If your personal information falls into the wrong hands, it can be used to steal your identity.

If you think your identity has been stolen, report it to your local police and your bank, and change your passwords.

Signs of identity theft

If your identity has been stolen, you may not realise for some time. These are some signs to look out for:

• Unusual bills or charges that you don’t recognise appear on your bank statement.

• Mail that you’re expecting doesn’t arrive.

• You get calls following up about products and services that you’ve never used.

• Strange emails appear in your inbox.

Act fast if your identity is stolen

What to do if you think your identity has been stolen.

Report it to the police

Report it to your local police department. Ask for the police report number so you can give it to your bank.

Contact your bank

Contact your bank so they can block the account. This will stop a scammer from accessing your money. You may also need to cancel any credit or debit cards linked to your accounts.

Change your passwords

If someone has stolen your identity, they may know your passwords. Change your passwords straight away. Think about all of your online accounts, including social media and other bank accounts.

Report it to the relevant websites

If you think someone has hacked into your online accounts, report it to the relevant websites.

Alert family and friends

If someone has taken over your social media accounts or your email address, alert your family and friends. Tell them to block the account.

Report it to the ACCC

The ACCC’s Scamwatch collects data about scams in Australia. Your report helps Scamwatch create scam alerts to warn the community.

Contact IDCARE

IDCARE is a free service that will work with you to develop a plan to limit the damage of identity theft. 

Protect yourself from identify fraud

Simple steps you can take to avoid identity theft.

Secure your mail

Put a lock on your street mailbox so that people can’t steal your mail.

Shred your documents

Letters from your bank, super fund and employer can all contain personal details scammers can use to steal your identity. Shred these kinds of letters before you throw them out.

Use public computers with caution

If you use a public computer, for example, at a library, make sure you clear your internet history and log out of your accounts.

Be careful on social media

Be aware of what you post on social media, particularly if your profile is public. Scammers can find out where you live, work and visit through your posts.

Use strong passwords

Make sure your passwords are long and contain a mix of numbers, symbols, capital letters and lowercase letters. Strong passwords make it harder for people to hack into your accounts. The Australian Cyber Security Centre has some useful tips to protect your information online.

Use security software on your computer

Use virus protection software to help stop hackers from accessing your information. This software can help protect you if you click on a suspicious link or visit a fake website.

Monitor your bank transactions

Check your bank statements and online accounts regularly for unusual transactions. If you spot something unusual, check it with your bank and find out if you need to act.

Request a copy of your credit report

Check your credit report for any unusual or incorrect debts. Find out how to get a free copy of your credit report.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/banking/identity-theft

Important note: This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

Important
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

As the nation drifts back to work and study after the summer break, it’s often a time to start putting your New Year’s resolutions into practice. For some, an extended holiday may have convinced you that you are ready for more of the good life and that it’s time to retire.

In the past, that would have meant leaving work for good. These days, retirement is far more fluid.

You might simply want to wind back your working hours to give your mind and body room to breathe. Or you may want to leave your full-time job but keep your career ticking over with part-time or consulting work. Others may dream of leaving the nine to five to run a B&B or buy a hobby farm.

Changing retirement patterns

There are already signs that people’s retirement plans are changing.

In 2019, the average retirement age for current retirees was 55 (59 for men and 52 for womenⁱ), but the age that people currently aged 45 intend to retire has increased to 64 for women and 65 for men.ⁱⁱ

There are many reasons for this gap between intentions and reality. Only 46 per cent of recent retirees said they left their last job because they reached retirement age or were eligible to access their super. Substantial numbers retired due to illness, injury or disability (21 per cent) while others were retrenched or unable to find work (11 per cent).ⁱⁱⁱ

Retired women were also more likely than men to retire to care for others. But for people who can choose the timing of their retirement, there can be good reasons for delay.

Reasons for delaying retirement

As the Age Pension age increases gradually from 65 to 67, anyone who expects to rely on a full or part pension needs to work a little longer than previous generations.

We’re also living longer. A man aged 65 today can expect to live another 20 years on average while a woman can expect to live another 22 years.^iv So the longer we can keep working and building a nest egg the further our retirement savings will stretch.

And then there’s COVID. If you lost your job or your hours were reduced during the pandemic, you may need to work a little longer to rebuild your savings. Even if you kept your job, you couldn’t go anywhere so you may have postponed your retirement plans. But now the COVID fog is lifting, and borders are reopening, retirement may be back on the agenda.

Whatever shape your dream retirement takes, you will need to work out how much it will cost and if you have sufficient savings to make it happen.

Sourcing your retirement income

The more you have in super and other investments the more flexibility you have when it comes to timing your retirement. If you plan to retire this year, you will need to be 66 and six months and pass assets and income tests to apply for the Age Pension. But you don’t have to wait that long to access your super.

