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The benefits of consolidating your super

All / 19.09.2019

The benefits of consolidating your super

What makes us change? Why do we resist making improvements in our lives? Often you know you should take some action but … but … there is always a reason not to.


Let’s take an example

You’ve had a few jobs over the years and been paid superannuation during each one. You have a number of super funds and you forget all about them until the annual statements arrive by mail or pop up in your inbox. Now you feel worried and confused. What does it all mean? Have I got them all? Is my money still safe? Am I paying for multiple insurance policies? What should I do with all this paperwork? And the worst one – am I paying too much in fees?

The usual option is to simply put them into your “too hard folder” and forget about it until next year… and then you go through all that confusion again!

But there is a better way and if you act now you can sort it all out and potentially save a lot of money!

Here is a five-step process to help you on your way:

Step 1 – collect all the superannuation statements you can find from your “bottom drawer” or print the latest from each of your online accounts.

Step 2 – make a time to meet with your financial adviser to go through the paperwork.

Step 3 – seek advice and select one superannuation fund that suits your needs.

Step 4 – sign transfer forms so your adviser can get the accounts rolled over to your chosen fund.

Step 5 – relax knowing that your super is all in one place.

Seriously, superannuation is too important to ignore. Getting your super under control can save you money in fees, cut down on paperwork, allow you to get an investment strategy in place, and help you keep track of your money.

The Australian Securities and Investment Commission reports that there are billions of dollars sitting in unclaimed or “lost” superannuation accounts with thousands more accounts added to the list each month. Inactive accounts with balances of less than $6,000 are transferred into the federal government’s consolidated revenue fund, so if you think you might have some old superannuation accounts that you haven’t touched in three years, don’t hand it over to the government, claim it!

Visit the ATO website at www.gov.au for more information or check your MyGov account at www.my.gov.au.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Traps to avoid in retirement – Leaving it too late to achieve your goals

All / 12.09.2019

Traps to avoid in retirement – Leaving it too late to achieve your goals

Most of us had retirement dreams, and couldn’t wait to finish work. So once retired, why haven’t we started ticking items off the bucket list? There’s no time like now for living your dreams.


When Tony and Chris retired they had grand plans involving a campervan, Kakadu and a rescue-dog. Their great Australian road-trip was happening the very next year, after they, “just got few things out of the way”.

Things like their daughter’s November wedding, then the kitchen reno in January. Kakadu wasn’t going anywhere; it would wait until July – after Chris’s knee reconstruction.

Eventually, they stopped putting a date on their road-trip. They were going to Kakadu – Someday.

But in this fast-paced world, someday can be elusive.

Nine years later Tony and Chris finally resumed preparations – they even visited a Campervan Show. But then Tony fell and needed hip surgery and reality hit hard: the road-trip was impossible.

Why do we so often put our dreams on hold?

While it’s unwise to spend retirement savings too quickly, delaying our goals may mean never achieving them – after all none of us is getting any younger. It’s important to enjoy life while still fit and healthy enough. If you’re not sure of your finances, speak to your adviser or tax accountant.

The key is to make firm decisions, budget carefully, and stick to your plans.

A wise man once said, “Don’t save a good wine for a special occasion. Open it now and make today the special occasion.”

In other words, live the best life you can – now.

Sound advice.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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The link between financial stress and mental health

All / 05.09.2019

The link between financial stress and mental health

If you’ve ever laid awake at night thinking about your finances you’ll know: financial stress can be debilitating. What you may not be aware of is the strong link between financial stress and mental health.

According to the Australian Institute of Health and Welfare, 4.2 million Australians received mental health related prescriptions from their doctors over the 2017-2018 period.

Though governments annually spend over $9 billion on mental health, there’s a continuous need for more resources, funding, and understanding around mental health issues.

What is mental health?

The term, mental health, refers to a wide range of health and behavioural issues that vary in severity and duration. Among the most common mental health issues in Australia are depression and anxiety.

