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What Is Stamp Duty In Australia? It’s Not Hard To Understand!

What Is Stamp Duty In Australia? It’s Not Hard To Understand!

What Is Stamp Duty In Australia – How Much Do I Pay?

When it comes to buying property, there will always be additional costs – and most of the time, these costs will go way beyond what you have to pay for the deposit. You will have to deal with lender’s fees, legal fees, building inspection fees – but what will most likely burn a great whole through your budget is the stamp duty fee.

To make things even more complicated, stamp duty has no standard rate in Australia. In fact, each state will feature its own rate – and this might leave you confused about what it is exactly and how much you will have to pay. To make things easier for you to understand, this article will present you the basics of stamp duty.

What Is Stamp Duty?

Stamp duty is practically a tax that pays for the property transfer (e.g. homes or lands) from one lender to another. They also apply to other types of properties such as mortgages and vehicles – as well as any other belonging that has your name on the contract.

When it comes to property, the value of the property will be the main deciding factor into how much you will have to pay. Moreover, the state in which you are making the purchase will also have its own role – which is why it is recommended that you make use of a stamp duty calculator.

However, as a general rule, the higher the price of the property, the more you will have to pay in stamp duty. Sometimes, this may add up to thousands of dollars.

When Do I Need to Pay the Stamp Duty?

This will differ from one state of Australia to another. For instance, in the ACT, you must pay the stamp duty within 28 days of settling, whereas in Tasmania and NSW you will have up to 3 months to make that payment. However, as a general rule of thumb, it is payable prior to settlement. Contact a conveyancer or your mortgage broker for more information.

How Does Stamp Duty Differ from Place to Place?

As you might have noticed, stamp duty differs depending on the place where you made the purchase. Three factors, in particular, will determine exactly how much stamp duty will cost.

Location: Stamp duty price is generally set as a percentage from the full price of the property – but this will also depend on the location where the property was built.

Property Type: Each property type will have a different value in stamp duty. For example, you will have to pay a different price for an existing residential loan compared to a vacant land.

Purpose: Do you want to rent the property straight away, or is your intention to live in it? In this case, the stamp duty might also differ.

Grants: Depending on what state, grants are available to first home buyers with no stamp duty payable up to certain values with discounts applied thereafter. Get in touch with our mortgage and finance brokers who will fill you in with what grant you may be eligible for.

The Bottom Line

If you need help calculating your stamp duty, contact our office right away. Moreover, if you are in need of help to finance the stamp duty, we may be able to help you out. We have many years of experience in helping our clients find an appropriate loan for their needs, and we would be more than happy to guide you through the process. Contact us on on 02 9121 6247 or submit your scenario online.  

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What Is Negative Gearing? It Can Save You LOADS!

What Is Negative Gearing? It Can Save You LOADS!

What Is Negative Gearing and How Does It Work?

Long story short, negative gearing means that you are making a loss. Basically, it shows that the interest expenses and repayments on your investment are greater than the rental return.

This can somehow be seen as good news, mainly because Australian property investors can significantly reduce their tax bill if they are subject to negative gearing. It also helps get your home loan approved as lenders take this deduction as borrowing power!

As expected with any useful benefit, negative gearing is now part of some controversies. Therefore, there are risks that come with it, as well as strategies that you can use to maximize the profit you gain from your property investment.

The Basics of Negative Gearing

As mentioned above, an investment property is considered negatively geared when the net rental income, after the deduction of expenses, is less than the interest that comes with the borrowed funds.

Naturally, the main result of negative gearing is a net rental loss. For example, you buy an investment property, renovate it, and then cover some of its maintenance costs. However, at the end of the year, you can be faced with a hard truth.

Namely – that the annual rental income that your investment generates is less than the expenses you have incurred and are related to that investment property.

The Good Side of Negative Gearing

We did mention that negative gearing comes with its own benefits, even if – overall – you are still losing money.

You can turn this loss into a benefit by offsetting negative gearing against the income that you earn from your other sources – other investments, income, and so on. In the end, you will be effectively earning less income. This means that you will have less tax to pay at the end of the next financial year.

In short, negatively geared investments give you the opportunity, and right, to deduct the difference resulted from your loss in your taxable income.

How Do You Calculate Negative Gearing Loss?

You need to do three things in order to come up with your negative gearing loss:

Add Up the Income from Your Property – this consists of the amount of rent that you collect from your investment property (multiply the weekly rent by 52).

Add Up the Expenses from Your Property – this includes maintenance costs, interest payments on the mortgage, as well as property management fees.

Deduct the Depreciation – depreciation is the loss that can be seen from the decrease in value of certain assets within your investment property as well as of the building itself. Almost anything can depreciate – drapes, carpets, appliances, and so on.

The Bottom Line

When looking for a deduction via negative gearing, you may even be able to deduct the full amount of rental expenses against your income (even your rental income), including wages and salary.

Overall, property investors can claim deductions in revenue, capital items, and building allowances – not to mention any additional deductible expenses, such as land tax, insurance, etc.