Generally, you can tap into your super once you reach your preservation age (between age 55 and 60 depending on the year you were born) and meet a condition of release such as retirement. From age 65 you can withdraw your super even if you continue working full time.

But super can also help you transition into retirement, without giving up work entirely.

Preservation age

Source: ATO

Transition to retirement

If you’re unsure whether you will enjoy retirement or find enough to do to fill your days, it can make sense to ease into it by cutting back your working hours. One way of making this work financially is to start a transition to retirement (TTR) pension with some of your super.

Case study

Ellie, a teacher, has just turned 60. She wants to reduce her workload to three days a week so she can explore other interests and gradually ease into retirement. Her salary will drop but if she starts a TTR pension she can top up her income with regular monthly withdrawals.

Most super funds offer TTR pensions, or you can start one from your self-managed super fund (SMSF). You decide how much to transfer into a TTR pension account, but there are some rules:

• You must have reached your preservation age

• Money can only be withdrawn as an income stream, not a lump sum

• There is a minimum annual withdrawal amount, for example, 4 per cent of your TTR account balance (2 per cent until June 2022) if you are aged 55-64

• The maximum annual withdrawal is 10 per cent of your TTR account balance

• Income is tax-free if you are aged 60 or older; if you’re 55-59 you may pay tax on the TTR income, but you receive a tax offset of 15 per cent.

One of the benefits of this strategy is that while you continue working you will receive compulsory Super Guarantee payments from your employer. A downside is that you will potentially have less super in total when you finally retire.

Retirement is no longer a fixed date in time, with far more flexibility to mix work and play as you make the transition. If you would like to discuss your retirement options and how to finance them, give us a call on Phone: 07 5641 4134.

i, iii https://www.abs.gov.au/statistics/labour/employment-and-unemployment/retirement-and-retirement-intentions-australia/latest-release

ii https://newsroom.kpmg.com.au/will-retire-data-tells-story/

iv https://www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/life-expectancy

Important: Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

If you want a shortcut to a financially healthy business, know that it begins with two key points – organisation and education. It’s a challenging task for anyone, especially small business owners. 

However, it isn’t impossible, and there are several ways you can apply those points. The last year has been a challenge for everyone, and it’s important that you know how to dig your way out of difficult times. You can’t do that unless your business is financially healthy. 

5 tips to move towards financial health

1. The numbers

Every line on your books is important so you need to know them all. What’s your revenue, what are your expenses, what does your payroll look like, what about overhead, assets, liabilities, equity, and costs of goods?

If it’s in the books then it’s worth knowing, and it’s the key to laying a strong foundation for a financially healthy business. It’s worth highlighting that you need a comprehensive bookkeeping system to ensure you do know your numbers. 

2. Billing

Consistency is vital, and billing is something that you cannot afford to overlook. The longer it takes you to invoice your clients and customers, the longer it takes to receive payment. Like every best practice, you need a process. 

You need an invoicing plan that will make life easy, and if you know you hate manual invoicing or you’re guilty of letting it fall by the wayside, then look into software that will do the heavy lifting for you. It’s worth the investment if it can handle recurring invoices and save time. 

3. Obligations

This point goes hand in hand with consistent billing. The reason you need to be consistent with billing? It is to ensure you receive payments on time so that you can meet all of your financial obligations. When you get one weak link, it can disrupt the entire chain, and if you make late payments, you get hit with fees. 

Paying your bills is a priority, whether it’s rent or mortgage payments, payroll, utilities, credit cards and loan repayments, vendor bills, and tax payments. Payroll is more than a financial obligation, people’s lives depend on you paying them on time, and there are laws for you to follow as well. Don’t forget to make a note of it in the books as soon as you take care of it. 

4. Emergency funds

Experts suggest individuals should have six months’ salary saved for emergencies, and businesses are no different. Nobody predicted COVID upending the world the way it did, and you can’t predict global events, but you can prepare. 

A loan will take time, even if it’s from a friend or family member. Start socking away money now. Start with at least three months of expenses, but a year is even better. When you need the cash injection you’ll have funds standing by. 

Succession planning falls under this umbrella. If something happens to you, you need a plan in place for who will lead the business. It might sound morbid, but you have invested so much time and energy into this business so, you need to take steps to protect your legacy. 

5. Separate accounts

The biggest mistake small business owners make is failing to separate funds. Your personal funds likely had a big hand in creating your business. However, you need to separate your personal and business funds fast. If the money is mixed in together, it will be far more difficult to keep track of accounting. 

Looking back at point one, the most important part of building a financially healthy business is knowing your numbers. So, why would you make life so much harder for yourself? 

