The Sun will NOT rise tomorrow…

 

We all experience alcohol differently. Some people become angry, others happy as they come out of their shell and let loose.

 

Maybe it’s just my age, but I have discovered recently that I become philosophical after a few drinks.

The other day I was sharing a terrific Japanese whiskey with a good mate and upon pouring our 4th shot, I asked him…..’what can you say with absolute certainty is TRUE that cannot be argued?’

 

His face went blank for what was probably only 20 seconds but felt way longer, then lighting up with excitement he announced…..’the Sun will rise in the morning’.

 

Fast forward 45mins of heated discussion and many more shots of whiskey, and here is where we got to, less the slurring.

 

If we left my lounge room and jumped in a rocket ship and travelled 300,000 kms into space, parking ourselves facing the Sun….what would we see?

 

We would see the Sun right? Not rising, not setting just doing what the Sun does, shining. However, our perspective from Earth is that it rises and it sets.

 

The point is your perception of something may seem right to you, but you could be seriously wrong.

 

The big fear globally right now is recession. With the inflation number in Australia just hitting 6.1%, the highest level in more than 20 years, the media everywhere is focused on how high interest rates will need to be pushed up in order to drive the economy backwards into recession.

 

It’s important to understand that prices of everything have risen a lot, but not because of an over heating economy, where the demand for goods & services overtakes businesses ability to supply them.

The rise this time is purely due to disruptions caused by the pandemic. This, plus the Russia/Ukraine situation have caused one-off price rises  which will eventually return to normal.

 

So while it’s true interest rates could not stay at near zero forever, be careful about what you believe they will do moving in the other direction. We might see the peak of this raising cycle quicker than the media would like you to believe.

 

And then those that rushed in the last few weeks to lock in very high 5 year fixed rates on their mortgage might realise that not everything we believe is true.

 

Kiril Ruvinsky

stamp-duty-explained

If you’ve never bought property before, you may not understand what stamp duty is.

In a nutshell, stamp duty is a tax. It’s not very exciting, but it’s one of those things that goes hand in hand with purchasing a property.

Navigating stamp duty can be tricky.

In this article, we explain what stamp duty is, how much it costs, recent changes and why you may have to pay it.

What is stamp duty?

Stamp duty is a charge applied by state governments on transactions relating to the transfer of land or property.

When you buy a property, it’s usually paid upfront as a one-off fee, so you need to budget for it in addition to your loan deposit.

How much is stamp duty?

Stamp duty is calculated as a percentage of your property’s purchase price. However, the amount also depends on a few factors – which state or territory your property is in, the property type and the type of buyer you are.

If you’re a first home buyer and meet certain requirements, you may be entitled to stamp duty concessions or exemptions on homes up to a certain value (more on this shortly).

Examples of stamp duty by state/territory

There are a few stamp duty calculators online that can help take the guesswork out of budgeting for a property.

Using this calculator as an example, if you bought a $700,000 established home as a primary residence and you were not a first home buyer, you may expect to pay the following in stamp duty:

State/Territory Estimated stamp duty
VIC $38,911
SA $38,626
NT $34,954
WA $27,757
TAS $27,105
NSW $27,002
QLD $19,668
ACT $19,571

What are the concessions/exemptions in my state?

Depending on the state or territory, there may be different concessions or exemptions available to certain types of buyers (particularly first home buyers).

As an example, if you’re a first home buyer purchasing a home in Victoria for $600,000 or less, you may be entitled to a full stamp duty exemption. If the property is between $600,001 and $750,000, the stamp duty is tapered.

In NSW, the First Home Buyer Assistance scheme (FHBAS) allows first home buyers to receive a concessional rate on stamp duty if they buy a new home valued at between $800,000 and $1 million or an existing home valued at between $650,000 and $800,000.

First home buyers may be exempt from paying stamp duty altogether if they buy a new home valued at less than $800,000 or an existing home valued at less than $650,000.

Meanwhile, the NSW government looks set to move ahead with reforms that would give eligible first-home buyers the option to either pay stamp duty upfront or opt into an annual property tax. The scheme would be applicable to homes up to the value of $1.5 million and be available from January 16, 2023.