While the causes of depression and anxiety are varied, financial stress is a common theme.

What is financial stress?

Financial stress is the all-consuming worry about money. Mortgage stress, in particular, is defined as needing to use more than 30% of the household income to cover mortgage payments.

A report by ratings agency Moody’s, stated that the number of Australian mortgages more than 30 days overdue was at its highest level for five years, (1.58%).

According to Relationships Australia, financial pressures are the number one contributor to relationship breakdown.

Signs of financial stress

Recognising financial stress before it gets out of hand is a step towards taking back control of your life. Some signs are:

  • arguing with loved ones about money,
  • difficulty sleeping,
  • feelings of anger, withdrawal or fear,
  • mood swings,
  • loss of /increased appetite,
  • increased use of alcohol or other substances,
  • thoughts of self-harm.

Reducing financial stress

Financial problems can happen to anyone. A sudden illness, retrenchment, or an unexpected expense may throw your budget out of kilter. However, there are steps you can take to get your finances back under control.

  • Seek independent financial counselling.
  • Speak to your lender about restructuring your mortgage or consolidating credit cards, etc.
  • Speak to your creditors about setting up a payment plan.
  • Work with your financial adviser to develop a realistic budget.
  • Contact the National Debt Helpline on 1800 007 007.

How can you manage stress?

Emotional stress can find you obsessing over ways to solve problems, ultimately affecting your behaviour and interaction with others.

Take care of your health by:

  • talking with a trusted friend or professional counsellor.
  • keeping a journal.
  • distracting yourself by going for a walk, seeing a movie or playing sport.
  • practicing meditation to take your mind to a ‘quiet place’.
  • taking back control, as discussed above.

Where to find help for mental health issues

If mental health issues affect you, or someone you know, consider:

  • speaking to your doctor,
  • calling Beyond Blue on 1300 224 636 or chat online,
  • calling Lifeline on 13 11 14 or chat online,
  • visiting Black Dog Institute at www.blackdoginstitute.org.au.

Thursday October 10 is World Mental Health Day, which aims to remove the stigma attached to mental health through awareness and information.

By removing some of the misconceptions around mental illness, we build a caring community in which those that are affected are more likely to seek the help they need.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Traps to avoid in retirement – Going too hard too fast

All / 29.08.2019

Traps to avoid in retirement – Going too hard too fast

Retirement: you’ve made it! And one of the rewards for all your hard work is that you can now access your superannuation. Suddenly a world of opportunities opens up – a Caribbean cruise, major home renovations or maybe helping your kids reduce some of their debt.

Of course you deserve to celebrate your retirement, but bear in mind that your super might need to support you for the next 30 years or more. Eat too far into your nest egg in the early days and you significantly reduce the time that your super will last. This is particularly the case in a low interest rate environment.

Take Ron and Val. They retire with a combined super balance of $800,000. At an interest rate of 4% pa this nest egg will fund annual living expenses of $60,000 for 19.4 years . If they spend $100,000 on travel and home renovations and give a further $100,000 to their children, the reduced nest egg will now only last 13 years.

Planning for big expenses in retirement is just as important as it is pre-retirement. The longer that an expense can be deferred, the longer the money will last, and the greater the total income received.

In Ron and Val’s case, this might mean scaling back the travel plans a bit, putting off the renovations for a couple of years, and helping their kids by making regular, small gifts rather than a large lump sum.

Your super is there to help you enjoy life in retirement, but it’s a balancing act. A little restraint now may allow for more fun later, so talk to your financial adviser about how you can make the most of your super in retirement.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.

 

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Health Insurance…yes or no?

All / 22.08.2019

Health Insurance…yes or no?

The argument has been waged for many years – do I take out health insurance or do I invest the same amount each year and if I get sick, the money will be available (and it’s earning me interest!)?

As with any type of insurance the decision is a personal one. Many people go without car, home or life insurance, thinking that the money is better spent or invested elsewhere… they are willing to take that risk. But how many of us have actually sat down and weighed up the differences between taking out health insurance or not, particularly with the government penalties on those not covered by a private health fund?