You need a business bank account as soon as possible. Additionally, open a business savings fund and credit card. When dealing with business purchases, you need to use business funds to cover the expense. If you’re paying staff, it comes from the company account. This ensures you have a clear record of where the money is coming from and where it’s going. 

Having business accounts also ensures your business has credit which will help ease the way for purchasing property if and when the time comes!  

Business ownership is as exciting as it is overwhelming, but often, small business owners make it more difficult for themselves than necessary. If you start with strong financial decisions, you lay a strong foundation for a financially healthy business. 

If you’d like to discuss your business finances, call us today on Phone: 07 5641 4134. 

Source: Flying Solo January 2022

This article by Nick Brogden is reproduced with the permission of Flying Solo – Australia’s micro business community. Find out more and join over 100K others https://www.flyingsolo.com.au/join.

Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) ac www.flyingsolo.com.au

When was the last time you looked closely at your loan, the progress you are making on paying it off and how it compares to others in the market? Analysing your mortgage could mean savings for you, as well as the opportunity to pay it off more quickly, invest in other assets or reach financial freedom sooner.

Make smaller payments, more often 

To cut the size of your payments, make more of them. This could even see you pay off your loan faster, and therefore pay less interest overall.

If you pay your mortgage monthly, consider changing to fortnightly repayments. For example, if your mortgage equates to $2400 a month, cut this in half and pay $1200 each fortnight. As well as having more manageable payments to make, by the end of the year you will have paid off $31,200 rather than $28,800.

Pay just a little bit extra

A minimum repayment is just that – for most loans there is no reason you can’t pay more, whether here and there or regularly.

By rounding up to a full number or contributing an extra $100 or even $10, you’ll significantly reduce your mortgage. It may also be worth considering putting all bonuses, tax returns and gifts into your mortgage.

Don’t decrease repayments when interest rates fall

Even if your repayments are lowered when fees and interest rates decrease, it doesn’t mean that’s all you have to pay and, by keeping your repayments at the same level when interest rates are lower, you will pay down more of the principle with each payment and make speedy progress on your loan.

Offset it

If you can, use an offset account. A mortgage offset account is linked to your loan and the interest payable on the loan from month to month is calculated by deducting what is in your offset account from your current loan. For example, if your mortgage is $500,000 and your offset account has $10,000 in it, you will only pay interest on the remaining $490,000.

An offset account will save interest while still giving you access to your savings. It also means investors can preserve the tax deductibility of the mortgage.

Find a better deal

Ultimately, your mortgage needs to suit you and your circumstances, or you will wind up paying too much. If you think your current loan no longer matches your situation, speak to your finance broker. They will be able to find the right product for you, as well as negotiating appropriate rates on it.

Of course, it is important to make sure that your lender doesn’t charge fees for extra repayments, refinancing, or any other steps you take in an attempt to save on your loan.

If you need help with budgeting to help pay your mortgage off sooner, contact us today on Phone: 07 5641 4134.

Source: MFAA

Reproduced with the permission of the Mortgage and Finance Association of Australia (MFAA)

Important:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Imagine yourself on selling day where you’re left wondering how you got the price so wrong. Now imagine the opposite, where your home sells for what you’d hoped – or more.

It’s important that you’re confident about the market in order to develop realistic expectations on the outcome. And that starts with accurate, reliable information.

Here are some things to consider:

Get to know what’s happening in your area

Check out property listing sites

They’re a great way to check out the recent home selling prices in your location.

Browse local agents’ websites

Many of them list their most recent results on their sites or in ads.

Head out to auctions

It’s a great way to observe buyer behaviour, sentiment and trends that you can’t get a sense for online. And the turnout alone can help set your expectations. Just don’t stretch or practise your Saturday Night Fever moves when the bidding starts.

Download a property report

Property reports provide a detailed breakdown of the sales in your area, including individual properties. Reports differ depending on who provides them (realtors, valuers, finance companies, etc.) but you can generally expect handy information like:

• the total number of properties sold in a suburb and the average selling price in the last 12 months

• the average asking price compared to the average selling price (a great indicator of how a property’s time on the market can impact what buyers are willing to pay)

• specific details for individual properties, like the number of bedrooms, car spots, etc. so you can make comparisons from similar properties to your own.

If you’re looking for insights for your area, download free NAB Property Reports to get the inside edge.

Get to know your property

Consider an independent valuer

Your agent should have already given you an informed estimate of your property, but professional valuers are often more accurate. By getting another opinion – especially one that’s independent – you’ll get a clearer and more balanced insight into your home’s true value.

Choose a valuer that’s both registered and experienced with your area/property type. For just a few hundred dollars, it’s definitely worth the cost.

