Debt Consolidation: What You Need To Know

Debt consolidation, not to be confused with debt elimination, is a great way to get a handle on your finances. If you’re swamped with credit card debt and personal loans, it can sometimes help to talk to a professional about debt consolidation. However, just be wary about the rates and fees as you might end up paying more in the long term and/or reduce the equity in your home.

What is debt consolidation?

Debt consolidation is where you transfer your credit card debt and any personal loans to your mortgage. The advantage of doing this is that the interest rate on your home loan is likely to be lower than what you’re paying on your smaller debts. You might also benefit from having only one regular repayment to manage. However, there are some things you need to be aware of.

Debt consolidation is not debt elimination

Since debt consolidation clears the debt from your credit cards, the temptation is to think that you’ve paid off the debt. But you haven’t. You’ve merely transferred the debt to your mortgage. So, once you’ve consolidated your debts, consider snipping your credit cards in two. Otherwise, you could get trapped in a debt spiral.

Remember the 80% LVR threshold

When you took out your mortgage, you might have been under the 80% loan to value ratio, which meant that you didn’t have to pay lenders mortgage insurance. Be careful when you consolidate your debts that you don’t reduce the equity in your home and have to pay lenders mortgage insurance.

Personal loans aren’t tax deductible

Interest charges on an investment loan are tax-deductible but interest on a home loan isn’t. When you consolidate your debts, you need to be mindful of how much interest you can claim as a tax deduction. Seek advice from a tax agent before making a decision in this area. To learn more about debt consolidation, contact us today.


Five Things Every First Home Buyer Needs To Know

Yes, owning a first home has its perks such as stability, investment, and comfort; it is also the single biggest financial commitment most people will make in a lifetime. So, before you decide to purchase your first property there are a number of things to consider, including your current personal circumstances and financial status.

Why do you want to buy a home?

The first thing any first home buyer should think about is the reason why they are buying a home. You should really consider both short-term and long-term reasons. Do you want to live in it or will it be an investment property? This can help determine the kind of loan you apply for and the kind of home you can buy.

Research potential properties and save

You need to know how much you are wanting to spend so you can plan realistic saving goals. For this to happen, you need to know the market. So, do some research on the areas you are wanting to buy in, checking out auction clearance rates and recent sales, as well as price trends in the surrounding area. You can go as far as introducing yourself to potential neighbours which will give you a great opportunity to ask questions about the area and get a feel for the people you could be living alongside in the future.

Factor in other costs involved when saving

Depending on the property you want to purchase, you could have a number of extra costs. So, as soon as you get the chance, ask your broker what other payments you will face. Aside from the purchase price, you may need to pay for things like the solicitor’s costs, building & pest inspection costs, and stamp duty (if you’re ineligible for one of the State Government’s home buyer grants) on your property. Remember that moving house isn’t free either; truck rental, mail redirection, utility, phone and internet connections may also be included.

Think about your future personal and financial circumstance

Just because your current situation allows you to get a home loan, that doesn’t automatically guarantee that you will still be able to service it in five years’ time.  Assess your lifestyle, such as your current income and expenses, as well as any future lifestyle changes you envision that could affect your earning potential. Also, make sure you can afford any increases in interest rates. Is there a possibility your role at work will change? Are you considering going back to study and reducing your working hours?

Get professional help

As you can see, there are so many things to consider when buying a property. Going it alone can prove costly so getting professional help as early as possible is highly recommended. You can use various professionals for tasks such as property checks, pest checks, and any other legal queries. By getting the right people to do the appropriate checks for you from the beginning, you can avoid nasty surprises down the track.

Remember, while some lenders will offer loans if you have saved less than the usual 20 percent deposit, being able to show a record of good saving habits will aid in getting your loan approved. Then, talk to us about applying for pre-approval on the right type of loan, we can help you work out what you can afford in terms of repayments.

Investing in Commercial Premises through an SMSF

There are various important decisions a business owner will make about their premises. For example, whether to rent or buy, where to base the business and even the style of the property.

If you are a business owner with an SMSF, there is an additional option to consider and that is – landing business premises and an investment property at the same time. Figuring out whether buying your commercial premises through your self-managed super fund (SMSF) is an option is imperative to the success of your investment.

There can be many gains through purchasing commercial property through your SMSF, including creating a certain level of freedom by smart use of resources.

Unlock your super

It can free up capital for you as the business owner and unlock your super so it can do more for you.


Another benefit to purchasing commercial property through your SMSF is that the property is protected against insolvency. So, depending on the type of business you have, this can be particularly appealing to you as a business owner.

There’s a tremendous level of protection of assets within super which ticks the asset protection box for a lot of SMEs that may be subject to litigation due to the nature of what they do.

The tax benefits

Then there are the tax benefits.

During the accumulation phase, income tax is only $0.15 in the dollar. In retirement, as the law stands, it is zero. This means that the money accumulated in an SMSF through the investment does not get taxed.

Beware of the responsibilities

On the flip side of the shiny self-management coin, there is an absolute element of responsibility on compliance matters. You are the trustee of an SMSF and you need to understand what those responsibilities entail.

You must pay commercial rates for rent through a prearranged lease agreement and, although having a protected asset is great for some businesses, it also means that equity is locked within the fund. You can’t take earnings elsewhere.


Having an SMSF means you can’t give all of this work to someone else to do for you, but you can seek advice. We are an accredited finance broker that has completed specialist SMSF lending and commercial property finance training, giving us the expertise to form an integral part of your advice and consultation team.