Managing A Complex Transaction

 

For most people, selling one property is stressful enough. Imagine how tricky it is to manage the sale of two properties and refinance two additional properties, all while buying your dream home.

How Refinancing Helped Save A Business – Case Study

Does your business have liquidity or cash flow problems? This is the story of a business with exactly these issues whereby managing the whole process we were able to assist. Perhaps refinancing or restructuring your business loans could be the solution for you.

 Case Study

We first spoke with the client Tanya* after she was referred to us as a result of word of mouth from another client who we had recently helped with equipment and commercial finance.

When Tanya came to us she was under extreme stress with her BBQ Chicken retail shop, and in desperate need of help restructuring her business and the loans she was funding the business with. She had found herself in this position after completing considerable upgrades to the business and premises on the promise of financing by a local Bank. As a result, she paid for many of the upgrades and equipment on her own personal credit cards and when the Bank declined the business expansion loan she began to face a severe cash flow crisis. As a result, she approached us here at Awesome Lending Solutions.

After completing our due diligence, we discovered that the entire business debt was actually in the form of a line of credit facility against her and her husband’s home. As a result the family home was completely exposed in the event the business failed and also as the loan had not been split in any way there was a considerable tax liability that potentially existed due to the mixing of deductible and non-deductible debt.

After a lot of work understanding the client’s current business structure and requirements. We went about creating a structure that would be able to meet their requirements going forward.

The first step in the process was to have all of the kitchen ovens, dishwashers, refrigerators and dining area equipment valued, this cost just over $700 but was well worth it as it provided a valuable cost base for depreciation claims in their tax returns. In addition as much of this equipment was brand new we were able to use the opportunity to seek equipment funding.  This allowed us to reduce the immediate cash flow drain – the credit card debts.

Once we were able to improve the credit card debt the next step was to seek business funding to repay the original Line of Credit loan used to purchase the premises and business. While the interest rate was marginally higher by 0.5% (about $110 per month) the fact that the majority of the debt was now secured by the business came as a great relief to Tanya. We are also sure it made the accountant’s job of claiming all of the business interest costs significantly easier and probably resulted in a lower accounting bill for her.

Like us to review your business lending to see if we can improve your cash flow. Simply contact us by clicking here.

* names have been changed for privacy reasons 

What To Look For At An Open House

There’s an old saying that you should never judge a book by its cover, and this is true for houses – after all, who would buy one having never seen more than the front door? Open inspections are opportunities to flick through the pages, and here’s how to take full advantage.

Use Your Senses

Sniff, peer, listen and feel as much as you can. Your nose might pick up a mouldy or musty smell that may mean damp. You might spy small or hidden cracks that could mean structural issues. That clattering sound when water is running? That can be a sign of serious plumbing problems.

Don’t Be Distracted By The Beautiful Bling

Anyone can invest money in pretty cushions and lamps to set off the house. Or bake some cookies just as the open inspection starts, so the house smells cosy and homey. But when buying property, you’re buying the sausage, not the sizzle. So look past the perfectly presented and lit lounge room to the size, shape and placement in the floorplan of the actual room, and imagine how you will use it.

Look Up

That means checking the roof on the way in and looking at the ceilings in the rooms. Damp and leakage issues are costly and notoriously hard to fix. And once the rot sets in, it’s there to stay.

That Kitchen And Bathroom Advice

It’s true what they say. If these two rooms aren’t what you're looking for,  can you live with it. If not are you willing to spend the money required to transform them? According to research, kitchen renovations in Australia have a cost of $10,608 to $31,722, provided that the room is in good condition and doesn't need any significant structural renovation. Bathroom renovations cost upwards of $10,000, and can end up blowing budgets.

Look At Your Surroundings

What does the neighbourhoods around the property look like? Check out the location at different times of the week and day. It may sound excessive, but maybe the house is under a window-rattlingly low flight path only when the weather is bad. There’s a bar across the road that blasts out loud music in the early hours but is closed during the day when inspections are on. Or there’s a factory down the road that when the wind blows a certain way sends nasty smells wafting. If you have kids, what are the local school like? What is the local crime rate?

Ask Lots Of Questions

What are the utilities like gas, electricity and water costing the current residents? A home with large windows seems bright and sunny, but it can also make for more drafts in winter and warmer rooms in the summer – both problems that make for higher utility costs. It’s also important to ask about previous repairs and renovations; if something goes wrong down the track, it can be good to have a history.