Leave any emotional attachment at the door

A common pitfall is confusing your property’s value with what you’re budgeting for. You might have your heart set on buying a special house in your dream location, but this thinking can lead to some tough reality checks. It’s also pretty easy to think your home’s the best on the block, so try to stay objective and compare apples with apples.

What happens if you’ve found your next property before you’ve sold?

Get ready for that next purchase

The property market can be ruthless, so you’ll need your finances sorted to move quickly on a dream home. If you’re borrowing a bit extra for a new place, there are some things that you can do to be prepared and help make that dream closer to reality:

• understand your borrowing power so you know your new home budget

• check if you’re in the position where you have usable equity, this could be released to help you with your next purchase

• make sure you’ve got pre-approval on your home loan to go that next step. 
  

Consider a bridging loan

You’re far more likely to find your dream property before you sell (and before you have some much-needed funds in the bank) but a bridging loan could be your answer.

A bridging loan ‘bridges the gap’ by providing funding to purchase the new property before you have sold the old one. This uses the value of both your new and existing property to help secure the loan needed to purchase. When you sell your existing home it allows you to reduce the loan back down in line with the new property value.

Taking out a bridging loan might seem like a no-brainer, but you’ll be paying it off on top of your current home loan, which can get a bit dicey if you’re not financially prepared.

It’s also crucial to be realistic about how long your place will take to sell and how much you’ll get. The last thing you want is to come up short for a loan that’s had time to accrue a lot more interest than you budgeted for.

Unsure? Contact us on Phone: 07 5641 4134 for more about bridging loans and if they’re right for you. 

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/home-property/buy-next-home/property-value

National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.

© 2022 National Australia Bank Limited (“NAB”). All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Are you thinking about taking a loan to secure a business? Prepare yourself for the process with this FAQ.

Buying a business can require a lot of money, which is why many people consider taking out a loan to ease the burden.

But in order to make this option work for you, not only will you need to fulfil a number of lender requirements, you’ll also want to make sure you’ve planned out exactly how taking out a loan will benefit you in the long term.

Here’s a list of common questions on the matter and their answers to help you prepare.

What is a business loan?

A business loan is a sum of money that is lent to your business and requires you to repay the loan, with interest, within an agreed time.

A loan can give your business a boost, help manage your cashflow or help you grow if you’re looking to expand, Commonwealth Bank general manager, business lending, Sam Hemphill said.

“The process for applying for business finance varies between different products, and you may be asked to provide financial statements, identification and a few extra documents if you are a startup business,” said Hemphill.

Who offers business loans?

A range of financial providers offer business loans aside from banks, so it’s important to shop around.

Consider and compare loans from credit unions or one of the emerging fintechs on the market.

READ: New solution to make access to working capital simpler

What should I prepare before talking to a lender?

In order to borrow a useful amount of money without getting into in an untenable situation, you need to assure a lender you can purchase the business and make it profitable.

Here’s what you should consider preparing before starting the conversation around which loan apply for.

1. Business background

Lenders will want to understand your professional background, your plan with the business, as well as how and when you’ll achieve profitability.

2. Borrowing needs

To start with, work out how much money you need to borrow to both purchase the business and perhaps some initial working capital as you get your feet on the ground.

The key here is to be realistic — you’ll need clarity on the key figures in terms of what you need and what you can achieve with the additional funding in order to service the loan.

3. Financial records

Financial statements from the current owner will be required, complete with financial projections to highlight whether you expect to be financially viable in six months, a year, or more. You will also need a carefully articulated business budget.

Lenders will require the financial statements for the last two years of the business you want to buy, chief growth officer of Valiant Finance, Tsing Lee recently told The Pulse.

This includes the asset and liability statement, a profit and loss statement, tax returns and potentially bank statements.

“If the incoming directors currently own any other ventures or businesses, these businesses may also fall under the same scrutiny to support the loan application,” said Lee.

4. Capital investment plans

You will also need to give the lenders a breakdown of how the loan will be spent which helps them to understand when they can expect a return on investment.

5. Advisor relationships

The lender will make a decision based on this information, so making sure it’s been carefully prepared (preferably with the help of an accountant) could be what seals the deal.

Bear in mind that how long it takes to be approved varies, so be sure to get the ball rolling sooner rather than later.

Does my credit score matter?

Yes, your personal credit score matters, and may even influence the interest rate offered to you by a lender.

Depending on which credit reporting agency you use, your score will appear as a number on a scale. An excellent score is usually between 800 and 1000, while a below-average score is about 550.

It’s worth noting that there’s been some changes in what you’ll see on your credit report. Up until July 2018, only negative financial behaviour was recorded.

But now, financial institutions add positive financial behaviour too — such as paying out a loan early.

This extra detail gives lenders an even clearer picture of your financial habits when determining whether you’re good for a loan.

You can access your credit report for free online via Equifax, Illion, Experian Credit Services or Get Credit Score.

