What Does the Coalition’s Win Mean for You?

Now that the Coalition has had an unforeseen,  re-election, what does it mean for borrowers and homeowners of Australia?

There is no doubt that the key policy battle ground during the election campaign was on housing.

Labor’s platform was that investors weren’t somehow “worthy” of negative gearing taxation benefits, even though it has been a policy for anyone with income producing assets for decades.

Likewise, the vast majority of property investors only own one dwelling, so being portrayed as “greedy” was never going to sit well with about 1.7 million Aussies.

The Coalition had a fight on its hand to convince the voting public that investors weren’t to blame for high property prices, but they ultimately prevailed.

Deposit help

First Home

This was also partly due to their announcement of the First Home Loan Deposit Scheme six days before the election.

The policy will guarantee deposits of up to 20 per cent for first-timers who have saved five per cent and earn under $120,000 for singles and $200,000 for couples.

The scheme is due to come into effect on 1 January 2020, which will likely require applicants to be pre-approved as well as buy dwellings within certain price ranges.

Tax cuts on the way

Apart from housing, the Coalition’s election platform was fundamentally about the economy, with policies to increase jobs and deliver tax cuts, all the while restoring the budget to surplus.

Some of the major policies include tax relief for low and middle-income earners, with a tax offset implemented from 1 July that is forecast to provide $1,080 for about 4.5 million workers.

Tax Cut

In fact, the Coalition’s longer-term tax plan will see about 94 per cent of taxpayers pay no more than 30 cents in the dollar.

When it comes to small businesses with an annual turnover under $50 million, the Coalition plans to reduce the company tax rate to 25 per cent.

It will also implement an instant asset write-off to $30,000, which will be expanded to medium-sized businesses as well.

The policy aims to help small and medium businesses invest in the machinery and equipment they need to grow.

Returning the budget to surplus will assist the government to create 1.25 million jobs over the next five years as well as invest $100 billion in major infrastructure projects across the country, according to their election policies.

Where to from here?

A returned Coalition government will provide some much-needed stability for our economy, but its promises and policies are only part of the solution.

Firstly, that’s because there will need to be cross bench support for many of these ideas to become a legislated reality.

Senate

Ditto, when it comes to the Senate, which ultimately decides which policies become laws and which become also-rans.

That said, in the lead-up to the election, it was clear that the Senate had more in common with the Coalition’s policies than the Australian Labor Party’s so many of these policies might get over the legal line.

The First Home Loan Deposit Scheme is one policy that has the potential to stimulate activity in the property market, but there needs to be others.

The economy, while reporting low unemployment rates, continues to tread water at best.

Wage growth is benign as is inflation, which recently hit zero. Government stimulus is required and action needs to be taken.

While some people think this is a good thing because prices aren’t going up, it actually means that the economy is going backwards to a degree.

The Reserve Bank is also ready to pull the trigger on an interest rate cut or two, but it really doesn’t have enough left in the tank to make much of a difference economically.

That’s why the re-elected government needs to create fiscal and regulatory stimulus packages as well.

There are brightest minds than mine that can determine what these need to be, but one of the easiest to implement would be to get banks’ lending again by halting the ridiculous hoops that good borrowers are still having to jump through.

We want a balanced market where both 1st homeowners can get into the market and investors can still prosper as these fundamentally point to the “great Australian dream.”

We look forward to seeing what ScoMo and the Liberals do in the next 100 days in power and what it sees fit to follow through on and what it doesn’t. Watch this space everyone…

Chris Connolly
Connolly Wealth Management
Level 1, 441 South Road
Bentleigh  VIC  3204

(P) 03 9591 8000
(F) 03 9530 8375
(E) chris@connollywealth.com.au
(W) www.connollywealth.com.au

Disclosure: Christopher Connolly (280099) and Connolly Wealth Management Pty Ltd (333350) are Authorised Representatives of Wealthsure Financial Services Pty Ltd AFSL 326450.

The information provided in this article is general in nature and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information you should consider the appropriateness of the information with regard to your objectives, financial situation and needs.

Disclaimer
The information contained in this email and its links/attachments are general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial products

 

Sources: Intuitive Finance; The Property Investors Choice

How you can be an Effective Business Owner

Make a tax-efficient investment in your business by 30 June 2019.

If you are considering purchasing business equipment or assets, we can help you with the finance to do it sooner. Not only will your business benefit right away, you could also be eligible for the ATO $30K instant asset write-off at tax time.

Funds to boost your business

  • Business loans from $5,000-$300,000
  • Fast application & decision
  • Terms from 3-24 months
  • Cash flow friendly repayments

What could you spend $30K on?

The instant asset write-off is available for a range of business expenses:

  • Updated technology, computers & printers
  • New office furniture or shop fittings
  • Kitchen equipment or cafe tables and chairs
  • Trade tools & machinery
  • New & second-hand work vehicles

Talk to me about using a short-term business loan to invest in business assets – right now business loans come with no repayments until July 2019.

