first home owner

Client success stories in the 2020-21 financial year

Over the past 12 months we have worked side-by-side with many clients to support them in making life changing purchases. We get satisfaction out of securing finance to fund purchases that will never be forgotten.

Below is a review of just some of the people we have helped over the last year and a summary of how we assisted them in securing their new property.

Having the right mortgage advice from an honest adviser makes what can be a daunting process a walk in the park. If you would like assistance in securing finance to fund your next property purchase or refinance please give us a call on 03 5434 7690 or email endeavor@endeavorbendigo.com.au

 

Eloise

Eloise settled on her first home after we assisted her with securing finance and navigating through the range of First Home Buyer benefits available at the time. The First Home Buyer Stamp Duty exemption allowed Eloise to save $15,000 on stamp duty for the purchase of her established home.

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Jake and Laura

We assisted Jake and Laura at the end of 2020 to purchase some vacant land. The couple then begun their build which is now complete. Exciting times ahead! They were able to take advantage of both the regional First Home Owners Grant of $20,000 and the $25,000 New Home Builder Grant which were available at the time.

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Erin and Ryan

Erin and Ryan settled on the purchase of their first home in the middle of this year. This was particularly exciting as we were able to secure them the $20,000 regional First Home Owners grant, even though the house was already built. Pretty good perk for new eligible properties, particularly when you can move in straight away.

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Tom

When Tom’s parents decided to move interstate he couldn’t pass at the opportunity to purchase the house he grew up in! Often when a sale happens between family members, the State Revenue Office (SRO) will not allow for the first home buyer stamp duty waiver if the house is sold under market value.

We worked with Tom, his parents and the SRO to ensure the house was purchased at a price which would allow for Tom to still be eligible for the stamp duty waiver.

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Albert and Quynh

We assisted Albert and Quynh by working through their borrowing power and arranged finance prior to attending an auction in a hot market, allowing the newly engaged couple to bid with confidence. Being prepared before the auction proved useful given their complex self-employed income and existing investments.

The couple were successful in winning the auction, a good result for all involved!

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McKinley Builders

Working with McKinley Builders involved “owner builder” which many banks aren’t comfortable with even for self-employed licenced builders. This also involved bridging finance which allows clients to build and move in to their new house before selling their existing house.

Better than living in a rental while you build and needing to move twice!

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Tom

We guided Tom through the regional Victoria $20,000 First Home Owners Grant and also the $25,000 Home Builder grant to help him finance his new home. He was referred to us by his employer, McKinley Builders, who are in the story above.

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Dill and Georgia

We helped Dill and Georgia take advantage of both the regional Victoria $20,000 First Home Owners Grant and the $25,000 Home Builder Grant. The couple were referred to us by their accountant as Georgia had become newly self-employed.

We worked with her and formed a plan of attack and timing for her and Dill to get their build off the ground.

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Hayden and Tilley

We helped Hayden and Tilley take advantage of the regional Victoria $20,000 First Home Owners Grant as well as the $25,000 Home Builder Grant. The couple were referred to us by their friends Georgia and Dill, the clients in the story above. They recommended Hayden come and talk to us, and we also later found out that we had been recommended to Tilley by one of her colleagues who is also an exciting client! So they knew they were in good hands.

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non-bank lender

Why choose a non-bank lender?

Whether you’re looking to grow or refinance your portfolio, non-bank lenders could be the best choice for your wealth creation journey.

A common misbelief is that non-bank lenders are tied to the strict rules that apply to more traditional finance lenders, but the truth is that non-bank lenders have the same obligations as the more conventional lenders.

Non-bank lenders are able to provide a much more personalised service to customers, often allowing customers to deal directly with the broker as opposed to the support staff at a bank. Non-bank lenders are also more likely to listen to the individual story of every borrower, rather than purely making assumptions as many conventional lenders do.

Many people are surprised to discover that non-bank lenders are very competitive on rates in the investment space and are able to help borrowers when their current lender is not willing to provide finance for them.