Could this be you?

Paul is a 30-year-old family man who pays $2,000 per year for basic health cover. By age 70 he would have contributed around $200,000 (adjusted for inflation). For this amount, he and his family are covered for hospital (with elective surgery) and ancillary medical costs, although still subject to his insurer’s hospital excess.

If Paul and his wife decided to cancel their health fund insurance and invest the $2,000 per year, assuming the $2,000 is indexed at 4% pa and the investment returns 7% pa, by age 70 their investment would be worth around $786,000! They would have to pay all of the costs of having a doctor of their own choice, in a hospital of their choice plus any other associated specialist costs. Paul will also pay the Medicare Levy Surcharge on his taxable income, which can be thousands of dollars (see below).

$786,000 sounds much better in your pocket than giving away $200,000 for something that will never usually cost that much… but how many of us are prepared to put away that amount of money and never touch it? That’s the tough question.

The Medicare Levy Surcharge

If you earn over $90,000pa as an individual or $180,000pa as a family and don’t have private health insurance, you will be charged the Medicare Levy Surcharge as outlined in the following table:

 No change Tier 1Tier 2Tier 3
Single threshold$90,000 or less $90,001 - $105,000$105,001 - $140,000$140,001 or more
Family threshold$180,000 or less$180,001 - $210,000$210,001 - $280,000$280,001 or more
All ages0.0%1.0%1.25%1.5%

If you’re a high-income earner this could amount to a hefty sum and wipe out any potential tax refund at the end of each year (or you may even have to pay extra tax).

But it still might be worth sitting down and doing your sums. Another option is to take out the most basic hospital cover and invest the difference you would be paying for full private health cover in your “own health fund”. Then when you get your tax refund, add that to your growing kitty. You might not end up with as much as the above case study, but if you’re willing to work out the difference, you might still be well ahead.

Insurance should be seen as just that – Insurance. We always hope we won’t need it but it’s there in case we experience unforeseen emergencies.

There are always alternatives and their associated upsides and downsides. In the end, the decision is up to you.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.

 

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The benefits of investing in yourself

All / 15.08.2019

The benefits of investing in yourself

A growing number of Australians are choosing to return to study as mature-age students. Perhaps caught in the hamster-wheel of mortgage and family, furthering their education wasn’t an option when they were younger.

But that was then.

Harriet had long fancied setting up a home-based book-keeping business. But being a single mum, raising her two daughters and working part-time in a clothing store, kept her too busy for anything else.

After her girls left home to begin their own lives, Harriet enrolled in a book-keeping course at her local TAFE. She’d put her own goals on hold for almost twenty years and now she was finally able to achieve them.

Older people return to study as mature-aged students for a number of reasons. Perhaps, like Harriet, they’re fulfilling a dream, that due to various lifestyle or family commitments, they’ve had on the back-burner for a while.

Some wish to update their skills and gain confidence at work, qualify for a job promotion or pay increase. Many seek a complete career change or something to keep them busy in retirement.

Take Ed, for example. After a thirty-year banking career, Ed was approaching retirement. Though he looked forward to finishing full-time work, he couldn’t see himself doing nothing at all.

After chatting with some local real estate offices, he discovered their regular need for a handyman to perform odd-jobs on properties they manage.

Happily for Ed, on 28 November 2018, the federal government announced an expansion of its Adult Australian Apprentices Incentive – a program supporting employers who engage a mature age (over age 25) apprentice.

Ed had always loved working with his hands, so he quit his job at the bank and began life as a mature-age apprentice. By retirement, he planned to achieve a trade qualification and enough work experience to set up a part-time handyman business.

Harriet and Ed are not alone. In fact, so many mature-age Australians are furthering their education that the federal government is a major sponsor of the National Skills Week.

This is a national event held in August each year, for the promotion of activities that align with adult learning, along with a support program for those preparing to return to education.

