 A question I am asked on a daily basis and a question which I feel you would ALL benefit from hearing the answer to. Especially in the current financial climate. “Why Isn’t MY rate that low?” The answer to this question is complex and multi-faceted. So, for ease of translation from ‘financial lingo’ to mainstream lingo, I have popped together this fictional conversation which is based on hundreds of similar conversations I’ve had to date. Bad acting aside, I am fully across the situation so please don’t allow the light hearted conversational tone of this text to distract you from its true benefit… So… “Why Isn’t MY rate that low?” Phil came to Wilson Financial with what we call an ‘old rate’. “I was referred to you by my neighbour. We’re on a really good package but our rate is nothing like the rates I’m seeing online in the two’s, how come my rate is so high?” To which I told Phil… “It’s ‘bracket creep’ which is a combination of the bank’s discounts getting larger over time, and the variable rates dropping. When the banks don’t pass on the full drop your rate creeps up against discounts on offer. Sometimes banks even offer NEW clients better rates than they do for existing clients!” Naturally, Phil was bit miffed. “Well, that’s a bit ordinary, I’m a loyal client… how do I get a better rate?” Now, this is where the sting stops stinging so much! Cue my response… “We have heaps of options. Firstly, you can ring your lender and quote another lender’s rate to try and get them to reduce your current rate. Often, this will give you a little bit of headway to a better rate.” Thinking of his precious dollars, Phil interrupted… “I did that and they reduced it a bit, but not much, why can’t they just price match?!” Yes Phil, I’m hearing you! “It’s not always that simple, banks are really big institutions, they have price wars among themselves and sometimes they seek new business as a growth strategy… in those cases, if you’re not a new client, you do tend to miss out. The other issue is that not everyone can move banks due to equity restrictions or current income, so you can’t just assume banks will price match. Some lenders also look for different types of clients, be it equity rich clients, or investors, to balance their books or meet certain targets that the regulators set out, it’s really complex!” “We need to learn to play the game Phil” I thought. (Ok, maybe that’s going a bit too far!) By now Phil was wondering what to do. “So, if they won’t price match, what else can I do to get a better rate?” Ahhh price matching… if only it were as easy as whipping out a competitor’s brochure like we do at the supermarkets! “You could consider a product switch with your current lender by moving to a different variable rate or even a fixed rate product – they are generally the same for new or existing clients! Or, if you really want to stay variable, and just get a better rate, you could consider moving your business to another bank? Banks are literally GIVING MONEY AWAY to move to them, it’s insane.” Now Phil was starting to see some light… “Yeah but won’t I have break costs to leave my bank?” And the best bit… “Maybe, but maybe not! In July 2010 the government passed new laws on exit fees. What this means is generally lenders can’t impose an early repayment charge if your loan is variable. If it’s fixed, you could cop a fee for sure, but because most people looking to refinance are on a variable rate you’ll likely just have a one off discharge fee of $250 - $350. You’d also then have land titles office fees of around $300 per property. (Insert Phil’s thinking face here!) “When you’ve got lenders willing to give you $4,000 to refinance, you’re really mad if you don’t consider shopping around to switch! We can do all that running around for you and then present you with three of the most suitable refinancing options that take into account your needs and preferences”. Almost there… “What??? Ok, there must be a catch! How much do YOU cost me?” The icing on the cake… “We are paid by the banks so the entire thing is fee free and obligation free! We negotiate pricing for you so you will possibly get a lower rate than what is advertised online too! (If you're skeptical, you can read more about that here!) Now, just like you, Phil liked the idea of saving money… “That’s crazy! Can you sign me up? What do I need to do?” And there you have it… a sneak peek into the many HUNDREDS of these conversations I have each year! Did you know, the average broker has 14 years’ experience? This is why over 60% of Australians are now turning to we brokers!
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 You may have heard over the past few days that the Federal Government has announced plans to further support our valued small and medium businesses with new loan structures. These loans will be unsecured and up to $250,000. These loans will be 50% guaranteed by the government. They are under the Government SME Guarantee Scheme. The details are outlined below.
It will be a good idea at this time to discuss these options with your accountants so that you can work out as individual businesses your needs and the borrowing levels available to you own business.
