distribution channels, such as SMS, robo-calls, and emails.

Below we’ve outlined some of the latest scams to ensure your monthly budget, mortgage repayments or savings account doesn’t get thrown into disarray.

Fake tax agent (phone scam)

The scam: a scammer pretending to be from the ATO sets up a three-way phone call between themselves, the victim and another scammer, who pretends to be an accountant who works at the same practice as the victim’s tax agent (the fake tax agent advises that the victim’s actual tax agent is currently unavailable).

The two scammers then work together to convince the victim that they owe thousands of dollars to the ATO, and that they need to immediately pay off the debt to avoid going to jail.

They’ll then ask the victim to pay using unusual methods of payment such as iTunes, Bitcoin cryptocurrency, store gift cards or pre-paid visa cards.

Avoid being scammed: know the status of your tax affairs by checking your details via myGov. Or hang up and independently call your tax agent or the ATO on 1800 008 540.

Extra tip: a variation of this scam is when the scammer offers a tax refund but advises that you have to provide a personal credit card number for the funds to be deposited into. Instead of the scammer depositing money they’ll instead steal funds from these cards.

Tax refund notification (SMS scam)

The scam: scammers are texting people informing them that they are due to receive a tax refund.

However, if you click on the link it will take you to a fake ‘Tax Refund’ form, where it will ask you to fill out your personal information (which the scammers will then steal!).

Avoid being scammed: the ATO doesn’t have an online ‘Tax Refund’ form and will never send you an email or SMS that asks you to access online services via a hyperlink.

Extra tip: all online management of your tax affairs should be carried out via your genuine myGov account, which you should only ever access by typing out my.gov.au into your URL address bar.

Imitating ATO phone numbers (phone scam)

The scam: the ATO is reporting an increased number of scammers contacting people using phone numbers that make it look like they’re genuinely from the ATO.

The numbers that have been appearing most frequently are 6216 1111 and 1800 467 033, but numbers for individual ATO staff members have been used as well.

The scammer will usually claim the potential victim has an outstanding tax debt and threaten them with arrest if it’s not paid immediately. Sometimes voicemail messages are left.

Avoid being scammed: remember that the ATO will never threaten you with arrest, demand immediate payment, refuse to allow you to speak with a trusted advisor or tax agent, or present a phone number on caller ID.

Extra tip: never call a scammer back on the number they provide. If you are in any doubt about an ATO call, hang up and phone the ATO directly (on 1800 008 540) to check if the call was legitimate.

myGov tax refund notification (email scam)

The scam: scammers are emailing people from a fake myGov email address, asking them to fill out an application to receive a tax refund – similar to the SMS scam above.

This scam is currently tricking victims because it displays the ATO’s myGov logo and the links look as though they’ll send you to the myGov website (spoiler: they don’t).

Avoid being scammed: do not click anywhere in these emails as they contain malicious links. As mentioned in the SMS scam, the ATO doesn’t have an online ‘Tax Refund’ form.

Extra tip: if the bottom of the suspected scammer’s email contains a line that says ‘If you feel you received this email by mistake or wish to unsubscribe, click here’, don’t click. It’s most likely another nefarious link.

Final word

If you ever suspect that you’re being scammed, don’t feel obliged to stay on the phone to be polite.

Simply hang up the phone straight away (or close the email) and either check your myGov account or directly contact your accountant or financial adviser.

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.

Your home is not perfect: the value of pest and building inspections

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They say that home is where the heart is. And it’s true that we spend so much of our time, money and emotions in our homes. So it can be hard to truly look at them and think that something could be wrong.

But when you’re selling your home, or looking to rent it out as an investment, any faults or flaws can cost you money.

That’s why it’s a good idea to have a building and pest inspection done before you list your home.

If any problems are uncovered, they can be dealt with there and then; if there aren’t any problems, you’ll be able to show potential buyers or renters the inspection results.

This will potentially help you get more value from your property.

Pesky pests

There are a number of common pests in Australia that can affect homes and cause problems for homeowners.

The ones most likely to cause trouble are cockroaches, rodents, and bedbugs. Destructive termites are also a serious issue in some areas of Australia, mainly in coastal areas and especially up north.

Cockroaches and rodents carry disease, get into and ruin food supplies, and leave droppings behind, making homes unsanitary. They are particularly dangerous to children and pets, though adults can also become sick from contact with these animals or their faeces.

