What is a deceased estate?

Deceased Estates encompass all of the property and belongings that hold monetary value, owned in the sole name of a person who has died. Most people are familiar with the concept of deceased estates as containing valuable items to be distributed to beneficiaries. It is perhaps less well understood that when someone dies, the debts and liabilities that they held during life often continue and must be discharged out of the estate. In this post, we will outline the general rules of deceased estates and what is and is not included.

When a person dies, everything they solely own forms their estate. This may include:

  • Real estate
  • Vehicles
  • Money in the bank
  • Investments
  • Insurance policies
  • Stocks and shares
  • Household items
  • Jewellery
  • Domestic pets, which are treated as property for the purposes of distribution of the estate.
  • Any other possessions.

Some types of income can also form part of the deceased estate. However, some assets will not be included because the deceased may have made other arrangements to distribute them. For example, assets that are jointly owned are not part of the estate and will pass to the surviving owner.

 

Who Is Responsible For Administering Deceased Estates?

Deceased estates hold the assets of the deceased in trust, from the time of the death of the person concerned, until the transfer of the property and/or assets to their beneficiaries as nominated in their Will.

It is administered by either:

  • An executor appointed in the person’s will, or
  • An administrator appointed by the Supreme Court.

If there is a valid Will, the person named as Executor in the Will is responsible for the distribution of the deceased estate according to the testamentary wishes as expressed in the Will.

A Grant of Probate is required before an Executor can administer a person’s estate and distribute the assets to the beneficiaries. This means the Supreme Court of Victoria issues/grants a document confirming that the will is valid. It also confirms the appointment of the executor. It’s officially called a grant of representation. There are two types of these grants:

  • Probate – where there is a will
  • Letters of administration – where there is an informal Will (not properly executed or drafted)
  • Intestacy – where there is no Will.

A grant of representation gives a person the legal right to administer the estate of the deceased. Some small estates (valued at less than $50,000.00 gross value) may not need a grant of representation.

After probate the executor collects all of the deceased’s probate assets, settles their debts, and ensures that the remaining assets are distributed to the nominated beneficiaries.

If someone dies without a valid will, they are said to die intestate, and the result is a more complicated process of having the estate distributed according to the law in accordance with the Administration and Probate Act 1958. Without a nominated executor in a will, the deceased is not able to decide who will take responsibility for administering their deceased estate, it is usually the next-of-kind who will need to apply for a grant of representation, or if no next-of-kin, the person who is next entitled to benefit from the estate in accordance with the legislation.

 

Responsibilities of an Executor

Administering an estate involves finalising everything relating to the assets of the deceased person’s estate.

This includes managing all the financial and legal issues, closing bank accounts, selling/transferring shares, dealing with the Superannuation benefits, and making sure all debts are paid and assets accounted for. It also means being responsible for making sure the beneficiaries named in the Will receive their inheritance. The Executor or Administrator (this information applies equally to both) is responsible for administering the deceased estate in the best interest of the beneficiaries nominated in the Will (or if no will exists, the deceased person’s next of kin or another person according to a state or territory law).

Tasks usually performed by an executor may include:

  • Locating the original or a copy of the Will
  • Arranging the funeral
  • Obtaining a death certificate
  • Applying for Probate
  • informing investment bodies of the death – these might include banks, building societies, and share registries and furnishing them with a certified copy of the Death Certificate
  • informing Centrelink and other government bodies, such as the Tax Office
  • locating assets and having their market value assessed by either a Real Estate Agent (x3) or a private valuer;
  • paying debts, income tax, and funeral expenses
  • transferring assets and paying stamp duty (if applicable)
  • distributing the surplus to beneficiaries.

 

Tax responsibilities

If you have been appointed as an Executor or Administrator of the deceased estate, you will also be responsible for managing the deceased estate’s tax affairs. This includes:

  • lodging a final return, and any outstanding prior-year returns, for the deceased person
  • lodging any trust tax returns for the deceased estate
  • providing beneficiaries with the information they need to include distributions in their own returns and, in certain cases, paying tax on their behalf.

There are generally no death duties in Australia. However, tax may be payable on certain income or capital transactions that arise as a consequence of a person’s death.

Any tax liability that may be generated from your role as Executor is separate from your own personal tax liability. Therefore don’t include any of the income of the deceased person or deceased estate in your own personal tax return (except for any trust income you may receive as a beneficiary).

Another item that may potentially have to be declared is any fee charged to the estate for executor services performed.

 

Capital gains tax implications

When the assets of a deceased estate are distributed, a special rule applies that allows any capital gain or loss made on a CGT asset to be disregarded if the asset passes:

  • to the executor
  • to a beneficiary, or
  • from the executor to a beneficiary.

However, if an Executor sells an asset of the deceased estate after two years after the date of death and then distributes the proceeds to the beneficiaries, the sale is subject to CGT applies and only a partial exemption to CGT may apply.

In most cases, the transfer of CGT assets into a deceased estate and then out to their beneficiaries will not incur an income tax liability.

 

Superannuation death benefits

In most cases, when a person dies, their superannuation fund will pay their remaining super to their nominated beneficiary, which is called a Superannuation Death Benefit.

If there are no binding death nominations, then the Trustee of the super fund will decide how the benefit will be paid. Depending upon the trust deed of the superannuation fund, and rules and regulations operating for superannuation, the trustee may pay it to the deceased estate, and it will be distributed in accordance with the terms of the Will.

If you are a dependant of the deceased, you do not need to pay tax on any component of a superannuation death benefit if you receive it as a lump sum (if you receive it as an income stream you may need to pay tax on it). Also do not include it on your tax return as income.

If you are not a dependant and you receive a death benefit it must be as a lump sum. The item is generally taxable as follows:

  • Taxed element of the benefit: 15% plus Medicare levy
  • Untaxed element of the benefit: 30% plus Medicare levy

 

Which debts are paid from a Deceased Estate?

A Will should also make provision for the executors to pay for expenses such as the funeral, and to discharge any debts out of the deceased estate. An Executor will also ensure that any applicable income tax is paid from the deceased estate. The estate must pay any other tax that falls due as a result of the liquidation of assets, such as superannuation payouts and capital gains on the sale of investments such as shares or property.

Generally, an Executor will pay the debts of the deceased before any assets are distributed to beneficiaries. The only exception is that the superannuation death benefits and life insurance of the deceased cannot be used to repay the debts of the deceased estate. All other assets of the deceased estate are available to the Executor for the purpose of discharging debts, regardless of the instructions of the will as to the distribution of assets. Therefore an executor is unable to, for example, distribute a mortgage-free property to a beneficiary if there are other debts in the estate that cannot be discharged without the sale of the property.

 

What happens if any debts cannot be settled?

If the estate does not contain enough assets to cover the debts at the time of death, the Executor will pay the debts according to either bankruptcy provisions or the insolvent estate provisions. An Executor is not required to repay the debts out of their own pocket unless they have some direct involvement with that debt (i.e. the debt is secured against a property that they own or, they have personally guaranteed the debt).

