Clive's recap on 2017

Clive Kirkpatrick's recap

I hope you've had a good 2017 and are close to winding down for the break.

This year has certainly been interesting. As we all know, funders and regulators have thrown us some curve balls; the ASIC and Sedgwick reviews bubbled away; and just this week we saw the Combined Industry Forum deliver its report on the future of commissions.

We support the CIF's recommendations (you can read more about them here), and we provided input to the process. In the end, it's about giving customers the best outcome. Changes in lending also underline the ongoing importance of having a properly diversified income stream. When you are taking care of your clients' full financial needs, you are ensuring they get the best outcome.

I'd like to thank everyone for your hard work and your commitment to your clients. I hope you have a well-earned break and happy Christmas and New Year.

Best wishes to you all,

Commercial lending wrap-up

As 2017 comes quickly comes to its end, I look back at the great success the Commercial & Equipment Finance growth over the past 3 years. We have enjoyed a massive 75% in growth, and many lenders are commenting on the growth pattern as we continue to build. We have many more brokers in the Vow network adding these products to their business planning, which is a terrific achievement.

We celebrated our third successful Commercial Conference in July in beautiful Hobart, and it was attended by over 125 brokers and lenders. Many new brokers were recognised for state awards for their tremendous efforts over the past 12 months Ian & Kelly Fraser (Qld), Donald Yum (NSW), Gary Casboult (Tasmania) and Chang Yi (Victoria) also our new National winner for 2017, Rob Diodato from Loans WA.

Next year we hold the conference earlier, in March, at the Sheraton Mirage on the Gold Coast. I look forward to seeing our continued growth in this sector in 2018 whilst we aim to settle over $1.3 billion by end of June. I take this opportunity to wish you all a Merry Xmas and Happy and Safe New Year.

Many thanks,

Depreciation rules: an unpdate

Major changes to tax deprecation has important implications for property finance sector and investors

By Paul Bennion, Managing Director, DEPPRO

Everyone involved in the property sector needs to be aware of important changes to tax deprecation benefits for properties that were signaled in the Federal Budget earlier this year and have now become law.

For example, the implications of the new changes may well see a greater demand for lending by investors for new properties rather than second hand homes moving forward. It may also result in property investors seeking more finance to purchase commercial properties over the coming years as commercial properties are unaffected by these important new tax deprecation changes.

This new legislation means that owners of second-hand residential properties (where contracts are exchanged after 7.30pm on May 9, 2017) will be ineligible to claim depreciation on certain assets.

Investors can no longer claim depreciation for plant and equipment assets, such as air conditioning units, blinds, curtains, ovens, cooktops, dishwashers, hot-water systems, security systems, solar panels or carpet in second-hand residential properties.
However, there has been no change to capital works rules which give the ability to claim a percentage of construction costs. These costs include buildings or extensions, alterations, improvements to a building or structural improvements such as new driveways, fences and retaining walls.

These costs are written off over 40 years, which is a longer period than other depreciating assets and generally make up 85 to 90 per cent of an investors' total claimable amount.
The positive news is that investors who bought a property before 7.30pm on May 9, 2017 can continue to claim depreciation. Previously existing legislation will be grandfathered, which means investors who already made a purchase before this date can continue to claim depreciation deductions as before.

It's also good news for investors who bought a brand new residential property or a new or second-hand commercial property. In both circumstances, they can continue to claim depreciation and will be unaffected by the changes.
However, if an investor bought a residential property after 7.30pm on May 9, 2017, they will no longer be able to claim depreciation on plant and equipment that they didn't buy but they can still purchase new plant and equipment for their second-hand property, and still claim depreciation for these assets they buy and directly incur an expense on.

These changes to tax depreciation highlight the importance for investors to obtain a tax depreciation schedule from a professional tax depreciation company when the buy a property.
This on-site inspection will identify what items an investor can and cannot legitimately claim in tax deprecation benefits.
Each year, the ATO focuses on reviewing tax returns made by property investors and it is fair to say that these new changes to tax depreciation will be the focus the ATO moving forward to ensure that property investor properly comply with them.
That is why is now critical for property investors to have professional tax deprecation report undertake for every new property they purchase.
Click the link below and complete the details to ensure your client receives a higher return on their cashflow.