Why does my lender want to see a business plan?

The most important document is the business plan, detailing what you’re going to achieve to validate the structure of the business.

But the exact amount of detail a bank wants may vary on a case-by-case basis across industries, NAB business bank executive Adam Zaccaria explained.

“What we’re really interested in is what the customer strategy is, what they want to change in the business, and what fundamental problems they want to solve,” said Zaccaria.

Having a business plan and the financials prepared or at least validated by an accountant is viewed favourably by banks, depending on the competency of the owner to complete on their own.

“The key to any business is to plan well and execute on that plan,” he said.

Make sure you do your due diligence when purchasing an existing business.

If you’re asked a question during the loan application process and you don’t know the answer, it won’t bode well for you.

You also need to understand why the seller wants to exit the business, and whether perhaps they know something they haven’t mentioned, such as new competition entering the market.

How much of a deposit can I expect to provide?

Lenders may also ask for a deposit to see your personal commitment to the business.

The size of the deposit varies, but lenders could be looking for a deposit of between 10 and 30 percent.

What type of loans are best for buying a business with?

Make sure you take the time to consider what type of loan works best for you, Hemphill said.

“There are number of different options between the types of loans (such as a term loan, equipment loan or an overdraft), the interest types (fixed or variable) and the repayment types (interest only, principal and interest or a combination of both),” he said.

The most suitable loan type depends on your business needs, length of the loan and the sum of money you need to borrow, Hemphill says.

“If you’re looking to grow or expand your business, a term loan allows you to cover larger up-front costs and provides a lump sum payment in order for you to finance your investment.

“If you’re looking to purchase an asset for your business like a car or machinery, an equipment loan allows your business to purchase an asset from a supplier and pay back the bank over a set term.”

How much should I borrow?

Calculating how much to apply for needs careful consideration.

Hemphill says new business owners need to bear in mind when purchasing a business, there could be significant up-front costs including the business purchase price, rent, equipment, additional shop fit-outs, inventory and wages.

“Businesses usually secure debt finance from a bank in order to cover the up-front costs when purchasing a business.

“A term loan is the most common type of debt finance used to finance the purchase of a business, as term loans allow you to repay the loan with interest over the medium to longer term, while keeping your repayments lower to help manage cash-flow,” said Hemphill.

With a term loan, your payback period can range depending on the type of security used to guarantee the loan.

“You can also pay principal and interest to completely pay down the loan at the end of the loan term, interest-only to pay only the interest component during the term with a lump sum payment at completion, or a combination of both.”

Consider getting professional advice from your accountant or a business advisor.

How do lenders decide whether to approve my business loan?

Lenders still predominantly use a decision methodology to assess risk and whether that risk falls within pre-defined, acceptable margins, said Lee.

These are:

• Character – willingness to repay

• Capacity – ability to pay back debt

• Capital – size of deposit and how much saved

• Collateral – assets as security for the loan

• Conditions – market conditions

The lender will look at how long the business has been established and trading for, how many employees they have, and the background and experience of incoming directors to better understand the risk posed by the change in management.

“If you’re looking for working capital, your borrowing power revolves around your business’ cashflow in the last 12 months.

“However, not all lenders are created equal and some will be more lenient.

“If your last six months have been great but your last 12 paints a less rosy picture, it’s crucial to know this to yield the best result possible,” said Lee.

A compelling credit submission that explains the purpose of the loan and how the risks are mitigated will help you get a better outcome.

“Lenders will assess the overall profile and determine the risk that they are willing to take depending on the asset type and condition plus the business’s overall credit worthiness and business performance.

“Sometimes, even though you do own a property, contributing a down payment can get you better terms, such as a lower rate.”

Buying a new business is both an exciting and sometimes stressful time, we can assist in evaluating your new business and your finance requirements, to get you started with your best foot forward Call us on Phone: 07 5641 4134 today. 

Source: MYOB December 2021

Reproduced with the permission of MYOB. This article by Nina Hendy was originally published at https://www.myob.com/au/blog/loan-to-buy-a-business/

Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

The basis of a good renovation budget is setting a realistic one in the first place. Once you do that, you may need a little help sticking to it. Here are a few pointers to help you on your way.

Learn the budgeting basics

If you’re a complete novice, or simply not very disciplined, now is the time to learn how to budget properly.

A realistic goal, budget or project needs to be SMART.

• Specific – what exactly are you spending money on?

• Measurable – how much do you need to spend on each item or stage?

• Attainable – can you (really) afford it?

• Realistic – does it fit into your budget without compromising other expenses?

• Timely – is it the right time? Do you need to prioritise other expenses? Will you be able to make payments on time?

Sticking to a budget takes willpower. As painful as it may seem, you need to start practicing patience and may need to start saying no to a few luxuries.

