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Silly Season Spending to Watch Out For

Silly Season Spending to Watch Out For

Nov 2, 2023 | Uncategorized

New year, fresh start – well, not exactly when it comes to lenders. If you’re looking to purchase a new home or refinance in the new year, it’s important to make sure your spending in 2023 doesn’t snowball into a home loan avalanche.

With the silly season fast approaching, we’ve rounded up our tips to help make sure your Christmas spending doesn’t impact your home loan goals for the new year.

Why do lenders care about Christmas spending?

When you apply for a home loan, lenders play Santa Claus with your finances, carefully checking your list of income and expenses. They want to know exactly what money is coming in and going out to see if you can afford your potential loan.

While Christmas spending may be a once-a-year celebration, lenders tend to be less jolly, treating expenses as expenses, regardless of what they’re for.

What you spend will be categorised, including what you spend on entertainment (Christmas presents and after work drinks will be lumped into this), home or rent expenses, groceries, utilities etc. A lender may also decide to classify the purchases made under these categories as living expenses, subtracting from your overall borrowing power.

Lenders also peek at any debts you currently owe, like existing personal loans or credit cards – so stashing those Christmas expenses on your credit card won’t make them magically disappear.

What silly season spending should you be watching out for?

With your spending habits and expenses influencing your home loan application, it’s important to keep a few things in mind this Christmas:

Buy now, pay later spending

AfterPay, Klarna, Zip Pay etc. Buy Now Pay Later platforms have become extremely popular in recent years – especially around the holidays.

When used responsibly, these platforms may be a helpful tool to make purchases – especially with Black Friday or pre-Christmas sales – but it’s important to note that these platforms can have an impact on your chances of home loan approval.

Whilst they do not typically charge interest on ongoing payments, they may charge late fees as well as account keeping fees. When making multiple purchases through these platforms, you may also struggle to meet your repayments – accruing late payment fees across multiple purchases. This can be particularly impactful if you link these accounts to your credit card.

Frequent missed payments may result in the provider reporting your behaviour to a credit reporting bureau, which is reflected in your credit history and can hurt your credit rating and your chances of loan approval.

Buy now pay later purchases may also be looked upon negatively by the lender as it can reflect poor money management and spending habits, indicating to the lender that you may be a risky borrower or facing financial hardship.

Credit card debt

Whilst credit cards can be a great tool for managing finances, not every cardholder has the discipline or budget to repay their balance in full each statement period.

If you’re only ever making minimum repayments on your credit card balance, you may find the extra spending you do at Christmas has added up once the new year rolls around. As mentioned above, these liabilities must be declared to your home loan lender so they can factor this into your borrowing power.

If you’re planning on putting Christmas purchases on your credit card, keep in mind that unpaid credit card balances may reduce the amount a home loan lender allows you to borrow -and could even contribute to your application being rejected if the debt-to-income ratio is too high.

The holiday hangover

It’s easy to get caught up in the magic of the Christmas season. Gifts under the tree, delicious Christmas dinners, entertaining at home, drinks with work colleagues, big budget Christmas parties, New Year’s Eve cruises…. But the magic of the holiday season wears off and you can be left with a serious financial hangover in the new year.

So how can you avoid a holiday hangover and make sure your silly season spending doesn’t impact your home loan approval (or your budget!)? Here’s what we’d recommend:

  • Make a budget and stick to it
    Establish a budget to ensure you can afford your Christmas expenses and pay them on time. This is especially important if you’re using a credit card or buy-now-pay-later services.
  • Pay your bills on time
    Timely bill payments are crucial for your credit score. Missing payments can negatively affect your credit score, making loan approval more challenging.
  • Pay off your debts
    Reducing your debts can improve your chances of loan approval. Pay off any outstanding debts, whether it’s a maxed-out credit card or a personal loan.
  • Reduce excess spending
    Be mindful of your holiday spending. The costs of socialising, food delivery, holiday parties, and gifts can add up quickly. Sticking to your budget can help you avoid overspending.
  • Think about timing
    If you plan to apply for a mortgage, consider reducing entertainment and lifestyle expenses at least three months before applying. If you’re applying in January, remember that your holiday spending will be scrutinized.If you’re concerned about the impact of your holiday spending on your loan approval, consider waiting a bit longer before applying.