Bankruptcy and insolvency estate provisions ensure that the first priority is the funeral, testamentary, and administration expenses. The Executor will then discharge current and past tax debts, regardless of any instructions that the deceased has left in the Will, followed by the repayment of secured debts such as home or car loans. The deceased estate will also prioritise the payment of any delinquent child support and make provision for the ongoing payment of child support for a dependent child (if applicable). If there is a HECS-HELP education debt outstanding at the time of death, the balance of the debt will be extinguished.

The final debts to be paid out of a deceased estate are unsecured debts, and it is this class of debts that are most likely to remain unpaid if the estate is insolvent. This means that even if a Will makes a provision, for example, that an unsecured debt to a family member is to be repaid, this debt will be paid only after all secured debts are discharged. This can be an issue where family members have provided substantial unsecured loans towards the purchase of a home or investment in a business.  This is one of many reasons that family loans should always be formalised and documented.

 

If you’re interested in knowing more about Deceased Estates, speak to the expert Geelong lawyers at The Hrkac Group. Making sure that everything runs as smoothly as possible depends on all legal and financial obligations being met, and that can require liaison between a number of different parties.

Our Geelong Lawyers’ expertise and experience in facilitating Deceased Estates can help ensure a positive experience for you. To make an appointment to meet one of our friendly Geelong Lawyers today, feel free to contact us via email or phone (03) 5224 2366.

At its July board meeting, the Reserve Bank of Australia (RBA) lifted the cash rate target by 50 basis points, in line with market expectations, bringing the official cash rate target to 1.35%. It also increased the interest rate on Exchange Settlement balances by 50 basis points to 1.25%.

This marks the third month in a row that the RBA has raised rates, with further increases expected over the course of this year as the central bank seeks to contain rising inflation. The third back-to-back rise follows an increase of 50 basis points in June – the largest increase since February 2002 – and 25 basis points in May. May’s increase was the first since 2010, as the central bank lifted the cash rate from its record low emergency level of 0.1%.

 

Global inflation is high

Global inflation is soaring. It is being boosted by COVID-19-related disruptions to supply chains, the war in Ukraine, and strong demand which is putting pressure on the capacity of production. Although monetary policy globally is responding to this higher inflation, it will be some time yet before inflation returns to target in most countries.

As part of the response, rate hikes are happening across the globe. The aim is to slow down economies and bring supply (production) and demand (spending) back into balance to address the soaring inflation rates. Nearly all central banks across the globe are lifting rates from ‘emergency’ levels to reflect more ‘usual’ functioning economies because of this.

In a statement from the RBA, Governor Philip Lowe had this to say on inflation in Australia:

“Inflation in Australia is also high, but not as high as it is in many other countries. Global factors account for much of the increase in inflation in Australia, but domestic factors are also playing a role. Strong demand, a tight labour market and capacity constraints in some sectors are contributing to the upward pressure on prices. The floods are also affecting some prices.

Inflation is forecast to peak later this year and then decline back towards the 2–3% range next year. As global supply-side problems continue to ease and commodity prices stabilise, even if at a high level, inflation is expected to moderate. Higher interest rates will also help establish a more sustainable balance between the demand for and the supply of goods and services. Medium-term inflation expectations remain well anchored and it is important that this remains the case. A full set of updated forecasts will be published next month following the release of the June quarter CPI.”

 

How COVID-19 and the war in Ukraine is driving inflation

An important factor to note in all of this is COVID-19. Workers are continuing to contract the virus and are forced to stay at home, resulting in fewer goods and services being produced. But economies are continuing to recover from the virus, with spending lifting. Unfortunately, spending is recovering more quickly than production. The other key factor is the war in Ukraine, driving up energy and food prices across the globe.

 

The Australian economy is resilient

In the statement from the RBA, Mr. Lowe commented on the Australian economy:

”The Australian economy remains resilient and the labour market is tighter than it has been for some time. The unemployment rate was steady at 3.9 % in May, the lowest rate in almost 50 years. Underemployment has also fallen significantly. Job vacancies and job ads are both at very high levels and a further decline in unemployment and underemployment is expected over the months ahead. The Bank’s business liaison program and business surveys continue to point to a lift in wages growth from the low rates of recent years as firms compete for staff in the tight labour market.

One source of ongoing uncertainty about the economic outlook is the behaviour of household spending. The recent spending data have been positive, although household budgets are under pressure from higher prices and higher interest rates. Housing prices have also declined in some markets over recent months after the large increases of recent years. The household saving rate remains higher than it was before the pandemic and many households have built up large financial buffers and are benefiting from stronger income growth. The Board will be paying close attention to these various influences on household spending as it assesses the appropriate setting of monetary policy.

The Board will also be paying close attention to the global outlook, which remains clouded by the war in Ukraine and its effect on the prices for energy and agricultural commodities. Real household incomes are under pressure in many economies and financial conditions are tightening, as central banks increase interest rates. There are also ongoing uncertainties related to COVID, especially in China.”

 

The Response

Central banks are ‘front loading’ rate hikes to try and get on top of inflationary pressures. That is, rates are being lifted more quickly and more aggressively than usual. The fear is that if higher rates of inflation take hold – become cemented in people’s consciousness – then it will take longer to bring the inflation rates back to preferred levels.

The risk with these ‘harder and faster’ rate increases is that they could cause economies to go into recession. Recessions are defined differently across the globe, but in Australia, the general definition of a recession is two consecutive quarters of economic contraction (declines in gross domestic product).

 

What this means for  your mortgage

For a typical owner-occupier with a $500,000 mortgage and 25 years remaining, this increase will see their monthly repayments rise by $137, according to RateCity.

Their total increase to date from the May, June, and July rate hikes would be $333 per month.

For a borrower with a $1 million mortgage, today’s decision will add $273 to their monthly repayments, bringing their total increase to $665 per month since April.

CoreLogic figures also showed national house prices fell for the second consecutive month in June by 0.6 %.

 

In conclusion

From the statement from the RBA:

“Today’s increase in interest rates is a further step in the withdrawal of the extraordinary monetary support that was put in place to help insure the Australian economy against the worst possible effects of the pandemic. The resilience of the economy and the higher inflation mean that this extraordinary support is no longer needed. The Board expects to take further steps in the process of normalising monetary conditions in Australia over the months ahead. The size and timing of future interest rate increases will be guided by the incoming data and the Board’s assessment of the outlook for inflation and the labour market. The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time.”

 

If you would like a free home loan review from our HG Mortgage broker team, download the below document and return it to us or email mortgages@hrkacgroup.com.au.

Download the document.

 

The information provided in this blog is of a general nature only and is not intended as either advice or recommendations and is not tailored to your specific circumstances. Please also note that this does include any information on any Payroll requirements imposed by any State or Territory Governments outside of the State of Victoria. 
Liability limited by a scheme approved under Professional Standards Legislation.

Among those who have their own business, there’s little doubt that payroll and bookkeeping can present challenges to businesses of all sizes. Handling time and attendance, payroll taxes and workers’ compensation can be difficult for even the most experienced business owners. That’s where payroll services and bookkeeping companies come in. These companies take the stress out of payroll and its related processes by providing intuitive services to companies of all sizes and industries.

It is the responsibility of a bookkeeper to provide accurate, up-to-date financial data so that your accountant can prepare annual financial reports as well as tax returns for your business. These accounting reports can also be used by you as a business owner to help make important decisions for your business.

