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How the budget will affect you as a home owner/property investor.

The top 5 points to take away from the 2017 budget if you’re a home owner or property investor:

  • In what has been an idea floated numerous times (and shot down), it’s the old policy of the “first home saver accounts” introduced by Labor. The federal government has given into public pressure on housing affordability and receive concessional tax treatment on contributions by being able to salary sacrifice, and the earnings will also be taxed at a concessional rate.
  • Importantly there will be here will be caps on the amount that can be contributed annually to the account and also an overall cap on the size of the fund. There won’t be an age limit on who can set up this fund BUT it can only be used for the purchase of a first home.
  • A “ghost tax” has been introduced to foreign investors. From a public perception point of view this is a great idea. It’s in the media a lot that many units/houses, especially in Melbourne, are being left vacant by foreign investors on purpose to allow them to negatively gear them. This will no longer be permitted; a levy of up to $5,000 can be imposed on foreign investors who leave the property vacant.
  • Retirees who downsize by selling the family home will be offered exemptions from new superannuation limits. This means they can contribute up to $300,000 into their super, from the proceeds of their house sale.
  • This last one is so important: Further roll-out of government’s City Deals between all levels of government and the private sector to develop urban areas. City Deals between the Australian Government, a state or territory government, and local governments will make our cities better places to live in and do business. Through City Deals, governments, industry and communities will develop collective plans for growth and commit to the actions, investments, reforms and governance needed to implement them. This is like a “Master Plan” and more importantly The focus is not just on capital cities and major urban areas – Australia’s regional centres are vital to the performance of the wider Australian economy. Improving their productivity and liveability will be addressed in City Deals.
Posted in First Home Buyers

Is it time to review your interest rates?

When finances seem tight in the household budget it’s normal to let go of the luxuries in our lives. From take-outs, to trips to the cinema, we sometimes look at trying to find a better deal on all our insurances.

Mind you this is an excellent idea even if the household finances don’t need your attention. There’s a few hundred a year that can be saved just be switching your home and contents, building and car insurance, even the health insurance industry is becoming more competitive when clients ask for a better deal. So imagine what can be saved if you review your interest rates regularly.

The mortgage industry is going through an incredible phase. People are losing confidence in the Big 4 and are turning to smaller financial institutions and independent mortgage brokers to get them a better deal. So what’s the best advice when you decide it is time to review your interest rates?

  • Affordability is tough ATM, don’t burn your credit file applying to multiple lenders.
  • Make sure you understand the features offered in a mortgage. The ones you don’t use could cost you unnecessarily.
    Lots of second tier competitors want your business and are very competitive (that’s a tick for us) if they suit your goals and needs.
  • Look seriously at whether to fix the lot unless you have good advice from a financial advisor as it can cost you more in the long run.
  • This may seem counter intuitive but start with your current lender armed with info of their competitors to save the costs of refinancing. You have to take into consideration the cost to exit your current mortgage and the cost to establish your new one.
    Pay attention to the comparative rates, this show % rate with all costs considered.
  • Be clear on what you do need & what your plans are for next 3-5 years.

But most importantly don’t be afraid to demand more from your lender, after all, they can’t exist without you so make sure you stand up for yourself, and you do that by being armed with as much information as possible.

Posted in Interest Rates

Are you looking to invest in property? Here’s what you need to know before you get finance.

If you’ve made the decision to invest in property you’ve probably done your due diligence in making sure it’s the right choice for you. If you’ve considered shares, stock market or gold and decided property investment is for you then let’s look at how to get into the right head space and especially what you need to look before you get financed.