Basically, negative gearing can protect you in case of a loss. It can also be used as a strategy when your investment property is not doing well but be aware that strategies do come with risks.

We can offer you more information and answer your questions if you have any. Simply contact us! Our team of experts will answer your questions and help you with anything related to home loans – including the process of finding the best one for you.

Contact us on on 02 9121 6247 or submit your scenario online.

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So, why use Highline Lending for your home loan?

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We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position

We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks

With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution

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What Is Invoice and Debtor Finance? Borrowing Against Your Unpaid Invoices!

What Is Invoice and Debtor Finance? Borrowing Against Your Unpaid Invoices!

What Is Invoice & Debtor Finance

When running a business, the only thing that you need – as soon as possible – is the cash that your customers owe you. With invoices, you can wait for quite a while before your cash flow starts moving, so to speak.

Luckily, businesses can rely on invoice and debtor finance to have one thing less to worry about. Such forms of finance will help your business release cash from the outstanding customer invoices – the perfect solution for slow cash flow!

Let’s now take a closer look at invoice and debtor finance!

The Basics

Invoice finance, also known as factoring, is one of the oldest lending forms in the world. Basically, clients that offer a service or conduct certain work with a factoring finance facility will not have to wait 30 or more days for their payment – instead, they will be paid straight away by the lender

By definition, factoring means that you provide a financier with completed invoices and get paid a certain percentage of an invoice anywhere between 24 and 48 hours. We have a lender who can offer same day invoice & debtor finance!

Naturally, roughly the same aspects apply to companies that rely on invoice and debtor finance. Businesses with factoring will enjoy very fast access to working capital – the same working capital would be tied up in accounts receivable for as long as 60 days without factoring.

Cash Flow Improvement – The Main Advantage

As mentioned above, invoice and debtor finance improves cash flow and helps businesses get their hands on their money much sooner than they would if they waited for customers to pay up.

Debtor finance provides a budget for slow-paying invoices and accelerates a company’s revenues. In short, working capital and cash flow are improved, allowing for the payment of wages, suppliers, and any other expenses on time – or sooner than needed.

How Does Invoice & Debtor Finance Work?

When applying for invoice & debtor finance, you will have to choose between invoice factoring and discounting – whichever suits your company the best.

Invoice factoring, unlike discounting, is fit for small companies that don’t have yet established the collection and credit departments. Factoring finances the invoices individually – while discounting does so in a batch.

The factoring company will then advance the business 80% to 85% of the invoice’s value – this process will start as soon as the invoice is submitted. The remaining 15% to 20% – minus fees – will be advanced to the business when the customer pays their invoice in full.

Benefits of Invoice and Debtor Finance

1. Cash Flow Improvement

2. Financial Stability

3. Ability to Extend Payment Terms

4. Flexible Financing Facility

The Bottom Line

In short, if you have a small business that could use improvement to its cash flow, then invoice and debtor finance is the thing you should apply for. However, keep in mind that your business must be well organized and free of major tax and legal problems.

Other than that, you shouldn’t have any issues applying for invoice & debtor finance!

On the other hand, if you need information or have questions regarding home loans and such, then you can contact our office. We will guide you through the process of finding the best loan for your needs – even exceeding your current one! 

Feel free to reach out and contact us today – we’re more than happy to help you! Contact us on on 02 9121 6247 or submit your scenario online.

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So, why use Highline Lending for your home loan?

CHAT WITH AN EXPERT
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We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks

With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution

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What Is Debt to Income Ratio When Applying For a Home Loan

What Is Debt to Income Ratio When Applying For a Home Loan

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What Is Stamp Duty In Australia? It’s Not Hard To Understand!

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What Is Debt to Income Ratio?

By definition, the debt to income ratio is a term used by lenders to determine a loan’s serviceability. Basically, as its name implies, the ratio is used to identify how much of the borrower’s monthly income is applied towards the payment of any ongoing debts, such as mortgage repayments, credit card payments, car loans, and so on.

If we were to take a look at debt to income ratio as an equation, it would be monthly total debts divided by monthly income.

Naturally, the lenders use this ratio when assessing your loan application. In short, the debt to income ratio is one of the things taken into consideration when you apply for a loan.

The Basics

For example, if you have a monthly income of $2000 and you make repayments of $500 each month, then your debt to income ratio is of 25%. Keep in mind that, when trying to get your loan approved, lenders will not want this ratio to go above 30% or 35%.

This is because a high ratio means that you are spending too much of your monthly income on your debts and that you won’t have any income left for your everyday life or living expenses if you were to take another loan.

A high debt to income ratio can have the following results:

1. You will struggle with the paying of any emergency expenses that may come up.

2. Banks will consider you at a higher risk of default and will most likely reject your loan application.

3. Too many rejected car or home loan applications will make your credit report look bad.

Reducing the Debt to Income Ratio

Naturally, if you want to reduce your debt to income ratio, you can do two things – either reduce debts or increase income. On top of that, you will have to monitor living expenses.

Let’s say that you find ways to decrease debt or even to increase income – this doesn’t mean that your home loan application is sure to get approved. High living expenses may also be the ones to break your loan application.

