Author: Comparable

Moving Home Checklist – What to Do with Energy and NBN Connection?

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It can be exciting to move into a new house. But, like most things in life, it's also going to be a bit of a hassle. One thing you don't want to forget is to set up your utilities. Here's a home moving checklist of things you need to ensure you're all set up with energy and NBN at your new home.

  1. Contact your current energy provider and let them know you're moving. They'll be able to give you an idea of when you need to cancel your service and whether there are any final charges or refunds owed.
  2. Research your options for energy providers at your new address. You may be able to get a better deal by shopping around.
  3. Make sure you understand the different pricing structures on offer from different providers. Some charge more for usage during peak times, while others have time-of-use metering, which can save you money if you're flexible with using energy.
  4. Once you've decided on an energy provider, contact them to set up your account.
  5. You'll need to give them your new address and other personal details. They may also require a deposit, depending on your situation.
  6. Make sure you cancel your old energy account once you've moved and set up the new one. This will avoid being charged for the energy you're not using.
  7. Contact your internet service provider and let them know you're moving home. They'll assist you in making your decision to cancel or transfer your service to the new address and whether there are any final charges.
  8. Research your options for internet service providers at your new address. You may be able to get a better deal by shopping around. When researching your options for internet service providers, it's essential to compare the rates and services they offer. Things you'll want to consider include the following:
    • The cost of the internet plan
    • The contract length
    • The length of notice you need to give before cancelling
    • Any special features or discounts that are offered
    • The company's customer service record

    Once you've decided on an internet service provider, contact them to set up your account. You'll need to give them your new address and other personal details. They may also require a deposit, depending on your situation.

  9. You will also need to take care of all those pesky administrative tasks. Make sure you update your address with all relevant organisations, such as banks, insurance companies, and utility providers. You'll also need to notify the electoral commission to continue voting where you currently live.
  10. Then there are the practical matters to attend to. Pack up all your belongings and label them clearly so they're easy to unpack once you get to your new home. If hiring a removalist, make sure you book well in advance - they tend to get very busy during peak moving periods.

Final Thoughts

Moving house can be stressful, but following the above home moving checklist will help ensure that you're all set up with energy and NBN at your new home. Just remember to take care of the administrative tasks, pack up all your belongings and label them clearly, and you'll settle into your new place in no time.

Comparable is an online platform that makes it easy to find the best removalists, energy providers, financing options and NBN plans according to your needs. We work with many retailers but strongly believe in getting you, our client, the best deal because we wouldn't exist without you! If you require any of our services, please get in touch with us at 1300 754 155.

How to Pick the Best NBN Plan for Your Home

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It's likely that NBN will be at the top of your list of options if you're looking for a home broadband internet plan. For the majority of Australian houses without NBN, home wireless broadband should be considered as an alternative. Regardless of your preference, every package includes unlimited data.

Finding the appropriate NBN package for your house and needs can be difficult, regardless of whether you are new to the NBN or previously connected. While cost is crucial, choosing the cheapest plan doesn't always imply that you'll be getting the most for your money.

Data Requirements

What percentage of your current internet plan's data do you actually use? You will be able to check online with your provider. Remember that if your internet speed drastically improves once you connect to the NBN, you might even start spending more time on the internet. If you don't require unlimited service, don't sign up for one. People frequently misjudge their data requirements for each month. By choosing a more affordable plan that still meets your needs, you may be able to save money.

Check Out Features and Services

There are numerous NBN plans to choose from, and providers will typically offer a bundle that meets your requirements. When evaluating NBN plans, consider all the features and services you want to include, such as download speeds and data caps. Verify that the plan contains all the features you require before making any commitments.

Speed Requirements

You must choose an NBN speed tier in addition to the data on the package. You pay extra each month depending on how much speed you want. Providers now frequently refer to their speed tiers as premium, standard plus, standard, and basic.

Every NBN connection is not capable of supporting all speed tiers. For instance, fixed wifi only offers standard plus, even though standard or basic service is typically the finest you can ask for.

For folks who mostly use the internet for occasional streaming, browsing or emailing, basic speed plans are best. It is roughly as quick as the typical connection, the kind of home broadband that most people had before to committing to the NBN.

Heavy users with less people in the house should stick to standard plus plans. It should be capable of managing several HD video streaming at once, but only one 4K video stream. Even downloading a sizable file, such as a game, is possible.