Have A Pre-Purchase Building And Pest Inspection

This may seem obvious, but many houses are bought and sold without one. Home inspectors are trained to find flaws in a home that your untrained eye may never see as a problem, but may cost a lot to correct down the line. If it’s your dream home, you may choose to buy it even with structural or pest problems, but you’ll no doubt be able to negotiate on price.

Before you start looking at homes, talk to an Awesome Broker about how much money you can borrow and which type of loan suits y

You have fell in love at open house and want to know if you can afford it; just click the button below; then use one of our calculators.

When Is The Best Time To Get Insurance?

Bought your dream home, planning a family or about to start a new job and wondering if insurance is the right move! Whatever life stage you’re at, find out how you can protect the things you love has to be a good thing.

Buying A Property

Investing in a property is an exciting milestone for many people and families, providing a place of comfort and a sense of accomplishment. However, in the event of life’s unexpected challenges, such as accidental injury or prolonged illness, mortgage repayments can cause financial stress. In these times, it’s important that financial obligations can continue to be met. A good place to start is to assess your personal situation and whether you and your loved ones could meet your mortgage repayments if you were unable to work.

Getting Married

Making a lifetime commitment to a partner is an important point marking the beginning of new experiences with someone you love. In the partnership of marriage you will share many things, financials being one of them. From assets to debt, it’s important to consider how life insurance can protect you and your partner in the future. Although insurance isn’t likely to be on your gift registry, it’s a good idea to speak to a financial adviser to review you and your partners’ financial situation. In the instance where you have shared financial obligations, it’s important to assess if you and your partner could maintain your lifestyle if one or both of you are unable to earn an income.

Starting A Family

Having children can be the start of an exciting adventure, and gives us the incentive to work to continue to build a future full of opportunity. With children comes the responsibility of providing security for your family, especially in times of uncertainty or when unexpected life events happen. It’s important to acknowledge what the impact would be on your family’s day-to-day lifestyle if you didn’t have your income. With the potential to cover school fees, living expenses and the ongoing wellbeing of your loved ones, a life insurance policy can provide the future you imagine for you and your loved ones.

New Job

You’ve scored your perfect job, or you’re embarking on a new business venture, which usually comes with a pay rise or increased responsibility. Companies and the government provide a certain level of cover in the event of illness or injury, however in most cases the cover provided through WorkCover and public welfare schemes don’t provide adequate protection. WorkCover only provides cover if you are injured at work, and not for any illness or injury sustained outside of work. As a state-based system, the level of cover could also differ based on your location, so too will the included benefits. The right life insurance policy can protect your income and relieve financial stress if you find yourself off work for an extended period. More importantly you will know what you’re covered for, so there are no surprises when it comes time to make a claim.

When Is The Best Time To Get Insurance?

The best time to get insurance is anytime, especially when you hit those life stages. But the question you should be asking is 'What is the right insurance?' The only way you can find out is to research or ask the experts. You need to ask the right question to find the right policy for you and at Awesome Lending Solution can help set you on the right track. Call Rebecca on 1300 761 988 with any insurance question.

FYI it's EOFY!

For Your Information, it’s End Of Financial Year

For most households, 1st of July dawns with barely a cross on the calendar. But just as 1st of January prompts many of us to take a pulse check on our health and resolves to do better, the New Financial Year is the perfect time to take stock of our fiscal fitness.

Build A Budget

It’s easy to lurch from payday to payday and bill to bill in the hope there’s more money coming in than going out. The best way to manage your money and ensure you are not living beyond your means is to set a budget and stick to it.Building a true budget requires honesty with yourself about how much you spend. Consider all of your costs for an entire month; groceries, bills, loan repayments, clothing, coffees, school fees, entertainment and everything in between; and stack them against what you earn. If you find there is little left over or worse, nothing at all, it’s time to cut costs.Consider expenses you can control versus those you can’t. Loan repayments, school fees, rent or council rates are fixed. But takeaways, movies or a new pair of heels are all at your discretion, and where you can cut back. Axing one takeaway coffee from your work day can net you nearly $900 a year, while making your lunch can save more than $1,800. Pare back on impulse purchases and eating out and your annual savings could soar. Need a Budgeting Planner, check out Awesome Lending Solutions.

Set Some Goals

Nothing spurs savings like something to look forward to, such as a holiday or even a deposit on a home. Build your savings goal into your budget and set funds aside as soon as you get paid. Better still, have funds debited from your pay into an account you can’t access easily, such as an online savings account. Want to see how quickly your savings could build? Check out Awesome Lendings Solutions Savings Calculator.

