Give Us A Call
If we can assist please contact Peter, David or Simon on 03 9882 2500 or email
Commercial Finance is Becoming Increasingly Competitive
The Commercial Property Finance market is becoming increasingly competitive with numerous Financiers staking out their ground.
Whilst the “best price”/rates often came from the banks with the biggest balance sheets, many of the 2nd tier lenders are becoming increasingly price/rate competitive and often make loan conditions less onerous.
With the increasing competition we are finding the Commercial Loan product features starting to be more flexible such as:
- Residential property backed loans for 20 year + terms
- Loans with redraw from a few Lenders with certain conditions
- Ability to structure “balloons” at the end to retain tax effectiveness
- Higher than normal Loan to Value Ratios (LVRs)
- Commercial property backed loans for 20 years
First Point Group has the ability to structure and source funding up to 75% LVR against Commercial property in some circumstances.
At First Point Group we do more than just source the finance for you. We navigate the whole loan process “end to end” from application/submission right through to documentation and settlement, ensuring your experience is smooth and trouble free.
If we can assist please give Peter, David or Simon a call on (03) 9882 2500.
Mortgage Insurance Explained
What Is Lenders Mortgage Insurance (LMI)?
LMI is an insurance policy which covers the lender in the event that you were in serious default on your loan, and the sale of your property still did not recover the loan. LMI is generally applicable once a loan has a Loan to Value Ratio over 80%, in simple terms this means in most cases a deposit of 20% (of the purchase price +Stamp Duty and other costs) is necessary if you want to avoid paying Lenders Mortgage Insurance. LMI can be a costly affair and therefore worth exploring strategies to avoid it!
Loan to Value Ratio (LVR)
LVR is the amount of money you wish to borrow over the value of the property that you wish to use as security. For example, let’s say the loan required is $440,000, and the property you wish to use as security is worth $550,000, then the LVR would be 80%.
Why Is The LVR Important?
LMI is calculated as a percentage of the loan amount, coupled with stamp duty. Your LMI will vary depending on your LVR as well as the amount of money you wish to borrow. The percentage you’re required to pay increases as the LVR and loan amount increase, and usually goes up in thresholds.
How Can You Avoid LMI?
The key to avoiding LMI is to reduce the LVR, this can be done by:
- Saving more deposit
- Help from a Family Member/Friend in the form of:
- Contribution Gift – This can come in the form of a monetary gift usually from a family member, that is not repayable or refundable
- Family Security Guarantee/ Family Pledge – Your parents can offer the equity (the value) from their property they own as security, this is used to guarantee a portion of the loan amount, not the whole loan amount
- Selected Lenders can potentially waive LMI for certain professions, or do not charge LMI up to 85% LVR irrespective of your profession
Finally, if your specific needs mean that the timing is right to make a purchase and you are not able to take an approach to avoid LMI, then ultimately you will proceed with a loan amount that is in LMI territory, this is not the end of the world. The LMI amount can be built into your loan; it therefore does not have to come from your pocket! This is called ‘Capitalising LMI’.
Calculate how much you could save with our Loan Comparison Calculator
Give Us A Call
If we can assist please call Peter, David or Simon on 03 9882 2500 or email us at;
Motor Vehicle, Business Equipment and Machinery Finance
There are a number of different options to consider when financing a motor vehicle or business equipment and machinery.
Chattel Mortgage
The facility is a commercial finance product where the Lender assists a borrower to take ownership of an asset (motor vehicle, business equipment or machinery) and takes a mortgage over the asset. GST is paid on the purchase price of the asset and the borrower, if registered for GST, can claim this payment back when they lodge their next BAS. The interest on the finance and depreciation of the asset are generally both tax deductible.
Novated Lease
The Novated Lease is a method of salary packaging a motor vehicle. The employee leases the vehicle and the employer pays the monthly lease payments to the Lender from the employee’s pre-tax income (in other words, salary sacrificing this income). The GST paid can be claimed back by the employer who then passes the benefit on to the employee.