Given that speed to market is currently key for property investors looking to pounce on a purchase, conventional lenders are becoming less enticing for borrowers.

In fact, stories of people missing out on a great deal because of lengthy turnaround times are becoming more and more common.

Momentum Intelligence’s Broker Pulse survey for March 2021 found that CBA’s average turnaround for broker-lodged loans was 12.7 days; NAB’s was 9.4 days; Westpac’s was 13.7 days; and ANZ’s was 16.4 days (business days). These are generally the best case scenario for simple applications whereas it can often take twice as long for self-employed applicants.

This is where non-bank lenders can provide a helping hand within a few business days at competitive rates. Endeavor Finance work with a number of non-bank lenders from around the country to secure the best loans for our customers.

 

If you are after a second opinion or want to know more about the non-bank lenders available, speak to Adam or Llewe at Endeavor Finance. Call 03 5434 7690.

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Support for first home buyers and builders

The First Home Loan Deposit Scheme is an Australian Government initiative to support eligible first home buyers to build or purchase a first home sooner.

From 1 July 2021, an additional 10,000 spots will be in place for the First Home Loan Deposit Scheme, as well as new property price caps. These spots will be allocated on a first in, first served basis.

The scheme ensures that purchasers are only required to put down a 5% deposit on the purchase price of the property, with the government guaranteeing the remaining 15% of the deposit.

Purchasers are required to borrow the remaining 95%, however, you can save up to $17,000 by not being required to pay Lenders Mortgage Insurance.

For more information regarding the scheme, including guidelines and full eligibility criteria, click here.

Purchase Price Thresholds

New property price caps for the First Home Loan Deposit Scheme will come into effect from 1 July 2021. For Bendigo and other regional Victorian areas, this is great news! The price cap for these areas, which was previously set at $375,000, is now being increased to $500,000.

Click here to view the new price caps for all Australian regions.

 

We can help you take advantage of the First Home Loan Deposit Scheme and smoothen out the process of you building or buying your first home. Give us a call on 03 5434 7690.

home buyer

Federal Budget boost for single parents

Under the proposed Family Home Guarantee, single parents will now be able to purchase a property with a deposit of just 2%, with the government guaranteeing the remaining 18%.

The Family Home Guarantee is limited to 10,000 places which will be spread evenly across four financial years, equating to 2,500 spots per year.

The scheme is open to first home buyers, as well as those who have previously owned a home.

The Family Home Guarantee aims to help single-parent families get onto the property ladder or re-enter the property market. The scheme was announced as part of the 2021-22 Federal Budget.

Eligibility

To be eligible for the scheme, you must:

  • Be a single parent with a dependant(s)
  • Earn less than $125,000 per year
  • Be an Australian citizen
  • Be above 18 years of age.

Apply

The Family Home Guarantee will commence from 1 July 2021, subject to legislative approval. Further information about the scheme will be available over the coming days on the National Housing Finance and Investment Corporation website.

 

In a separate measure, the government has also announced an expansion of the New Home Guarantee scheme with an additional 10,000 places. The scheme allows first home buyers to build a new home, or purchase a newly built home, with as little as a 5% deposit.

 

If you have any questions regarding the Family Home Guarantee, or would like assistance determining if you are eligible for the scheme, please give us a call on 03 5434 7690.

Low interest loan scheme available for SMEs

The Small and Medium Enterprise (SME) Recovery Loan Scheme is designed to support businesses who received the final round of JobKeeper payments. It has also been expanded to assist businesses that were affected by the March 2021 floods and are located in specific disaster zones within New South Wales and Queensland.

Under the Scheme, businesses will have access to low-cost bank loans up to $5 million where the Government guarantee will be 80% of the loan amount. Lenders are able to offer businesses a deferral on repayments for up to 24 months and loan terms can be up to 10 years.

The interest rate on loans will be determined by lenders, however, they will be capped at around 7.5%, with some flexibility for the interest rate on variable rate loans to increase if market interest rates rise over time.

