8 Reasons to Consider Refinancing your Home Loan

If you have had your current home loan for a number of years, it is likely your needs have since changed, or you may be missing out on flexible features or add-ons that have since become available.

Refinancing your home involves paying out your current loan with a new one (in many cases, with a different bank) – which may allow you to select certain features that better suit your lifestyle, your wants and your needs.

Here are 8 reasons why you could consider refinancing your home:

 

1. Save on Fees

Your interest rate will have a significant impact on how much you actually pay on your mortgage. If you have had your loan for a number of years, you may be paying loyalty tax. This is when lenders charge long term customers a higher interest rate, compared to new customers. Securing an interest rate just 0.5% lower than your existing loan, can see you save thousands, ultimately resulting in your loan being paid off quicker, and who doesn’t want those extra dollars in their pocket?

It is important to remember your home loan is more than the interest rate – All lenders measure their rates differently, which is why it is so important to speak with a Lending Specialist or Mortgage Broker to ensure you are reviewing all aspects of the loan before making the change.

 

2. Customise your loan

It is likely that your personal circumstances will change over the course of your home loan and you may need to alter your loan accordingly. When getting your home loan years ago, it may have included features that no longer suit you today, or you have found that over time, the features on your current loan are just not being maximised. Adding or removing features to better suit your lifestyle can help give you the flexibility you need. There are a range of features available to you, including flexible repayments, redraw facilities or even offset accounts. As always, it is best to consult our team of Geelong Mortgage Brokers to explore the best path for you.

 

3. Opt for a fixed rate

Fixed rates work really well in the right situations however upon the end of your fixed rate term, you will be transferred to a higher variable rate by default. However, refinancing your fixed loan once it has ended, may see you avoid having to pay any associated fees with leaving a fixed home loan early.

 

4. Access home equity

If you want to access your home equity, refinancing is the way to do it. Your equity is the portion of your home that you own outright. You can calculate your equity by subtracting your remaining home loan from the balance of your home’s current value. Accessing your equity can then help fund major purchases or investments.

 

5. Investment Opportunities

Refinancing your home can help you maximise your equity on your home. You could then use those funds to invest in real estate, shares, or other opportunities.

 

7. Facilitate Renovations

Enhance your property’s value and move closer to achieving your dream home by undergoing renovations on your property. To avoid having to take out a new loan to fund your renovations and ensuring your savings stay in your bank, think about using the equity in your home which can be unlocked by refinancing your home.

 

7. Debt Consolidation

You may have other debts, including personal loans, car loans or credit cards.

Debt consolidation involves combining those other debts with your home loan. This simplifies repayments and makes managing your repayments more convenient.

 

8. Switching Lenders

You may not be 100% satisfied with your current lender. This could be in due to a number of factors, some of them being: inadequate website, mobile app or in person services, inflexible repayment methods or a negative experience with the customer service provided. Whatever the reason, if you do decide to refinance based off the lender, ensure you are taking into consideration all aspects of the new loan and not just the lender.

 

If you are considering refinancing your home loan, there are steps you need to take to ensure you are eligible to do so. Our team of Geelong Mortgage Brokers are dedicated to helping you ensure your home loan journey is as simple and stress free as possible. We have access to a range of home loans offered by banks and non-banking lenders, to ensure we find the best suitable option for you.

Take control of your financial future by meeting with our team of Geelong Mortgage Brokers and home loan specialists at The Hrkac Group. Make an appointment today via our Contact Us page, or phone us on 03 5224 2366.

General Advice Warning
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. Whilst all care has been taken in the preparation of this material, it is based on our understanding of current regulatory requirements and laws at the publication date. As these laws are subject to change you should talk to an authorised adviser for the most up-to-date information. No warranty is given in respect of the information provided and accordingly neither nor its related entities, employees, or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.

With tax season rapidly approaching, we all enjoy exploiting any offset offered by the government to reduce our tax bill. Unfortunately, it’s important to note that the Australian Taxation Office (ATO) has recently announced the Low and Middle-Income Tax Offset (LMITO) has been discontinued and will no longer be available to claim starting from this 2022-23 financial year. You might be wondering how this change affects you and your tax bill.

 

Firstly, what was the LMITO

 The LMITO was introduced in the 2018-19 financial year as a temporary measure to provide relief to individuals earning low to middle incomes. This offset gave taxpayers earning up to $126,000 a maximum tax break of $1,500. It aimed to supplement the income tax cuts introduced by the government and benefit those who may not have benefited significantly from the changes in tax brackets.

The LMITO was structured as a non-refundable tax offset, meaning it could reduce the amount of tax an individual owed. However, it did not result in a cash refund if the offset exceeded the total tax liability if you did not use the full offset amount of $1,500. For example, if you earn $35,000 in the financial year, the maximum you could receive as an offset was $675 and there was no more you could claim or receive. LMITO only reduced the tax payable amount where you had paid tax during the year. The offset amount varied depending on an individual’s taxable income, as seen in the table below, with the maximum benefit available for claiming $1,500 to those earning between $48,001 and $126,000 per year.