To find out more about the stamp duty concessions or exemptions in your state or territory, speak to us.

Budgeting for stamp duty

When creating your purchasing budget, it’s important to factor in how much stamp duty you’ll need to pay. Stamp duty can be costly, so it can really affect the type of property you may be able to afford.

Keep in mind that lenders may also want to see proof of savings to cover the stamp duty costs in addition to your deposit when applying for a loan.

It’s a good idea to get advice from your accountant about how stamp duty may affect you.

What does stamp duty go towards?

The stamp duty you pay is disbursed back into the economy by state and territory governments. It may go towards health, transport and roads, police, justice and emergency services sectors, for example.

Do you have to pay stamp duty on additional properties?

Yes, stamp duty is applicable to all property title transfers (unless you’re eligible for an exemption).

What if a home is gifted to you?

Even if a property is given to you, you will need to pay stamp duty, as ownership of the property is being transferred from one party to another.

There may be exemptions on stamp duty for properties that are inherited, but in this instance, inheritance tax may apply. Speak to your accountant or conveyancer for clarification.

Still have questions?

If you need further help navigating stamp duty, please get in touch.

As your broker, we can help you create a purchasing budget and find a loan that works for you.

Is your credit report healthy?

One of the things lenders take into consideration when assessing your ability to repay a loan is your credit report.

As part of the loan application process, they’ll assess your financial history, including any previous credit applications you’ve made and any payments you may have defaulted on.

If you’re in the market to buy a property, here’s why you need to check your credit report.

What is a credit report?

A credit report is a detailed record of your credit history. It includes information about the types of credit you have applied for, which loans you’ve opened and how you’ve repaid your debts.

Credit providers like banks and utility companies provide details about your credit habits to credit reporting bodies, which then compile your credit report.

Your credit report may also include a credit rating. This is a numerical value that represents your creditworthiness and how reliable you are as a borrower. The higher the score, the better.

How to check your credit report.

In some instances, a credit report can contain a false or incorrect entry. That’s why it’s so important to check yours regularly (you can do so every three months).

If you’d like to access your credit report, please get in touch.

If you do notice something is amiss, you can find tips for fixing your credit report on the moneysmart website.

What is your credit report used for?

When you apply for a loan, the lender will use your credit report to help them decide whether to lend you money, how much they will lend and on what terms.

Of course, they’ll also consider things like your assets, liabilities and living expenses, but your credit report is a consideration.

Does your credit report contain positive information?

Yes. Credit reporting changes have come into effect requiring banks to pass on positive information about your credit history as well as the bad stuff.

Instead of just sharing negatives like defaults and infringements, now your credit report includes positive financial behaviour such as whether you have a solid repayment history.

This gives lenders a clearer picture of your credit history when deciding on loan applications.

Financial hardship changes

From July 1, 2022, changes will come into effect relating to the reporting of financial hardship information.

Say something unexpected happens. A natural disaster for example, and you have to enter into a ‘financial hardship arrangement’ with your lender.

Previously, your credit report might have shown you missed repayments during the arrangement without it being evident that you and your lender had agreed to a financial hardship arrangement.

Now, the repayment history information on your credit report will reflect that there was a financial hardship arrangement in place.

Essentially, it means that if you’ve needed financial hardship assistance, you can better demonstrate your creditworthiness through more accurate reporting of your circumstances.

To find out more about these and other changes relating to financial hardship and credit reporting, head to the CreditSmart website.

How to keep your credit report healthy

Here are some tips to keep your credit report in check:

• pay your bills and loan repayments on time
• pay your credit card off in full each month
• lower your credit card limits and cancel credit cards you don’t need
• consider consolidating debt (speak to us about whether this is right for you)
• limit your credit enquiries
• remove your name from utility bills if you move
• be cautious about identity theft
• regularly review your credit report.

Like to know more?

If you’d like to access your credit report, please get in touch.

I can answer any questions you might have on how to improve your credit report (and therefore your desirability as a borrower to a lender). We’re here to help.