Pay Down Debt

The new financial year is the perfect time to assess debt and prepare a plan to reduce it, starting with those debts with the highest interest. Consumers often make the mistake of paying extra off their home loan while carrying high-interest debt (up to 20 per cent per annum) on their credit card. You will be far better off financially if you clear the high-interest debt first. A $5,000 credit card debt at 17.5 percent, for example, attracts $850 in interest a year while the same amount on a 4 per cent per annum home loan costs just $200 in interest. Credit card providers must now outline to customers how long it will take to pay off their debt if they pay just the monthly minimum. Check out the numbers on your next statement and take steps to pay as much off as you can.

Organise Your Deductibles

Start the new tax year by knowing what you can deduct and sorting your receipts. Australian income-earners are entitled to minimise their tax so find out what you are allowed to deduct in your line of work. Try to keep a record of all relevant receipts, even if it’s just in an envelope or folder. If unsure of what you can claim, visit ato.gov.au or talk to your accountant.

Get Savvy With Your Super

If you are at a point in life where you have extra disposable income, it may be worth contributing more into your super. Talk to your tax advisor or accountant about your individual circumstances and how much extra you’re allowed to contribute. Superannuation is reported after the end of each financial year so keep an eye out for your next statement in coming months to see how your retirement fund is faring. 

Make Sure You Are Covered

Insurance may be considered a grudge purchase, but it could be the difference between financial ruin and getting back on your feet if the worst happens. Check your home and contents policy to ensure you have enough cover to rebuild and replace your possessions in the event of a total loss. Many homeowners make the mistake of just taking out enough building cover to repay their mortgage. But the sum insured should cover the cost of rebuilding your home at today’s prices, including any landscaping and fences. Similarly, contents insurance should be sufficient to cover all of your belongings if you have to buy them again as new. If you have an investment property, make sure you have a specific landlords’ policy to cover claims for loss of rent or tenant damage, which are not covered on standard home policies.

Mortgage Matters

The new financial year is an ideal time to review your mortgage, regardless of how long you have been with your lender. It never hurts to look around at other institutions and their loans to ensure your mortgage is still structured to suit your circumstances. Even 0.5 per cent shaved from a $250,000 loan will save more than $23,000 over 25 years.Talk to your Awesome Mortgage Broker about your financial goals and circumstances for this financial year so they have enough information to help you determine the right loan for your situation. 

6 Reasons Why You Should Love Refinancing

Are you contemplating refinancing but you’re not sure whether it is the right move for you?

While there is no simple response to that question, there are numerous advantages associated with refinancing that you may wish to consider.

Advantage 1: Home Loan Refinancing Could Reduce Your Monthly Repayments.

Refinancing may give you a chance to take advantage of the lower interest rates on offer. By refinancing, you could secure reduced repayments. This could occur when the loan has a lower fixed rate or lower variable rate or you receive a discounted loan which is when an Awesome Mortgage Broker negotiates a percentage off the market rate for the life of the loan. You could also opt to extend you loan repayments a little longer bringing the actual repayments down.

Advantage 2: The Total Interest Paid On Your Home Loan Could Be Reduced.

While it depends on the loan terms of the lender, even with the possible expenses of refinancing, with the reduced interest rate it is still possible for you to be paying less altogether on your mortgage. Importantly your mortgage broker should ensure that you have thorough calculations the costs of refinancing to ensure the savings you make out ways the potential costs. You should also ask your Awesome Mortgage Broker if any lenders will refund any of these costs.

Advantage 3: You Can Pay Your Home Loan Off Quicker.

If you have ended up in a situation where you are making significantly more income than you were when you first purchased your home you may wish to renegotiate the loan term or access a professional package to pay the loan sooner. Making additional payments off your loan is not always permitted; check your some loan contracts to see if this is your situation. Some loans contracts also change the repayments annually to ensure the loan runs the full 30 years. If this is you circumstance, more reason to start considering refinancing to a lender who will allow additional repayments. In some instances, it is worth considering looking at a reduced term to ensure the loan is paid off faster.

Advantage 4: Your Better Credit Could Qualify You For Lower Interest Rates.

If you have a better credit rating now than when you purchased your home it is highly possible that the interest rate on your loan is significantly higher than some of the current rates. It would be worth your while to speak to an Awesome Mortgage Broker to find out where your credit rating is today. Homeowners who have built up and improved their credit rating since purchasing their home can often take advantage of the most competitive rates out there. A better credit rating equals better interest rates, therefore, lower repayments.