The Scheme is enhancing lenders’ ability to provide cheaper credit, allowing many businesses access to vital funding to help them get through the impacts of COVID-19 and invest for the future.

Eligibility criteria

To be eligible, you must:

  • Have a turnover of less than $250 million and be a recipient of the JobKeeper payment between 4 January 2021 and 28 March 2021, or
  • Have been affected by the March 2021 floods and be locate in eligible Local Government Areas

For a full list of the eligible Local Governments Areas, click here.

Eligible loan uses

Loans issued under the Scheme can be used for a number of business purposes to support investment, including:

  • refinancing existing loans and pre-existing debt
  • purchasing commercial property
  • acquisition of another business.

Uses not permitted with the loan:

  • purchasing residential property
  • purchasing financial property
  • lending to an associated entry
  • leasing, renting, hiring or hire purchases of existing assets that are more than half way through their effective life.

How to apply

 

All loans backed by the Scheme will be available through participating commercial lenders. We work closely with a number of lenders on our panel to help clients secure funding for their business. If you’d like to discuss or need assistance in obtaining finance, we can help.

 

For full details on the SME Recovery Loan Scheme click here: https://treasury.gov.au/coronavirus/sme-recovery-loan-scheme

 

If you have any questions regarding the SME Recovery Loan scheme, please give us a call on 03 5434 7690.

First home buyer with government support; just how good can it get?!

At the moment there are a range of support packages available to first home buyers and we pulled off the ‘quadfecta’ for a recent client of ours.

The first home buyers had a combination of savings and gifted cash to compile together 5% of the land and build price, plus a clean and consistent rental history. The bank recognised this and were able to secure a land and build worth $440,000 with their deposit of $23,300 (or just over 5%).

Endeavor guided applicants in pursuing all available grants for first home buyers and builders and were successful in all applications, pulling off almost $60,000 in savings for the pair!

 

The grants the pair were eligible for included:

Grant

Grant amount
Cash saved as a result of First Home Buyer stamp duty exemption $4,370
Cash as a result of ‘First Home Owners Grant’ $20,000
Cash as a result of ‘Home Builder Grant’ $25,000
Cash saved as a result of ‘New Home Guarantee’ $10,000
Total benefit as first home buyers

$59,370

 

These outstanding results are a regular day at the office for our team. If you or a family member are looking to join the property market we highly recommend you speak to Llewe or Adam at Endeavor Finance to get the Endeavor Finance difference.

Call 03 5434 7690 or email endeavor@endeavorfinance.com.au

Phillip island finance success

Phillip Island Retirement Dream | Customer Success Story

Dreaming of warmer weather?

This house settled this month for one of our property investors who picked up a nice beach house in the tightly held market of Phillip Island, along the coast of Victoria.

It’s got us thinking about the beach and warmer weather! Great location, with the owner’s future intention to relocate there when they decide to retire.

Not only are we very active in the Bendigo property market; We help finance property Australia wide.

Phillip Island finance broker Phillip island finance success

Chasing yield in a low interest rate world

Low interest rates and unsettled sharemarkets make the chase for yield a challenging prospect. Yield is important, particularly for those approaching or already in the retirement phase as maintaining capital and enjoying a steady income stream are the two key factors to provide for comfort in the years ahead.

But how can you get a decent return when the cash rate is only 1.5% and the interest rate on many traditional fixed interest investments is not much better?

According to Canstar, fixed term deposits are offering an average of 2.69% for one year and 2.87% for five years.i While it is above the inflation rate of 1%, it’s still modest.ii

Of course, there are other conservative investments such as government bonds but even these offer only low returns. According to Bloomberg, 2-year government bonds have a yield of 1.59%, five-year 1.74% and 10-year 2.11%.iii

Corporate bonds

Corporate bonds generally offer better returns than government bonds, term deposits or cash because they carry a higher risk. With corporate bonds, you are lending money to a business in return for interest payments compared with shares where you become a part owner of the company. You can buy the bonds via a prospectus, but these days many are traded on the ASX.

