Financial Management

Simple Ideas to Boost Your Home’s Value

Taking care of basic maintenance tasks before you sell your home is a no-brainier, but a quick and not-too-costly renovation can add a lot of appeal for potential buyers, and may boost the final sale price.

Basics first
Fix those little faults that you no longer notice – leaky taps, rusty gutters, broken window catches. They can make a huge difference to a buyer’s perception of value.

Landscape the garden
A well-kept garden can create a low-maintenance feel before buyers even step inside.

Bring the outside in
Opening living areas to the garden can be as simple as adding big bi-fold doors that create an inviting sense of flexibility.

Take the inside out
A barbecue area, deck, pergola or even a plunge pool all invite buyers to imagine their future lifestyle in your home.

Light and bright
Brightening dark areas boosts a home’s appeal; you can install skylights quite economically, and swap solid doors in dark areas for glass-panelled ones.

Fresh paint makes a home look ready to live in. Think carefully about colours, and maybe seek some interior design advice – although neutral colours present some people with a blank canvas, to others those spaces just seem bland.

A solid footing
New carpets make a home feel new. Again, think carefully about colour. Look under the carpet – those timber floors will be lovely when sanded and sealed.

Green it
Installing solar panels or a solar hot water system can add value for potential buyers, who will see future energy cost savings.

Bathroom fix
A brand-new bathroom can cost a lot. Instead, think of replacing shower curtains with clear glass screens and installing new taps, a water-saving cistern and even a new toilet seat. Replace small tiles with big ones, and clean/renew the grout.

Add storage
Buyers are looking for places to store their stuff – cupboards in the garage and in neutral spaces such as hallways, or a butler’s pantry in the kitchen is great too.

Some simple and affordable renovation moves can make your home more desirable to buyers, potentially adding to the final sale price.

 

Source: Simply Living Winter 2018, Allan Faint at the Home Finance Centre of Australia.

Budget Breakdown: Implications for Property Buyers and Sellers

How will 2018’s Budget affect the national property market? For buyers and sellers alike, we take a look at what you need to know.

The 2017 Budget had a strong focus on housing supply and affordability. This year, housing took a back seat with no new, direct measures for first home buyers or renters. However, some of the changes will likely have an indirect effect on both the residential and commercial sectors.

Stable interest rates
Home buyers can take comfort from the fact that the Budget isn’t likely to put immediate pressure on interest rates. President of the Real Estate Institute of Australia Malcolm Gunning says: “This expected interest rate stability comes at a time when housing prices in some of our major cities are showing signs of easing, leading to improved affordability for first home buyers.”

No change to negative gearing
The government’s decision to leave negative gearing alone brought sighs of relief from the real estate and development industries. Gunning described this as an ideal outcome for the housing market1, considering the stringent changes introduced last year to quell investor
demand.

“[It was] pleasing to see that the government recognizes the important role the current taxation arrangements for negative gearing and capital gains tax play in increasing supply, keeping rents affordable and easing the burden on social housing by leaving these unchanged,” he said.

More land for home building
The budget did commit to establishing a $1 billion National Housing Finance and Investment Corporation and to release more land suitable for housing.

As well as unlocking some Commonwealth land for development, the government has taken steps to discourage investors from holding on to land3 that could be used for new homes. From July 2019, investors will no longer be able to claim expenses such as council rates and maintenance costs for vacant land that could be used for housing or other development. The aim is to reduce so-called ‘land banking’, a process that allows investors to hold on to land in the hope that its value will rise while simultaneously enjoying tax benefits granted on the basis that the land would be used for homes or commercial buildings. Under the new rules, the deductions will only apply once a property has been constructed on the land and is available for rent.

Easier access to cheaper housing
Housing is cheaper outside the major cities but lack of access can make it an unrealistic option, particularly for those who work in commercial centres. The government’s allocation of billions of dollars in transport infrastructure upgrades3 could help resolve this problem over the longer term.

Projects designed to attract home buyers into less expensive areas include upgrades to roads on the Gold Coast, the North South Rail Link in Western Sydney, the Melbourne Airport Rail Link and continuing upgrades to the Bruce Highway in Queensland. Nationally, there are also plans to reduce the congestion4 that can make a daily commute from the suburbs so frustrating.

