Weekly wrap - Saturday 27th February
Changes coming to stamp duty?
There’s talk around changing the way stamp duty is being calculated in New South Wales. At the moment, it's an upfront cost that you pay when you purchase a property. Stamp duty was brought in 1986. At that time, the median house price was $98,000 in New South Wales, so that's the figure that was used to calculate the duty. The median house price now in New South Wales, and particularly in Sydney, is over a million dollars. It doesn't really make sense that we're now paying so much more on stamp duty because the market's changed so much over the years. It's been over 20 to 25 years since they've even reviewed it.
There's talk about maybe changing it from an upfront tax to a land tax that's paid annually. One advantage for buyers that buy and sell, or maybe only stay in properties for a couple of years, would obviously be that they could save a lot of money. But a buyer who likes to retain property or hold it for a long period of time could potentially end up paying more with an annual land tax than an upfront one.
This topic is being discussed in New South Wales, but generally what happens is that it creates a bit of a precedent for opening a discussion in other States.
Not only is Queensland the best state in the country to live in, currently our stamp duty is a little bit lower than the other States around the country. But this could have a huge impact, and a bit of reprieve in those costs would be good for everyone.
If your interest rate starts with a 3 or a 4, please read this...
This week, we looked at refinancing two investment properties that some clients currently have. One with a 4.04% pa interest rate and one with a 4.53% pa. It blows our mind that banks and lenders can still charge that.
These two loans are interest only, as it is part of our clients’s strategy to have a principal place of residence, which has a debt reduction strategy on it.
The first investment was at $497,000 with a 4.04% pa interest rate. We got that down to 2.89% pa. That is a 1.15%pa saving in rate. But the numbers attached to that suddenly is about $5,500. We’ve generated a saving of about $470 per month on that property alone.
The other investment was at $247,000 with a 4.53% pa interest rate. The savings generated by refinancing are about another $4,000 a year, or $340 a month.
These clients are therefore saving $800 plus per month on two properties, which are now going to be able to steer into their own occupied property. And for the pleasure of being able to introduce them as a new client, they're also going to get a $2,000 cash back from their new lender. So their total savings for the first 12 months are just short of $12,000, and $10,000 per year going forward.
There's not even additional payments. It's just savings on interests our clients are already paying - overpaying should we say - to a bank.
If your interest rate starts with a 3 or a 4, just get in touch.
Timeframes for Easter
Surprise, it's Easter! This time of year traditionally is busy for the banks. There are many public holidays, which make purchase contract dates, purchase settlement dates, etc., very difficult.
If you're signing a 30 days or a 45 days contract somewhere in the next couple of weeks, what does that look like? Is that even achievable? Please make sure that you understand when these dates are starting to pop up in the calendar.