Westpac to compensate home loan customers


Westpac today announced it is compensating customers who held one of 13,000 Westpac owner occupier interest only variable home loans affected by a mortgage processing error.

The error has led to these customers continuing to make interest only repayments on their mortgage instead of being switched to principal and interest repayments at the end of their interest only period.

To read Westpac's media statement, please visit:

A dedicated customer service line has been established for customers with any queries. Should customers contact you for information, please ask them to call 1300 132 925.

Major banks tighten lending guidelines

CBA has introduced the Credit Assessment Summary (CAS) which will be used for all home loan and line of credit applications involving personal borrowers. This document came into effect on 2 December 2017 and presents a summary of information provided on behalf of the borrower or which the bank has verified, including:

  • A summary of loan requirements and objectives
  • Personal details and financial information
  • Total monthly living expenses at a household level
  • Information about the credit applied for

CBA has also introduced new credit policy changes, effective 4 December 2017. These include:

  • Reducing the maximum LVR without LMI from 80% to 70% for selected securities in particular postcodes
  • Reducing the amount of rental income and negative gearing eligible for servicing
  • Changing eligibility for LMI waivers including all professional packages and LMI offers for customers financing security types in some postcodes

Finally, CBA has also made changes to its consumer lending credit policy with brokers having to consider the following when completing any loan applications:

  • Verification of all liabilities and commitments held with other financial institutions
  • Verification of the bank's expanded requirements for liabilities and commitments
  • Amended requirements for acceptable rental income verification
  • Removal of fully maintain company motor vehicle income type
  • Introduction of a notional monthly rental commitment for those living rent-free
  • Removal of charge cards as a liability for servicing

This follows Westpac who brought in a number of responsible lending changes affecting how brokers enter in requirements and objectives questions for clients. The questions are designed to help brokers understand their client motivations, align the products to their needs, and prompt brokers to explain consequences around each choice of product to the client. Additional R&O questions will also apply for each applicant of the loan, including for clients with foreseeable changes, special circumstances, current financial hardship, or those approaching retirement age.

Vownet update

While many of you are closing deals, doing Christmas shopping and hanging tinsel, we have been working hard on Vownet. The focus at the moment is on running the pilot program and refining the software so it best meets your needs.

Pilot participants have been impressed with the functionality of the software. In particular, they like the fact that the platform will be structured around keeping the client informed via email and SMS functions throughout their application. The platform will also assist our brokers by having a strong focus on helping with compliance.

From a technical perspective, we're progressing well on integrating ApplyOnline. The data extraction project is proceeding, and we are running our first test - this will facilitate the migration of data from Symmetry. Another important focus is on making design refinements to improve usability.

Better Business Awards finalists

Finalists for The Adviser's Better Business Awards have been announced, and there are plenty of people from the Vow network featured in the list. Well done to all of these high performers, and good luck on the night.

Ayers Home Loans
Best new office

VIP Mortgage Solutions

  • Best new office

XIN Mortgage

  • Best new office

VIP Mortgage Solutions

  • Best Customer Service (Office)

Scott Juda, Accrue Equity

  • Best Customer Service (Individual)

Centum Mortgage Group

  • Best Customer Service (Office)
  • Best Independent Office (5 or more brokers)

Whitestar Finance

  • Best Independent Office (less than 5 brokers)

Shehan Wijayasinghe, Elephant Financial

  • Best Newcomer
  • Best Customer Service (Individual)
  • Rising Star

Beach Finance - Brendan Phillips

  • Best Community Engagement Program

Jessica Peletier, Seed Financial

  • Best Customer Service (Individual)
  • Best Newcomer
  • Best Regional Broker

Tamara Virgo, TV Financial Services & Planning (Esperance)

  • Best Regional Office
  • Best Regional Broker