Finance Lease
The Finance Lease is where the Lender owns the asset (motor vehicle, business equipment or machinery) on behalf of the borrower and leases the asset back to the borrower over a fixed term. There is a balloon/residual option for the borrower to purchase the asset at the end of the term. GST is paid on the monthly lease payments and the balloon/residual. The borrower, if registered for GST, can claim this payment back progressively over the term of the facility. Generally, the monthly lease payments are tax deductible.
Commercial Hire Purchase
The Commercial Hire Purchase is where the Lender owns the asset (motor vehicle, business equipment or machinery) on behalf of the borrower and hires the asset back to the borrower over a fixed term. The borrower will take ownership of the asset once the facility term is completed and any balloon/residual is paid. GST is paid on the purchase price of the asset, upfront fees and interest. The borrower, if registered for GST, can claim the payment made on the purchase price and upfront fees when they lodge their next BAS. The GST paid on the interest charges can be claimed back progressively over the term of the facility. Generally, the interest on the finance and depreciation of the asset are both tax deductible.
Operating Lease
The Operating Lease is where the Lender owns the asset (motor vehicle, business equipment or machinery) and the borrower rents the asset for use over a fixed term. At the end of the term the asset is returned to the Lender. GST is paid on the monthly lease payments and can be claimed back progressively over the term of the facility. Generally, the monthly lease payments are tax deductible.
Would you like a motor vehicle finance quote?
If we can assist please call Peter, David or Simon on 03 9882 2500 or email;
All Time Low Interest Rates – Should You Fix Or Not?
In a market with all-time low interest rates, you may have the question on your mind; “should I fix my interest rate or not?”
Over the past two years, the Reserve Bank (RBA) Cash Rate has decreased four times. With the most recent cut in August to an RBA cash rate of just 1.50%, many home loan rates are now close to 4.00% which is a level we have never seen before.
Because of these low rates, many people are strongly considering whether they should be fixing their interest rate, or leaving it at a variable rate.
Advantages of Fixing?
A decision to fix an interest rate can be considered as insurance against future variable rate rises which may increase your loan repayments.
Key questions you may consider are:
- Do you value certainty of knowing exactly what your repayments will be each month?
- Are you on a tighter budget and not in a position to make additional repayments?
- Are you not likely to clear your loan during the fixed term? (eg. there is no chance you may want to sell and move house)
If your answer to these questions is yes, you may want to consider talking to us about fixing your interest rate.
Disadvantages of Fixing
It is important to note that fixed rate loans may not suit all borrowers.
- Your overall flexibility can be reduced –
- Many fixed rate loans do not allow additional repayments (without a fee)
- Fixed loans can involve expensive “break” costs if there is a need for early repayment of the loan. This may arise from unexpected life or business events
- Fixed loans generally do not offer any ability to redraw
- Fixed loans generally do not offer any Offset Account feature
- If you fix your interest rate, particularly over longer terms of three to five years, you may be committing to an interest rate beyond anyone’s ability to accurately predict rate movements
- If you fix and then interest rates continue to fall, you will be stuck paying a higher interest rate than the rest of the market is paying
Hedging Your Bets?
A good strategy often implemented by clients wanting the best of both worlds, can be to fix part of your loan, and leave the rest on a variable rate. In this scenario you actually end up with two loans, and two monthly repayments, but the overall total repayment is usually similar to what you are currently paying.
This strategy can provide benefits of both options:
- The fixed loan portion can help manage the risk of interest rate rises
- The variable loan portion enables you to maintain some flexibility of extra repayments, redraw, and offset (depending on the Lender and product)
In Summary
Fixing your loan/rate can be appropriate for some people, whilst it can cause disastrous consequences for others. Therefore we strongly recommend talking to one of our Consultants before making any decisions, as we can assist you to weigh up the costs, savings, risks and other benefits, alongside ensuring that the strategy suits your specific needs.