Below are links to the various major banks Covid 19 sites for both home loan and business loans: https://www.anz.com.au/promo/covid-19/ https://www.commbank.com.au/latest/coronavirus/business-support.html?ei=cor_newloan#new https://www.nab.com.au/personal/customer-support/covid19-help/business-support-loans https://www.westpac.com.au/help/disaster-relief/coronavirus/ As always we remain here to support you so please don’t hesitate to call us to talk through what you need us to do to assist, remember those around you that are there to support your business, your accountant, solicitor, financial planners and brokers. Best contacts for us are: Liz Wilson – Broker and Business Owner – 0414798760 Chris Tracey – Commercial Finance – 0467999230 Geoff Lisle – Equipment Finance – 0488366131 George Root – Financial Planner – 0499992130  Our loyal clients, referrers, friends and family…. This financial burden will be worn by us all, and we must all play our part to carry what we can of it. The spirit of compassion, community, and patience is something we must all find now, so that we can come to the other side, together, and rebuild. I feel the following topics are paramount to understanding 'the new norm', as we all race to adapt.  🚨 Breaking news - Job Keeper Payment 🚨 ROUND THREE STIMULUS The round three stimulus has just been announced by the Morrison Government for the fact sheet click here. The announcement is for a $1,500 per fortnight job-keeper payment, to keep Australians in their jobs when the work dries up. The employers will receive the payment, and be required to pass this on to their employees. This will be enforced with the new Single Touch Payroll system that is now mandatory for employers. This is available for full timers, part timers, sole traders and even casuals (if employed over 12 months with the business). Business must have turnover of less than $1 billion and turnover is reduced by more than 30% relative to the comparable period a year ago. If you were on the books on March 1 via the mandated Single Touch Payroll System you are eligible even if you have been stood down. The government will backdate payments to today. Casuals are eligible if they worked for 12 months or more. New Zealanders on the 444 visa are included, but other temporary visa holders are still in question with discussions 'under way'. 🚨 Home Loan Deferrals 🚨 Many clients are jumping straight on to home loan deferrals on offer of up to six months. Of course at this time, we are 100% on board with this, as an effective way to reduce overheads immediately. We do urge you to please temper these actions with the following thoughts in mind;
Hardship information for equipment finance / cars please follow this link 🚨 What we are seeing 🚨  First and foremost the feedback from clients is that when lenders reach back out to them (and you will have to wait) the deferments are more being granted relatively easily. This is great news for home owners under duress. Some lenders it's as simple as a phone conversation. So don't put it off thinking it will be difficult, get ahead of your needs now. In other news, the speed at which business’s, lenders and employees pivot will be critical to our success as a nation, as employers, and as employees. Some great examples of how business are adapting to no contact: Lenders Lenders are adapting to approve video interviews for clients and guarantors so we can keep going Valuers moving to virtual valuations – this is not out just yet but will be released soon Banks triggering Kerbside valuations more freely (photos from the front of your street) Business’s Here are some insights into how business’s I know of are adjusting;
Overseas innovators For laughs – an Oregan strip club called the Lucky Devil Lounge launched a new food delivery service called Boober Eats! That’s a full redeployment of services! Hedley & Bennet which make chef aprons started stitching fabric face masks instead. Swimwear Startup, ‘Summersalt' switched its customer service to emotional support If you are in services, don’t forget to connect via ZOOM/Facetime or other programs, people deal with people, not business’s. 🚨 Professor Paul Kellys Message 🚨  “We have to change the way we as people interact with each other” Professor Paul Kelly, the Australian Government Deputy Chief Medical Officer. Public Health Advice is to work from home if you can. As we can, we are! Wilson Financial feels that social distancing needs to be encouraged and we are easily able to help impact less community transmission by working remotely. The only way to ensure we achieve the new Aussie dream of flattening the curve and saving lives is to reduce contact. If we can do something remotely we are and virtually everything we do can be remote.. Whilst many may like to see us face to face, we ask you to Facetime/Zoom/Skype or video conference with us. We promise we will make the process easy for you all the while saving you money. 🚨 What about renters 🚨 I was particularly inspired by message from Scomo last night to find bespoke, personalised solutions to managing tenancies and what in many cases is YOUR investment but may also be your tenancy. NOW is the time to reach out to your landlord if you need help. Now is the time to listen to your tenant if they need help. Come up with arrangements so you have a business or tenant leasing your home/commercial building at the end of this bridge. Come up with arrangement with your landlord so that your business can re-emerge in tact. We would remind you, that banks are not offering ‘free money’ to people with investment properties by freezing payments, as payments are not frozen, the interest is typically capitalized meaning it is added to the loan every month and the loan increases. As a result, we need not regard landlords as the ‘greedy owners’, many landlords have worked very hard to owner a property which were then leased at market or commercial rates. We also need to remind landlords to find compassion for their tenants, and not be short-sighted about what is happening. To find it in their hearts for those impacted, to find ways to lessen the burden. We believe there may be more announcements on rent so stay tuned... 🚨 Above all - it's business as usual 🚨  Whilst we are helping our frontline industry clients with the immediate effects of Covid-19, it is business as usual for us. We are pleased to report that sales and purchases are occurring, equipment is being bought, and many clients have succeeded in innovating to adjust to low contact Our hearts go out to industries being ravaged by the effects social distancing is having on your sales and trade. We want you to know that your needs are our priority right now, so reach out and talk to us. We also note that recent changes in rates and uncertainty has prompted unprecedented levels of refinance enquiry and with all of the $4,000 refinance rebates on offer from many lender partners, we are working very hard to keep up with demand for these restructures. Please bear with us as we must prioritize hardship assistance.
Above all, please call us if we can assist, the office phone lines are being manned by our team just as normal. 1300 780 826 or (02) 4860 3399 |
AuthorLiz Wilson has been working in finance for nineteen years now. She regularly blogs on industry topics and here you will find over a hundred personally written blog topics and case studies... 
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