Is Your Low Fixed Rate About To Expire? What Can You Do To Minimise The Financial Impact?

Mortgage Brokering

By Reece Droscher

In the current interest rate and inflationary climate Mortgage Brokers are spending a lot of time engaged with their existing clients, discussing what will happen when the current fixed rate on their Home Loan expires. When rates were at their lowest a lot of borrowers, quite smartly, took advantage of this and locked in their rate for anywhere between 1 and 5 years. Most took a fixed rate of 2-3 years at rates as low as 1.79%. As all good things must come to an end, these rates will be coming up to their expiry dates over the next few months, and some borrowers could see their mortgage rates increase by almost 5% when their fixed rate expires.

If you are in this situation there is one important thing you should do to plan for this eventuality and to try and mitigate, as much as possible, the inevitable impact on your cashflow that you will be about to experience.

Talk To A Mortgage Broker And Review Your Loan

It is vitally important to get a real understanding of your options, and discussing your situation with a mortgage broker will be the best course of action to ensuring you get the best deal and minimise the financial impact of a significant increase in your interest rate. We can talk to your current lender to see what they can offer as an incentive to remain with them or see what else is available in the market that may be a better option.

There are a number of lenders offering cash-back incentives to attract new business, some up to $4,000 depending on the loan amount and other factors. They may also be negotiable on the interest rate to ensure they win your business. Your mortgage broker is in the perfect position to help with these negotiations by presenting a case to the lenders, then seeing who is offering the most suitable deal.

Mortgage Brokers can also negotiate with your current lender if you provide them permission to do so. I have personally re-negotiated rates for new clients who were placed on the standard variable rate once their fixed rate expired, and their existing Bank discounted their rate by almost 1.5% to ensure they retained the business. It costs Banks more money to attract a new client than to keep their existing customers, so they are being a lot more aggressive using their business retention teams to offer existing clients better deals.

It is also important to note that a mortgage broker is required to act in the best interest of their client, which is not a requirement of the Banks or other lenders. When you engage a broker to review your loan we are required to provide our clients with the most suitable option to meet their needs, even if the best option is for the client to remain with their current lender and the broker receives no remuneration by recommending this option. This ensures that you are receiving the best advice available at the time of the review.

Every client’s requirements are different, and dealing with a Mortgage Broker will provide you with a much wider range of options than just dealing with your current lender. At SHL Finance we are helping our clients save thousands by reviewing their loans and ensuring they are getting the best deal to meet their needs.

Please call Reece Droscher on 0478 021 757 to arrange a review. www.shlfinance.com.au

Accountant

By Warren Strybosch

New ATO rules you need to understand if you wish to claim a tax deduction at the end of this financial year.

Even before COVID hit, many people were working from home, and it was costing the ATO a lot of money. During COVID the amount of work from home (WFH) deductions that were claimed, increased dramatically.

During COVID, the ATO was generous enough to offer a shortcut method to calculate the WFH deductions. You simply added up all of your hours working from home and multiplied it by 80 cents per hour.

Unfortunately, a lot of individuals who submitted their own tax returns got it wrong or over claimed the amount they were entitled too.

The shortcut method was supposed to include your phone and internet use and the depreciation of items purchased for your home office. However, it seems some people claimed the hours as well as claiming phone, internet and office equipment. Even some tax agents and accountants were getting it wrong.

As such, the ATO has tightened up on WFH claims for 2023 and made it an arduous process for those wishing to claim the WFH expenses from 1st March 2023.

The first thing the ATO did was get rid of the COVID shortcut method and will only allow two methods to calculate WFH: the fixed rate method or the actual costs method.

In the past, most people would simply opt for the fixed rate method because it was less onerous to keep records but that is all about to change. The ATO is now applying a rigorous approach to record keeping where WFH expenses are involved including under the fixed rate method.

The fixed rate deduction will be 67 cents per hour but those who now work from home must keep a diary of all the hours they work from home. The ATO will not an estimate based over several weeks. No, the ATO wants you to record every single hour you work from home under the fixed rate method.

The ATO stated that taxpayers should