What does a record low interest rate mean for you?

With a record low cash rate of 1.75%, there has never been a better time to make serious inroads into paying off your home loan sooner.

Low interest rates also means good news for investors or people looking to enter the property market.

low interest rates

Over the past 6 years, we have seen continual drops in interest rates. The last interest rate rise was back in 2010, thankfully the current situation is far removed from the days of the 80’s and 90’s where rates were at a crippling 17% – 18%.

For home owners, a simple strategy to pay off your home loan quickly is to keep your repayments at the level of the previous interest rate rather then decreasing your repayment in line with the lower interest rate. By maintaining your repayments on the higher rate, more of your principle is being re-paid, saving you thousands in interest over the term of the loan.

For investors, a lower interest rate means lower interest repayments potentially making your property positive in cash flow. This gives you the ability to acquire new property with a new loan at a much cheaper rate than it was a year ago having the benefits of positive cash flow on top of capital growth. Using the rental income from your investments to reduce the balance on your home loan is a positive move in paying of your loan sooner, releasing more equity and allowing you to purchase additional investment properties.

At present, we are able to secure rates from 3.74%, with an additional cash rebate of $1250 for each property / loan you refinance. For example, let’s say you have a total of 4 properties, this equates to $5000 cash back in your pocket on top of the additional interest rate savings.

There really has never been a better time to review your loans. Let’s talk.

Contact Chris or Laura on 08 84317444 or email answers@businessi.com.au

Superannuation Budget Update

The budget is fast approaching and although the Liberals have remained tight lipped on their proposals a few possible changes have slipped through the cracks. With the release date being brought forward to 3 May 2016, Super Initiatives urges clients to take action beforehand.

 

 Possible Changes:

  • Contribution caps may be reduced
  • Tax on concessional contributions for high income earners may increase (currently 30% for those with Taxable Income over $300,000)
  • Transition to retirement rule changes making people reduce their working hours to receive a TTR
  • Tax on earnings above a threshold when in pension phase

 

3 Months

To ensure you are maximising your super fund’s tax saving potential remember to:

  • Make all contributions before 30 June 2016 (preferably before budget night, in case the rules change)
  • Withdraw at least the minimum pension amount prior to 30 June 2016

If you have a SMSF, we ask you to consider having us review your 2016 contributions and pension withdrawals prior to 30 June 2016 to ensure you do not exceed your caps and incur an unnecessary tax bill.

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For more information, please contact:

Why having a FREE home loan review could save you thousands!

Having your home loan reviewed is a quick and easy process and can ensure that you are on a competitive interest rate and that you still have the best product to suit your needs. A loan review doesn’t have to be a refinance either, sometimes you can remain with your current home loan provider. At Loan Initiatives we have qualified Mortgage Brokers who have the ability to negotiate with your lender and potentially provide you with a more competitive product.

Other possible points are listed below:

  • An interest rate difference of 0.25% on a $300,000 mortgage can save you about $50 per month! That’s a saving $18,000 over the life of the loan.
  • A rate reduction may mean you can pay extra off your home loan each month and reduce the term of your loan.
  • Interest rates are at an all-time low, and most lenders are offering better rates and products to remain competitive in the current market.
  • Your financial position and goals may have changed and there are products that will help you achieve those new goals.
  • Most importantly, a review of your home loan is FREE!

We can complete the review over the phone or via email, alternatively we can come to you at a time that suits you! Call our home loan team today on (08) 7123 2855 to get the review process started.

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Variable Interest Rate Increases

Today, the last of the 4 major banks have announced they will also be increasing their interest rates. ANZ today announced that they would raise their variable rates by 0.18%. Earlier this week Westpac increased their rates by 0.20% and CBA and NAB followed suit with CBA increasing their rates by 0.15% and NAB by 0.17%.

CommSec Economic Insights – 3 March 2015

Reserve Bank Board meeting: The cash rate has left at a record low of 2.25 per cent. There is a clear  bias to cut rates again.

The Reserve Bank has made a strategic decision and is conserving its  ammunition. Rates may be cut again if the economy needs a bit more  help. But there is no urgency, no panic. The statement is short, sharp  and to the point. And that’s why the decision can be applauded.   Consumers won’t be spooked by successive rate cuts. But rates are  still low, and can fall further. So the decision is positive for confidence  and hopefully causes more consumers and businesses to spend,  invest and employ.

Click here to read the full CommSec Economic Update

CommSec Economic Insights

Federal Government is projecting a $40.4 billion deficit (2.5% of GDP) for the current financial year

Economic growth is expected to hold at around 2.5%, while unemployment forecasts have lifted from 6.25% to 6.5%, and

The blowout in the budget deficit was largely due to the slump in commodity prices – in particular iron ore.r