If you wish to discuss any financing questions please contact Peter, David or Simon
Meet Our Consultant Team
If we can assist please call Peter, David or Simon on 03 9882 2500 or email;
5 TIPS TO GET YOUR PROPERTY READY FOR SUMMER
At last!! Spring is in the air and the temperature is on the rise. We hate to be the bearers of bad news, but now is the time to get out, roll up your sleeves and get those jobs done so that you can enjoy your home over the summer. These tips will also help maintain or even improve the value of your property!
1. Clean out the gutters and downpipes
Many home owners procrastinate about this job – A gutter full of leaves can cause several problems such as:
- They can be a fire hazard, particularly in areas that are prone to bush fires
- As leaves break down they can rot the wood trim in your eaves
- The added weight of leaves in your gutters, together with water when it rains, can lead to gutters bending and eventually breaking
2. Reseal your deck
Your deck is quite often your showpiece, or the best feature of your backyard that stands out the most. Give it a coat of decking oil to give it that nice shine that it should have for all your summer BBQ’s. As well as making it look better, sealing your deck each year will help it to last much longer
3. Check your flywire screens
There is nothing worse than been trapped in a hot house because you are scared of the swarm of flies and mosquitos intruding through the holes in your flywire. It doesn’t cost much to replace your torn flywire screens, so this is one of the easiest ways to let some fresh air into your house this Spring and Summer.
4. Add a coat of paint
A simple coat of paint can make a world of difference to the look and feel of your home, as well as preserving the value of the property! You don’t want to do this in the blistering heat of summer and certainly not in the rainy miserable weather of winter. Re-painting also prevents rotting and gives you the chance to modify your colours and patterns to suit the look that you want.
5. Think about Cooling
We all have different budgets and ideas for how we plan to keep our homes cool this Summer. Although the purchase and installation of split system air-conditioning may initially be expensive, it does add value to your home. Putting the financial side of things aside, it is important for your health and safety, particular for the elderly and young children. Simpler solutions such as new curtains and blinds can also make a big difference in keeping your home cool and will help in reducing your energy bills.
Service Choice Savings
Peter’s Italian Adventure
Well don’t we all just love our travel no matter what stage in life we are at. The world is so small now we can just jump on a plane and then the next day you are in a different country with a completely different culture to our own. It is so exciting!
My wife Kerry and I recently set off to Italy for a month. We had never been to this part of Europe before so a wonderful adventure was ahead of us. The impetus for the holiday was to attend a wedding of our Sydney nephew at Malcesine Castle Lake Garda (Garda De Lago). He was marrying a lovely Czechoslovakian girl he met in Canada some years ago. The wedding was an amazing experience at the Castle.
Over the month away we met some terrific people. Our guides were wonderful, locals just great. Italy is such a contrasting country (the parts we visited) and certainly very different from the Southern parts of Italy to the Centre & then North and in Venice.
We travelled from Garda across to the majestic Lake Como then down to Naples through the beautiful towns on the Amalfi Coast, up to Rome and its incredible history, then to Tuscany with its wineries, magnificent rolling hills and villas.
We visited amazing old towns like Assisi, Siena and Lucca where we went to an opera that runs every day of the year in memory of Giacomo Puccini, spent some time in Florence and Pisa, then onwards to Cinque Terre walking between some of its beautiful coloured fishing villages.
We continued further north to Sestri Levante in Liguria, worked our way back to the beautiful northern lakes district including Lake Orta, Lake Maggiore and its island jewels, over to Trento, beautiful Verona and its famous colosseum then Venice – the fascinating town built entirely on water.
We finally spent some time at Burano Island before the long journey back to Melbourne!
Italy stole our hearts.
Minori – Amalfi Coast:
Lake Como
Venice
Dolomites – Andalo
