Steven Korner

Eliminate personal debt

Australia has some of the highest personal debt levels in the world and it is only increasing. Some of these debts are incurring interest at over 20%. If you pay down this debt it means you are receiving a guaranteed 20% return on your money.

Take control of your super

Superannuation is your nest egg for retirement. Too many of us have super spread across multiple funds. Consequently, this means that unnecessary fees are diminishing our future. This is the financial year to consolidate your super and take back what is yours.

Review your home loan

Interest rates are currently at record lows, despite this, many banks are still charging their customers an arm and a leg in interest. Speak to a mortgage broker to take advantage of the highly competitive interest rates some banks are offering. If you have a $500,000 loan and you decrease your interest rate by only 1% you will save approximately $5,000 per year in interest payments.

Construct a savings plan

Sit down and determine how much money you want to save this financial year. Now, divide this number by 52 weeks to create your weekly savings goal. Think about things you could easily substitute out of your life in order to achieve this. For example, if you were to stop buying your morning coffee this financial year you could save yourself upward of $1,400.

Plan and begin to achieve your financial targets

Most of us fail our financial year’s resolutions because we do not keep ourselves accountable to our goals. A Harvard University study found that only 3% of students had both written goals and concrete plans. However, this 3% were making ten times more than the rest of the 97% of the class after 10 years. Schedule yourself one hour to write down your goals and how you are going to achieve them. Revise this every six month and the results will speak for themselves.

The post New Financial Year wealth tips appeared first on AdviserVoice.

Alfred Moller

Record numbers of Australians are leaving to live and work overseas. Expat lending specialist Alfred Moller has five top tips for Australians who have made the move.

According to the Australian Bureau of Statistics, in the year ending 30 June 2018, 289,000 people left Australia to live overseas, an increase of 12,200 from 2017, the highest number on record. During the same period almost 91,000 Australian citizens decided to emigrate.

So, you’ve finally made the move. What next?

1. Find a local accountant who can operate in both the Australian and local tax jurisdiction

Finding an accountant prior to tax time will assist with education and allow ample time to plan effective tax strategies.

2. Separate your finances

Ensure that your income and expenses are separated into at least two different accounts. Not only will this make it easier for your accountant come tax time, but it will also allow transparent documentation if you pursue finance. You may also elect to keep a minimum balance in your Australian bank account if existing loans are set-up for direct debits.

3. Find a good broker

If you intend to purchase an Australian investment property or a home to return to in Australia, speak to a specialist broker, NOT your existing bank. A specialist broker will understand each bank’s foreign income policy while a bank can only recommend their own products, which may not suit you. For example, only one major bank will accept income derived from United Arab Emirates Dirham, but there are suitable second and third tier lenders who will. Let’s put that into context: John may be a director of a fortune 500 company in Dubai, however the bank may not lend to him purely based on the currency of his salary.

4. Engage a buyer’s agent to assist you in purchasing a property

Buyers agents such as Milk Chocolate help purchase established Australian property specifically for Australian expats. An efficient agent will ask questions such as the intention of the purchase:

• Do you intend to live in it when you move back to Sydney?
• Is this a holiday home, short- or long-term rental property?
• Have you considered diversifying your property portfolio with a commercial property?

5. If your relationship status changes, plan ahead

If you have met your partner while overseas have a discussion ahead of time as to whether they intend to move back to Australia with you. If it is the case, speak to an Australian migration agent such as Four Points Immigration and plan ahead of time. This will remove the headache and any unwanted surprises when you return to Australia.

Being an Australian expat can be a difficult and stressful time of your life and the population of Australian expats globally is expected to increase. By following the aforementioned tips you will put yourself ahead of the game.

By Alfred Moller, Expat Lending Specialist, Residential and Small Business Lending Specialist

Sources:
ABS: 3412.0 – Migration, Australia, 2017-18
ABS: 7.3 million migrants call Australia home

The post Being an expat and managing your finances overseas appeared first on AdviserVoice.

Alfred Moller

There are many things to consider when planning to move overseas for work.

It can be a daunting task to get your affairs in order and the following tips can ensure your financial and property affairs are taken care of before leaving Australia.