At The Hrkac Group, we partner with SIBS Bookkeeping Geelong to provide our clients with bookkeeping services. They specialise in payroll services in Geelong and work with you to ensure that your employees are paid on time and that all of your legal obligations as an employer are met, taking the worry out of your payroll processes. This allows you as a business leader to focus on important enterprise tasks instead of worrying about how and when individual employees will be paid. Here’s a breakdown of just a few of the services that a professional Bookkeeper can assist you with.

 

1. Payroll STP (Single Touch Payroll) Finalisation Process

Single touch payroll is a recent regulation that changed when and how small businesses report payroll activity to the Australian Tax Office (ATO). Businesses used to be required to report this information to the ATO once a year. Now, you must send a report after each payday. And those reports must be submitted digitally, in a specific format. As an employer, You need to make sure you can submit compliant reports every payday.

You also need to make a finalisation declaration by the 14th of July each year. If you do not finalise by this date, you should do so as soon as possible to ensure your employees can access their information to complete their income tax returns. If you can’t make a finalisation declaration by the due date, you will need to apply for a deferral.

If you don’t already use an accountant or bookkeeper, this could be a good time to start. They can take care of your STP requirements throughout the year and also the finalisation process.

 

2. WorkCover Annual Declarations

You must have a valid Victorian WorkCover Policy if your total remuneration to employees and rateable Subcontractors is $7,500 per annum or more. If you are registered for Victorian WorkCover, you must submit an Annual Declaration to WorkSafe VIC stating the cost of remuneration paid to your workers (including rateable Subcontractors)  over the year and an estimate of their remuneration for the following year.

You would usually log in to WorkSafe’s Online Employer Services (OES) to complete the declaration; another set of logins to remember, more data you need to find and keep handy to be compliant. Or, you can have a professional Bookkeeping/payroll service take care of this for you.

(*Please note other Australian States and Territories may have different requirements).

 

3. Payroll Tax Annual Declarations

The payroll tax applies if you pay wages (including rateable Subcontractors) in Victoria and your Australian remuneration exceeds this year’s monthly threshold of $58,333 (year ended 30th June 2022). There is also the mental health and wellbeing surcharge, which commenced on 1 January 2022. You must pay this surcharge if you pay Victorian taxable wages and your Australian wages exceed the first annual threshold of $10 million, with a first monthly threshold of $833,333. (*Please note other Australian States and Territories may have different requirements).

You must register with the State Revenue Office (SRO) to pay payroll tax where you exceed the relevant monthly threshold regardless of your annual remuneration paid. You will need your payroll records handy to help you. Penalties and interest may apply if you do not register.

Once registered, you can use the SRO’s secure online system Payroll Tax Express (PTX Express) to lodge monthly returns, pay your tax, complete your annual reconciliation, apply for a refund and update your records. If you are registered to lodge and pay monthly, you must submit your wage details every, even if you do not have a payroll tax liability. Employers self-assess their liability on a monthly basis and pay by the seventh day of the following month or the next business day (many businesses are eligible to report and pay on an annual basis depending on their total remuneration paid).

If this all sounds like too much work, payroll tax declarations are a specialty service of Bookkeepers. They can take your Payroll Tax Annual Declaration off your plate so you can get back to running your business.

 

4. CoINVEST Quarterly lodgements

CoINVEST is the construction industry long-service leave fund in Victoria, governed by the Construction Industry Long Service Leave Act 1997. The scheme was established in 1976 to ensure workers in the construction industry would have access to long-service leave, even if they didn’t remain with a single employer for the required seven years. CoINVEST operates as a fund into which you as a construction industry employer must pay a quarterly contribution fee proportionate to the size of your workforce’s total wages.  After seven years of working in the construction industry, workers can claim their long-service leave from CoINVEST.

Every three months, you must complete a ‘Workers’ Days and Wages’ form. You record how many days your employees worked in the quarter and also how much the employee was paid over the same period. CoINVEST will then issue an invoice to be paid, currently based on 2.7 percent of total gross wages reported on the form.

This is something else a qualified bookkeeper can take care of for you; the SIBS Bookkeeping Geelong team is experienced in processing these types of quarterly payments.

 

5. Portable Long Service Leave Authority (PLSA)

Did you know that the Victorian Government has made permanent Long Service Leave Benefits Portability Regulations that came into effect on 1st October 2020?

Much like Co-Invest works for the relevant trades and construction industries – The PLSA allows workers in community services, contract cleaning, and security to take their long service entitlement with them if they change jobs but stay in the industry. There is a quarterly lodgement and payment required.

 

6. Incolink Monthly lodgements

Incolink provides a safety net for workers in the commercial building and construction industry where permanency and continuity of employment are significant issues. For you as an employer, Incolink takes care of your redundancy compliance obligations, avoiding any large payouts at the end of projects.

If you have a membership with Incolink, you need to make monthly contributions. This is another specialty service that SIBS Bookkeeping Geelong can assist you with.

 

7. Paying Superannuation on time

As an employer, you must pay super contributions for your eligible employees to avoid the Super Guarantee charge.

You must pay your employee Super Guarantee contributions electronically to either a complying super fund that meets specific requirements and obligations under super law, or a retirement savings account (RSA) which provides a low-cost and low-risk savings strategy for retirement. Each of your employees may have a different fund which will need to be set up when they join your payroll.

You must pay Super Guarantee contributions by quarterly due dates – 28 days after the end of each quarter to avoid the Super Guarantee Charge Liability *. Some super funds require employers to contribute monthly. By registering with these funds, you agree to make monthly contributions to that fund. You can also arrange to make post-tax super payments on behalf of your employees if they request this.

If this all sounds like a lot of hassle on your behalf, engage the services of a professional bookkeeper. They’ll take this payroll pain off your shoulders to give you back the time you need to run your business.

(*Please note that this is when the Employers or relevant Labour Hire Subcontractors Superannuation Fund must receive the quarterly contribution by – for many clearing houses – you must lodge the Superannuation payment request by around the 14th/15th days after the end of the quarter to avoid the Superannuation Guarantee Charge Liability)

 

In conclusion

One size does not fit all when it comes to bookkeeping and payroll services. Each individual business and industry comes with its own unique circumstances and requirements. That’s why The Hrkac Group partners with SIBS bookkeeping Geelong. They work with you to simplify your business’s internal processes when it comes to keeping the books up to date through innovative ideas and technology. They work offsite and online, allowing them to complete monthly bookkeeping in record time; ensuring the best results for your business.

Most importantly they give you more time to focus on what’s important to you; running your business. If you’re looking for Payroll Services Geelong, look no further. To learn more about what services SIBS Bookkeeping Geelong can offer you, contact us via email or phone 0488 614 668.

The information provided in this blog is of a general nature only and is not intended as either advice or recommendations and is not tailored to your specific circumstances. Please also note that this does include any information on any Payroll requirements imposed by any State or Territory Governments outside of the State of Victoria. Please contact our partner – SIBS Bookkeeping team or us – the Hrkac Group Accountants team – if you would like assistance as to how, or if, any of the abovementioned would apply to you.