Families and shared homes that utilize the internet for simultaneous video streaming, gaming, and uploading are the ideal candidates for premium services. However not all locations can reach these speeds. Once you've signed up, your provider should run a line test to determine whether you'll benefit from a premium plan or whether you should switch to standard plus.

Research NBN Providers

When looking for the best NBN plans, you can use many tools for your research, such as Comparable's NBN plan comparison tool. The tool will allow you to compare plans based on speed, data allotment, cost, etc. across all NBN service providers. Research is crucial once you've found an NBN plan that sounds ideal for you.

Final Thoughts

Finding the optimal plan requires determining your speed and data requirements in addition to your monthly spending limit. There are numerous NBN options available, and since most Australian consumers have access to four primary NBN speed tiers, we’re here to assist you navigate through what's available.

Hiring Removalists: How to Find the Best Company for Your Needs

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It's often said that moving is one of the most stressful experiences a person can go through. And while that may be true, it doesn't mean you have to go through it alone. There are professionals who make a living helping people move their belongings from one place to another - removalists.

But with so many removalists, making a choice can be challenging. When you're looking for a removalist company, you'll want to make sure that the company is reputable and has a good track record. You can do this by reading online reviews or asking for recommendations from friends or family who have used a removalist in the past.

How to Find the Right Company for Your Needs?

The most important thing to remember when hiring removalists is that not all companies are created equal. Some are better than others, and you must find the right company for your needs. Here are a few tips to help you find the best company for your move:

Do Your Research

One of the best ways to find a good removalist company is to do your research. Ask friends and family members who have moved recently for recommendations. You can also check online reviews like Yelp or Google Reviews to see what other customers have said about different companies.

Get Quotes from Multiple Companies

Once you've narrowed your options, it's time to get quotes from different companies. Be sure to get quotes from at least three different companies so you can compare prices.

Read The Fine Print

Once you've chosen a company, read the fine print before signing any contracts. This will help you avoid any surprises down the road.

Make Sure They're Insured

Finally, make sure that the company you choose is insured in case of any accidents or damage during the move.

What To Do If Something Goes Wrong During the Move?

Even if you research and choose a reputable company, there's always a chance that something could go wrong during the move. If this happens, you should contact the company and let them know what happened.

If the issue can't be resolved with the company, you may need to file a claim with their insurance company. To do this, you'll need to gather receipts or documentation related to the damage or accident. Once you have all this information, you can contact the insurance company and start the claims process.

Final Thoughts

Moving can be a stressful experience, but it doesn't have to be. By following the tips above, you can make sure that you find the best possible removalist company for your needs. And if something goes wrong during the move, don't hesitate to contact the company or their insurance provider to resolve the issue.

Comparable is an online platform that makes it easy to find the best removalists, energy providers, financing options and NBN plans according to your needs. We work with many retailers but strongly believe in getting you, our client, the best deal because we wouldn't exist without you! If you require any of our services, please get in touch with us at 1300 754 155.

Credit Checks When Switching Utility Providers – How Does It Affect My Credit Rating?

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When switching utility providers, your credit rating is checked to ensure you are a good risk for the new provider. This is because utility providers want to make sure you will pay your bill on time.

What is Credit Rating?

A credit rating is a number that shows how likely you are to repay a loan on time. The higher the number, the better your credit rating. A good credit rating means you're a low-risk customer who is more likely to repay a loan on time.

How Credit Rating Affects Utility Service?

You will not have any problems switching utility providers if you have a good credit rating. However, if you have a poor credit rating, the new provider may require you to pay a higher deposit or may refuse to provide service to you altogether.

There are a few things you can do to improve your credit rating, such as:

  • Registering on the electoral roll
  • Making all your loan and credit card repayments on time
  • Keeping your debt levels low
  • Not applying for too much credit in a short period

If you're considering switching utility providers, checking your credit rating first is a good idea. This will give you an idea of whether the new provider will likely accept you. You can check your credit rating for free with Noddle. Sign up and create an account.

When reviewing your credit report, look for any inaccuracies dragging down your score. If you find any, you can dispute them with the credit reference agency.

If you have a poor credit rating, options are still available. Some utility providers offer basic bank accounts that come with a prepaid card. This means you can't go into debt and can only spend what's on the card. Alternatively, you could consider a guarantor loan, where someone else agrees to repay the loan if you can't.