Helping Australians age at home
In last year’s Budget, the government introduced the Downsize Contribution so that, from July 1 this year, homeowners over 65 will be able to invest up to $300,000 from the proceeds of the sale of their family home into their superannuation fund5. Along with a higher income in retirement, the move could also be seen as encouragement for singles and couples to sell, freeing up more family homes.

There was some speculation that in this year’s Budget the government would use changes to capital gains charges for sellers as further motivation to downsize but, instead, it introduced a measure designed to help retirees stay where they are6.

Now every homeowner over the age of 65 has the option of taking out a reverse mortgage worth up to $11,799 a year for the rest of their lives. A reverse mortgage is effectively a loan that allows homeowners to access the equity they have built up in their home without selling their property. The loan is usually repaid when the house is eventually sold and there are limits in place to prevent people from owing more than their property is worth.

If you’re thinking about buying, selling or taking out a reverse mortgage in 2018 or 2019, you might want to talk to your mortgage broker about the recent Budget and how it could affect you personally.

Source:  Simply Living Winter 2018, Allan Faint of Home Finance Centre of Australia

 

Refinancing Could Save You Thousands – and Give You Greater Flexibility

Reducing the interest you pay on your mortgage could help you save thousands of dollars in interest over the period of your loan. As there’s plenty of competition in the home loan sector, it could be worth looking around for a lower rate.

What is refinancing?
Refinancing is the process of replacing an existing loan with a new one. When it comes to home loans, it means your existing home loan is paid off and replaced with a new one.  This is different from a second mortgage, where you draw on the equity you have built up in your home.

How can it help me save?
If you were paying 5.37per cent interest on a principal and interest home loan of $600,000 for a 25 year term. Your monthly principal and interest payments per month will total $3,648.00. If you swapped to a mortgage at a lesser rate of 5.24 per cent, however, you’d pay just $3,602 a month. Over 25 years, that saving each month would add up to $13,800 in total savings.

Another savings option when refinancing is to choose a loan with a lower interest rate but continue with the same monthly payments as you were making on the higher rate. This approach will see you pay less interest and pay your mortgage off faster.

Alternatively, refinancing can help save money by consolidating debt from high-interest credit cards or personal loans into a single home loan with a lower rate of interest.

Features to consider
Most mortgages offer a number of features and benefits. If you’re considering refinancing, it’s a good idea to think about which features are important to you before starting a search for a lower interest rate.

  • Variable rate or fixed rate. A fixed rate gives you more certainty over the longer term. A variable rate fluctuates with the market, so you’ll save when it’s down but there’s always a risk it will rise. (In January 1990, for example, the Australian home loan interest rate reached an all-time high of 17.5 per cent.)
  • Offset account. Cash in hand can be offset against your loan balance until you need to spend it, potentially saving interest.
  • A line of credit. If you have a lot of equity in your home, a lender might be prepared to offer you a relatively inexpensive line of credit secured against the property.
  • Repayment flexibility. Repaying a loan fortnightly rather than monthly can make it easier to fit in your budgeting plans.
  • Early pay out. You may want the option of paying a loan out early with minimal penalty.

Weighing up the costs
There can be costs associated with refinancing and it’s important to factor these in to your decision-making. For example, if you took out your loan before 30 June 2011, the lender might be able to charge you an exit fee for terminating the loan ahead of schedule. If yours is a fixed-rate mortgage, you might have to pay a break fee.

For a new mortgage, you may have to pay an establishment fee and the ongoing administration fees could be higher than you’re currently paying. And if your loan has redraw facilities, there may be a charge each time you take money out of your account.

Do the math’s
You can use an online mortgage calculator to work out what repayments will be for different loan amounts at different interest rates.

You can also compare fees and charges to ensure they won’t offset any savings in interest over the life of a loan. The Australian Security & Investment Commission’s Money Smart website has a useful mortgage switching calculator that can help you assess overall costs.

A broker can help
Refinancing can be a serious financial decision with a number of variables to consider. A good broker can help establish the type of loan that may work best for you, how much you can borrow and any extra features you want.