Taxable income Maximum offset amount
$0-$37,000 $675
$37,001-$48,000 $675 plus 7.5 cents for every $1 above $37,000, to a max of $1,500
$48,001-$90,000 $1,500
$90,001-$126,000 $1,500 minus 3 cents for every dollar above $90,000

 

There is still an offset to be claimed, the Low Income Tax Offset (LITO).

 With LMITO being discontinued for the 2022-23 financial year, there is still an offset that can be claimed, called the Low Income Tax Offset (LITO).

Are you finding these acronyms confusing, is this the same offset?

The Low Income Tax Offset (LITO) is in place to help low-income earners, those earning up to $66,667 per year. So, if you earn more than $66,667, you cannot claim this refund.

Similar to the LMITO structure, LITO can only reduce the tax payable amount where you have paid tax during the financial year and it is a non-refundable tax offset. Meaning it will reduce the amount of tax an individual owes but will not result in a cash refund for the portion not offsetting their income. The offset amount varies depending on an individual’s taxable income, as seen in the table below:

Taxable income Maximum offset amount
$0-$37,500 $700
$37,501-$45,000 $700 minus 5 cents for every $1 above $37,500
$45,001-$66,667 $325 minus 1.5 cents for every $1 above $45,000

 

Impact on taxpayers

 The removal of the LMITO will have varying effects on taxpayers depending on their income levels. Individuals who previously benefited from LMITO may experience a slight increase in their tax bill. The extent of the impact will be directly related to their taxable income and how the changes in the regular tax rates and brackets align with their circumstances.

It is important to note that while LMITO has been discontinued, the tax cuts that were implemented alongside its introduction remain in effect. These tax cuts, which were aimed at benefiting low and middle-income earners, are still applicable and will continue to provide some relief.

Rest assured, the discontinuation of the LMITO won’t impact your monthly pay cheque. However, if you previously enjoyed the benefits of this tax offset, its cessation means a higher overall tax payment and a potentially reduced tax refund during tax season.

 

Don’t forget you CAN now claim for your home office expenses if you are working from home

Remember the ATO has introduced changes to home office claims for the 2022-2023 financial year. These changes aim to reflect the increased costs associated with working from home and to make it more straightforward for taxpayers to claim their home office expenses. You can read our blog here to learn further details of what exactly it means for you.

 

Geelong Accounting

As you prepare for the upcoming tax return season, it’s always advisable to consult with a tax accountant or use a reliable tax calculator to understand the changes and accurately estimate your tax obligations. Staying informed about tax policy updates is crucial to ensure compliance.

The expertise and experience of our Geelong Accountants at The Hrkac Group can help you with your tax return. If you need assistance or advice about what offsets you can claim or whether you’re entitled to claim working-from-home expenses or any other tax questions, then please get in touch. To make an appointment to meet with one of our friendly Geelong Accountants, contact us via email or phone (03) 5224 2366.

 

Liability limited by a scheme approved under Professional Standards Legislation.

We are living in a world that is ever more reliant on technology.

Now days, in Australia, you would be hard-pressed to find a business that doesn’t utilise a computer as a part of its day-to-day operations.

 

Whether it’s for basic invoicing and data storage or as a fundamental tool of your trade, the humble computer has become the workhorse of the modern business.

With that in mind, what would happen if you fell victim to a cyber attack? Would your business still be able to operate?

 

With scammers becoming more and more sophisticated, regular antivirus software is struggling to keep up. This is leaving businesses vulnerable to a security breach.

 

Today’s article comes from our friends at Universal Computer Solutions, a local Geelong based IT firm, and it talks to the best ways of combating a cyber attack.

 

“Top 3 Reasons Your AV Isn’t Stopping Fastbreak Spam” by Universal Computer Solutions.

 

If you would like to discuss the ways you can significantly decrease the risk of spam containing malware affecting your business, contact the team at Universal Computer Solutions by emailing admin@universal.com.au

Recently the staff at The Hrkac Group participated in the Multi-Sport Festival in Geelong.

The event saw staff from Accounting, Financial Services & Finance complete in either the 5km or 10km fun walk/run events.

It was a great team bonding event and a sense of personal satisfaction for everyone to complete the course.

As a result, we are hoping we may be able to participate in a similar event as a team later in the year.

Recently for Christmas 2012 – the staff of The Hrkac Group Accountants and Financial Services decided that instead of holding a Kris Kringle through their Social Club which is called FIFA, that they would instead donate money to the BayFM Bethany Giving Tree Appeal.

Through this effort over $200 was raised, allowing for some children in Geelong the experience of receiving a Christmas gift, when otherwise they may have missed out.

It is amazing the feeling you can receive from the gift of giving and the knowledge you have made someone smile….

The staff has other ideas in tow so we will update you on these as they occur…