Here’s what you need to do/know before you do your finances:

  • Contrary to popular belief less than 6% of Australians, or roughly 1.3 million people, own an investment property, this is important to recognise.
  • List your assets, including you and your partners (if relevant) income. Make sure you include what your current expenses are. This will help you understand how an investment property will affect your own cash flow.
  • Set you goals. Consider what you want? Do you want to positively or negatively gear this property, find out the pros and cons.
  • Do your research in the areas you’re thinking of investing in. Are they saturated? Are there any big plans for infrastructure nearby, this is both a positive and a negative. Building works for 2 years could lessen your property but a new train station would increase its value.
  • Make sure you have reconciled your risk. Understanding your own attitude towards risk will help you when deciding what property to buy.
  • Start budgeting, yes sounds boring BUT budgeting is the only way to balance your incomings and outgoings, and lenders love to see the work you’ve done to present yourself a lower risk than others.
  • Stay focused, it’s easy to get caught up in the emotional roller-coaster of home purchasing but take the emotion out of this, it’s a business transaction so treat it as one.
Posted in Property Investment

Breaking down the budget.

Budget can be a tough time, even if you are financially savvy. Politicians are experts at putting forward a budget that sounds amazing (spin anyone?) but when you break it down it affects you more than you realise.

So how does the 2017 budget affect you?

Let’s take a snapshot shall we:

  • This was the budget of budgets for small business owners: You will now have access to the “instant asset write-off” scheme which means business owners can instantly claim up to $20,000 of necessary business purchases for tax purposes.
  • If you are older than 65, are on a pension or are looking at downgrading your home this is a budget for you. This includes the ability to add $300,000 into your super from the sale of your home, tax free. This is to encourage downsizing to free up housing for younger, bigger families.
  • If you’re a student this is a tough one for you, fees have increased by 7.5 percent as of next year and you’ll have to pay your loan off faster. Under the new budget, the new HECs repayment threshold is now $42,000 a year – down from $55,000 a year.
  • If you’re a first home buyer it was announced that young people can contribute and withdraw up to $30,000 from their super to purchase their first home.
  • If you’re married and currently own your own home there doesn’t seem to be anything in the pot for you but also you won’t have anything taken away. So carry on as usual.
  • If you have a disability or are the carer of someone who does the government has confirmed it will “fully fund” the National Disability Insurance Scheme to be rolled out nationally by 2020. This is amazing news.
  • If you’re a foreign investor there is now an annual levy of $5000 if you do not rent out the property you’ve purchased or have someone living in it. Overseas-based investors will also now only be able to buy 50 percent of new housing developments.

It’s a balanced budget for most, some tough decisions for students but some welcome news regarding foreign investors which may help our affordability issues.

Posted in Misc

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Posted in Uncategorized

Hello world!

Welcome to WordPress. This is your first post. Edit or delete it, then start writing!

Posted in Uncategorized

What the RBA is likely going to do with interest rates in 2017?

What the RBA do to the cash rate and, in turn, to your mortgage interest rate (if passed on by your lender) can be enough to set your blood pressure going. So what does the RBA have in store for 2017? As always it will depend on who you ask but the general consensus is they will rise through-out 2017. It is, however, unlikely to herald the return of sharp, and steep, monetary policy tightening cycle (as in 2008) from the RBA according to David Scutt from Business Insider Australia. Prior to the devastating GFC cash rates were 7.25%, yes 7.25% which sounds unbelievable now.

With household debt at a record level high many house owners religiously tune into the RBA announcement every month to see how the decision will affect their monthly budget. With many families living close to the line, many calling pay day “allocation day” instead, a difference of $150 a month can have a knock on effect for the rest of their budget.

According to Julia Corderoy (news.com.au) 1 in 5 Aussies will experience “housing stress” if interest rates go up by 0.5%. Our own government have agreed that the impact of higher housing costs is most strongly felt by lower-income groups, particularly low-income renters for whom home ownership is increasingly out of reach, thanks Yates & Milligan for confirming this. Many experts note that the only way to manage expected interest rate hikes (mostly towards the end of 2017) is for the government to get involved and offer some great policies to prevent a catastrophe.

So who is in the “know” when it comes to interest rate rises? The big 4 banks would be my bet and what has their faxed rate mortgage % in recent months? It’s gradually gone up, bit by bit, indicating that more variable rises are in the forecast for the year.