The federal government also provides financial support for mature-age Australians seeking to further their education along certain study paths. The list of eligible courses covered is extensive. See the Funded Course List at www.education.vic.gov.au for further information.

Additionally, government study loans are available through the Higher Education Loan Program (HELP) which has a range of loan schemes to help with various study costs.

You’re expected to begin repaying your HELP debt – even if you’re still studying – if you’re earning above a certain amount. Repayments are between 4% and 8% of your income, depending on how much you earn, and will be calculated through the income tax system.

So whether you’re wishing to enhance and update your existing skills, embark on a new career or simply learn something new, the opportunities are endless. Start by checking out local TAFE colleges for course guides.

And if you’re living remotely or don’t fancy a classroom environment, consider studying online. You’ll be amazed – and inspired – by the range of online courses available. Further, they are often cheaper than face-to-face courses, enable you to schedule study around other commitments and provide interaction with teachers and fellow students.

Perhaps that long-held dream of working an archaeological dig isn’t out of reach after all! The world is bursting with possibilities; and we’re never too old to explore them!

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Will there always be an age pension?

All / 07.08.2019

Will there always be an age pension?

With all of the talk about the need to be self-sufficient in retirement it’s not surprising that many people assume that the government-funded age pension will be phased out altogether sometime in the future. But will it?

Both sides of politics have committed to retaining the age pension “for those in need”. The age pension is means tested using both an income and an assets test – the test that pays the lowest pension is the one that is used.

Conclusion – The age pension will remain, but not for everyone

There are two other aspects to the government’s retirement income policy – compulsory superannuation and tax-concessional voluntary superannuation. Following the increase to the assets test thresholds in January 2017, many people now qualify for only a part pension. Meaning, the general rule still holds – as you build more super, you will qualify for less age pension.

One aspect that people don’t consider is the age when a pension becomes payable. Historically, it has always been age 65 for men, and since 1995 the qualifying age for women progressively extended to age 65.

With people now living longer lives, the age pension may be payable for 20 to 30 years – a very long-term commitment for governments. This raises the question “why 65?”

The answer to this question suggests another key issue in the provision of the age pension. It all goes back to Otto von Bismark, the German Chancellor in the 1880s. He introduced state funded “accident and old age insurance” – the first pension scheme in the world. This standard was followed throughout the rest of Europe and eventually the world.

His actuaries nominated age 65 as when the “old age insurance” would be payable. This was at a time when the average life expectancy of a German male was 44. A very small percentage of the population could expect to receive the pension and they were not likely to receive it for long.

In 2010 the government considered the question of ‘why 65?” and the age pension age was increased. Starting from 1 July 2017, the qualifying age for both men and women increases by six months every two years. From 1 July 2023, the qualifying age will be 67.

With increasing “grey power” as our population ages, it would be political madness for any government to even consider abandoning the age pension. Instead, fewer people are likely to qualify at a later age for a shorter period.

This is all the more reason to continue to build your own superannuation nest egg and become self-sufficient in retirement

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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The 9 golden rules of investing

All / 01.08.2019

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Could a tree-change work for you?

All / 25.07.2019

Could a tree-change work for you?

Cleaner air, less traffic, open spaces, lower cost of living…did we mention less traffic? There are any number of reasons to consider a tree change, but if you’re serious about leaving the bright lights behind, better do your homework first.

Housing affordability

Buying a home is more affordable in the country, and that goes for renting too.

In Wodonga on the Victoria-NSW border, you can rent a 4 bedroom, 2 bathroom, modern family home for around $390 per week. You’d pay around $610 for a similar home in Melbourne’s Glen Waverley.

You could buy a 4 bed, 2 bath home on a 1,000 square meter block in Orange for just over $500,000, while a similar dwelling 250 ks up the road in Hornsby, Sydney could set you back over $1 million.

While property is generally cheaper to rent or buy in the country you’ll need to consider other factors such as council rates.