They can then gather information from many different lenders and help assess the costs and benefits associated with each loan.

As well as doing the legwork for you, they can guide you through the refinancing process and apply their knowledge and understanding of mortgages to help you achieve the best outcome if you decide to go ahead.

Source:  Simply Living Winter 2018, Allan Faint at Home Finance Centre of Australia

 

Save on Your Summer Cooling Bills

It’s not just cold w inters that cause our energy bills to skyrocket. Australia is known for its scorching summers, so on hot days it’s important to stay cool – but having the air conditioning blasting 24/7 can send your home’s running costs soaring.

According to the Department of Environment and Energy, 40% of the energy used by the average Australian home is for heating and cooling1. As the days grow w armer, here are some easy things you can do to stay comfortable while keeping your power bill down.

Do a spring clean
Make sure your cooling system is in good shape by cleaning out the filters, keeping the outdoor equipment free of dirt and leaves, and getting the unit serviced if needed. This w ill help ensure your cooling system works well, reduces energy consumption and improves air quality.

Get smart about cooling
Experts recommend setting your air conditioner at 24 degrees or warmer so it runs most efficiently: every degree cooler uses more energy. It also helps to run Source: air conditioning only in the parts of your house that are being used.

Before you turn on the air conditioning, cool yourself by taking off any extra layers of clothing and try using a fan, as these consume a fraction of the energy. Sitting a bowl of water in front of the fan increases its cooling effect.

Keep the heat out
When you know it’s going to be a hot one, close your windows and curtains or blinds early in the day. You can shade the outside of your home with awnings, a shade sail or trees.

Throughout the day, don’t add any unnecessary heat. Turn off lights and appliances you’re not using, and enjoy a barbecue outside rather than using the oven.

Be window-wise
When the day starts to cool down, turn off your cooling system and open up windows or doors on both sides of your house. This will allow the hot air to escape and a cool breeze to flow through. If you can, keep some windows open overnight. You could also install w indow coverings, glazing or tinting.

The best way to use less energy7 Head outside and make the most of those bright summer days!

Source:
1 http://yourenergysavings.gov.au/energy/heating-cooling/understand-heating-cooling

 

Author:  Alan Faint, http://www.hfcahobart.com.au/

How Your Broker Can Boost Your Business

Are you a property owner with a business? Your mortgage broker can help you with commercial and asset finance too.

One of the basic tenets of work/life balance is: ‘Don’t bring your work home with you.’ But what if you could bring your home to work? It’s a scenario that home owners with a business should consider when seeking commercial or asset finance.

Three common types of business finance are:
Business loan: the lender loans money to the business for its operations and the business repays the lender with interest.

Commercial investment: the lender loans money to the business to invest in an asset, including real estate. The asset is often used as security and the repayments attract interest.

Chattel mortgage or equipment loan: the lender loans money to the business to purchase equipment or vehicles, which are used as security. Repayments attract interest.

When it comes to purchasing an asset, lenders will often use the asset as security against the business’ debt. In some cases, however, such as with the purchase of equipment or vehicles w here the assets may depreciate over time, the asset itself may not be sufficient security. In other cases, for instance when a business seeks a loan for operational needs, there may be no security.

Sometimes the more security you can offer a lender, the lower the interest rate it will charge and vice versa. Unsecured loans often attract the highest interest rates. If you’re a home owner with equity in your property, you may be able to use this equity as security to leverage a better rate on your business loan.

As with mortgage rates, commercial and asset finance rates w ill vary from business to business. Lenders w ill look at things such as industry volatility, how long you’ve been in business and your financial records to determine the risk factors that will contribute to their loan terms. Your mortgage broker can offer an unbiased view on whether your property is suitable to be used as security, how much equity you can use and how this might affect different loans from different lenders.

Brokers aren’t just for home mortgages. Don’t leave business growth until the future – explore how commercial and asset finance can work for you today.

Author:  Alan Faint, http://www.hfcahobart.com.au/

How to Purchase an Investment Property

If you’re interested in becoming a property investor, it can be hard to know where to start. Here are seven tips to help get the ball rolling:

1. Make a plan and stick to it
The property itself isn’t the end goal – you’re likely looking to make a profit. Once you know your end goal, create a plan for a realistic time-frame. Remember to review this plan regularly as your situation and the property market changes.

