A MESSAGE FROM AUSTRALIAN MONEY MENTORS ON PREVENTING THE CORONAVIRUS FROM INFECTING YOUR FINANCES
Navigating your options whether it be restructuring lending applying for hardship etc. can be for some overwhelming and time consuming
Already in trouble or just concerned about getting into trouble or just want to talk call us for a chat.
We are here to help!
We know, we know – you don’t want to hear a single thing more about Corona unless it involves an afternoon out in the sun with some friends featuring the beloved beer brand – but unfortunately, there are a few pieces of COVID-19 information that we just can’t sweep under the rug.
- The economic impact of COVID-19 is large, and will continue for some time.
- The economic impact will impact your wealth, directly and indirectly.
- The opportunities to continue to prosper during this period.
We are only seeing the beginning of the changes that are on the way, both on the health front and the wealth front. There are going to be issues far more complex than lack of groceries at your local supermarket. In fact, we’ve already seen them taking effect within different industries.
In just a few short weeks since COVID-19 has hit Australia, we’ve seen hundreds of jobs vanish, profits slashed and normal bills such as rent, mortgage and utilities falling into arrears.
This is the tip of the iceberg, and we will not be the Titanic! We’d rather be the lighthouse that stops you from crashing into the rocks.
We know this sounds scary, but we don’t need to panic. So what do we need to do? Look up and look ahead! Plan and strategise to make sure there is a future. Here at Australian Money Mentors we have never been in the game of people living paycheck to paycheck. We are not interested in simply ‘getting by’, and we are definitely not interested in our customers failing when it comes to their finances.
So, don’t delay – now is the best time to implement a plan to ensure you’ve got optimal control over your financial situation during these uncertain times and into the future.
Areas we can discuss and give you general information on:
- Taking advantage of the banks offers to put your mortgage on hold
- Make sure you have a financial cushion where possible and if you don’t already have one, we can inform you how you can create one
- Restructure your lending
- Consolidate and negotiate debts
- Change from Principle and Interest loans to Interest Only Loans
- Check your contracts to see if you are entitled to a repayment holiday
- Renegotiate your lease agreements
- Review and create budgets
- Apply for hardship if needed
- Credit Card Balance transfers
Examples of measures already implemented detailed on the next pages.
The Australian Government has announced an economic response totaling $17.6 billion which includes boosting cash flow for employers by:
- Providing up to $25,000 (tax free) cash flow support to eligible SMEs with a turnover of less than $50 million that employ staff.
- Providing 50 per cent wage subsidies to eligible employers of apprentices and trainees for up to nine months from 1 January to 30 September 2020.
Supporting business investments and severely affected regions are also a focus.
Increasing the instant asset write-off
From today, the Government is increasing the instant asset write-off threshold from $30,000 to $150,000 and expanding access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million) until 30 June 2020. In 2017-18 there were more than 360,000 businesses that benefited from the current instant asset write-off, claiming deductions to the value of over $4 billion.
Backing business investment
The Government is introducing a time limited 15 month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions. Businesses with a turnover of less than $500 million will be able to deduct 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
Boosting cash flow for employers
The Boosting Cash Flow for Employers measure will provide up to $25,000 back to small and medium-sized businesses, with a minimum payment of $2,000 for eligible businesses. The payment will provide cash flow support to businesses with a turnover of less than $50 million that employ staff.
The payment will be tax free.
This measure will benefit around 690,000 businesses employing around 7.8 million people.
Supporting apprentices and trainees
The Government is supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage for up to 9 months from 1 January 2020 to 30 September 2020.
Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer that employs that apprentice.
This measure will support up to 70,000 small businesses, employing around 117,000 apprentices
Stimulus payments
The Government will provide a one-off $750 payment to social security, veteran and other income support recipients and eligible concession card holders. Around half of those that will benefit are pensioners.
There will be one payment per eligible recipient. For example, if a person qualifies for the one-off payment in multiple ways, they will only receive one payment. The payment will be tax free and will not count as income for Social Security, Farm Household Allowance and Veteran payments.
Following consultation with regulators, the Australian Banking Association (ABA) has announced a relief package for small business customers, which includes the suspension of loan repayments for six months.
The relief package will apply to more than $100 billion of existing small business loans, which according to the ABA, could provide up to $8 billion of relief to the sector.
