There’s something about Lending
With all of the current uncertainty those of you wanting to lend or refinance the process is currently taking much longer than usual. Some of the lending institutions being Banks or private lenders previously used offshore staff however offshore staffing levels have been reduced which in turn means lengthier application times.
When interest rates were higher it resulted in a higher tax deduction to help you reduce overall tax for investment and business loans. With Governments around the world reducing rates due to Covid19 and other macro-economic matters, interest rates have fallen to record lows and the tax deductibility of these loans has also fallen.
If you feel that an investment is going to add to your family’s wealth and you have to borrow to achieve that, now is a very attractive time to lend. There are some solid investments on offer with quality shares and real estate available currently. There is speculation interest rates will drop further and even go negative, but without a crystal ball none of us really know.
If you are thinking of refinancing now is also a good time to consider it. Some of the lending institutions are offering cash back deals and the 3 & 5 year fixed rates have dropped also.
If you are in the market for a new loan or a refinance here are some tips to help you with the process:
- Be prepared and have your documentation ready.
- Last lodged tax returns, financials & assessment notices.
- From your tax agent your Current ATO portal reports for all accounts for the last 12 months.
- 2 Current payslips.
- Rates and Body Corporate Notices.
- Have your 2020 Tax Returns prepared.
- Check your Credit Score.
What is a Credit Score?
A credit score is basically a number that is calculated and indicates how credit-worthy you are. Scores range from 0-1000 with 1000 being attractive to lenders. A high score means banks, insurance companies etc will be more likely to lend to you and often at more favourable rates.
If your score is < 500 you are less attractive to lend to and you need to look at why? Credit scores are affected by unpaid bills, applying for credit too often or defaulting on credit cards or loans to name a few.
Credit simple (www.creditsimple.com) is a free website where you can access your information. I would recommend doing this to see your score. You will be able to access most reported information ranging from credit enquires, defaults, credit infringements, judgements etc and other public record information. If you find an error on your report get to work on correcting it or if the information is correct, but your score is low, look to understand what is causing your low score.
As always we are here if you have any questions so feel free to give us a call 07 54379900.
Quote from Luke Meisenhalter (Loanright Financial Services) “While interest rates are currently at an all-time low, the variance in lending guidelines between banks during the COVID-19 pandemic is now more diverse than ever. If you are thinking of applying for a new loan, refinancing, or even changing your loan structure with your existing bank, it more important than ever to speak directly with a broker that can offer a wide range of choice, to make sure that your application goes to the right bank, the first time. By approaching the best institution for your needs you will significantly reduce the hassle with information required and delayed processing times.”