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How to purchase your next car with a car loan

Australians have a few options when it comes to financing a car, and you should make sure you know what each finance option entails before committing to one or the other. Different types of financing can cost more or less depending on the details. Here’s the pros and cons of the two most prevalent options – car loans and dealership finance.

Car loans With a car loan, you’ll receive the full purchase amount in a lump sum, so that you can outright pay a dealership for your new vehicle. Typically, car loans last from one to seven years, and because the car you buy will be secured to the loan, interest rates will be lower than for an unsecured loan.

The benefits to a car loan is that you can shop around for the best deal and choose your own lender. Your car will also be paid off completely by the time you finish your payments. Furthermore, you’ll have the option to buy from private sellers.

The drawback to car loans is that the interest might be a little higher than what is on offer from a dealership. Because the loan is secured to your vehicle, if you default on payments, the lender is entitled to claim your vehicle to recoup what you owe. There may also be additional fees involved with the loan.

Dealership finance Many car dealerships have financing options which can seem very attractive due to lower (or in some cases, zero) interest on the loan, and subsequently lower monthly repayments. The important thing to note here is that dealership finance often involves a balloon payment at the end of your term.

So, while your regular monthly payments are lower, you’ll still be required to drop a hefty lump of cash to clear the final payment. Of course, you might opt to refinance the balloon payment, but you’ll need to be absolutely clear of your obligations to settle the balloon payment when running the numbers.

The benefits to dealership finance is that there is far less paperwork involved, and you also get some leverage in terms of negotiating the sale price. The drawbacks are that this financing option is available only for new dealership cars, and that you have to have a strong credit score to be eligible.

To find out how to get the ideal deal on your new car, speak to our experienced team of mortgage brokers today.

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August Cash Rate Remains at 1.50%

The Reserve Bank of Australia (RBA) has announced that it will leave the cash rate at 1.50% for yet another month, making it 12 months at the record low rate.

Governor Philip Lowe had this to say in his official statement: “Conditions in the housing market vary considerably around the country. Housing prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases remain low in most cities. Investors in residential property are facing higher interest rates. There has also been some tightening of credit conditions following recent supervisory measures to address the risks associated with high and rising levels of household indebtedness. Growth in housing debt has been outpacing the slow growth in household incomes.”

So, what does all this mean for Sydney home owners? As we’ve mentioned before, many lenders change their interest rates at their own discretion. Recent trends have seen interest-only loan rates rise sharply for a number of the major lenders. If you’re uncertain about which home loan is best for your personal needs, make sure to speak to an expert adviser at Euphoria Loans for a free consultation & to visit your options.

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July cash rate remains at 1.50%.

As expected the Reserve Bank of Australia (RBA) has announced that it will leave the cash rate on hold for yet another month. Governor Philip Lowe had this to say in his official statement:
“Conditions in the housing market vary considerably around the country. Housing prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades. Growth in housing debt has outpaced the slow growth in household
incomes. The recent supervisory measures should help address the risks associated with high and rising levels of household indebtedness. Lenders have also announced increases in mortgage rates for investor and interest-only loans.”
So, what does all this mean for home owners? As the Governor Philip Lowe mentioned, a number of lenders, including the Big 4, have recently changed their interest rates at their own discretion. In particular, interest-only loan rates have risen sharply for a number of major lenders. Make sure to keep a close eye on any rate movement, and consider whether your current loan is the right one for you. Speak to an expert adviser at Euphoria Loans for a free home loan health check to visit your options.

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Interest rates remain at historic low | June 2017

The Reserve Bank of Australia (RBA) has announced that it will leave the cash rate on hold at 1.50% for another month. Governor Philip Lowe had this to say in his official statement:

 

“Conditions in the housing market vary considerably around the country. Prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades. Growth in housing debt has outpaced the slow growth in household incomes. The recent supervisory measures should help address the risks associated with high and rising levels of indebtedness. Lenders have also announced increases in mortgage rates, particularly those paid by investors and on interest-only loans.”

 

So, what does all this mean for you? As mentioned in the statement by the Governor of the RBA, there have been a number of lenders, including the Big 4, who have recently changed their interest rates at their own discretion.

 

Keep a close eye on any rate movement, and consider whether your current loan is the right one for you, right now.

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NSW stamp duty changes for first home buyers

First home buyers will save as much as $34,360 with a new package of measures designed to improve housing affordability across NSW. Under the new scheme, stamp duty on new homes up to $800,000 will be discounted.

 

This has been announced with changes to stamp duty for foreign investors who will now see a surcharge on stamp duty doubled from 4% to 8% and surcharge on land tax from 0.75% to 2%. Investors of any type will also no longer be able to delay their stamp duty for 12 months when paying for properties off the plan.