Be realistic about renovation costs

It’s scary how quickly things can add up on renovation projects. And, it’s impossible to set a realistic budget until you get detailed renovation costs and quotes.

There are some helpful renovation budget calculators and cost guides available online. And, they’re free.

Don’t try and guesstimate your costs. If you’re doing a big renovation or extension you absolutely need plans and designs that you can get proper quotes on.

Architects, designers, builders and engineers are the kind of professionals you need to get advice from.

Reconsider what you can afford

Once you have detailed renovation costs, decide what you must have and what you’re willing to live without.

Get professional advice from your local real estate agent to help figure out where to save and where to splurge. You need to know what will add value to your home in the short and long term.

Avoid spending money that you won’t get back when you sell. That’s called overcapitalising. If you plan to live in the home for the long term it may be less of an issue for you.

Lifestyle blogs and online renovation forums can offer advice on where to spend your renovation budget too. For example, some experts recommend spending 5% of the value of your home on a kitchen and up to 1.5% on your bathroom.

Ask for a fixed-price contract

Some builders may offer fixed-price contracts. If their price is more than a standard contract, it’s because they’re taking a risk on any overspend or delays, not you.

It could be worth the extra you pay to know exactly what you have to pay for upfront (and make it much easier to stick to your budget).

Add a buffer to your original budget

If there’s one thing that’s certain in life, it’s that your renovation will cost more than you think.

Even with the most detailed plans and cost guide, the unexpected can happen. It’s recommended you add between 10 and 20% of the cost to your project to your budget.

This buffer helps pay for unexpected costs, like unforseen structural issues or ground works. This is what’s called a ‘contingency’, and every good renovator should have one.

Ready to chat? Talk to us on Phone: 07 5641 4134 today. 

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/personal/life-moments/home-property/renovate/budget

National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.

© 2022 National Australia Bank Limited (“NAB”). All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Prices for property, cryptocurrencies and shares have all hit records recently. While great news for investors, there’s always a risk that some people will jump into the market because they are afraid of missing out on easy money.

FOMO, or the fear of missing out, has always been around on financial markets, but social media and reality television have taken it to a whole new level.

In the lead-up to the 1929 Wall Street Crash, the saying was that when the shoeshine boy or taxi drivers started giving you share tips, it was a sure sign the market was running ahead of itself. Rather than a signal to buy, it was probably time to bail out or bide your time.

These days, social media has become the new shoeshine boy.

A long history

This fear of missing out goes back even further to the mid-1600s Dutch tulip market bubble. At its height, the cost of the rarest tulip bulb was the equivalent of six times the average wage. People rushed to buy tulips on credit for fear of missing out. Inevitably, the tulip bubble burst, devastating investors and the Dutch economy.

A much more recent example of a market getting overheated was the dotcom boom at the turn of the century when people paid top dollar for shares in companies with no history of profits.

Two decades later, and there are concerns that FOMO may be a factor in the rise of property, shares and cryptocurrencies. Over the past year, Australian house prices have jumped 22 per cent on average and more in some parts of the country.ⁱ People are scared that if they don’t get in now, then they will never get a foot on the property ladder.

Global share price to earnings (PE) ratios are also at high levels. Some argue that high prices are justified by low interest rates while others worry that some companies may be valued on an overly optimistic view of future earnings.ⁱⁱ

Cryptocurrencies are complex

But it’s the focus on cryptocurrencies that has some market veterans concerned, not least because these are complex new instruments that are not well understood.

At the end of the day, you should always understand where you are putting your money and how it fits your investment objectives and risk profile. If a big drop in price would keep you awake at night, then crypto may not be for you.

In its typically understated style, the Reserve Bank has warned that “the current speculative demand for cryptocurrencies and their surge in value is likely to reverse”.ⁱⁱⁱ

Meme stocks are also an area of concern. These are companies made popular with retail investors through social media sites like Reddit. Examples include AMC and Gamestop.

They are what used to be called pump-and-dump stocks, popularised in the movie The Wolf of Wall St. The only investors to really benefit are those who got in at the beginning and sold in time to realise their gains; not the ones who bought at the peak of the frenzy.

Think long term

Investments should always reflect your long-term objectives. Jumping from one investment to another just because somebody says it’s a good thing can be dangerous.

In the words of Warren Buffett, it pays to be counterintuitive with the market. Rather than follow the crowd “be fearful when others are greedy and greedy when others are fearful”.

But humans being human, tend to do the opposite and pay the price. It’s an age-old maxim that in the long run, growth assets like shares and property tend to outperform other asset classes. You won’t enjoy those long-term gains if you are buying and selling in reaction to short-term market moves.

