Finance

The first property you buy doesn’t have to be the one you live in. Starting out with an investment property is one way to get a foothold in the property market and would especially suit the following scenarios. You can’t afford to buy in your favourite suburb You might want to live near beaches or cafes or close to work so you don’t have to waste time commuting. In which case it may be more cost-effective to rent where you want to live and buy an investment property in a more affordable area. There are some investors who have never lived in a property they own, choosing instead to rent in desirable locations they would never be in a position to buy. You haven’t decided what kind of home you’d like to buy You may not yet have a family or you might be...

Record breaking housing construction is still underway, according to research by BIS Shrapnel and Master Builders Australia. The value of residential building work is forecasted to grow from $51 billion in 2013-14 to $68 billion in 2016-17, which will see the number of homes exceed 200,000 during this period. Research shows the construction boom has been sparked by the extended period of low interest rates, which has encouraged builders and developers to address the pent up demand for housing. Home building has not kept pace with population growth for many years, translating to a deficiency of around 100,000 homes says researchers. A growth in high-rise apartments has led the charge but the construction of detached houses is catching up. If you’re looking to buy a home or an investment property, the message is not to wait around. With interest rates sitting at historic lows...

Taking out home insurance is a requirement of most lenders, but it pays to become familiar with the fine print before you choose a policy. If your home is burgled and your electronic gear is stolen, did you know there is probably a cap on how much you can claim. If your child accidently lobs a ball through the kitchen window, you might not be covered for broken glass. If your property is burnt down, the cost of temporary accommodation might be taken out of the amount you insured your home for. A good place to start is by understanding the difference between ‘total replacement’ cover and ‘sum insured’ cover. Total replacement cover typically has the highest premium and includes all the costs to rebuild your home to the standard it was prior to an event. ‘Sum insured’ will cover you up...

You already own one property and now you want to purchase a second. How do you get started? We have helped many clients with this scenario and this is what we tell them: 1. Choose a strategy There are various ways to approach property investment so it is important to decide which one works for you. First ask yourself what you are trying to achieve: long term financial security? A little extra cash flow? Multi-million dollar portfolio? Then decide how best to go about it: do you want to renovate and then sell for quick profit or would you prefer to buy and hold the property to achieve capital gain? Going ahead without an investment strategy not only leads to confusion during the property search, but also opens you up to all kinds of unwanted risks like buying the wrong kind of property, paying too...

Investment loans dominate the market and the majority of investors use a mortgage broker, according to new research. Investment property loans have grown by 37 per cent in the last four years, while owner occupied loans grew by 4 per cent in the same period, according to the Roy Morgan Research Consumer Single Source Survey. In another survey, conducted by Property Investment Professionals of Australia, almost 70 per cent of 800 property investors say they have sought services from a mortgage broker. So what is it that draws property investors to mortgage brokers? Undoubtedly one of the biggest selling points is that brokers can shop around to secure the best product and lender to suit the client. As a mortgage broker we invest our time in staying up to date with the latest products and we have a large panel of lenders from...

  When you’re buying a home, there are new decisions, considerations and jargon to decipher. Even interest rates can be confusing – with a ‘comparison rate’ being shown beside the advertised rate. What is a comparison rate? When home loan interest rates are displayed, a comparison rate is also shown alongside it. A comparison rate helps you compare the costs of different home loans. They take into account not only the interest you will be charged, but also known fees and charges relating to the home loan. This can help you understand the true cost of a home loan. For example, one home loan may have an interest rate of 5% p.a. and a comparison rate of 5.5% p.a. when fees and charges are included. Another loan may have a lower interest rate of 4.5% p.a., but a comparison rate of 6% p.a., because...

Paying your loans and bills on time has taken on a new level of importance thanks to reforms to Australia’s credit reporting system. On 12 March 2014 a ‘positive’ system was introduced to give lenders more detailed information about a customer’s credit risk and ability to repay debt. Previously, only negative information such as defaults and bankruptcies was permitted to be held, whereas the new system rewards good repayment behaviour, giving consumers the chance to improve their credit score and borrowing prospects. Lenders are now able to see the full picture, including how many other accounts their customers have and what credit limits are attached to them. This more detailed information gives lenders a better understanding of whether a further loan would make the borrower even more overcommitted. It also means they can distinguish between high and low risk borrowers and potentially...

Did you know that you can claim tax deductions for the wear and tear to the fixtures, fittings and appliances in your rental property? Depreciation is one of the many great tax breaks that make property investing affordable for the average person. It refers to the decrease in value of a property or asset – such as the carpet wearing and furniture becoming dated – that occurs over the time you own it. Depreciation rates vary according to the age of the property, with new properties collecting the greatest benefits. As an investor, you can write depreciation off as a tax-deductible expense and in doing so make valuable savings and increase your cash flow. Here’s how: Building Allowance Also known as capital works deductions, these include construction costs, the cost of altering a building and the cost of capital improvements to the surrounding property. As...

Most property developers would say risk is an unavoidable part of their trade and being prepared for what lies ahead can mean the difference between success and failure. The most effective way to minimise the chance of things going wrong is to do your homework. Be ready for the following common scenarios to occur and have a plan for how to reduce your risk and work towards returning a profit. Interest rate rises It might seem obvious to factor in the possibility of rate rises over the life of your development, but you'd be surprised how many developers have been caught out when they have borrowed too much money on lower interest rates and then could no longer meet their loan commitments as rates started to spiral upward. Talk to us about a loan that can be tailored to suit your individual needs. Rising...

Between all the Christmas parties, gift buying and holiday activities, it's all too easy to wake up in January with a credit card hangover. Start thinking now about ways to practice safe Christmas spending and you may well avoid the New Year pain. Pay with cash When you pay by credit you don't think much about the cost, but when you pay with cash or a debit card you have to know that you have the money before you can make the purchase. Resist impulse shopping Before you hit the shops, make a list of what you need and then resist the urge to add impulse buys unless you really need them. Read catalogues and go online to find out where the best prices are before you leave home. Set a limit When it comes to gift buying, nights-out or holiday activities, set a limit on...