The Bottom Line

Therefore, the debt to income ratio is only a part of a home loan. For example, if you have a low ratio but high living expenses, then it may be difficult to make repayments – that if your loan gets approved.

There are various ways through which you can achieve a proper debt to income ratio. We can offer you all the information you need about loans and such – in fact, we can even help you get the best loan for your needs.

We are more than happy to help you – just reach out and contact us today! Contact us on on 02 8530 1107 or submit your scenario online.

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FREE HOME LOAN GUIDES
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So, why use Highline Lending for your home loan?

CHAT WITH AN EXPERT
CHAT WITH AN EXPERT

We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position

We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks

With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution

CHAT WITH AN EXPERT
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Top Reasons Why You Should Use a Property Manager For Your Investment Property!

Top Reasons Why You Should Use a Property Manager For Your Investment Property!

Using a Property Manager to Manage Your Investment Property

The thought of using a property manager comes when you’ve just purchased a new investment property or when you consider spending less time managing your existing properties.

Outsourcing property management comes with a lot of benefits. However, you have to make sure that the property manager you hire is experienced, can be trusted, and can provide you with high-quality services.

On top of that, a property manager will manage your investments – it goes without saying that you have to be sure that you want to hire one. Here’s what you should take into consideration when you consider using a property manager.

When Should You Hire a Property Manager?

Having an investment property doesn’t mean that you have to deal with its management on your own. There are some circumstances that may make you hire a property manager, such as:

When you don’t live near your property – in this scenario, you will want someone close to your investment, preferably someone with local connections, ability, and knowledge to attend to your property in a timely manner.

No interest in hands-on management – you should consider a property manager if you don’t want to waste time arranging repairs, collecting rent, conducting property inspections, filing bonds, adjudicating disputes, locating tenants, and so on.

You don’t want to interact with your tenant – most investment property owners find it easier to rely on a property manager to deal with the day-to-day issues related to tenancy. This is because most of these issues are sensitive and usually lead to bond inspections and such. A property manager will deal with this instead, helping you avoid difficult situations.

Limited time – naturally, when you don’t have enough time to properly manage an investment property, you’d rather pay a property manager so that the property reaches its maximum potential in terms of profit.

You can afford a property manager – if you’d rather save time and can afford to hire a property manager, it is likely that you will choose to do so. Furthermore, the fees involved are tax deductible on the investment.

You have multiple rental units or properties – if you have to deal with multiple properties/units, then you will definitely seek the services of a management company, as you will not be able to properly deal with all of them – including their issues.

Things to Consider when Using a Property Manager

Obviously, you shouldn’t take any property manager for granted. When searching for one, you have to be as diligent as you were when you bought your investment property.

For example, it is recommended that you:

Test their property management knowledge – interview the property manager for the job and don’t take their experience for granted. It doesn’t matter if they work for a big management company – they have to be fit to manage your investment.

Trust your gut – when interviewing them, their knowledge and experience is only a part of what you are looking for. Trust your gut and choose one that seems like a good communicator and negotiator and shows to be honest, approachable, and organised.

Cheap isn’t necessarily better – choose the property manager based on the interview, their skills, experience, and so on and not on their rates. Property managers who specialize on this field rather than also offering services, are recommended.

The Bottom Line

If you are unsure whether you can deal with the management of your investment or not, then it is better if you meet with a property manager and see what they can do for you.

Keep in mind that an investment that’s managed in a bad way will make you lose money and regret buying that property in the first place. Therefore, it is better to just pay a property manager and let them help you make a profit.

Here at Highline Lending, we have relationships with some of the best property managers and real estate agents and are more than happy to make an introduction.

If you have any more questions or need certain information regarding property or loans, feel free to get in touch with us. Our experienced team will provide you with all the information you need and help you find the best loan for you.

Therefore, if you are looking for a loan for an investment property, make sure to reach out and contact us today! Contact us on on 02 9121 6247 or submit your scenario online. 

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Whether you’re a first home buyer looking at entering the market or an existing home owner looking at ways to save money on your home loan, we have you covered. We’ve put hundreds of hours of research into these guides to ensure you end up ahead, and it’s completely on the house.

FREE HOME LOAN GUIDES
FREE HOME LOAN GUIDES

So, why use Highline Lending for your home loan?

CHAT WITH AN EXPERT
CHAT WITH AN EXPERT

We meet for a consultation, obtain your supporting documents and proceed to structure and package your application for approval knowing exactly what the banks want to see. We also monitor your home loan post approval ensuring you’re home loan suits you and your financial position

We get paid a commission from our lenders as a result of introducing your business to them. Subsequently, our service is at no cost to you. Our commission does not affect your interest rate whatsoever, if anything, we’re in a position to get you a lower interest rate than the general public due to our relationships with our banks

With our many years experience in the industry, we’ve been exposed to both easy and complex loan scenarios. Each loan we process gets presented to over sixty financial institutions, ensuring we have explored all options possible and are able to provide a solution

CHAT WITH AN EXPERT
CHAT WITH AN EXPERT