That’s not to say you should set and forget your investments. For instance, when the market is booming, it may present an opportunity to realise some of your gains, sell any duds, and reinvest the proceeds when bargains emerge.

If you are considering an investment but unsure about its worth or where it might sit within your overall portfolio, give us a call on Phone: 07 5641 4134.

i https://www.corelogic.com.au/sites/default/files/2021-10/211101_CoreLogic_Oct_homevalueindex_Nov1_2021_FINAL.pdf

ii https://www.forbes.com/sites/bradmcmillan/2021/09/20/how-can-we-tell-if-the-market-is-overvalued

iii smh.com.au

The information (including taxation) is general in nature and may not be relevant to your individual circumstances. You should refrain from doing anything in reliance on this information without first obtaining suitable professional advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) before making any decision to acquire a product.

If you‘re planning to sell your business in the future, start taking action as soon as possible. You’ll need time to implement the changes that will improve the market value of your business and help you get the price you want.

Growth strategies

Thinking of selling your business in five to 10 years? It’s worth checking the current value of your business today – before seeing what you can do to increase it over the next few years. 

Here are 10 value-adding steps that you can consider well in advance of putting your business on the market.

1. Expand your market

A potential buyer will consider market viability. Therefore, ensure your market is growing or has the potential to grow. If you’re in a declining industry, you’ll either need to reverse this or look to expand into a growing industry.

Diversifying to gain a new revenue stream and increase cash flow will help raise the value of your business in the eyes of a buyer. This is important because a commercial viability analysis will be one of the first things a potential buyer will be interested in.

2. Change your market position

Consider your business model viability: is there enough of a market for the product or service you’re offering? You may be able to grow by changing your market positioning, for example:

• A motel might be able to grow and attract a new clientele by becoming more upmarket and gradually improving its facilities, standards and therefore prices.

• A specialist engineering business could grow by appealing to a broader market and developing cheaper, mass-market versions of its best products under a different brand name.

3. Conduct regular market research

A potential buyer will have many questions to ask when acquiring a business; you can protect value by showing you know your market and regularly research possible change. This shows buyers your business is not standing still and can adapt to change.

Setting up processes to monitor the business climate and getting quality customer feedback on their changing needs will help you keep track of your market. Planning ahead to anticipate challenges will help you create a strong, consistent track record.

4. Develop your brand

A buyer will see significant value in buying an already established business with a respected brand. No matter how small, any business has the potential to differentiate itself from its competitors and become the market leader in a defined niche. To achieve this, you need a brand that captures the essence of your business.

A brand builds your market credibility over time and its reputation helps to sustain revenues as you grow.

What do your products or services offer that sets them apart from those of your competitors? This is your unique selling proposition and is the basis of successful branding. Conduct a brand review and take any necessary steps to enhance or re-invent your branding.

5. Form strategic alliances

Strategic alliances can be an important source of growth, particularly if you don’t have the skills and resources to exploit your opportunities. For example:

• Forming an alliance with a complementary business can help you tender for work that your business couldn’t normally deliver on its own.

• Working with a major distributor may be more effective than developing your own sales channels.

These actions could increase the market value of your business when it comes time to sell.

Management systems

6. Show growth potential

A potential buyer will be most interested in growing a new business, so aim to create a business that can be scaled up. For example, if you develop good business systems and operating manuals, you can show buyers that the business has the potential to:

• become a franchise

• expand into other geographical areas

• acquire smaller competitors.

7. Maintain physical assets

Maintaining assets helps to generate value. Failing to do so can see your assets decay beyond repair. Tangible assets such as machinery, equipment and property are relatively easy to register and protect through insurance and maintenance schedules.

If possible, try to own the core physical assets that you rely on for success. Owning your premises can provide both security and the potential for capital growth. Be sure to seek advice from an advisor regarding asset finance, business loans and equipment leasing.

8. Protect intangible assets

It’s important to recognise and protect all the intangible assets that add value to your business. Once you start listing them you may discover there are even more of these assets than you realise.

Assets such as intellectual property (IP) can add both security and value. Review IP Australia to see what could be patented, copyrighted, design protected or trademarked.

Remember the less obvious assets too. For example, in a ‘knowledge’ business whose value largely reflects the skills of its employees, the business risks losing value if the employees leave or take intangible business assets with them, such as a copy of the customer database. Consider these steps:

• Protect your customer database and other key records by creating backup copies and keeping them off-site or in a fire safe. Your customer database is a significant source of value to a buyer, especially if you can show that you gain repeat business through it.

• Use passwords to limit employee access to sensitive or confidential information.

• Periodically check that you can successfully restore copied data.

9. Protect your property

Set up systems to minimise the risk of employees ‘owning’ some of the value in your business. For example, salespeople may feel they own certain customer relationships. Include clauses in employment contracts to clarify ownership of any IP developed in the business, and to prevent former staff from competing with you.