Advantage 5: Refinancing Allows You to Access The Equity You Have Built Up 

The major advantage for many who refinance is accessing of possible equity which has accrued since purchasing your home. With the rise in the value of property prices in today's market, this is something worth considering. The access to equity is a great way to complete those renovations that you have been dreaming about while watching the reality shows. Another way you might use the equity; which many of Awesome Lending Solutions clients do; is to start building your own property portfolio by using the equity as a deposit for the next investment property.

Advantage 6: Refinancing Allows You To Consolidate Debt At A Home Loan Rate 

The interest rate on your mortgage is one of the lowest available. By consolidating higher interest loans like credit cards and car loans, you can save yourself thousands in interest. Ask your Awesome Mortgage Broker for a split home loan with the same condition but with the lower rates and you could be paying off that debt before you know it.

The options are endless.

Want to know more about how to access the equity or just want a better rate but don't know where to start then join us at our next Awesome Investment Club being held on the 7th of July 2015. 

5 Hurdles Between the Professional Woman And Her Loan

At Awesome Lending Solutions, we have seen a big change in the market conditions, with the recent rate cuts; Australia is currently experiencing a huge change in what people can borrow. It is an awesome climate for both first home buyers and investors, so much so that you may be able to buy a property now that you maybe could not afford six months ago with the higher interest rates. However, just because the professional woman can borrow more doesn’t necessarily mean the Bank will approve her loan application.There are many reasons her loan may be rejected. A Bank may turn down her loan application even if on face value the financial side of the loan seems to stack up. At Awesome Lending Solutions, here are the main reasons we see loans being rejected and our tips on improving your chances of being accepted: 

You Have A Poor Or Low Credit Score Or Maybe Even Defaults 

Missed or late bill repayments will show up on your credit file, and these can adversely affect your chances of getting a home loan. Even that disputed mobile phone bill from 5 years ago can come back to haunt you. Ensure your bills are paid on time and resolve any past disputes quickly. At Awesome Lending Solutions, we can check your credit file to avoid any potential embarrassment.

You Have Bank Statements Showing Multiple Incomes And Varying Spending Habits

We have come across many successful professional women who prefer to take on various consultancy roles as opposed to being committed to one employer or move within an industry quite regularly. While you know why you have three different employers in the year the Bank does not and will assume that it denotes instability in employment. This type of employment history tends to lead banks to examine your income in detail, as well as your living expenses, and other financial commitments slightly more critically when they evaluate how much they think you can afford to borrow. Every woman should develop a budget to work out how much they think they can afford, and when you preparing the budget don’t forget to include in the budget incidentals (we all like a bit of retail therapy)  even that morning coffee to give you a realistic picture of how you spend your money. This will help ensure your income is sufficient to meet potential home loan repayments. Please Contact Awesome Lending for a copy of our budget calculators to assist you with this. 

When The Story Of Your Savings History Is Clear

You have your deposit covered as well as a great job and income to meet your monthly commitments, but the bank might still say ‘No’ based on your savings history. It is important to be ready to demonstrate to your Bank or Broker how you accumulated your deposit. This will help them see that you are capable of managing your finances and meeting commitments with a savings plan.  Often this could be as simple as setting up a separate account where you have a set amount of funds being deposited on a regular basis. 

You Just Have Enough Money Put Together For The Deposit

While the savings plan can help, this can be hard; it is often tempting to dip into your savings for the latest sale or holiday with friends. Think about ways of locking money into accounts that have time delays on withdrawals such as term deposits. While you don’t want to put your life on hold, banks have minimum deposit requirements and depending on the property and application you may be required to have more. Why not talk to Awesome Lending Solutions about the size of the deposit that you would need before you apply for the loan.

You Have Fallen In Love With A Property, But The Bank Does Not Feel The Same Way

It might be the property of your dreams, but things like the size, location and presentation are all things the Banks will look at. For example, some banks won’t lend in certain post codes of if they think the apartment is just too small and won’t satisfy the banks requirement. You can avoid this by obtaining a property report from Awesome Lending Solutions for the property you are interested in to make sure it is acceptable for a loan. Are You Credit Ready? The secret when applying for any loan is that it's like any good dinner party; you need to prepare well in advance. This means having all your financial information up to date, with clear investment goals and projections for the next 3 -5 years. Show the lender that you have given a lot of thought into purchasing your next property and how you intend to manage your finances so you are considered a 'safe risk'.