Six tips to review before becoming an expat

1. Researching suitable schools for the children prior to moving will minimise the hassle and will narrow your search options upon arrival

2. Consider how the family home will be managed:

• assess the security needs if leaving the home vacant
• consider renting the property to generate passive income
• consider leasing the property using a property manager or leasing using short-term rental managers such as MadeComfy
• consider a family member or friend managing home via an Airbnb account

3. Speak to a mortgage broker and review your interest rates (once overseas it can be difficult to negotiate an Australian home loan)

4. Revise your expected overseas income, current budget and financial goals as an expat with a financial planner

5. Inform your accountant about working overseas, nature of contract/conditions and expected duration as tax issues may need to be reviewed

6. Open an international bank account for transactional and savings capabilities. Financial institutions such as HSBC, Citibank, Deutsche Bank and Bank of America are well suited, depending on the relocation country.

By Alfred Moller, Expat Lending Specialist

The post Expats: Tips for people preparing to work offshore appeared first on AdviserVoice.

Aaron Funda

Many first-home buyers just can’t quite afford the property they want in Sydney and Melbourne. People seeking to buy in the inner-city suburbs that are well serviced by public transport should think about ditching the car.

“Maybe your car commitments are stopping your home aspirations. A relatively small car debt limits the extra capital that is often needed to buy in Sydney or Melbourne. Inner suburbs have good transport links which are continuing to improve, and car costs may be the last area that couples can change to get the loan size that they need.

By reducing your everyday expenses and any credit card limits, personal loans or car loans you can increase your borrowing power substantially,” said Aaron Fuda, mortgage broker, at Omniwealth.

The effect of paying out car loan and reducing credit card limits by a couple on their borrowing capacity could lead to a further $100,000 being available:

The couple’s increased borrowing power could allow them to afford that property they have always wanted but could not previously afford.

They exchanged only $20,000 of car loan debt for $100,000 worth of home loan borrowing power.

The post Want to increase your borrowing power by $100K? appeared first on AdviserVoice.

A manager has joined the accounting team and a senior lawyer has joined to expand legal team.

“The 2019 landscape for financial services means that the best people providing the best service at an affordable, transparent price for the consumer is a necessity. We welcome onboard Zachary Sienkiewicz to our accounting team and John Golinelli to assist with the growth of our legal team.

“We integrate service for clients at a high level. This often means the various divisions of our firm meet beforehand to sketch out solutions for client needs and even things that are not yet on the client’s agenda,” said Matthew Kidd, Chief Commercial Officer at Omniwealth.

Zachary Sienkiewicz – Manager in Omniwealth’s Financial Services team
Chartered accountant, Zachary Sienkiewicz, has been appointed as a manager within Omniwealth’s financial services team. Zachary will contribute to modernising the current processes of the financial services team at Omniwealth, he will manage a team of accountants and tax specialists.

John Golinelli joins Omniwealth Law practice
John Golinelli has been appointed to the Omniwealth Law practice. He is an experienced legal practitioner and will assist clients with legal issues across the firm’s accounting, mortgage broking, business advisory and financial planning groups.

He will work in association with Stuart Austin who is managing director of Omniwealth Law.

The post Omniwealth makes two senior appointments appeared first on AdviserVoice.

Andrew Zbik

Omniwealth’s Property Sale Series starts with the question: When to sell an investment property? The first study looks at paying down home debt.

There are times when you should listen to your parents, and times when you should not listen to your parents.

I have a couple who are clients. When they first got married in their mid-twenties their parents told them: “Get a mortgage, buy a home and pay off the mortgage as fast as possible.” This first home was a small two-bedroom apartment in a 1930’s-built apartment block.

Lots of character but not suitable for them and the extra two children they now have. Two years ago, they moved out to rent a larger home and have been renting out the apartment since. It was good parental advice to listen to. For the home they paid around $500,000 over a decade ago – today it’s worth $1 million. The remaining mortgage is $200,000. That was good parental advice to follow.

