home loans Archives - Chartered Accountants, Taxation & Business advice Ashburton

Remembering your Insurance When you Renovate

Posted on February 12, 2020February 12, 2020 by Glance Consultants

Renovating your home or investment property is an exciting time, whether you are creating a better space to live or improving investment opportunities. However, homeowners can get caught up in the build that they forget to look at what is covered by their home and contents insurance.

The first step is to identify what kind of builder you are using, this is important as the different types incur different warrantees. For owner builders, no warranty is required whereas a registered builder will be required to supply you Warranty Insurance on signing the building contract.

Homeowners must inform their insurer that they are planning on renovating a property. If you fail to do so, the insurance for that property may become void, meaning in the event something happens during the renovation, you will not be covered. Some insurance policies also require you to be living in the property for the insurance to be valid. Therefore, if you are relocating during the renovation period, check on the living requirements for your policy.

Home and contents insurances are designed to cover existing homes, not building sites. If the renovations are valued at over $50,000, your home will be categorised as a building site and further insurance will be needed.

Your policy will also be affected once the renovations are finished if they have increased the value of the house. Being under insured can leave you out of pocket if you need to make a claim. After renovations are completed, homeowners should revise their home and contents insurance again to make sure everything is up to date and compliant.

Are you meeting the Active Asset Test?

Posted on November 1, 2019November 1, 2019 by Glance Consultants

To qualify for small business CGT concessions, an asset must meet the conditions of the Active Asset Test to apply. An asset is considered active when you own it and it is used or held ready for use in relation to a business. You can also have an intangible active asset if it is inherently connected with a business you carry on.

An active asset of yours has been held for a certain amount of time, based on how long you have owned the asset and the test period to meet the requirements of the Active Asset Test. The test period begins when you acquired the asset, and ends at the earlier of

the CGT event, or;
when the business ceased, if the business in question ceased in the 12 months before the CGT event.

Assets owned for over 15 years need to have been held for at least 7.5 years within the test period and assets owned for 15 years or less need to have been held for at least half of the test period to satisfy requirements.

When the assets are shares or trusts, passing this basic active asset test is not enough to qualify for CGT concessions. In addition, the asset will need to pass a further test, called the 90% test, to determine whether it is to be counted as an active asset or not. The test is satisfied if CGT concession stakeholders in the company or trust in which the shares or interest are held have a total small business percentage in the entity claiming the concession of at least 90%.

The periods in which the asset is active does not have to be continuous, however, they must total the minimum periods specified. An asset does not need to be active just before the CGT event.

Rights and Responsibilities of Landlords

Posted on February 13, 2019November 1, 2019 by Glance Consultants

rights responsibilities landlords Property investment has a lot of elements throughout that contribute to a smoothly run transaction between landlord and resident. As a homeowner, you have rights and responsibilities to maintain when dealing with your property and the occupants. The relationship between proprietor and occupant is one of giving and take, it is important to familiarise yourself with what is expected from you as well as your rights as the owner.

Your Rights

Firstly, you have the right to choose and know your tenant. As long as your choices do not conflict with the Equal Opportunity Act, you have the right to choose a renter you see fit to live in and upkeep your property. As the homeowner, you also have the right to landlord insurance to guard you against potential financial loss. This cover usually relates to the property specifically but there are plans available to cover the belongings of both the renters and yourself. As long as you provide a fair warning, you have the right to increase rent at the end of a fixed term lease where the resident wishes to continue the agreement. In the unfortunate case of a tenant not paying rent for over 14 days, you have the right to evict them from the property.

Your Responsibilities

Being a landlord comes with many responsibilities that you need to consider. The security of the property is up to you, you will need to make sure alarms and locks on both doors and windows are secure before a new resident moves in, it is also your job to upkeep these security measures. It is also your responsibility to maintain and repair elements of the property. Treating the property as if you were living there is important, your tenants deserve a well-kept environment and reliable assistance on repairs. Finally, the law restricts how much access you have to your property if occupied. You must contact renters before coming over to give notice, do not just drop in unannounced.

Is a House or Apartment a Better Investment?

Posted on January 22, 2019November 1, 2019 by Glance Consultants

House or Apartment Investment Property is a valuable addition to any investment portfolio. Deciding whether a house or apartment is a worthier investment depends on many factors. Keep in mind that timing is your best friend for buying any property due to the housing market’s volatility.

Consider the information below so you can make the right move for you in the property market.

Apartments

Apartments are not inferior investments to houses as they present many advantages that houses do not.

Apartments are usually more reasonable than houses as they lack land and costs like insurance, maintenance and upkeep are provided for by body corporate in a strata scheme
Apartments in inner-city areas that are accessible to tenants and provide higher rental yields, lending security to your investment.
You can build up a diversified property portfolio with greater efficiency with apartments as opposed to the more costly investment of houses

Houses

Houses also offer several advantages.

The value of land appreciates over time, making your investment worth it in the long run
Suburban houses are less costly but still have significant investment potential if the suburb is being developed or accessible by public transport
You may have complete autonomy and control of how your run your house as opposed to apartments which have to adhere to body corporate rules

Checking the Fine Print of your Home Loan

Posted on November 6, 2018November 1, 2019 by Glance Consultants

If a home loan is too good to be true, odds are it is. Due to the lengthy time commitment of a home loan and the costly investment, what may seem like small oversights can add and cost you thousands. A guide to reading the fine print of your home loan is attached below.

Introductory rates

Low-interest rates on loans may not be for the entire borrowing period.

These types of rates offer a very competitive interest rate that many don’t realise is for a limited period, usually 12 months. The interest rate will rise to a lender’s standard variable rate, which may not be the most competitive rate you sought on the market. It is vital to know how long the introductory rate on your home loan is available for before signing the agreement.

Don’t forget about LMI

If you borrow over 80 percent of the value of your property, you are required to pay lender mortgage insurance. The higher percentage amount of the value of the property you borrow, the higher this fee will become.

Restrictions on additional payments

In some variable rate loans and fixed-rate loans, additional payments at any time or within the fixed rate period are not permitted. A cap may be placed on additional payments. You should check your terms and conditions to make sure that if you receive an inheritance, a bonus at work or win the lottery, you can pay your home loan down when the opportunity is presented to you.

Category: home loans