Is there a way for home buyers to protect themselves in the year to come? Yes ofcourse, there are a couple of things they can do: Firstly re-mortgage, go find a great rate, with an smaller buyer (Yes I mean us) But seriously re-financing is a great idea. Secondly, have a hard think about a fixed rate but know the risks involved (paying more for peace of mine) and thirdly go onto interest only for 12 months but continue to pay the same as you were paying before, this will give you a buffer should there be a hike rise.

Posted in Interest Rates, Uncategorized

Top 10 tips for preparing to sell a home

As you know we all love lists here and nothing beats a good check-list prior to selling your own (or investment) home. We’ve scoured the web, asked our clients and these are the Top 10 tips for preparing to sell a home:

  • Repaint the walls neutral colours. As much as you love your DIY renovation, it could turn off a good portion of your buyers. So repaint your rooms in neutral tones: as colour can be distracting. This allows buyers to focus on the spaces themselves, not the colour of the walls.
  • Light! Light! Light! Open up all the windows to let in the natural light. If the space has low light add floor or table lamps to those areas. Perspective buyers love an inviting, bright, and cheery room. It also makes the rooms look bigger.
  • Organize your storage space. Storage space is a huge selling point, and if your closets are stuffed to the brim, buyers will think you don’t have enough of it. IKEA have excellent storage solutions or if you have a storage unit pack your opposite seasonal wardrobe away to make the areas look more stream-line.
  • Make something yummy before an open house. There’s nothing quite like the smell of fresh bread; a “homey” smell like baking cookies or bread can help people connect with a kitchen. Not a baker? Fake it with a scented candle.
  • Sort out your curb appeal. Clean up the front of your house, yes that may mean a trip to the tip but it’ll be worth it. Trim those bushes and if you have any budget get some good quality mulch in the garden beds.
  • Buy a new welcome mat. Let buyers know they’re invited into your home.
  • Hose it down. Use a high-pressure hose on your home, really giving it a good fresh spray. It’s amazing how fresh and clean it could look, once you’ve actually done it. Do this once and you’ll be able to easily spot any areas that may need attention.
  • Staging. Position your furniture in a way that can help make the rooms appear larger if you can. It just may shorten the time your home is on the market and it may even get you your asking price! If the property is vacant, hire a home staging professional. The right furniture can turn an older home into a gorgeous, modern house.
  • Fix the small things, that leaky tap, that missing smoke alarm, do it now. It’ll make the world of difference at an open house, buyers look for the little things, don’t give them any cause for concern.
  • Clean carpets or wash curtains to remove any lingering odours and to breathe new life into tired furnishings.
Posted in Living, Uncategorized

Top 10 things you need to do before applying for a home loan

We all love a check-list (note financial geek here) but you’ll find a checklist is a great way to make sure you have all you need before applying for a home loan. So here they are:

1. Get a hold of your credit file/score. It’s a fairly straight forward application on https://www.finder.com.au/credit-score and it’s FREE. Knowing your credit score will help you determine your list of lenders.
2. Organise and prepare your paperwork. This one sounds like a no-brainer but it’s amazing the amount of people who don’t do this. Applying for a loan is very straight forward IF all the paperwork has already been collated.
3. Start saving now. Lenders love to see a rainy day kitty looking healthy as it makes you look less of a risk for them.
4. Look at re-financing, this is a great way to free up some cash and make your disposable income look healthier which lenders LOVE.
5. Compare lenders before you decide. There are loads of loan comparison sites like www.canstar.com.au. Be warned of some of the extras than come with a lower variable interest rates, for example, high exit fees, high management fees that essentially cancel out the interest rate savings.
6. Don’t quit your job or start a new business. It makes you look riskier to a lender and they don’t like risk!
7. Pay all your bills on-time. Did you know that even an overdue (not even a demand letter) on your council rates can end in a negative decision from a lender?
8. Reduce the limits on your existing credit cards. Lenders look at credit available to you and not just what debt you actually have to lower them to a decent and comfortable level in line with your budget.
9. Check if you are eligible for any concessions like a first home buyer grant or a stamp duty exemption depending if you’re an investor or if you’re buying an existing or a new dwelling.
10. Speak to a professional, that’s right. Call me and I’ll walk you through it!

Posted in Home Loans, Uncategorized
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