Do Utility Credit Checks affect My Credit Rating?

When you switch utility providers, your new provider will do a 'soft' credit check. This means they'll look at your public records, such as whether you've been bankrupt or have had any CCJs (county court judgments) against you. They won't be able to see your complete credit history, but this information is enough for them to decide whether you're a good risk.

Utility credit checks will not affect your credit rating. This is because they are known as 'soft searches,' which are only visible to you and don't appear on your credit report.

On the other hand, a 'hard search' is visible to potential lenders and can impact your credit score. Hard searches are usually carried out when you apply for a loan, credit card, or mortgage.

Final Thoughts

When you switch utility providers, your new provider will carry out a 'soft' credit check. This means they'll look at your public records, such as whether you've been bankrupt or have had any CCJs against you. They won't be able to see your complete credit history, but this information is enough for them to decide whether you're a good risk. Utility credit checks will not affect your credit rating.

If you're thinking of switching utility providers, it's better to check your credit rating first. This will give you an idea of whether the new provider will likely accept you. 

Could an eco reno boost your property’s value?

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You’ve probably heard that interest rates are on the rise and national property prices are on the way back down. Here’s how you can kill two birds with one stone: by refinancing to unlock equity and giving your home an energy-efficient makeover at the same time.

Did you know that energy-efficient homes generally attract premium prices and sell faster than non-eco listings?

That’s according to the 2022 Domain Sustainability in Property Report, which found an energy-efficient house in the median range sells for $125,000 more (+17.1%) on average than a non-sustainable house.

The results are quite good for apartment owners too, with energy-efficient units selling for $72,750 more (+12.7%) than non-energy-efficient apartments.

Dr Nicola Powell, Domain’s chief of research and economics, says more and more sellers are addressing the demand for eco-friendly homes, as online listings with popular eco features attract 8.7% more views on average.

“More than half of all for sale listings in all states and territories contain energy-efficient keywords,” she says.

Installations that are popular with potential buyers

Here are the top three eco features popular in house listing searches right now.

1. Solar power: Australia has no shortage of sunshine. And there’s no shortage of demand for houses with solar panels either. A 2020 Origin Energy survey showed 77% of Australians view houses with solar panels as being more valuable. And 55% of renters said they would consider paying increased rent for solar panels.

2. Water tanks: if you have a sizable garden or lawn, a sustainable irrigation system can help keep your water bill down. Make use of the rainy season by collecting water in tanks. When the dry season hits, you’ll be prepared with free, nutrient-dense rainwater to lavish on your garden.

3. Insulation and glazing: window glazing and insulation can help stop your heating and cooling efforts from leaching out. You’ll also reduce the summer heat and winter chill invading your home.

Financing your eco reno

Depending on your situation, many lenders now offer green loans to help homeowners install environmentally sound features – and the good news is that lenders usually offer lower interest rates on green loans in an effort to encourage sustainability.

Another option at your disposal is to unlock the equity in your home to fund your eco reno.

And it’s not a bad time to consider doing so, as property prices increased 23.7% in 2021.

So how does ‘unlocking equity’ work?

Well, let’s say you bought an $800,000 house three years ago that, due to last year’s property price surge, is now worth $1 million.

And let’s also say you took out a $600,000 loan for that house, which you’ve managed to pay down to $500,000 (hurrah!).

By refinancing that $500,000 loan into a $700,000 loan (70% of your property’s new market value), you can unlock $200,000 in equity to help fund a deposit for your renovations.

It’s also worth noting that banks will typically let you borrow up to 80% of a property’s market value.

And don’t forget to check out any government rebates that may be available for eco your installations.

Get in touch today

If all of this seems confusing, don’t fret! We’re more than happy to help you navigate loans, equity, and refinancing for your eco reno.

And if you decide to proceed, the good news is that part of the process can include refinancing your home loan.

Why’s that good news?

Well, just because interest rates are going up, doesn’t mean you can’t scope out a better deal on your mortgage. Competition amongst lenders remains fierce, particularly if you have a decent amount of equity and a strong track record of meeting your mortgage repayments.⁣

So if you’d like to discuss your reno and/or refinancing options, get in touch today.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Why you might want to refinance sooner rather than later

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Thinking about refinancing? As interest rates rise, so do the hurdles you need to clear. Here’s why you might want to look at refinancing soon to avoid potentially missing out.