10. Retain key staff

Dedicated and experienced staff can be a key asset in the eyes of a buyer. Key staff who have helped you create a valuable business are themselves an important part of that value.

To retain them, make sure you provide opportunities for career progression and use incentives to align pay with the value they create. Make your business an attractive place to work. Good working conditions and competitive wages will help to retain their skills.

Strengthen your team through selective recruitment and training. Look for staff who will create value for your business, and managers with transferable skills who can help you manage growth and achieve the best standards.

Clearly communicating your vision and strategy to staff will also help to motivate staff and gain their buy-in to value-adding goals.

Start planning

A potential buyer will conduct detailed due diligence when buying a business, so start planning to strengthen these 10 areas in your business now. Also take note of the steps that help to ‘distance’ you from your business. Buyers will see less value in a business too reliant on an owner. If this applies to your business, take steps to show that your business can stand alone.

Next steps

• Meet with staff to plan medium and long-term ways to add more value to your business.

• Meet twice yearly with staff and your advisers to discuss possible political, economic, technical and social changes.

• Lock in intellectual property to identify what you can protect.

• Create a realistic timeline of value-adding actions that you want to implement, and make a start.

• Talk to your advisor about asset finance, business loans and equipment leasing.

• Find out more about selling your business.

Speak to us about your finance and lending needs. Call us on Phone: 07 5641 4134. 

Source: NAB

Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/business/small-business/moments/manage/cash-flow-tax/increase-value

National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.

© 2022 National Australia Bank Limited (“NAB”). All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

If your New Year goals include buying your first home, even though you’re finding it impossible to save for that ever-increasing deposit, you’re not alone. Many people ask us if they can get a home loan with zero or a very small deposit. The answer is a qualified ‘yes’. As always, it depends on your circumstances. Let’s take a look at some of the options you may have.

Some no deposit options

A guarantor home loan is the most common ‘no deposit’ home loan. This is when a parent or close relative offers their home as the guarantee for your loan. It’s a very serious commitment because if you fail to meet your repayments, the lender can take the home as payment.

A guarantor home loan may mean you need to save little to no deposit, making it faster for you to buy your first home. Your chances of approval can also increase and you can avoid Lender’s Mortgage Insurance too.

When borrowing 100% of your loan, your regular mortgage repayments will be higher so it’s important to ensure you can afford the ongoing repayments. You may also need savings to cover the fees and taxes that come with a mortgage application and buying a property. A few lenders will have 105% loans that cover these costs.

Different lenders can have different terms and conditions, so it’s important to make sure you and your guarantor understand what these are before committing to anything. We can help explain the terms and conditions to both you and your guarantor and find suitable lenders.

There are some smaller or specialist lenders who offer 100% home loans without a guarantor. However, they usually have tight restrictions on the annual income needed to qualify and their interest rates tend to be higher so we usually view them as a last resort.

Low deposit loans

You increase your lender options if you have a deposit, even a small one of around 5%. Some people use gifts or an inheritance to boost their deposit savings while others consider dipping into their superannuation to do it.

While many lenders accept a deposit of at least 5%, they typically charge LMI on loans with deposits smaller than 20%. This can add a sizable chunk to the cost of your loan or reduce the amount you can spend on buying a property. Different lenders have different rules and LMI rates so it can be confusing.

Government support to help you into your home

Lender’s Mortgage Insurance (LMI) rates vary depending on the lender and the amount you borrow. Fortunately there are some ways to reduce or avoid what you have to pay. A parental guarantor who covers your deposit means you don’t have to pay LMI. Buyers using the First Home Loan Deposit Scheme also avoid it. You may also be able to add the LMI to your mortgage amount. The best thing to do is get in touch sooner rather than later. We can work out the types of loans and grants you may be eligible for and the fees, including LMI, you will need to budget for.

If you’re a first home buyer, you may be eligible for a First Home Owner’s Grant. You can use this as a deposit and to pay for fees and taxes like stamp duty. These grants can change from year to year, so it’s a good idea to check in with us for the latest version and any changes that are coming up.

First home buyers may be able to buy a house with a 5% deposit and avoid paying LMI with the Government’s First Home Loan Deposit Scheme. This is where the government provides the lender with a guarantee on up to 15% of the loan so no LMI is needed.

You can see that there is a variety of ways to open the door to buying your first home. Getting a mortgage with no or a small deposit can be done, especially with the government schemes to give you a helping hand. However as offers and conditions frequently change, it’s a good idea to keep in touch about what will be available. We can let you know the next round of application dates and help you apply for grants as well as your mortgage. 

Contact us on Phone: 07 5641 4134 if you’d like to discuss this further.