Liability limited by a scheme approved under Professional Standards Legislation.

Financial success can look very different for everyone, whether it’s living debt-free, building an investment portfolio, or prioritising superannuation for early retirement. No matter what financial success looks like to you, there’s one thing that can accelerate your journey there, and that is a strong relationship with an expert Financial Planner.

When looking to engage the services of a local Geelong Financial Planning firm, it is important that their service offerings can accommodate your lifestyle and needs. Perhaps you are time-poor and prefer phone appointments, or value an active role in the management of your investments with regular reviews. At the Hrkac Group, our Financial Planning team are there when you need, and how you need, but there are certain times when scheduling an appointment may be required to keep you on track for financial success.

 

1. Annual Review

As a part of an ongoing advice service arrangement, your Financial Planner should review your financial position at least once a year. At this annual meeting, your Financial Planner will perform a thorough review of your position and current financial strategies. In particular, they should consider the following;

  • Have you experienced any financial changes, such as debt levels, income and expenses?
  • Has the level of investment risk you’re comfortable with changed?
  • Whether your current personal insurance cover remains appropriate.
  • Is your portfolio performing in line with expectations?
  • If any changes to legislation or financial products could affect you.
  • Are you on track to meet your goals?

 

2. A big life change. 

Marriage, a new baby, death, divorce, moving home, the loss of a job and any other major life-changing event can impact your goals, taxes and debt significantly. Ideally, you should consult your Financial Planner if you’re going through any significant life changes at your earliest convenience.

 

3. Taking on significant debt. 

Purchasing a new car, a new home, starting your own business, or acquiring a large debt can also massively impact your financial plan. Your Financial Planner can help outline the advantages and disadvantages of such major financial decisions, and make amendments to your financial strategies to accommodate.

 

4. Coming into some money. 

If you have inherited a large sum of money or received a significant bonus or promotion at work, a boost to your finances could be a good prompt to meet with your Financial Planner. Your taxes, strategies, and the structure of your portfolio may be impacted. Your Financial Planner can provide insights and recommendations for investing your new windfall.

 

5. Estate planning

For any major changes to your estate plan, you should meet with your Financial Planner to ensure that your financial plan is structured correctly in light of the changes. Of course, your Financial Planner cannot offer legal advice, but they can ensure that your existing investments and strategies are supportive of your estate plan.

 

6. Retirement Planning

Preparing for the comfortable retirement you have earned through years of hard work should be at the top of everyone’s list. Whether it’s a distant thought or just around the corner, a Financial Planner can help determine your retirement income needs, maximise your retirement savings and give you the support you need to retire comfortably.

  

7. Sophisticated Investors

Whether you’re a sophisticated investor, highly diversified or simply prefer to actively monitor and engage with your portfolio, a more regular formal review may be beneficial. The right Financial Planner will be able to tailor an ongoing service package to meet your needs and offer monthly, quarterly, or biannual review services.

 

One size does not fit all when it comes to financial advice. Aside from initial meetings and annual reviews, financial advice can be beneficial at the many, various turning points in your life. You should always feel comfortable contacting your Financial Planner any time that you are making important decisions that may impact your finances.

If you’re interested in knowing more about what happens when you engage the services of a Financial Planner, speak to our expert Geelong Financial Planning team at The Hrkac Group. They work strategically with you to develop a tailored strategy aimed at achieving your desired financial outcomes.

Our Geelong Financial Planning team considers your individual needs, goals, and objectives. So, whether it’s retirement planning, wealth creation and management, superannuation advice or wealth protection and insurance, you can feel reassured knowing it can be handled under one roof at the Hrkac Group. If you’re looking for Financial Planning Geelong, look no further. To make an appointment to meet one of our friendly team today, feel free to contact us via email or phone 03 5224 2366.

 

This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

If you’re buying or selling a property in Geelong, you may have heard a lot of different terms being thrown around. But don’t be overwhelmed if you haven’t heard the majority of these before. With the help of experienced Geelong conveyancers, you are still more than capable of completing the purchase or sale of a home.

Our friendly Geelong conveyancers at the Hrkac Group have compiled an easy reference guide of some of the most common conveyancing terms to help you through the process. Refer to this glossary of conveyancing definitions as you come across them on your property selling or purchasing journey.

 

Agent
The real estate agent who the seller, or vendor, has engaged to manage the sale of the property.


Auction
When the sale of a property is conducted in public and is sold to the highest bidder.


Caveat
A caveat is a legal claim lodged against a property by a person with an interest in the property. A caveat will prevent a property from being sold or transferred unless it is removed.


Common property
Areas of a property used by and belonging jointly to all owners of a property. This applies to such properties as apartment blocks or multi-dwelling complexes.


Contract of Sale
A written agreement between the buyer and seller of a property that outlines the terms and conditions of the sale, inclusions, price, descriptions of the property, and completion date.


Cooling off period
A period of three business days which commences from the date when an exchange of contracts has taken place between the purchaser and the buyer of the property. During this time, the purchaser can choose to walk away from the contract, though may be required to forfeit 0.2% of the purchase price. There are some circumstances in which a purchaser can’t cool off, such as buying at an auction.


Covenant
An agreement creating an obligation on the titleholder of a property to do or refrain from doing something. For example, a restrictive covenant could state that no more than one dwelling may be built on the land.


Deposit
A percentage of the purchase price for the property being sold. This amount of money is paid by the purchaser as an assurance that they are going ahead with the purchase of the property in question. This amount is usually held by the estate agent until all paperwork for the purchase of the property has been signed.


Easement
A right to use and access part of the land on the property. This right can belong to someone who is not the landowner. An easement is typically used when access is required for wires and pipes for maintenance of sewage, drainage, and electricity. An easement can also refer to shared driveways and paths on a property.


Encumbrance
Refers to the fact that there’s a mortgage or caveat registered for the property title.


Equity
Having ‘equity in your own house’ refers to the difference between the market value of a property and what is still owing on a mortgage. This will increase as the loan is repaid or as the property’s market value increases.


Finance
Pre-approval is the stage where your bank/lender has confirmed an amount you are able to borrow, based upon your financial position. Finance is not guaranteed at this point and is conditional.

Unconditional Approval is the stage where your bank has carried out all the necessary enquiries, including a valuation on the property it is taking as security and has agreed to formally lend you the funds required for your purchase. This stage is “unconditional” because it doesn’t have any further conditions attached to it, except for the execution of documentation.


Fixtures
Items that are attached to the property and which ownership moves from the seller to the buyer with the property.


Joint ownership
Title to property is held in one of two ways. Joint tenants means that each person owns the property jointly and equally. In the event of one joint tenant surviving the other, the property automatically passes to the remaining joint tenant or tenants. Tenants in common means that each person owns a share (can be 50/50, 70/30, 99/1 or any share you wish) in the property. On the death of one party that share passes to whoever inherits their estate, so having a current Will is essential.


Mortgage
An amount of money loaned to a person or entity that is used to define the purchase of a property. This will be registered on the title to the property and can be used to claim a legal interest in the property purchased.


Mortgagor
The person or entity who receives the mortgage.


Mortgagee
The person or entity who provides the mortgage.