This is a multi billion dollar lifeline for small businesses when they need it most, to help keep the doors open and keep people in jobs,
Banks are putting in place a fast track approval process to ensure customers receive support as soon as possible.
What did the RBA announce?
The board reduced the cash rate target to 0.25% – adding that it will not increase the cash rate until progress is made towards full employment and it is confident that inflation will be sustainably within the 2-3% target band.
Quantitative Easing – The RBA announced it will be purchasing government bonds in the secondary market as part of a target for the yield on 3-year Australian government bonds of around 0.25%.
A funding facility for banks, with particular support for credit to SMEs – The facility is for at least $90bn but there will be extra funding for those banks which increase lending to small and medium businesses
The cash rate
Unlike the previous cash rate reduction just a couple of weeks ago, this move did not see a vast number of banks and lenders cutting their own rates.
Commonwealth Bank made the decision not to cut variable rates for its mortgage customers, but did cut one, two and three year fixed home loan rates for owner occupiers paying principal and interest by 70 basis points to 2.29% p.a.
The major bank also announced a 100 basis point reduction for all existing cash-linked small business loans.
NAB has announced a support package for business and personal customers in response to the economic fallout from the coronavirus (COVID-19) outbreak.
In line with the Australian Banking Association’s (ABA) announcement earlier today, NAB will enable business customers experiencing financial difficulty to defer their payments on floating and variable rate business loans for up to six months.
However, NAB has also announced that it would extend the offering to home loan customers experiencing financial hardship.
In addition, NAB will:
- Cut 200bps from interest rates on new loans and all overdrafts on its flagship digital business product QuickBiz, effective March 30.
- Reduce variable rates on small business loans by 100bps, effective March 30
- Reduce fixed home loan rates by up to 60bps
ANZ Decreases Variable And Fixed Home Loan Rates
Key Information:
- Effective 27 March 2020, ANZ will reduce variable interest rates for home, residential investment and line of credit loans by 0.15% p.a.
- Effective 23 March 2020, ANZ will reduce its 2 year fixed rate for owner occupiers paying principal and interest to 2.19% p.a.
- Introduction of a 10-month term deposit rate of 1.75 per cent for depositors
Like the Commonwealth Bank of Australia (CBA), NAB will not reduce variable home loan rates, despite the Reserve Bank’s emergency cut to the cash rate.
Suncorp
Effective today, Friday, 20 March 2020, Suncorp will make the following changes:
Owner Occupied & Investment Residential Lending:
- Decrease all variable interest rates by 0.25% p.a.^
- Decrease fixed interest rates, including the introduction of a new Home Package Plus 5 Year Fixed Rate Special Offer for both Owner Occupied (Principal and Interest) and Investment (P&I and I/O)
- A change to the Owner Occupied, Better Together Back to Basics Special Offer discount (margin) for Interest Only
Help for small businesses
The RBA’s facility of $90bn compliments an investment announced by the Morrison government of up to $15bn to enable smaller lenders to keep supporting SMEs.
The Australian Banking Association has also this morning announced a small business relief package, which will see banks defer loan repayments for six months for small businesses which need help due to COVID-19. It will apply to more than $100bn of existing small business loans and depending on customer take-up could put as much as $8bn back into the pockets of small businesses.
Banks are putting in place a fast track approval process to ensure customers receive support as soon as possible.
THE LENDING DOORS ARE OPEN!
They are open for business, to keep you in business. With the RBA’s actions of injecting millions of dollars into the economy, they will encourage economy stimulation through lending activities.
But most of all, we understand that each individuals’ circumstances are different, and we will help you through solutions based on what is best for you and your goals.
We wish you all the best of health.
Call us on: 03 9841 8111 or email us on: info@australianmoneymentors.com.au today.
Stay safe!
Regards,
Tony Zikas and George Lambadaridis
& The Team at Australian Money Mentors
Ph: 03 9841 8111
Em: info@australianmoneymentors.com.au
Disclaimer: This document highlights the current information currently available and we have prepared this to present key findings to help raise awareness to the public in simplified terms. This does not take into account the client’s exact personal situation or financial needs. Please read through all documents publicly available or information provided by your own trusted information sources to form a well-rounded and unbiased decision. We always recommend seeking independent legal and financial advice before proceeding with an opportunity and or to attain financial advice. We do not and cannot make any guarantees about the completeness, reliability or accuracy of this information and information can change at any time. Any action you take on this will be at your own risk and we will not be liable for any losses or damages in connection with this announcement.