Not sure if your silly season spending will impact your loan approval?

Thankfully we’re here to do the hard work for you. Before ever sending your documents to the lender, we’ll sit down to work everything for you and discuss what can be done to increase your chances of success.

Ready to get started? Call or email our team today.

How will the NSW Budget Impact the Property Market?

How will the NSW Budget Impact the Property Market?

Oct 3, 2023 | Government Grants

Treasurer Daniel Mookhey says the Minns government’s first budget includes $13 billion in savings and focuses on public services and essential workers – but what impact will it have on the property market?

With NSW in the midst of a housing shortfall, residents are finding rents rising, interest rates climbing and home ownership rates falling as demand for social housing is at a record high.

With the housing shortfall a key focus of this budget, let’s take a look at how budget changes could potentially lead to changes in the NSW property market:

First Home Buyer Scheme Expansion

Also in the budget was a $1 billion expansion of the first home buyers’ scheme, designed to deliver the government’s election commitment of confronting the housing availability and affordability crisis.

This expansion would see five out of six home buyers not paying stamp duty, with 1000 first home buyers using the scheme to be fully exempt from paying stamp duty.

The expanded scheme will cost around $250 million more than the scrapped reforms of the former Perrottet government which allowed first home buyers to opt for property taxes instead of stamp duty.

Housing Shortfall

NSW has a projected shortfall of 134,000 over the next five years, with many advocates warning that this funding will not be enough to put a dent in the 56,000 strong social housing waitlist, with the Community Housing Industry Association calling for $6 billion to deliver more social housing properties to address this shortfall.

Housing Infrastructure Fund

There will also be a new $400 million Housing Infrastructure Fund that will be financed from money left over from more than 700 finished projects that have been funded through Restart NSW, created as a result of the proceeds of privatisation.

This funding will go towards building sewers, footpaths, streetlights, parks and schools in new suburbs, with $100 million set aside for regional NSW. This fund will also support infrastructure for infill housing.

$300 million towards “affordable” housing

Labor will also invest $300 million in the state-owned developer Landcom to deliver 3,288 market homes and an additional 1,409 affordable homes, as well as $60 million on publicly owned build-to-rent trials in the Northern Rivers and Illawarra-Shoalhaven areas. The time frame for delivery on these properties is out to 2039/2040.

The government will also build 3,100 affordable homes by 2028-29 as part of the National Housing Accord.

The $610 million Commonwealth Social Housing Accelerator program will also see $224 million put towards social and affordable housing, as well as an additional 1,500 social housing homes over the next four years. This package includes $70 million for social housing units in regional NSW and $35 million for housing of Indigenous people.

Wondering how the budget will impact your property decisions?

Get in touch with our team today. Together we’ll look at your property goals and how these changes could impact you.

Eight ways to spring clean your finances before applying for a loan

Eight ways to spring clean your finances before applying for a loan

Sep 1, 2023 | Borrowing Power, Purchase, Refinance

We often associate Spring with renewal, fresh beginnings and cleaning and decluttering at home, but what about your finances? As the real estate market ramps up, there’s no better time to embark on a financial spring clean, especially if you’re in the market to buy.

A clean financial state not only improves your chances of securing a mortgage, but also sets you up for a more stable financial future – so let’s look at some of the ways you can tidy up your finances:

Refresh (or set) your budget

It’s easy to set and forget a budget – or not set one at all.

Dinners out, streaming subscriptions, coffees and impulse shopping can quickly add up. When applying for a home loan, this spending is what lenders tend to scrutinise – so why not clean this spending up now. Have a look at our previous article, How your Daily Spending is Impacting Your Borrowing Power for some tips.