Mortgage guarantee insurance
Paid by the borrower to protect the lender against failure by the borrower to keep up mortgage repayments or to pay back the loan in full when it is due. Such insurance normally applies where the borrower’s loan exceeds 80% of the value of the property. This type of insurance is taken out by the lender, with the cost passed on to the borrower. The borrower remains liable for any shortfall; for example, if the property is sold and the proceeds do not cover what is owed to the lender.


Off the Plan
An ‘Off the Plan’ property is a unit or house that has not yet been built, and you have agreed to buy based on the Developers’ plans.


Owners corporation
Formerly known as a body corporate. An owners corporation has the collective ownership of the common area in a subdivision of land or buildings. It is responsible for the administration, upkeep, and insurance of the common area shared by all the owners (the common property).


Section 32/S32
Information that the seller must provide to the buyer advising of restrictions such as covenants and easements, outgoings such as rates, and any other notices such as compulsory acquisition. Also known as a vendor’s statement.


Settlement
When ownership of a property passes from the seller to the buyer and the balance of the sale price is paid to the seller.


Stamp duty
A state government tax, based on the sale price of a property, paid by the buyer when property ownership is transferred. Also known as duty.


Statement of adjustments
A document that includes all the adjustments of certain costs such as taxes, rates, water, rent, and how they are divided up between the purchaser and the vendor. Until settlement, the vendor must pay all expenses pertaining to the property. These expenses transfer over to the new owner of the property upon completion of the settlement.


Subdivision
The process of dividing one piece of land into different lots. This is a common practice among buyers who wish to buy land with the intention of building multiple houses or units on it.


Subject to finance
A contract clause that states the purchaser of the property in question has to obtain finance for a set amount by a certain date. Failure to do so releases them from the buyer’s contract without a financial penalty.


Title
A legal document identifying who has a right to the ownership of a property.


Transfer of Land
A document recording the change of ownership of a property from the seller to the buyer.


Vendor/Seller
An individual or entity selling land.


Zoning
The permissible uses of an area of land as stipulated by the council.

 

Geelong Conveyancing

If you’re interested in knowing more about what is required when buying or selling a home, speak to the expert Geelong conveyancers at The Hrkac Group. A smooth property settlement depends on all legal and financial obligations being met, and that can require liaison between a number of different parties including solicitors, lenders, and real estate agents – even representatives of local councils.

Our Geelong conveyancers’ expertise and experience in facilitating a stress-free settlement can help ensure a positive outcome for you. So, whether it’s a change of name or transfer of title, an application for subdivision, or any matter regarding commercial or residential conveyancing, you can rest easy knowing it can be handled under one roof at the Hrkac Group. If you’re looking for Geelong conveyancing, look no further. To make an appointment to meet one of our friendly Geelong Conveyancers today, feel free to contact us via email or phone (03) 5224 2366.

It seems like Superannuation Guarantee requirements are always changing. Just when you think you’ve got all the rules and eligibility criteria committed to memory, they evolve again. Today we’re discussing an important change to superannuation requirements that happened at the beginning of 2020, but it’s worth a reminder: Employers can no longer use money contributed by employees in salary sacrifice arrangements to meet or reduce their legal Superannuation Guarantee Contribution obligations.

Current Superannuation Guarantee legislation requires employers to contribute 10% of an employee’s base salary into their nominated super account. Prior to January 2020, employers could calculate this Superannuation Guarantee amount based on the reduced salary after any salary sacrifices. And because the Superannuation Act made no distinction between a contribution from salary sacrificing or an employer contribution, employers were also able to use employees’ salary-sacrifice super payments to meet their legal Superannuation Guarantee obligation.

This means that employees who believed they were boosting their retirement income by sacrificing part of their salary to pay extra on top of the compulsory amount paid by employers were inadvertently reducing their Superannuation Guarantee entitlements.

Prior to the introduction of this bill, employers typically calculated employees super guarantee contributions using one of three methods:

1. Based on the base salary (before any salary sacrifice is deducted)

Base salary $60,000
Salary Sacrifice $10,000
Taxable Salary $50,000
Employee Super Guarantee Contribution ($60,000 x 10%) $6,000

Under this method, the salary sacrifice deduction is not considered when calculating the Super Guarantee Contribution.

 

2. Based on the taxable salary (after any salary sacrifice is deducted)

Base salary per quarter $60,000
Salary Sacrifice $10,000
Taxable Salary $50,000
Employee Super Guarantee Contribution ($50,000 x 10%) $5,000

Under this method, the salary sacrifice amount is excluded from the Super Guarantee Contribution calculation and the final superannuation calculation is lower than Method 1.

 

3. The salary sacrifice amount is considered as part of the Superannuation Guarantee contribution by the employer

Base salary per quarter $60,000
Salary Sacrifice (Included in SGC calculation) $10,000
Taxable Salary $50,000
Super Contribution $10,000

Under this method, the employee’s salary sacrifice amount is included by the employer as part of their Employee Super Guarantee Contribution and no additional employer superannuation contributions are paid.

 

This is where the big change comes in. The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No. 1) Bill 2019, came into effect January 2020. With the introduction of this bill, the Superannuation Guarantee contribution will need to be calculated using the first method listed above only, based on the employee’s salary base.

Since January 1 2020, employers have been required to pay the minimum Superannuation Guarantee Contribution calculated on their employees’ base salary, including any salary sacrifice amount, into their super to avoid the super guarantee charge. It also prevents employers from using any salary sacrifice contributions made by employees to meet their minimum Superannuation Guarantee Contributions.

Reporting requirements also changed. If an employer makes super contributions under a salary sacrifice arrangement or makes extra super contributions to a super fund for an employee, these extra contributions may need to be reported on your employee’s payment summary.

 

Unsure if you’re meeting your superannuation contribution requirements?

If you’re interested in knowing more about Superannuation Guarantee Contributions or reporting requirements, speak to an expert Geelong accountant at The Hrkac Group. when it comes to minimising your taxation liabilities and maximising your income, our team of Geelong accountants at The Hrkac Group is there to help you with practical, effective advice.

Take control of your tax planning and minimisation needs by meeting with one of the business accounting specialists at The Hrkac Group. To make an appointment to meet one of our friendly team today, feel free to contact us via email or phone (03) 5224 2366.

 

This information has been provided as general advice. We have not considered your financial circumstances, needs, or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

A credit score is a number representing your financial history. It is calculated using the information in your credit report, which includes your payment history, the number and type of accounts you have, the amount of debt you have, as well as the length of your credit history. If you’re in the market for credit or a loan, it’s in your interest to boost your credit score as much as you can.

Credit scores are taken into consideration by potential lenders and creditors when determining whether or not to approve an applicant for credit. For example, if you’re applying for a home or business loan your mortgage broker may discuss your credit score with you. It can serve as an indication as to how likely you are to pay back the loan.

Your credit score will typically sit on a scale of zero to 1,000 or zero to 1,200, depending on the credit reporting agency. Higher credit scores demonstrate responsible past credit behaviour, which may instil more confidence in potential lenders and creditors when they are evaluating a request for credit. If you have a lower score, financial institutions will be less inclined to allow you to borrow large sums. If they do, your interest rates may be higher – as motivation to repay the loan sooner rather than later.