When was the last time you refinanced?

If the answer is “never”, or you can’t actually remember, there’s a good chance you’re paying a higher interest rate than you could be due to the “loyalty tax”.

You see, the banks don’t think you’re paying attention, and as such, they only offer their lowest rates to new customers in a bid to win them over – as proven by the RBA.

In fact, a recent RateCity analysis found that customers who stay loyal to their bank could be hit with an extra $5,101 in interest over the next three years alone (based on a $500,000 loan taken out with CBA in 2019).

For a $750,000 loan that would be an extra $7,652 in interest, and for a $1 million loan it’s $10,202 extra.

This is a big reason why owner-occupier refinancing across the country rose 9.7% in June to a new record high of $12.7 billion, according to the Australian Bureau of Statistics.

Great. But why is refinancing now so important?

Ok, so when you refinance, your new lender must assess something called your “home loan serviceability”.

Basically, that’s your ability to meet your home loan repayments at an interest rate that’s at least 3% above the rate you’re being offered.

And as you might have seen on the news, the big four banks are tipping the RBA’s official cash rate to increase from 1.85% in August to anywhere between 2.60% (Commbank forecast) and 3.35% (ANZ forecast) by November.

That means as interest rates go up, so too will the hurdle you’ll need to clear for home loan serviceability when refinancing.

All in all, that means the sooner you refinance, the lower the hurdle you’ll need to clear to ensure you’re not stuck with your current rate and lender.

How to explore your refinancing options

This is the easy bit! Simply get in touch today and we’ll help you get the ball rolling.

And even if you don’t want to refinance with another lender, there’s always the option of asking your current lender to review your rate, indicating that you’re prepared to refinance if they don’t come to the table.

After all, loyalty should be a two-way street!

So if you’d like to find out more about what options are available to you, give us a call or flick us an email today – we want to help you through the period ahead as much as we possibly can!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Refinancing numbers are surging across the country, here’s why

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Rising interest rates got you feeling a little vulnerable? It might be time to take some control back by refinancing or asking for a rate review. Here’s why we’re seeing refinancing numbers surge across the country. In just two months we’ve seen the Reserve Bank of Australia (RBA) increase the cash rate from a record-low 0.10% to 0.85%, and it hasn’t taken long for most lenders to pass those rate increases on to customers. Unfortunately, the RBA has warned that more rate hikes are on the way, which might have left you feeling at your lender’s mercy. But there are ways you can make yourself feel more in control, including by doing what tens of thousands of mortgage holders around the country did in May: refinancing or asking their current lender for a better rate.

Homeowners are refinancing in droves

According to PEXA’s latest refinancing insights, refinancing increased by more than 20% in May (from April) across each of Australia’s four most populous states. Here’s a quick breakdown: NSW: 10,838 refinances. That’s up 20.8% on April, and up 15.6% year on year. VIC: 11,500 refinances. May up 26.7% on April, and up 23.3% year on year. QLD: 6,699 refinances. May up 21.8% on April, and up 49.6% year on year WA: 3,244 refinances. May up 25% on April, and up 46.1% year on year

So why the big increase in refinancing?

Lenders now, more than ever, need to attract and retain borrowers. So just because rates are going up, doesn’t mean you can’t scope out a better deal – especially if you have a decent amount of equity and a strong track record of meeting your mortgage repayments. If that sounds like you: you’re a good customer. And lenders want good customers. The other big reason for the recent surge in refinancing is that smaller lenders are stealing more and more borrowers away from the major banks with super-competitive rates. In fact, in NSW, Victoria, Queensland and Western Australia combined, the major banks and their subsidiaries had a net loss of more than 5,000 borrowers to non-major lenders in May, according to PEXA. Competition is fierce!

Why work with a broker now?