You can currently get yields of around 2.75% for high quality, lower risk corporate bonds, however if you already have exposure to company shares on the market, then adding corporate bonds to your portfolio may reduce your level of diversification.

It is also worth considering investments such as hybrids, which have characteristics of bonds and shares, hence the name. You can currently get a yield of up to 6% in hybrid issues from household name companies including the major banks, ultilities, retailers and insurers.

As an alternative to selecting individual bond issues, a professionally-managed bond fund offers the opportunity to invest in a diversified portfolio of corporate and government bonds and cash.

Good returns from shares

Shares continue to be attractive for investors looking for regular income. The average dividend yield for listed companies is 4.2%; with capital growth, total returns are above 9%. In the latest reporting season some $24 billion was paid out in dividends from Australian listed shares.iv

One key advantage of shares is dividend imputation, where you may actually end up with a cash rebate on the tax that has already been paid by the company.

Stocks such as banks and telcos are often viewed as good sources of yield although concentrating your investments in one or two sectors reduces diversification and increases risk.

Similarly, focusing exclusively on yield may mean that your portfolio is not as diversified as it should be.

Property options

Residential investment property has featured as a major source of investment returns in recent years, but with house prices high and rents tightening the yield has been falling. Add to this the lumpiness of an investment in property – you can’t just sell the kitchen if you need quick cash – and property may carry increasing risk.

Commercial property may be a better option given that in the year to March the average annual return was 14%.v

As an alternative to direct property, listed Real Estate Investment Trusts (REITS) invest in a diversified property portfolio and can be bought and sold on the sharemarket. Since March they have performed quite strongly.v

The hunt for a decent yield in a low interest world is likely to be a feature of investment markets for some time. But your investments, and particularly those that constitute your retirement strategy, should be a long-term plan. Chopping and changing asset classes to try and get a good yield can prove costly.

Call us to discuss the best income-producing investments for your needs.

i www.canstar.com.au/term-deposits/the-current-term-deposit-environment/

ii www.tradingeconomics.com/australia/inflation-cpi

iii www.bloomberg.com/markets/rates-bonds/government-bonds/australia

iv www.commsec.com.au/content/dam/EN/ReportingSeason/August2016/ CommSec_Reporting_Season_August2016_Dividend-windfall-24billion-to-be-paid-out.pdf

v www.afr.com/real-estate/commercial/investment/commercial-property-the-top-investment- in-the-year-to-march-20160517-goxj63

Keeping score of your credit rating

In many ways, applying for a loan has never been easier. Interest rates are comparatively low and competition among lenders for new business is intense, so it can come as a shock when a loan application is turned down. The reason is often a bad personal credit score, but few people understand what that is, let alone how to improve it.

Having a good credit score can help you secure the best financial deals, but first you need to understand what your credit score is and what steps you can take to improve it.

What is a credit score?

Your credit score is based on information collected by credit reporting agencies and documented in your personal credit report. This information includes personal details such as your age and where you live, how much you’ve borrowed and who from, the number of credit applications you’ve made and any unpaid or overdue payments. These could relate to a bank loan, rent, mortgage or even an overdue phone bill.

Lenders and credit providers such as banks and credit unions use this information to work out how risky it is to lend you money.

How do you find your credit rating?

The good news is that you can get a copy of your credit file once a year for free as well as your credit score from online sites such as Creditsavvy, Equifax (previously called Veda) and Finder (which uses Equifax scores).

Depending on the credit reporting agency, you will receive a number out of 1000 or 1200 that’s broken down into five categories, from excellent to below average. If you fall into one of the lower categories, lenders may ask for more information or deny you credit.

It’s worth checking your credit file before you apply for a loan to make sure the information is accurate and that you haven’t been the victim of fraud or identity theft. If there are mistakes, credit providers and reporting agencies are legally obliged to investigate and correct them free of charge.

How to improve your credit score

You can increase your chances of being approved for a loan by understanding your score, correcting any errors and improving your creditworthiness with some simple actions.

