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Contents Jeremy Fisher 518b Old South Head Rd
Welcome to 1st Street Home Loans. We are an Australian-owned mortgage advisory company with a difference. Due to our strong relationships with the banks, industry leading technology, honest approach and only the highest level of service, we were recently awarded as the number 1 independant mortgage broker in Australia. With an increasing number of people today turning to mortgage brokers for professional and unbiased service, 1st Street Home Loans is fast becoming their broker of choice. We offer a free and impartial service that provides access to over 30 residential and commercial lenders and more than 500 loan products from across Australia. The Mortgage and Finance Association of Australia (MFAA) is the peak body for the Australian mortgage industry. Members include banks, mortgage managers, credit unions, mortgage brokers, wholesale funding institutions, real estate agents, valuers, solicitors and conveyancers. All MFAA members belong to an independent dispute resolution scheme such as the Credit Ombudsman Service Limited. Loan writing members are also required to become Accredited Mortgage Consultants (AMC). An AMC is covered by professional indemnity insurance, has passed probity checks, and has met education and experience requirements set out by the MFAA. |
Hello, Welcome to 1st Street's monthly newsletter. If you require any assistance in obtaining the right loan for you, or if you have any questions in regards to an existing loan, please do not hesitate to contact me personally on 1300 88 01 09 or 0411 33 9998. Kind regards, Jeremy Fisher Drawing The Line
But there are some risks involved with this flexibility. A line of credit is the most flexible type of home loan. In essence they’re home loans from which you can pay money off and draw money out very flexibly. Interest rates have traditionally been higher than more traditional home loans. However, the mortgage market has become so competitive that the rates for these products are often comparable with standard home loans. How does it workA Line of Credit works like a credit card, with the lender setting the limit based on normal home loan lending criteria. Borrowers can often have the flexibility to choose whether to pay off the loan or just the interest. If you’ve paid off some of the capital, you may be able to borrow back up to your original limit. There is no restriction on what the money can be spent on, and no tricky “redraw rules” to make it difficult to access the funds – it’s as simple as writing a cheque or paying by EFT or credit card. Reducing the debtInterest payments can be reduced by having all of your income paid directly into the line of credit account. Then you use a credit card to pay for all your living expenses, taking advantage of the interest free days (which can be as many as 55). Then the credit card is paid off completely from the line of credit account. This technique is reducing the amount owing to the bank and therefore reduces the interest payable for that period where your income is sitting in your line of credit account. The other benefit of this arrangement is that any income “left over” after you pay the credit card off is an extra payment on the loan, so reducing the amount owing. Discipline neededWith a flexible arrangement like this comes the need to be careful. Because the funds are readily available, it could be tempting to spend the extra funds available. Therefore you need to be disciplined to take advantage of its features, rather than ending up owing more than you budgeted for. One way to take advantage of the flexibility whilst managing the risk, is to take out a normal principal and interest home loan plus a smaller line of credit. This way you get the benefits of both types of loan. ConclusionIt requires self-discipline to stick to a schedule of payments and reduce your loan when you have such easy access to your money, but it does give you ready access to a ‘cheap’ loan, and very flexible payments. To make the most of this sort of loan, look for an account you can use as your main transaction account, too. With most lenders offering line of credit products it pays to shop around. Please get in touch if you need some help. Stop Money Laundering
It has been introduced to help prevent money laundering and terrorism financing. Money laundering is the act of cleaning ‘dirty’ money. In other words, putting money earned from crime through the financial system and thereby making it difficult for authorities to track the money back to the crime. This new legislation is an attempt to establish an ‘audit trail’ so that it will be easier to follow the money and prosecute. Why is it needed?In Australia it is estimated that $4.5 billion is laundered every year. Much of this growth is because of the growth in electronic banking. Gone are the days where you go into a bank and process your banking transactions face-to-face. We are now processing our transactions electronically through ATMs, online banking and EFTPOS. Investment portfolios are also becoming far more complex which meant exposure to illegal acts. For these reasons it has become necessary for this Act to be established. Also, on the international front, in October 2005 the Financial Action Task Force (FATF) evaluated the systems in place in Australia and found that they were not up to the standard required for the finance sector to be able to compete in other countries. Who does it affect?Businesses or individuals offering services that can be exploited to launder money or finance terrorism, such as banks, superannuation fund managers, foreign exchange dealers and even bookmakers. The Act spells out these ‘designated services’ which include opening an account, accepting money on deposit, making a loan, issuing a debit card, issuing travellers’ cheques, and sending and receiving instructions on electronic funds transfers. ImplementationThe AML/CTF Act will be implemented in stages, with the first stage having begun on 12 December 2007. Businesses are given 12 months after each stage to become familiar with and implement the changes. The Australian Transaction Reports and Analysis Centre (AUSTRAC) will only take action if a business has failed to take any steps towards compliance. What's involvedFrom now on customers will be required to identify themselves when receiving designated services under the act. This identity process may be more or less arduous than the current 100 point system, dependent upon the level of risk attached to the transaction. Risk categories of low, medium and high will be used. There will also be ongoing monitoring of customer activity with suspicious matters being reported to AUSTRAC. Those within the industries affected will most likely have the experience to detect when suspicious transactions have taken place, so the Act is merely taking this suspicion one step further by reporting it. ConclusionWhilst the thought of the AML/CTF Act seems daunting, in reality it is just a few more steps required on the paper trail. Australia needs to act in order to remain competitive on the global market and to eradicate these illegal transactions. For full details on the Act and its impact refer to the Government website at www.ag.gov.au/aml. |
1st Street Newsletter
JANUARY 2008
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