The amount of loans being written by brokers continues to grow. In fact, brokers are currently writing 70% of all new home loans in the country – the biggest market share ever. And as you know, brokers are loyal to you, not to any particular lender. That means that if we think you can get a better deal elsewhere, we’ll encourage and help you to do so – not hope that you’ll stay put on your current rate. And even if you don’t want to refinance with another lender, there’s always the option of asking your current bank to review your rate (and indicating that you’re prepared to refinance if they don’t come to the table). So if you’d like to find out more about what options are available to you, get in touch with us today – we’d love to help you feel like you have some agency in the period ahead. Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Banks tighten lending, reducing the maximum you can borrow

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Some of Australia’s biggest banks have tightened their mortgage lending criteria, meaning you might not be able to borrow as much from them. How might this affect your next purchase? This week ANZ lowered a key lending cap, indicating it will no longer lend to borrowers with a debt-to-income (DTI) ratio above 7.5 (meaning people can borrow up to seven and a half times their gross annual income). NAB meanwhile has reduced its cap to eight times a borrower’s income. Up until this month, both banks had been willing to lend up to nine times a borrower’s income. In effect, the changes mean the maximum amount you can borrow with them to buy a property will be reduced. Fellow big four banks CBA and Westpac have not announced any reductions but have said they’re already applying tighter lending rules to borrowers seeking loans with high DTI ratios.

Why are banks tightening lending?

The increased focus on lending caps comes as financial institutions and the industry regulator, the Australian Prudential Regulation Authority (APRA), prepare for the impact of higher interest rates (many economists are tipping another rate hike in June). APRA started making moves as early as late last year when it announced new borrowers would need to be tested to see if they could cope with interest rates at least 3% above the current rate (up from 2.5% previously). Then, this week APRA Chair Wayne Byers indicated the regulator was concerned about the rise in high DTI loans being issued by some banks. “We will also be watching closely the experience of borrowers who have borrowed at high multiples of their income – a cohort that has grown notably over the past year,” he told the AFR Banking Summit in Sydney. “Interestingly, this growth has not been an industry-wide development, but rather has been concentrated in just a few banks.”

So how do DTI ratios work?

Your DTI ratio is very simple to work out. The formula is: total debt / gross income = debt-to-income ratio. So, if you’re seeking a $700,000 home loan (and have no other debt), and you have $160,000 in gross household income, your DTI is 4.375 – a ratio most lenders would be very comfortable with. However, a household in the same financial position seeking to borrow $1.4 million for a home would have a DTI of 8.75, putting it above the caps now being imposed by ANZ and NAB.

So how much can you safely afford to borrow?

There’s a fine line between maximising your investment opportunities and stretching yourself beyond your limits, especially with interest rates on the rise. And that’s where we come in. It’s not only important to stress-test what you can borrow in the current financial landscape, but also against any upcoming headwinds that are tipped to hit borrowers – such as multiple interest rate rises. So, if you’d like to find out your borrowing capacity and options, get in touch today. We’d love to sit down with you and help you map out a plan. Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

ATO hit list: rental property income and capital gains

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Property investors beware: the Australian Taxation Office (ATO) has revealed the four key areas it will be targeting this tax year, and rental property income/deductions and capital gains are high on the hit list. Tax office Assistant Commissioner Tim Loh says this tax season the ATO will be targeting four key problem areas where it commonly sees people making mistakes, including: – rental property income and deductions; – capital gains from property, shares and crypto assets; – record-keeping; and – work-related expenses. “We know there are still some weeks left until tax time, but if you start organising the income and deductions records you’ve kept throughout the year, this will guarantee you a smoother tax time and ensure you claim the deductions you are entitled to,” says Mr Loh.

1. Rental property income and deductions

If you’re a rental property owner, it’s important to include all the income you’ve received from your rental in your tax return, including short-term rental arrangements, insurance payouts and rental bond money you retain. “We know a lot of rental property owners use a registered tax agent to help with their tax affairs. I encourage you to keep good records, as all rental income and deductions need to be entered manually,” explains Mr Loh. He adds that if the ATO does notice a discrepancy it may delay the processing of your refund as it may contact you or your registered tax agent to correct your return. “We can also ask for supporting documentation for any claim that you make after your notice of assessment issues,” Mr Loh adds. For more information visit ato.gov.au/rental.

2. Capital gains from property, shares and crypto assets

If you dispose of an asset such as property, shares, or a crypto asset including non-fungible tokens (NFTs) this financial year, you will need to calculate a capital gain or capital loss and record it in your tax return. Generally, a capital gain or capital loss is the difference between what an asset cost you and what you receive when you dispose of it. “Through our data collection processes, we know that many Aussies are buying, selling or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations,” adds Mr Loh.

