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Welcome
The question on everyone’s lips
at the moment is ‘Will interest
rates go up? Well nearly every
economist in the country
believes so. Inflation data
released last week shows the
national economy is still strong
at 3.9% (4.4% annual rate in
Brisbane), and above the reserve
banks goal of 2 to 3%. A
number of retail institutions,
Harvey Norman for example are
also reporting strong sales
growth and the unemployment
rate is at historic lows.
Another key indicator is building
approvals and the recent release
showing building approvals
increased 0.5% in September
supports any decision to
increase rates.
How have the banks reacted
to the news? A couple of our
larger lenders (CBA and ANZ)
have already announced
increases in fixed rates. On the
flip side some of the smaller
players are taking advantage of
these announcements and are
Fixed Versus Variable
One of the key choices you may
need to consider when deciding
on a loan that is right for you is
between a fixed and variable
interest rate.
Certainly a good understanding
of your financial position and
goals will help you make the
right choice between a fixed or
variable product. Over the
different stages of the life of your
mortgage you may find one or
more of the below options
appropriate, influencing your
choice of product.
Fixed rate products are for a set
term, usually one to five years,
although some lenders offer up
to ten-year terms. The fixed rate
generally reverts to a variable
rate at the end of the fixed term
or, depending on the terms of
the loan, you may have scope to
renegotiate a further fixed term
at that point.
E-mail:
hughesi@bigpond.net.au
Issue 3
October 2006
Fast Facts:
Seasonally adjusted
the unemployment
rate remained at
4.8% in September
2006
The consumer price
index increased
0.9% in the
September quarter
2006 taking the
annual rate to 3.9%
enticing customers by holding rates.
What does this all mean? As I have previously mentioned, if you
are sensitive to rate increase, then it maybe time for a free mortgage
Total dwelling
check before all lenders increase rates. To illustrate how you can save approvals increased
in a rising interest rate market, consider a customer locking in a
$300,000 three year fixed home loan in December 2005 at 6.44% will 0.5% in September
be $235 per month better off should the interest rate rise next month 2006 and the annual
as anticipated.
The article below is provided as an opportunity to compare the
approval rate is
benefits of fixed and variable or combination of both. 6.1% higher
compared with one
year ago.
Fixed rate loan products provide repaying the loan early).
certainty in your monthly
And of course, the faster you are
payments, and in a time of rising
able to pay off your loan the
variable interest rates can
cheaper it will be. Variable loans Australia’s
provide peace of mind. On the
other hand if interest rates go
can also offer features such as population reached
redraw, offset, portability
down, you could end up in a
situation where your fixed rate is
(transferring the mortgage from 20,552,000 people.
one property to another) and
higher than the variable rate.
split loan facilities.
Fixed rated products generally
Split rate loans can offer a
have fewer features than variable
combination of the two options
rated - however every product is
where one portion of the loan is
different and must be considered
fixed and the other is at a
on its merits. Fixed rated
variable rate. You will have
products may also have penalties
certainty on repayments for the
for early payout or additional
fixed portion while retaining
repayments.
flexibility on the rest. You are
Variable rate products are more normally able to make extra
suited to a borrower who is repayments, or pay off the
prepared for the up-and-down portion of the variable, without
fluctuations in interest rate incurring penalties.
movements. Many variable rate
products also offer flexibility in
repaying the loan (i.e. they don’t
penalise the borrower for

Legal
By Michael Hains, Hains Solicitors
When the Buyer is a
Trustee
Most banks have special
requirements where the
Buyer of a property is a Trustee.
It is usually the case that the
Trust Deed must be amended to
satisfy a lender.
A good lawyer will amend the
Trust Deed within 24 hours (no
problem !). However, most
lenders require the amendment
to be 'stamped' - and the State
Government is currently taking
Real Estate
BY Peter Campbell, Blackwood St Realty
Selling an Investment
Property that is
Tenanted
If you are looking to sell your
investment property, it is
important to communicate with
the tenants, as they can often
feel like their privacy and quiet
enjoyment has been invaded.