Some regional municipalities cover large areas – that equates to a lot of maintenance with fewer residents. This means council and water rates can be pricier than in the city.

Another point to think about is bushfire zoning. If you’re in a high-risk area, insurance premiums can be more costly. When building a house in a bushfire-prone area you may be required to modify your building plans to accommodate the area’s fire rating. This will increase the cost of your project.

Make sure you do your sums. Talk to local councils about rates and levies. If buying land, read your Section 32 carefully and be aware of all zoning requirements.

Work

Government incentives encourage industries and businesses to move to regional areas. As employment opportunities in regional areas grows, so too does the economic well-being of its towns.
This flow-on enables local governments to build and maintain community infrastructure such as parks and family-friendly spaces and resources, such as libraries, transport and shops. All of this provides a wide range of employment opportunities.

It’s a good idea, to check the job-market in the area, and if possible, have a job lined up before you make any final decisions.

Could you make it work?

Holidaying and living are two separate things. Try not to make the mistake of assuming an idyllic getaway will be your perfect permanent tree-change.

On holiday you’re relaxed; you’re not a taxi for your kids’ weekend activities, you’re not harried by housework, school and work pressures.

If you’re serious about moving to the country and you’ve a location in mind, do your due diligence. Start by researching the following:

  • Schools
    • primary/secondary/tertiary
    • adequate facilities and teaching resources
    • good range of subjects
    • good location
  • Medical
    • hospitals, doctors, dentists
    • ambulance service
  • Community
    • kids/adults sporting clubs
    • library
    • public transport
    • local theatre or art group
    • swimming pool
    • well-maintained parks and gardens
  • Entertainment
    • bars, restaurants, cafes
    • theatre or cinema
    • shops

Australians are blessed with an abundance of wide-open spaces. If you’re dreaming of a tree change, do your research and draw up a plan; your dream could become reality.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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Why it just got harder to get a home loan

All / 18.07.2019

Why it just got harder to get a home loan

Anyone applying for a home loan these days will find that there are more hurdles to jump than has recently been the case. So why is it harder to get a home loan? And what can you do to improve your chances of getting a loan?

The Royal Commission

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry that concluded in early 2019 discovered a number of lax lending practices by some of Australia’s biggest lenders. Of particular concern was that some banks failed to verify the living expenses of home loan applicants. In many cases this lead to people receiving loans that they were unable to repay. The Royal Commission also revealed that one of the bank regulators, ASIC, did little to punish misconduct, so there was little incentive for banks to comply with their legal obligations.

In response to the Royal Commission ASIC promised greater scrutiny of lending practices and lenders began to ask for a lot more information when assessing home loan applications. They now require detailed proof of both income and expenditure at a level that many people may find intrusive.

Bigger deposits

The decline in home prices in Australia’s major cities mean that buyers don’t need to borrow as much for a given property, which should make it easier to get a loan. However, falling prices create a greater risk for the banks, and one way to reduce this risk is to require a higher deposit, extending the time it takes to save that deposit.

Stringent stress testing

Even before the Royal Commission the prudential bank regulator, APRA, introduced a requirement that banks check on their borrowers’ ability to service their loans if there is a significant increase in interest rates. While it might be possible to borrow at an interest rate of less than 4% per annum (pa), the banks need to check that the loan is still affordable at an interest rate of more than 7% pa, thus reducing the amount that can be borrowed.

Being prepared

The main response to this more difficult lending environment is simple, but that doesn’t make it pleasant. Unless you are able to increase your income, you’ll need to save more. Inevitably, that means spending less:

  • Apps such as TrackMySPEND from MoneySmart can help you track your spending and make it easier to work to a budget.
  • Keep detailed records of saving and spending. You will be asked for them come loan application time.
  • Start early. You are more likely to be successful in your home loan quest if you can show a consistent history of saving and responsible spending spanning years rather than months.
  • Shop around. By all means start with your regular bank, but also check out what the non-bank lenders and mortgage brokers can offer.

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.

Disclaimer
Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.
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