Bedbugs aren’t likely to carry disease, but their bites are painful and itchy, and their life cycle makes it extremely difficult to remove them from a home. Like fleas or lice, their eggs are basically impervious to chemicals.

This means that a home must be treated multiple times; the first treatment will kill any adults and nymphs that are currently present; the second treatment is designed to kill any eggs that have hatched into nymphs before they can become breeding adults.

Each of these pests can be difficult to manage on your own, and often require professional treatment to eliminate the problem.

Demonstrating that your home is clear of them can make it possible to sell your home for a higher price.

If you’re renting your place out, on the other hand, you’ll know if the pests entered the property before or after your new tenants.

Building inspections

Many buyers will want their own inspector to survey the building before they place a bid, but you can sometimes skip that process by having your own inspection completed.

You can also have a building inspection completed before you even consider listing your home for sale.

Building inspectors look for all sorts of faults in a home, from major structural damage to leaking pipes.

Once any problems are identified, you can make a decision about whether it’s better to disclose the issue and lower the selling price on your home, or fix the problem before you sell the house.

Which solution is right for you depends on the specific damage and the cost of repair.

The one thing you should absolutely not do, as you prepare your home for sale, is to take the ‘she’ll be right’ approach.

There’s nothing worse than having a potential buyer uncover something you should have known about. This immediately makes the buyer wonder what else you don’t know about – or worse, aren’t telling them about.

Final word

Whether you’re looking to sell, or simply looking to get in new tenants, knowing that your property is in tip-top shape can help you maximise the return on your investment, and make smart decisions about repairs and pricing.

If you’d like to find out more about this topic, or others that may help increase the value of your property, then get in touch – we’d love to help out.

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.

Interested in increasing your rental returns by up to 30%?

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What would you say if we told you that you could potentially increase your rental returns by up to 30% simply by ticking a box? You’d probably call us ‘barking mad’.

But according to new research by Domain Group data, median asking rents for pet-friendly properties are higher than for homes that don’t allow pets in almost every capital city.

Take Melbourne’s inner city, for example, where just 1% of apartments allow pets.

The median rent for pet-friendly apartments is $550, whereas the median rent for apartments that don’t allow pets is $422.50. That’s a $127.5 difference, or 30%. Think about how much quicker that could help you pay off your home loan.

It’s a similar trend around the nation, too.

In many Sydney suburbs the median rent difference ranges from 12-26%, Brisbane’s southern suburbs have a difference of 13%, and so too do Perth’s western suburbs.

Houses are no different

When it comes to the difference in house rental prices, Brisbane’s inner city leads the nation where houses allowing pets fetch 21% higher rent. Meanwhile, the Canberra suburb of Gungahlin (13%) slips into the nation’s top five among a number of Sydney suburbs.

The recurring theme seems to be that the lower the proportion of properties advertised as pet-friendly, the higher the difference in median rental prices.

“We definitely see an increase in rents when properties are pet-friendly,” one Sydney real estate agent told Domain. “Hands down it’s the biggest inquiry we get for any property.”

Here’s what a Brisbane real estate agent added: “I love to give out a property which is pet-friendly because I know I’ll have a bigger pool of people coming through and the take-up is much faster.”

Factors to consider

Ok, so not every property is suitable for a pet. Not to mention that some strata bylaws don’t allow pets.

But if it’s something you’re interested in looking into, here are some important factors to keep in mind.

– Put in place a pet agreement: Have your tenant sign an agreement that outlines how many pets are allowed, what breeds, and what rooms they cannot enter (ie carpeted rooms). It can also stipulate that the pet should not annoy neighbours, not damage the property and that the tenant should take pest control precautions to keep the property free of fleas.

– Ask for a pet reference: There’s a good chance that the people moving into the apartment have rented another property before. Therefore be sure to ask their previous property manager how the pet behaved at that premises.

– Insurance and tax implications: While the tenant will be liable for most property damage (except general wear and tear), it’s worth double checking your landlord insurance policy to see what you’ll be covered for. And when it comes to footing the bill for general wear and tear, the good news is that it can be deducted from your rental income come tax time.

Final word

As you can see, there are some pros and cons to weigh up.

Sure, advertising your property as pet-friendly when seeking a new tenant can increase your rental return, but you’ll want to ensure you’re welcoming a pet into your investment that won’t be destructive or keep the neighbours up at night.

If you’d like to find out any other tips about potentially increasing rental returns on your property, then don’t paws for thought – give us a call right meow!

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.