They now need a bigger home. Their parents are saying to them “Buy a new home and keep the apartment for a long-term investment. Why would you sell the apartment? That’s a crazy idea. It’s cash flow positive”

So, this is where good parental advice turns into bad parental advice. I shall tell you why.

Scenario 1

If they followed parental advice second time around …

If they keep their apartment, their maximum borrowing capacity is around $1.85 million. They can comfortably borrow enough to buy a larger home valued up to $1.5 million plus purchase costs. (Presuming they have not maxed out all of their borrowing capacity.)

So, their situation looks like this:

In this scenario, the original apartment has a lot of equity in it. However, by drawing that equity for the purpose of buying a new home, that new debt is still non-deductible debt even though it may be secured against an investment property.

Having a $1.585 million-dollar home loan at long-term average interest rates of around 7%pa will require a total of $3.796 million in principle & interest loan repayments over 30 years. Our couple will need to have earned around $6.274 million over the 30 years pre-tax to pay off their new home loan. OUCH!

Scenario 2

If they seek proper advice …

Now, let’s be smart. Let’s drop the emotion attached to that beautiful full brick quaint apartment they bought when they first got married (and yes – not following parental advice now).

I have assumed they would clear around $775,000 after agent sales fees and paying off the original mortgage. As this was their original home, and they have been renting for the last two years, the sale of the property is still capital gains tax free (CGT). There is a rule that if you sell a property that was originally your home and you have been renting another property to live in that you do not own, you can sell that property CGT free for a period of up to six-years after moving out.

Let’s look what happens if we use all of the proceeds from the apartment sale towards the new home purchase.

This has created a weekly cash flow saving of $677 per week by not following parental advice the second time around.

By selling the original investment apartment, and reducing the home loan to $805,000, at long-term average interest rates of around 7%pa will require a total of $1.928 million in principle & interest loan repayments over 30 years. Our couple will need to have earned around $3.186 million over the 30 years pre-tax to pay off their new home loan.

This has saved a total of $1.868 million in principle & interest loan repayments over the life of a 30-year loan.

Importantly, they now have plenty of equity in their new home. If suitable, they can draw on this equity to purchase new investment assets. If the new debt secured against the home is used for investment purposes, this will then be tax deductible debt.

This is the first example I will write in a series of when it may be appropriate to sell an investment property. Getting suitable advice has made a big difference to this couple’s weekly cash flow and their future.

By Andrew Zbik, Senior Financial Planner

The post When to sell an investment property? appeared first on AdviserVoice.

“We are excited to have a financial adviser with Richard’s wealth of experience join our team at Omniwealth. Richard has an extensive financial services background spanning 30 years.

“Richard shares our vision to deliver an exemplary client experience across the range of services that Omniwealth offers. I feel that his knowledge as a SMSF specialist will certainly enhance that experience,” said Matthew Kidd, Chief Commercial Officer of Omniwealth.

Richard has 30 years of experience as a chartered accountant and financial planner and spent the last 13 years as a Principal in the financial planning team at Mercer in Sydney. He is an SMSF-accredited specialist (CA).

The post Omniwealth appoints a senior financial adviser appeared first on AdviserVoice.

Alfred Moller

A knee-jerk reaction from the Federal Government, says expat adviser.

“The Federal government’s proposed scrapping of the capital gains tax exemption for Australians residing overseas is predicted to affect over 100,000 expats. The proposal is considered by expats to be the most lucrative government ‘cash grab’ this decade,” said Alfred Moller, Expat Lending Specialist at Omniwealth.

Working Australians who live overseas are at risk of losing their capital gains tax exemption on their Australian main residence if they sell the property while overseas. However, many argue that Australian expats deserve to have corresponding rights to dispose of their main residence without paying capital gains tax.

The legislation is yet to pass and with the June 2019 deadline looming, the stakes for Australian expat families could not be higher. The main criteria will be their residency status when the property is sold.

Three simple questions can be considered to understand whether Australian expats will be affected by the proposed changes:

1. Are you planning to move back to Australia?
2. Are you intending to move into your Australian family home, upgrade or downgrade?
3. What is your intended time frame for the above?

“Understanding your intentions and speaking to your tax adviser can reduce any capital gains tax payable,” said Mr Moller.