Here’s a general breakdown of credit score ranges from the three major credit agencies in Australia:

 

Credit Score Range Illion Equifax Experian
Excellent 800 – 1000 833 – 1200 800 – 1000
Very good 700 – 799 726 – 832 700 – 799
Average 500 – 699 622 – 725 625 – 699
Fair 300 – 499 510 – 621 550 – 624
Low 0 – 299 0 – 509 0 – 549

 

It’s important to remember that everyone’s financial and credit situation is different, and there is no perfect score that will guarantee better loan rates and terms.

Now that we’ve established what credit scores are all about, here are 5 tips to keep front of mind if you want to boost your credit score and establish or maintain responsible credit behaviours:

 

1. Pay your bills on time, every time.

A record of consistent and punctual payments can contribute to a stronger credit score. This includes all your bills. Late or missed payments on credit cards, mobile phones, utilities, or your rent may be reported to credit agencies, which will likely negatively affect your credit scores. If you’re having trouble with paying a bill, contact the service provider immediately to ask about alternative arrangements or payment plans. Avoid skipping payments, even if you’re contesting a bill. Creating a monthly budget and scheduling automatic payments for bills and other repayments could help you avoid late or missed repayments.

 

2. Pay off your debts promptly.

Again, having evidence of prompt repayments will contribute to a strong credit score. On the other hand, making late payments can damage your credit. Although paying off a debt can initially cause scores to dip temporarily, in general you could see an improvement in your credit as soon as one or two months after you pay off the debt.

 

3. Keep your credit card balance below the limit.

A higher balance compared to your credit limit may negatively impact your credit score. Keeping your balance low with consistent and on-time repayments will look good on your credit report. Limit new applications for credit or loan products where you can and if appropriate, consider lowering the limit on any credit cards you have. This will put a firmer limit on the amount of debt you can accrue.

 

4. Apply for credit cautiously.

Applying for multiple credit accounts within a short period may have a negative effect on your credit score. Whether you are approved or not, your application for a new credit or loan products will be visible on your credit report. Multiple applications for credit within a short time can flag to lenders that you are under credit pressure.

 

5. Check your credit reports regularly.

It could be worth checking your credit report carefully to ensure all the information listed is accurate. If your credit report does contain incorrect information, it could be having a significant impact on your overall credit score. You’re entitled to a free copy of your credit reports every 12 months from each of the three nationwide credit agencies by visiting www.annualcreditreport.com. Checking your own credit reports won’t affect your credit scores.

By cross-referencing your credit report against bank statements and other financial documents, you may be able to spot inaccuracies on your credit report. In that case, you can contact the credit provider or the credit reporting body and ask them to amend your report. This could definitely help you boost your credit score.

 

If you’re interested in knowing more about credit scores, speak to the expert Geelong Mortgage Brokers at The Hrkac Group. when it comes to obtaining a home loan or business loan – whether it’s to purchase a home or refinance/consolidate your debts or purchase assets – the Geelong based brokerage team is there to help you with practical, effective financial advice.

We listen, we understand and we know what the best solution for your particular needs is. Our honest, knowledgeable Geelong Mortgage Brokers will give you the confidence to negotiate for your future so together, we can develop and maintain your wealth. Make an appointment today via contact us, or phone (03) 5221 2355.

The ESG in ESG investing stands for Environmental, Social, and Governance. ESG investing is a form of socially responsible investing that prioritises financial returns along with a company’s impact on the environment, its employees and stakeholders. It is becoming a more commonly adopted practice as investors take into consideration more than just profit in their investing strategies.

Likewise, companies are becoming increasingly aware of their ESG footprint. But it can prove difficult to gather all the relevant information to ensure you are making a well-informed decision on whether a company meets or doesn’t meet ESG criteria. A great solution is to engage the services of a local Geelong Financial Planner, like The Hrkac Group who can do the groundwork for you.

There are many reasons for adopting a more sustainable investment approach. Some investors see it as a way to increase returns; many consider companies with a higher focus on ESG to be more forward-thinking and future proof.

During recent market turbulence related to the pandemic, many companies with strong ESG focuses showed lower volatility than non-ESG focussed companies. For others, it’s important that their investments align with their values. For example, an investor may choose to avoid investing in companies without carbon offset policies as climate change is an environmental issue of high importance to them.

While uniform methods to evaluate different ESG metrics are in the early stages of development, Investors can utilise various analytical approaches and data sources when determining what to invest in. Companies committed to ESG initiatives should be publishing measurable goals and their progress against those goals, in regular sustainability reports. A local Geelong Financial Planner, like The Hrkac Group can assist you in finding the pertinent data.

Read on for a breakdown of the different ESG metrics you can consider when determining where to invest.

 

1. Environmental: Conservation of the earth and its natural resources

The environmental component of ESG investing considers how a company’s practices affect the planet. Some examples include:

  • Climate change policies
  • Greenhouse gas emission targets
  • Carbon footprint targets
  • Pollution
  • Water usage and conservation
  • Overfishing and poaching
  • Deforestation
  • Energy efficiency and renewables
  • Waste management and recycling
  • Green transport solutions
  • Green technologies, innovations and products

 

2. Social; Consideration of people & communities

The social element of ESG investing covers how a company treats its employees, customers, consumers, suppliers, and the local community. Some examples include:

  • Employee satisfaction and compensation
  • Employee engagement and turnover
  • Employee training and development
  • Employee safety policies
  • Ethical supply chain sourcing
  • Human rights
  • Labour standards
  • Gender, diversity and inclusivity in hiring, promotions, and pay increases
  • Data protection and privacy
  • Public stance on social justice issues
  • Community relations
  • Customer satisfaction

 

3. Governance; Standards for running a company

The governance component of ESG investing relates to business ethics. Some examples of this include:

  • Executive compensation
  • Policies that define and enforce ethical business practices
  • Board composition; gender, diversity, representation
  • Audit committee structure
  • Conflicts of interest for board members
  • Shareholders’ ability to nominate board candidates
  • Transparency, bribery, corruption, lawsuits
  • Lobbying for particular issues
  • Political contributions
  • Whistle-blower schemes

 

There are multiple ways you can apply ESG principles to your investment strategy. You can employ an exclusionary approach, in which the investor eliminates companies according to the above criteria before deciding on where to invest. Another approach is to incorporate ESG as an additional factor within a broader decision-making process. ESG investing offers the chance to vote with your dollar; where you invest your money can be a powerful way to support communities, fair wages, and a healthy planet.

If you’re interested in knowing more about the world of ESG investing, speak to the expert Geelong Financial Planning team at The Hrkac Group. We consider your individual needs, goals, and objectives and work strategically with you to develop a tailored strategy aimed at achieving your desired financial outcomes. Make an appointment today via contact us, or phone (03) 5221 2355.

If you want to break into the Geelong property market, you’ll likely find yourself in the market for a home loan. When searching for the ideal home loan for your needs, you have a few options available. You can do it yourself and visit the big four banks and various lenders in the hopes of discovering a deal that’s right for you. Or, you can engage the services of a local Geelong Mortgage Broker, who will do all of the groundwork for you.