Review your credit score

Do you know what your credit score is? Or how you can improve it? Money Smart have made is easy with their credit score guide: https://moneysmart.gov.au/managing-debt/credit-scores-and-credit-reports

Cancel or consolidate subscriptions

Netflix, Disney+, Kayo, One Pass, Amazon Prime, gym memberships – monthly subscriptions can quickly add up, and for many of us they are often left unused.

Why not look at all of the weekly/monthly/annual subscriptions you have and then decide what can stay, go or swap for a cheaper (or free) option. You may find that you end up saving hundreds each month on subscriptions you simply don’t need.

Reassess your financial goals

Do you have financial goals? If so, when’s the last time you checked in with them? If not, why not start now? By setting a goal, you have something to work towards and be aware of.
Some great financial goals to get you started include:

  • Sticking to a budget
  • Increasing your income
  • Saving for a house deposit
  • Putting money towards retirement
  • Breaking the paycheck-to-paycheck cycle

Re-think your spending

Have you ever stopped to look at what you’re spending, where you’re spending it and how much you’re spending?

You might be surprised to find that those small regular expenses quickly add up and impact your saving goals – and these expenses are often what lenders scrutinise.

Have a look at your income and expenses as a whole and see where there’s room to reduce expenses, increase savings or change your spending habits to be more in line with your financial goals.

Take inventory of debts

What money comes out of your account each month? Could you consolidate or remove some of those debts? Paying off your various debts via a single loan with a competitive interest rate not only helps you save money, it also leaves you with one simple payment date each month. This, in turn, may help reduce financial stress.

Debt consolidation is something we can help you with. Want to get started? Contact us today.

Prepare for the unexpected

Accidents happen, illness occurs, appliances break and all when you least expect it. An emergency fund can be the difference between an event being a crisis or an inconvenience and it’s so important that you make sure your emergency fund is fully funded and up to date.


Three to six months of essential expenses saved in a separate bank account is the general rule of thumb for an emergency fund, but even a small amount can make a big difference. If you don’t have the funds to transfer right away, why not start small and make a plan to build that fund with weekly or monthly deposits.

Make sure you’re getting the best deal

Are you paying too much for your insurance or household bills? Whilst many companies offer incredible deals to sign up with them, very few companies offer great deals or incentives for existing customers.

Many of us are too busy (or just don’t think about it) to check whether or not we’re getting the best deal. This typically means that we’re spending extra money each month for no reason.

Not sure where to start? We recommend comparing rates and deals on the below:

  • Utilities (gas, electricity, water)
  • Insurances (home, health, car)
  • Internet and Phone Plans

Also be sure to let your current provider know that you’re looking for a better deal. More often than not, they’ll offer you a discount or match the price to retain your business.

Ready to get started?

By reviewing your credit, improving your financial health and rethinking your spending, you’ll be well on your way to achieving your homeownership goals.

Need some help to get started? Contact us today and let’s get ready to welcome the summer in your new home.

Everything you need to know about buying off the plan and securing finance

Everything you need to know about buying off the plan and securing finance

Aug 1, 2023 | Investment Property, Purchase, Self Menage Super Fund (SMSF)

There are many different ways to purchase property – and one of those ways actually involves committing to purchasing a property that doesn’t yet exist.

Buying real estate ‘off the plan’ means committing to purchasing a property that is still in the pre-construction or early construction phase, often long before a building or development project is completed. Many home owners and investors see buying off the plan as a good way to purchase a brand new property, however, just as with any investment, there are pros and cons to consider – so let’s have a look at them.