If you get a tenant off side, it can
cause unnecessary challenges and
inhibit your ability to quickly sell
the property.
Financial Planning
By Michael Goodwin, PIS Investment Services
Effective Salary
Sacrificing for
Superannuation
Salary sacrificing involves
foregoing part of our salary and
having our employer make
additional contributions into
superannuation on our behalf.
This allows us to build up
additional savings for our
retirement whilst receiving an
immediate tax benefit. This
occurs because income we
receive from wages or salary is
taxed at our marginal tax rate
(which may be up to 45%, plus
Issue 3
three weeks ... yes THREE
WEEKS ... to look at these
documents and decide that no
stamp duty is payable on them.
In other words, when a Buyer is
going to purchase in the name of
a trust, either they need to be
alerted to this problem and get
their lawyers to solve it
immediately ... or they will need
a lot longer than usual for a
settlement.
Eventually, of course, the
Government will realise that
For this reason, it is important
that your managing agent is
always the first to be notified of
your intention to sell. The
managing agent will have a
relationship with the tenant and
be able to negotiate inspections
and open houses on your behalf.
If a tenant is being difficult with
inspection times, you may want
to consider offering the tenant
an incentive, such as a reward
$$value if the property is sold
within a period of time. This
may motivate the tenant to take
extra care in the presentation of
Medicare levy) whilst
superannuation contributions
are taxed at a maximum rate
of 15%. The Australian
Taxation Office allows tax
concessions where salary
sacrificing arrangements are
“effective”.
One of the hallmarks of an
effective salary sacrifice
arrangement is that there
must be an agreement in place
between the employee and
their employer. This
agreement must be put in
place before the work to
which salary sacrificing applies
taking three weeks to look at a
document and decide that they
don't want any money from it, is
quite ridiculous ! In the mean
time, agents can 'add value' to a
transaction for both sellers and
buyers, by warning them of this
possible delay.
To contact Michael, phone 07
3290 0914 or e-mail
mjh@hainslaw.com.au.
the property and allow more
frequent inspections, as there
will be a monetary reward for
the tenant.
Being a tenant in an investment
property that is on the market
for sale can be unsettling, as you
can imagine. We like to think
that we take the time to care for
the needs of our clients and
customers, as without both we
have no business!
To contact Peter, phone 0419
719 419 or e-mail
office@blackwoodst.com.
has commenced. In other words,
you can't salary sacrifice after
the work has been done.
Salary sacrificing can be a very
effective way of reducing the
amount of tax we pay whilst
building wealth for our
retirement. There are some
pitfalls but by following the ATO
guidelines, these can be avoided.
To contact Michael, phone on
5443 5577 or e-mail
mgoodwin@pissunshinecoast.co
m.au.
Isn’t this Odd?
Pelicans held on suspicion
of being drunk
Four pelicans suspected of being
drunk on sea algae were being
tested at a Southern California
wildlife centre Saturday after
one of them crashed headlong
into a car. Three of the
California brown pelicans were
found wandering dazed in the
streets of Laguna Beach after
another pelican struck a vehicle's
windshield on a nearby coast
road.
It suffered internal injuries and a
long gash in its pouch and was
undergoing toxicology tests.
Officials at the Wildlife Care
Center said the seabirds may
have been under the influence of
algae in the ocean that can
produce domoic acid poisoning
when eaten. The other pelicans
were rounded up after assistant
wildlife director Lisa Birkle
warned the public to be on the
lookout for birds acting "drunk,"
disoriented or being in an
unusual place.
Shellfish tainted with domoic
acid was thought to be the
culprit behind a 1961 attack of
seabirds on people and cars in
the oceanside California town of
Capitola that inspired Alfred
Hitchcock's horror movie "The
Birds."