To help you make a decision, we’ve created a list of 5 areas to compare the services of a Mortgage Broker against what you get from a bank.

 

1. Customer experience

When you visit a bank, you will only have their specific home loan options to choose from. They will explain their available products and recommend the one that most suits your needs. You will need to go through this process of talking through your options with multiple banks to make sure you are getting the best deal. If you decide on a home loan, the bank may put you in touch with a Lending Specialist to assist you with filling out your application.

When you choose to go through a Mortgage Broker, they will guide you through the entire process, start to finish. They can show you various options from lots of different banks and lenders, helping you compare rates, features and fees, all in one meeting. Your Mortgage Broker will ultimately connect you with a bank or non-bank mortgage lender and will be there to advise you through the application process.

 

2. Deal options

Banks can only offer you their own range of home loan products. The big four may have the largest range, with loans to suit most types of borrower, while smaller banks may have fewer options.

A Mortgage Broker has access to hundreds of loan products via their lending panel. This is a selection of 20-30 lenders, sometimes more, that the Mortgage Broker regularly does business with. They know all the ins and outs of each of these home loan products and can recommend the perfect one for you.

 

3. Advantages

Many banks, particularly the big four, have a large selection of home loan products. And they might employ Lending Specialists who can provide advice similar to a Mortgage Broker. But only for the range of home loans they offer. Banks can also offer you package deals on other financial products, like credit cards and savings accounts. But these bells & whistles may distract you from the prospect of a better deal out there for you.

With a Mortgage Broker, you receive knowledgeable advice and guidance from a professional who has tabs on a wide range of home loan offers. They can instantly compare rates from their full panel of lenders and assist you through the application process. They work for you and their service is usually free.

 

4. Disadvantages

Banks can only offer the limited home loan options they have available. They want you to sign up with them and understandably won’t tell you that there’s a similar or better product available somewhere else. They can’t offer independent advice and guidance.

With a Mortgage Broker, you will need to go through the application process twice; once with the Broker and once with the Lender, though they will guide you through both. And although their selection is much wider than a bank, a Mortgage Broker is limited to the lenders on their panel. It is also worth mentioning that while a Mortgage Broker works for you, their payment comes in the form of a commission from the lender you choose via their service.

 

5. Commissions and fees

Banks will typically charge an application or settlement fee, plus several other fees. Some banks charge more fees than others, and certain home loan products may have more fees than others available from the same bank.

Mortgage Brokers receive payment for their services through a commission from the lender you end up signing with. The majority don’t charge extra fees, there is no extra cost to you.

 

A Mortgage Broker can act as an intermediary between you and the bank. They research the hundreds of available home loans on the market so you don’t have to. They work directly with you to support you through the application and settlement process, helping you gain a full understanding of the paperwork and terms & conditions before signing on the dotted line.

If you’re in the market for a home loan, talk to our honest, knowledgeable Geelong Mortgage Brokers. The Hrkac Group Geelong Mortgage Brokers work with a large variety of lenders, both bank and non-bank, so we are able to ensure you are working with loan products that have all the features you need at a rate that works for you. We will work alongside you to guide you through your home loan application.

Make an appointment today via contact us, or phone 03 5224 2366.

If your work sees you involved in the world of high-stakes business or puts you at risk of bankruptcy, you may be concerned with how you can best protect your assets. Particularly an asset as important as the family home. One method of protecting assets is to make sure that they are not held in the name of the at-risk person, rather someone trusted, such as a spouse. But a recent judgment heard by the Full Court of the Federal Court will have a profound impact on the way accountants approach spousal assets.

The judgment held that a $4.5 million property acquired in the name of one spouse was in fact owned by both, equally. Below we discuss the ruling, its repercussions, and our advice on how you can best protect yourself and your family.

 

The ruling.

Mr. and Ms. Bosanac purchased a home in Dalkeith, Australia in 2006. They paid a $250,000 deposit with funds from a joint loan account in both their names and borrowed the remainder. Although both contributed to the purchase price equally, the property was transferred to Ms. Bosanac as the sole registered proprietor. Both Mr. Bosanac and Ms. Bosanac lived in the property up until they separated in 2015, after which Ms. Bosanac inhabited the property alone.

The property was used as collateral to acquire other investment assets. Pertinently, Mr. Bosanac used borrowed money secured by the mortgage to conduct share trading.

As a means to recover an outstanding debt owed by Mr. Bosanac to the Australian Taxation Office, The Commissioner of Taxation sought a declaration from the court that Ms. Bosanac, as the sole registered proprietor of the family home, held 50% of the beneficial interest on trust for her husband. The matter primarily centered around the question of whether Mr. Bosanac had an equitable interest in the residential property for $4.5million which had been registered solely in the name of Ms. Bosanac.

Ultimately, the Federal Court judgement held that the property was jointly owned, enabling the Commissioner of Taxation to make a claim on the family home for Mr. Bosanac’s unpaid taxes.

 

Repercussions.

With the Commissioner of Taxation being successful in the second-highest court in Australia, this decision has significant repercussions in accounting. It overturns current asset protection methods used by accountants where an asset is held in a spouse’s name to protect against litigation and other claims against the at-risk spouse.

The case sets a new precedent for such matters. Based on the ruling, effectively this is the new law and the Commissioner of Taxation can be expected to enforce it in future cases. Clients in a similar position should immediately seek advice from their accountant on changes required to be made to their asset protection structures.

 

How you can protect your most important assets.

As accountants, we cannot give asset protection advice. Our expert legal team is on hand to help you ensure your assets are protected. But there are a few takeaways from this new Federal Court judgement for accounting. If your line of work puts your assets, including your family’s home, at risk, here are some things you may like to take into consideration.

  1. The property title should be solely in the name of the not-at-risk person.
  2. The bank account that loan repayments are taken from should also be solely in the name of the not-at-risk person.
  3. The at-risk person should not contribute directly to the loan.

Every situation is different, and there is no one size fits all approach to taxation planning and asset protection. Talk to our professional, approachable, and proactive Geelong Accountants to make sure you are best positioned to make the most out of taxation legislation, including investment-based tax-minimisation measures. If you want extra protection for your assets, seek advice from Hrkac Group Legal Services in Geelong, we have the experience to help you resolve any problems quickly, inexpensively, and with minimal stress.

Make an appointment today via contact us, or phone 03 5224 2366.

Liability limited by a scheme approved under Professional Standards Legislation.

You may be thinking of retirement or wanting to start setting some long-term financial goals. Maybe you’ve come into a sudden windfall of cash and you’re wondering what to do with. Planning for your financial future is one of the most significant things you can do for yourself, and your loved ones. Financial Planners are experts in helping people manage their money and in monitoring and reaching their financial goals. They can provide a range of Financial Planning services, from wealth creation & management, superannuation, wealth protection & insurance, to retirement planning.

A Financial Planner will focus on your financial situation, needs and goals. A professional, qualified and experienced Financial Planner will be able to help you implement the most appropriate strategy to achieve your desired outcomes. They will advise you of the benefits, alternatives, costs, and risks associated with your available options, and help you choose the one that is right for you.

We recommend following the guide below to help you choose a Financial Planner that is suitable for you.