  • Pay your bills on time.
    When you’re busy or on the move it’s easy to overlook an electricity bill or to forget a payment. One way to avoid this is to set up automatic payments.
  • Lower your credit card limits.
    You may think having a high credit card limit is a mark of success, but it can count against you. Lenders consider your credit limit as a liability even if you never use the full amount and pay your balance in full every month.
  • Consolidate your debt.
    By consolidating several personal loans or credit cards into one it can make it easier to keep track of repayments and save on fees and interest.
  • Avoid making multiple credit enquiries.
    Making lots of enquiries in a short space of time has a whiff of desperation about it and can lower your credit score. Do your homework, only consider a new loan or credit card when you need it and then apply for the options most suited to your needs.
  • Notify your credit providers if your circumstances change.
    If you move be sure to notify your bank, other lenders and utilities so your bills will be redirected and you won’t inadvertently miss a payment. The same goes if you change financial institutions – you need to contact loan providers to switch over automatic payments.

If you are about to start house-hunting or see an attractive investment, then timely access to credit is critical. Knowing your credit score and improving it if necessary can not only speed up your loan approval but also help you negotiate the most competitive rates.

If you would like to discuss ways to tackle debt and get your finances in shape, give us a call on 03 5434 7690.

Gearing up for growth

Record low interest rates are making it harder for your money to keep pace with the rate of inflation. While it may be a struggle to grow your wealth in such an environment, low interest rates do mean that it is cheaper to borrow.

So why not take advantage of this opportunity by borrowing money to invest in growth assets such as shares or property? Gearing (borrowing) can be a great way to fast-track wealth creation although it must be remembered that it is a double-edged sword. While using borrowed money magnifies profits, it also magnifies losses. However, by borrowing sensibly and cautiously, and investing in quality assets, the benefits can outweigh the risks.

As well as boosting your returns, there are also tax advantages because you can offset interest paid on your loan against your income.

What are your options?

There are a number of ways you can borrow to invest including home equity loans, margin lending, warrants and internally geared managed funds. Each has its pros and cons so it is wise to get professional advice.

Home equity loans

As the name implies, home equity loans let you borrow against the equity you have built up in your home by using a redraw facility or an additional line of credit.

This method of borrowing is relatively cheap to service as you are only paying mortgage rates of interest. The downside is that you put up your home as collateral.

Margin loans

The second method is via a margin loan where you typically borrow somewhere between 30 to 50% of the value of an asset. The lender will stipulate the maximum you can borrow, called the loan to value ratio (LVR).

If markets fall, your LVR will rise and if it rises above a certain level you have to pay extra money to rebalance your borrowing. This is called a margin call and may be requested at short notice, forcing you to sell some of the investment quickly (and at a bad time) to meet the call.

Warrants add leverage

Warrants, which are traded on the Australian Securities Exchange, give you exposure to an underlying asset for a portion of the price without the need for margin calls.

As a result, a warrant gives you leverage which means small changes in the value of the underlying asset result in larger changes in the value of the warrant. This magnifies gains and losses.

There are many types of warrants, each offering a different level of risk and leverage. Warrants can be on individual shares or on exchange traded funds which offer greater diversification.

The maximum you can lose is the amount you paid for the warrant. As the borrowing is non-recourse, you can walk away and only be liable for the loan.

Gearing made simple

The simplest alternative is to let a professional handle the borrowing for you with an internally-geared managed fund. The advantage here is that you don’t need to take out a loan yourself, risk your home as collateral or face a margin call.

Such funds are for investors seeking capital growth rather than income and should be viewed as a long-term investment as the funds are generally more volatile than the share market in the short term.

You can also gear up your self managed super fund with a limited recourse loan. The rules are complex so it is vital that you receive the right advice to make sure you comply with superannuation laws.

You can turn today’s low interest rates into tomorrow’s gains. If you would like more information or assistance in deciding the best borrowing strategy for your personal situation, such as refinancing your home loan while the interest rates are low, please give us a call on 03 5434 7690.