 

For first home buyers, this comprehensive package will:

 

  • abolish stamp duty on all homes up to $650,000
  • give stamp duty relief for homes up to $800,000
  • provide a $10,000 grant for builders of new homes up to $750,000 and purchasers of new homes up to $600,000
  • abolish insurance duty on lenders’ mortgage insurance
  • ensure foreign investors pay higher duties and land taxes
  • no longer allow investors to defer paying stamp duty on off-the-plan purchases

 

The NSW Government released this below chart to show how much first time homebuyers will save under the new scheme.

 

*Total of stamp duty exemptions plus first home owners grant plus savings from LMI duty abolition (Genworth LMI Premium Estimator based on a first home buyer with a $50,000 deposit).**Does not include additional land tax surcharge.

 

 

Additional Grants

 

There will also be a range of changes to first-home buyer grants. First home buyers building a new property will be entitled to a $10,000 grant on homes worth up to $750,000. First home buyers purchasing a new property worth up to $600,000 will be entitled to a $10,000 grant.

From the 1st of July, Insurance duty on lenders’ mortgage insurance will be abolished. Which is imposed at a rate of nine per cent of the premium. The removal of this duty will save all home buyers money if they need lenders’ mortgage insurance, not just first time buyers.

For example, on a home valued at $800,000, a buyer with a deposit of $50,000 who needs lenders’ mortgage insurance, could save about $2,900.

 

 

How can you take advantage of this scheme?

 

Along with the superannuation savings scheme, announced during the federal budget in May, first home buyers have been a big focus in property news in the last few weeks. If you are looking to purchase you first home, feel free to get in contact with Euphoria Loans for a free consultation to learn how you can take advantage of these schemes.

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The Federal Budget 2017

Treasurer Scott Morrison has described the 2017-18 budget as “honest”, attempting to please first home buyers & many other Australians. So what exactly were the changes in the housing industry?

 

Here is Euphoria Loans’ quick summary of the budget & who it affects…

 

 

For First-Time Home Buyers…

 

First home buyers have done modestly well with this budget.

As expected, they won’t be able to use their superannuation as a deposit for their first home, but they will be able to make voluntary contributions into their superannuation as savings towards a deposit. There will be a lower tax rate of 15% on withdrawals and you can contribute up to $15,000 a year & $30,000 total by taking advantage of this scheme.

The scheme comes into action in July & a couple can both take advantage of the scheme together.

 

 

Foreign Investors & Ghosts…

 

New restrictions on foreign property owners could be a benefit to first time buyers. Foreign investors will now be faced with extra charges for properties left vacant, dubbed as a ‘Ghost House Tax’ for up to $5000 & there will be an increase in application fees, which will also work out to at least $5000.

Foreign property owners will now also pay the capital gains tax when they sell their own home. For new developments, foreign investors will be capped at 50 per cent.

 

 

Those over 65…

 

Those over the age of 65 who want to downsize their home can now put up to $300,000 of the proceeds into their superannuation fund from their primary residence. Both sides of a couple can take advantage of this.

By encouraging those of the baby boomer generation to downsize, the government wants to free up larger homes for growing families. It’s no surprise to have something like this announced, it’s been heavily discussed in the past with many older home owners currently living in homes with many extra bedrooms & big maintenance costs.

In the past, those over 65 have been reluctant to move, an issue which the government is hoping to tackle with the new scheme.

 

 

The Property Investors…

 

Negative gearing rules for property investors have been tightened. They are no longer able to claim tax deductions related to travel expenses for investment properties, this is due to widespread rorting of the system.

Under the new rules, depreciation deductions for items such as washing machines and ceiling fans will only be allowed if the investor actually bought them. This measure is intended to address concerns that such items are being claimed as tax write-offs by investors more than their actual value, which is expected to claw back around $260 million in the next four years.

 

If you need advice on how to get your first mortgage, get in contact with Euphoria Loans today on 02 8321 8895.

 

 

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Interest Rates: No Change for May 2017

It comes as no surprise that the Reserve Bank of Australia (RBA) has elected to leave the cash rate on hold at the historical low of 1.50%. Governor Philip Lowe had this to say in his official statement:

 

“Lenders have announced increases in mortgage rates, particularly those paid by investors and on interest-only loans.”

 

“Conditions in the housing market continue to vary considerably around the country. Prices have been rising briskly in some markets and declining in others. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades. Growth in housing debt has outpaced the slow growth in household incomes. The recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness.”

 

So, what does all this mean for you? As mentioned in the statement by the Governor of the RBA, there have been a number of lenders, including the Big 4, who have recently changed their interest rates at their own discretion.

 

With rates expected to increase during the second half of the year, Australians should keep a close eye on any rate movement, and consider whether your current loan is the right one for you.

 

Call Euphoria Loans on (02) 8321 8895 if you are not sure whether your loan is right for you.

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