 

1. Consider what you need from a Financial Planner.

What type of guidance are you looking for exactly? Before seeking financial advice it’s wise to make sure you have a fairly good idea of what you’re hoping to get out of it. This depends on your stage of life, how much money you have, and what you’re trying to achieve.

If you’re just trying to save money, figure out how much to contribute to your super or what to do with an inheritance, your enquiry may be resolved by one-off advice. This could include recommendations about budgeting, superannuation consolidation or insurance.

If you’ve reached a point in your life where you want to start being strategic about your financial future, you may be needing help developing a holistic financial plan. This may comprise advice on topics such as investment portfolios, tax planning, life insurance and in-depth retirement planning. The outcome is a comprehensive plan that will help you secure your finances well into the future.

As an individual’s circumstances and situation can change over time, Financial Planners will generally offer Ongoing Advice & Review Services.  These services will include regular reviews and monitoring of the recommendations, which helps ensure that they remain appropriate, and continue to meet a person’s ongoing needs.

 

2. Research Financial Planners & ask questions.

Before you commit to a Financial Planner, you want to ensure you’re engaging the best person for you and your circumstances. The best way to see what a Financial Planner offers is to read their Financial Services Guide (FSG). This provides an overview of their qualifications, the services they offer, how they charge and their Australian Financial Services (AFS) licence details. Anyone who gives personal financial advice must be authorised through an AFS licensee.

It’s always a good idea to have a list of questions for your Financial Planner handy to help you make your decision. Here’s a short list to help you get started:

  • What are your qualifications?
  • What are your fees?
  • Do you receive any commissions or incentives from the financial products you recommend?

There’s no one-size-fits-all in Financial Planning, so ensure you do your homework to find the right one.

3. Choose your services.

What specific Financial Planning services do you want to learn more about or put into action? To help you decide, here’s a brief overview of some of the services Financial Planners can offer.

  • Superannuation: A Financial Planner can assist you in choosing a super fund, advise you on how much you should be contributing to your fund, or help you with investing your super. They can also help you organise insurance through your super.
  • Insurance: This could include guidance on life insurance, total and permanent disability insurance, or income protection insurance
  • Personal investments: There are many personal investment options available, and each serves a different purpose. Whether it’s property, shares or ETF’s, managed funds or bonds, a Financial Planner will have the knowledge to recommend an investment strategy to achieve your goals.
  • Retirement Planning: A Financial Planner can support you to determine your retirement income needs, maximise you super contributions, ensure you’re invested appropriately, or even transition into retirement early.

Doing your homework on the services you’re interested in will set you up for success in your first session. It’ll also help you get the most out of your initial meeting.

 

Planning for your financial future is all about making your money work for you by choosing the right financial strategies. Financial Planners have the knowledge and experience you need to help you take control of your financial future.

Here at the Hrkac Group, we are a team of experienced, capable and respected Financial Planners who are passionate about educating you on the strategies and options available to get the best possible outcome for you.

Take control of your future today by meeting with the Geelong-based Financial Planning team at The Hrkac Group. Call us today on 03 5221 2355.

 

This information has been provided as general advice. We have not considered your personal or financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.

When selecting a mortgage broker for your home loan, it’s critical to protect your interests by choosing the right one for your needs. If this is your first home purchase, this may be foreign territory. A mortgage broker should be able to guide you through the process, help you choose the right loan to finance your home, and facilitate the whole process. However, it’s essential you do your due diligence before choosing a mortgage broker.

Below we outline five key things you should take into consideration.

  

1. What are your available options?

Taking out a home loan is a big commitment, no question. You aren’t just going to go with the first result on a google search. Taking into account your financial situation, you need to carefully consider your available options to determine the type of loan you will need.

  • How big is your deposit? The size of your initial deposit determines the type of home loan and interest rates you can qualify for. If your deposit is less than 20% of the purchase price of your prospective home, you will also have to pay Lender’s Mortgage Insurance.
  • What loan features do you need? Do you require an offset account, extra repayments, or a redraw facility? Features such as these may save you money and provide flexibility.
  • Fixed or variable interest rate? A fixed-rate home loan means your repayments will be the same for a set period; usually up to 5 years. This may help you with budgeting or save you from potential interest rises. Alternatively, a variable rate home loan is subject to the current interest rates in the market.
  • Can you afford the monthly repayments? Take stock of your monthly finances. Go over all of your incomings and outgoings and be realistic about what you can afford.

 

2. Have you researched your broker?

Ask your mortgage broker about their qualifications and experience. Ideally, they will have many years of experience and a portfolio of satisfied customers. Make sure they are licensed to provide you with a loan. They should have their own Australian Credit Licence or be qualified to act as an authorised Credit Representative, as required by the Australian Securities and Investments Commission (ASIC). Some other accreditations to look out for include:

  • Have a Certificate IV in Finance and Mortgage Broking
  • Accredited under the National Consumer Protection Act
  • A member of the Mortgage & Finance Association of Australia (MFAA) and/or the Finance Brokers Association of Australia (FBAA)

If any of your family or friends have recently gone through this process with a broker, you should ask them about their experience. Were they happy with their broker? What they would do differently next time? What are some things they would look for in their next broker?

 

3. Who is on your broker’s lending panel? 

Brokers are restricted by a list of banks they can access loans from, this is known as their “lender panel”. A good broker will have a range of lenders on their panel and regularly engage the services of the full range, depending on the borrower’s circumstances.

Check if the broker has a range of reputable institutions. If not, you may miss out on better deals. Make sure your broker can explain how many lenders they have on their panel, how many they use, and why.

 

4. What are the fees, charges & commissions?

A broker is required by law to clearly explain and demonstrate how they are remunerated. Most brokers receive a percentage-based commission for their work, paid by the bank that is providing the loan. There is no cost to you.

 

5. Do you have a list of questions ready to go?

It’s always a good idea to have a list of questions for your broker handy to help you make your decision. Here’s a list to help you get started:

  • What is your ownership structure? Ask your broker who owns them. Some are owned or part-owned by banks. Research shows that broker companies owned by big banks send more loans back to their parent company. A good broker won’t be influenced by their ownership structure and will recommend a wide range of loans from across the market.
  • Can you provide a credit assessment? A broker is legally obliged to follow responsible lending laws and should never sell you an inappropriate loan. They must assess your income and expenses along with your financial objectives and expectations. This is all contained in a document called a credit assessment.
  • Can you supply me with a credit guide? A broker is legally required to provide you with a credit guide. It encompasses the broker’s contact details and a record of the commission the broker will receive if you go ahead with the loan.
  • How many lenders are on your panel? This will let you know how many loans a broker can look at for you – some have lots of options but others offer a surprisingly limited selection.

If a broker can’t answer basic questions about charges, commissions, and ownership structures, this could be a warning sign. A good broker should always be transparent about their business and services.

 

When it comes to obtaining a home loan the Geelong-based brokerage team at the Hrkac Group is there to help you with practical, effective financial advice.

We will help you find the best home loan solution for your particular needs. Our honest, knowledgeable mortgage brokers will give you the confidence to negotiate for your future so together, we can develop and maintain your wealth.

Make an appointment today via contact us, or phone 03 5224 2366.