The benefits of purchasing property off the plan

  • Lower Purchase Price
    One of the main attractions of buying off the plan is the potential to secure the property at a lower price than it would be once construction is finished. Developers often offer discounts and incentives to early buyers which can result in significant savings.
  • Potential Capital Appreciation
    In a rising property marketing, purchasing off the plan can be a smart investment strategy. As property values will likely increase during the construction period, buyers may benefit from capital appreciation ever before they’ve settled on the property.
  • Customisation Opportunities
    This benefit particularly applies to home owners, but also provides investors with opportunities to boost their potential rental income. Purchasing off the plan often gives you the chance to customise certain aspects of the property, including selecting finishes, materials or layout preferences to suit their specific needs and tastes.
  • Delayed Payment
    When purchasing off the plan, buyers typically pay a deposit upfront and the rest of the purchase price upon completion. This extended settlement period provides you with extra time to save or secure finance.
  • Stamp Duty Savings
    As Stamp Duty is only payable on the land for off the plan purchases, you could be savings thousands of dollars on your purchase.
  • Deposit Options
    Whilst most buyers pay cash to secure their deposit, purchasing off the plan provides you with other more flexible deposit options to consider, including Bank Guarantees and Deposit Bonds. It’s always best to check with your property consultant as to what method of payment the develop is happy to accept.
  • Tax Advantages
    Being a new property, investors can claim depreciation which is a major tax incentive. This helps to reduce the ongoing costs of holding the property, allowing you to build a larger portfolio.

The disadvantages of purchasing property off the plan

  • Uncertainty
    One of the things that potentially buyers are often afraid of is the uncertainty of buying off the plan. As the property is yet to be constructed, buyers have to rely on floor plans, artist impressions and development promises as they’re not yet able to see the final product.
  • Construction Delays and Risks
    Construction projects can face unexpected delays due to various factors, such as weather, planning permits, development applications or financial issues. These delays may result in buyers having to wait longer for the property’s construction, impacting their plans.
  • Market Fluctuations
    Whilst a rising property market can bring capital appreciation, a declining market can have the opposite effect. If property values drop during the construction period, buyers may find themselves with a property worth less than they originally paid.
  • Changes in Financial Circumstances
    A buyer’s financial situation may change between time of purchase and completion, as well as general economic circumstances. This can make it harder to secure financing or meet the financial requirements during settlement.

How can you mitigate risk and increase your chances of securing finance for your off the plan purchase?

As mentioned above, economic or personal circumstances may change between the time of purchase and completion, however, below is what we always recommend our clients do to ensure they can reduce risk and have the best chance of securing finance for their property:

  • Increase your savings
    This will help to cover any unlikely shortfalls
  • Do not apply for any lines of credit during this time
    Don’t be tempted by credit card offers and avoid signing up for any additional lines of credit whilst waiting for your property to be completed. This could impact your borrowing capacity or credit rating.
  • Ensure all commitments are paid on time and up to date
    No lender likes to see late or outstanding payments, so make sure you’re paying all commitments on time.
  • Don’t change employment
    Some lenders can have issues with short term employment so it’s important that you chat to us should your employment change.
  • Maintain or reduce your living expenses
    Increasing your lifestyle costs may reduce your borrowing capacity so it’s important to keep an eye on your budget.

What should you consider when purchasing off the plan?

We’ve talked about the pros and cons, but what things do you need to consider when purchasing off the plan?

  • Research the developer
    You want to make sure that you thoroughly research the developer’s reputation, track record and completed projects prior to committing to an off-the-plan purchase as this will give you an idea of their creditability and their quality of work.
  • Understand the Contract
    Ensure you carefully review the purchase contract with the help of a legal professional. Pay close attention to clauses regarding potential changes in the property’s design, timeline and provisions for compensation in case of construction delays.
  • Finances
    It’s important that you know what you assess your financial situation and consider the risks associated with the investment before committing. When working with Sanford Finance, we’ll sit down to work out your goals, discuss potential risks and action plans and discuss contingency plans in case of unforeseen circumstances to ensure you’re not jumping into anything you’re not prepared for.
  • Location and Market Analysis
    Think about the location of the development and its potential for future growth. Consider things like the demand for similar properties in the area and evaluate the long term investment potential for the property.

What finance options are available during the construction phase?

Purchasing a property off the plan can be quite stressful and challenge even the best laid plans, however, our construction loans take a lot of stress out of the equation.