3. Record-keeping

For those who deliberately try to increase their refund, falsify records or cannot substantiate their claims, the ATO warns it will be taking firm action against them this year. If you’re not in a rush to complete your tax return, it might be better to wait until the end of July, which is when the ATO can automatically pre-fill a lot of information for you. “We often see lots of mistakes in July as people rush to lodge their tax returns and forget to include interest from banks, dividend income, payments from other government agencies and private health insurers,” the ATO says. Just note that not all information can be pre-filled for you, so be careful to double-check. “While we receive and match a lot of information on rental income, foreign-sourced income and capital gains events involving shares, crypto assets or property, we don’t pre-fill all of that information for you,” adds Mr Loh.

4. Work-related expenses

Many people around the country have changed to a hybrid working environment since the start of the pandemic, which saw one-in-three Aussies claiming work-from-home expenses in their tax return last year. “If you have continued to work from home, we would expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls,” says Mr Loh. To claim a deduction for your working from home expenses, there are three methods available depending on your circumstances. You can choose from the shortcut method (all-inclusive), fixed-rate method, or actual cost method, so long as you meet the eligibility and record-keeping requirements. For more information visit ato.gov.au/deductions.

We’re around to help you this tax season

The end of financial year is a busy time for all finance professionals – and mortgage brokers are no different, as there are plenty of important June/July deadlines we can help you with. That includes helping your business obtain finance to make the most of temporary full expensing before CoB June 30, and assisting potential first home buyers apply for the Home Guarantee Scheme come July 1. So if there’s something you think we can help you with this EOFY period, please don’t hesitate to shout out – we’d love to help you out. Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Financial hardship arrangement reporting is about to change

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With interest rates on the way back up, there’s no doubt some households around the country are starting to do it a bit tough. Coincidentally, some big changes kick in on July 1 when it comes to recording financial hardship arrangements. In the past, if you were unable to meet your loan repayments, you could enter into a financial hardship arrangement with your lender and it couldn’t be reported in official credit reporting systems. In many cases, the repayment history in your credit report would show a blank month or possibly a missed payment during the hardship arrangement period. Neither of these two approaches told the full story about your credit history and that a financial arrangement had been agreed upon with your lender.

So what’s changed from 1 July 2022?

Ok, so from July 1, the credit reporting system will introduce financial hardship information into credit reports. This means that if you enter into a financial hardship arrangement that reduces your monthly loan repayments, then for the next 12 months your credit report will show: – that you were current and up to date with your payments for that hardship month, provided you made your reduced payments on time; and – a flag alongside your repayment history information for the hardship month, indicating a special payment arrangement was in place. The flag in the credit report will be referred to as ‘financial hardship information’ and can take two forms (A or V) depending on the type of arrangement: A indicates there was an arrangement for the month that temporarily deferred your repayments (which will need to be repaid later or be subject to a further arrangement). V on the other hand means the loan was varied that month to reduce your repayments. The good news is that the financial hardship information flag will only stay on your credit report for 12 months, whereas regular repayment history information stays for 24 months.

So is all this good or bad news?

Well, like most changes in life, it comes with pros and cons. The changes are intended to give you the ability to ‘protect’ your credit report if you experience financial hardship – in no way are they designed to exclude you from applying for credit. However, a financial hardship arrangement flag may prompt prospective lenders to make further inquiries to better understand your situation. If, for example, the hardship arose because of a temporary reduction in your work hours, but you’re now back in stable employment, in most cases it shouldn’t cause any major issues for your loan application – especially if we can provide proof to your prospective lender. Additionally, hardship arrangements can stem from a natural disaster that’s completely outside your control, such as a flood or bushfire, which can be explained to a lender. Importantly, the financial hardship information cannot be used by a credit reporting body to calculate your credit score, whereas regular repayments that are missed outside a hardship arrangement will impact your credit score.

Having trouble meeting your repayments? Get in touch

As you’ve probably noticed, the Reserve Bank of Australia has been aggressively raising the official cash rate in recent months, which means your monthly repayments would most certainly have gone up if you’re on a variable loan rate. And if you’re on a fixed loan rate, you also need to think ahead to what your monthly repayments might be when the fixed-rate period ends and reverts to a variable rate. So if you think more rate rises may soon strain your monthly budget, now is a good time to start putting extra money away into an offset or savings account to build up a buffer. Other options we can help out with are refinancing and debt consolidation, both of which can help reduce your monthly repayments. Whatever your circumstances, we’re here to support you however we can over the period ahead. Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.