 

Regards,

 

Chris Connolly

Connolly Wealth Management
Level 1, 441 South Road
Bentleigh  VIC  3204
(P) 03 9591 8000
(F) 03 9530 8375
(E) chris@connollywealth.com.au
(W) www.connollywealth.com.au

Disclosure: Christopher Connolly (280099) and Connolly Wealth Management Pty Ltd (333350) are Authorised Representatives of Wealthsure Financial Services Pty Ltd AFSL 326450.

 

 

 

1 Government asset write-off eligibility is subject to independent tax advice.

2 Deferred payment offer available for new and existing approved customers on a new Prospa Small Business Loan. For eligible business loans settled between 3 May and 9 June 2019 inclusive, no loan repayments required from the loan settlement date to 30 June 2019 (inclusive); loan repayments begin on 1 July 2019. For eligible business loans settled between 10 June and 30 June 2019 inclusive, no loan repayments required from the loan settlement date to 21 July 2019 (inclusive); loan repayments begin on 22 July 2019. Total loan repayment term will be extended by the time equal to your loan payment deferral period. Offer only available to customers with connected electronic bank statements. Offer not available in conjunction with any other offer. Offer may be withdrawn without notice. Standard approval criteria, fees, terms and conditions apply.

Disclaimer
The information contained in this email and its links/attachments are general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial products.

Need a Loan for Your Next Home?

Whether you’re upsizing, downsizing or just moving to a home in a new location, no doubt things have changed since buying your last home. This article explains the finance options available when you’re moving on to your next home. We also highlight a few other key considerations to think about.

How do you get from one home to the next?

The ideal way to do it, financially speaking, is to sell your existing home first. That way you’ll know exactly how much money you can spend on your next home and how much you’ll need to borrow. Moving on to your next home this way will also put you in a good position with potential lenders for your next home loan.

But life isn’t always that straightforward. If you can’t sell your existing home first for some reason, you might want to consider a loan product known as a ‘bridging loan’, which gives you access to funds to buy your new home before you’ve sold your current one.

What is a bridging loan?

There are generally two types of bridging loans: closed bridging loans and open bridging loans. Closed bridging loans are available to borrowers who have already locked in the sale of their existing property and know when it will settle. These are usually short-term arrangements. Open bridging loans are used when the existing property has not yet been sold and these can be arranged for up to 6 months.

How do bridging loans work?

A bridging loan requires the lender to work out the size of the total loan by adding the value of your new home to your existing mortgage, then subtracting the likely sale price of your existing home. This requires a valuation by the bank which will cost approximately $200 for each property.

Typically, you pay interest-only on the entire loan amount until the first property is sold and the principal is repaid in full. Bridging loans are sometimes structured so you only make principal and interest repayments on the loan until settlement, capitalising the interest due on the rest of the loan. Either way, once you have sold your existing property, the loan reverts to an ordinary home loan.

The pros of bridging loans

  • You won’t miss out on your ideal property.
  • If you want to build your next home, you can stay in your existing property until the new one is completed.
  • You won’t have to worry about matching up settlement and move-in dates.
  • You may achieve a better price for your existing property without the pressure of having to sell immediately, particularly in the current selling environment.
  • You can avoid the costs of renting while you’re between homes and paying the movers twice.

The cons of bridging finance

  • During the bridging period, you’ll have two loans that are accruing interest.
  • Both properties will have to be valued by the lender – which could be costly.
  • The longer it takes to sell your existing home, the more interest you’ll pay, as the interest is compounded monthly.
  • If you don’t sell your current home within the bridging period, you could be required to pay a higher interest rate to continue. .
  • You’ll need at least 20% of the total value of both properties (either in cash or equity in your existing property) to qualify for a bridging loan.

Alternative finance options

If a bridging loan isn’t right for you, there may be other options available to get you over the line with your next property purchase – so talk with us first. For example, if you have enough equity in your existing home, you may be eligible to use a line of credit.

Other considerations

Do you really need to sell your existing home? With many of our property markets experiencing a ‘correction’ at present, it could be a good idea to keep your current property as an investment and sell it on when the market recovers. Talk to us about your financial circumstances and we’ll see if you have the borrowing power to make it happen.

The ideal way to find out which loan you need and what you can afford to do with your existing home is to talk to us first. We offer tailored finance solutions, based on your individual circumstances. So, if you’re thinking about moving on to your next home, please get in touch with us today!

Chris Connolly
Connolly Wealth Management
Level 1, 441 South Road
Bentleigh  VIC  3204

(P) 03 9591 8000
(F) 03 9530 8375
(E) chris@connollywealth.com.au
(W) www.connollywealth.com.au

Disclosure: Christopher Connolly (280099) and Connolly Wealth Management Pty Ltd (333350) are Authorised Representatives of Wealthsure Financial Services Pty Ltd AFSL 326450.

 

Disclaimer
The information contained in this email and its links/attachments are general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial products.