A construction loan most commonly has a progressive drawdown where you receive instalments of the loan at various stages of construction, rather than receive it all at once at the start.

This means that you generally only pay interest on the amount that is drawn down, as opposed to the entire loan amount.

A number of lenders also offer construction loans that are interest-only during the construction period, later reverting to a standard principal and interest loan once the build is complete.

Construction Loan Case Study:

Craig and Belinda are purchasing land for $300,000 in Adelaide and building a new home for $400,000 for a total value of $700,000. They are borrowing 95% or $665,000. Assuming an interest rate of 5.95%, the repayments required by Craig and Belinda during the build phase will look like this:

Current Loan Current Loan Current Loan Min. Monthly Repayment Required
Land Loan Nil $265,000 $1,314 IO
Deposit 5% $20,000 $285,000 $1,413 IO
Base 15% $60,000 $345,000 $1,710 IO
Frame 20% $80,000 $425,000 $2,107 IO
Enclosed 25% $100,000 $525,000 $2,603 IO
Fixing 20% $80,000 $605,000 $2,999 IO
Practical Completion 15% $60,000 $665,000 $3,966 P&I
Totals $400,000 $665,000  
IO = Interest Only P&I = Principal and Interest

In the above table we can see that the repayments steadily increase over time and are interest-only during the build phase. Once the final payment is made, a construction loan will generally convert to Principal and Interest repayments.

How do you get started?

Buying off the plan can be exciting and nerve wracking all at the same time, but we’re here to help. We’ve helped many clients secure their dream property or investment property off the plan and know what you should be looking for, what lenders are looking for and are here to help you navigate the off-the-plan market more confidently.

Ready to get started? Contact us today!

Why the ATO is scrutinising investor loans

Why the ATO is scrutinising investor loans

Jul 3, 2023 | Investment Property

They say one bad egg can spoil the bunch – and that’s certainly the case for investors with the Australian Taxation Office (ATO) set to launch a rigorous examination of investor loans this year as part of increased efforts to combat fraudulent claims.

The new ATO residential property loans program will target a large percentage fo the nation’s 2.2 million property investors, aiming to target incorrect deductions and undeclared income.

ATO assistant commissioner Tim Loh said that data will be collected on approximately 1.7 million investors’ loans, cross checking that information with information already obtained from banks and property managers. In addition to this, the ATO will soon collect landlord insurance data as well.

How often are errors or deliberate manipulations occurring?

A recent analysis revealed that 9 out of 10 property investors’ tax returns were incorrect.

Whilst the majority of errors on tax returns are due to simple mistakes or lack of reasonable care by property investors, there are many deliberate attempts to manipulate tax debts or inflate refunds and this is what the new program will target.

Common mistakes made by property investors included misallocating loan interest costs when refinancing for personal purposes, underreporting or failing to declare rental income, not apportioning expenses for private use and claiming the full loan amount instead of only the interest.

How will the ATO carry out this investigation?

The ATO will initially collect investment property loan data from at least 16 banks, including the big four. This information may include account details, loan balances, transactions, loan types and terms as well as unique account IDs. This information will then be used to cross-match against the data the ATO already has to ensure that no mistakes or deliberate manipulations are taking place.

What should you do as an investor?

Good record keeping is essential for investors (as it always has been). With the new ATO program providing greater information for data matching, it’s important that property owners keep records to be able to explain any errors or differences that may be found.

Tim Loh has advised investors to retain all records related to a property’s expenses, income, purchases and sales for a minimum of five years after the property is sold.

The ATO also has a number of products to help taxpayers and registered agents get returns right. The Tax Time Toolkit for Investors is a handy tool for investors as it includes a dedicated guide and a number of fact sheets for rental property owners to ensure you have the right information.

Wondering if your loan measures up?

We’re here to help. With decades of experience helping property investors do the right thing for themselves and the tax department, we’re here to answer any questions or find the right loans for you needs. Get in touch with us today to get started.

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