The post Over 100,000 expats could be affected by proposed CGT change appeared first on AdviserVoice.

Alfred Moller

Given the recent Liberal leadership spill, perhaps it’s wise to revisit the scrapping of the Capital Gains Tax (CGT) main resident exemption for non-residents. The exemption is currently sitting 29th in the queue of legislation yet to be discussed, however the current political climate causes further uncertainty.

Scott Morrison officially took office on the 24th of August 2018 after ousting former PM Malcolm Turnbull. With 2019 set to be a difficult election year for both major parties, the ability to pass legislation in both the Senate and House of Representatives will be slowed, creating uncertainty as the June 2019 CGT grace period looms. Understanding the implications of the proposed CGT change can assist Australian expats.

At present the current CGT exemption applies to expats, however if the bill passes there will be a CGT ‘Light switch’ which will grant expats a full CGT exemption or none at all. If you are planning to reside overseas permanently or if there is a slim chance of doing so, selling your main residence prior to June 2019 will avoid paying CGT on the sale proceeds.

However, if you are planning to move back to Australia, you will remain CGT exempt once you return and reside in your existing home. The CGT will be apportioned to your time as a resident.

Expat example:

You purchased your house in 2008 and moved overseas in 2010. The property is deemed to be your main residence for 2 years.

If you then move back to Australia in 2015 and reside in the property, it will not be deemed as your primary residence for the 5 years you were overseas.

If the property is then sold in 2018, 50% will be CGT exempt as you resided in your home for 50% of the time over a 10-year period.

Expats should speak to their families to understand whether moving back to Australia is feasible. If not, disposing of their Australian home prior to June 2019 will prevent unnecessary CGT on the sale.

For those planning to reside in Australia in the future, it is important to be aware of the current apportioned tax ruling, so talk to your accountant about how it might affect you.

By Alfred Moller, Expat Lending Specialist

The post Comment on CGT review of main resident exemption for non-residents appeared first on AdviserVoice.

Interest-only options on home and investment loans have a limited life span, typically occurring in the first 1–5 years of your loan term. During this period, you will only pay the interest charged on your loan without any principal reductions to your loan.

At the end of the interest-only period, your lender will issue you a letter notifying you that your next repayment will be principal and interest, which will be much higher than your current repayment. Moving forward, the new repayment will be made up of the interest charged and the principal reduction of your loan; commonly over a 25 year period.

Lenders are currently reluctant to provide or extend interest-only options for home loans, due to government regulation. These same pressures are not being applied to investment loans and continued recommendations for interest-only repayments are presented by Omniwealth Finance to lenders.

Interest only loan expiry checklist

1. Borrowers need to minimise the impact on their cashflow from transitioning loan types. Omniwealth Finance has created a checklist for all borrowers to assist with this transition:
2. Contact your lender or check your internet banking to find out if your loan is on interest-only and, if so, when the interest-only period ends. Set yourself a reminder three months before this happens to allow adequate time to review your options.
3. Shop around at different lenders or appoint a mortgage broker to do so on your behalf. This should be a complete review to determine whether your loan still fits your needs and whether you have got the most competitive rate. Keep in mind it may have been up to five years since your last review.
4. If you want to pay principal & interest, moving to a new lender and obtaining a new 30-year loan term can decrease your monthly commitment but also slow down the repayment of your loan.
5. If you don’t want to pay principal & interest, then moving to a new lender may allow you to obtain a new interest-only period if that product fits your needs.
   It is important to consider the interest rate differential between the principal & interest and interest-only options. The switch to principal & interest with the right negotiating
6. on interest rate, can sometimes be a more cost-effective option for borrowers. Generally the difference in the interest rate is about 0.50%.
7. As a borrower, it is always important to remember that you are in control of your mortgage and you don’t have to stay with your current lender. So, if you receive a letter telling you that you ‘must’ switch to principal & interest, review the checklist and weigh up your options.

By Aaron Fuda, SMSF, Residential & Small Business Mortgage Broker

The post So, what happens when your interest-only loan expires? appeared first on AdviserVoice.