2. Research the market
Do your research to see what types of propert ies are easily attracting tenants and what properties are staying on the market for longer periods of t ime. This will help you choose the right property to purchase.

3. Pick your location carefully
Location is critical to performance. Consider the proximity of the property to the CBD, schools and local shops. It’s also a good idea to find out what the public transport options are.

4. Know your budget
Always check your financials before deciding to purchase a property. Get pre-approval and make sure you have all extra costs available, including conveyancing, inspections and any taxes.

5. Think about how you purchase the property
When setting up the sale contract for your purchase, consider whose name to put the house under. Whether it’s in your own name, through your super or a family trust, it’s important to understand how this investment affects any existing assets.

6. Think about what tenants are looking for
Look for properties that offer that little something extra, like a second bathroom or a lock-up garage – anything that might appeal to potential tenants looking for a home of their own.

7. Ask for expert advice
Your broker can put you in touch with accountants, real estate agents, lawyers and valuers – experts that can help guide you in your decision making.

 

Author:  Alan Faint, http://www.hfcahobart.com.au/

Avoid Confusion About Home Loan Pre-Approvals

Confused about home loan pre-approvals? Here’s everything you need to know before you start house hunting.

What information do you need?
First, your broker will want to build a comprehensive picture of your finances. To do this, you’ll need to provide evidence of everything including:

  • pay slips and tax returns for your income
  • title deeds for tangible assets (i.e. physical items such as buildings, machinery and inventory), and portfolio statements for intangible assets (non-physical items such as copyrights and patents)
  • loan statements for existing loans.
  • credit card statements showing your credit limit
  • other financial obligations.

What happens at your first appointment?
At this initial appointment, your broker w ill confirm your identity and use your information to calculate an approximate borrowing figure. During this appointment, you’ll need to fill in a pre-approval application form.

How do you get approval?
Once you’ve chosen the mortgage, your broker will perform a credit check. The result of the credit check helps the lender determine whether you’re a suitable borrower and how much they should lend you.

When do you get approval?
Once the lender approves your application, you’ll receive a conditional approval certificate from the lender that is usually valid for 90 days. It’s important to remember that this is not approval for the actual loan. Use this figure to work out how much you can spend on a property, taking into account the size of your deposit and other expenses such as conveyancing fees, Stamp Duty and so on. Securing pre-approval will allow you to house-hunt with confidence. What happens next? When you’ve found the perfect property and you’re ready to make an offer, remember to tick ‘subject to finance approval’ on your offer before contacting your lender or mortgage broker to finalise the application process.

Understanding Your Borrowing Capacity
Being approved for a home loan is an exciting moment. But it’s important to understand your borrowing capacity before you commit to a mortgage. Just because you can borrow a certain amount, doesn’t mean you should.
Here’s how to assess your financial situation to understand how much you can borrow.

Consider your existing financial commitments
In principle, your borrowing capacity depends on a number of factors, including:

  • your income
  • your monthly expenses
  • your existing debts
  • how much deposit you have saved
  • current interest rate
  • type of loan
  • whether it’s a principal, or principal and interest loan
  • the term of the loan
  • estimated repayments

As a general rule, it’s not a good idea to allocate more than 30% of your monthly household income to re-paying your home loan.

Put together a budget
The best way to know what your borrowing limit might be is to create a budget – and stick to it. Once you know w hat’s coming in and going out of your bank account, you’ll know how much you can afford to repay – and therefore how much you should borrow.

There are a number of different phone applications or websites that can help you put together a budget. When setting your budget, make sure you consider factors such as:

  • council rates
  • body corporate fees (if applicable)
  • insurance costs
  • maintenance costs
  • utility bills
  • estimated groceries
  • medical bills and health fund payments
  • school fees
  • phone and internet costs
  • petrol and transport payments
  • entertainment, travel and clothing
  • other loans or credit card debts

Think about the future
When putting together your budget, make sure you leave a bit of wiggle room in case things change. It’s important to understand how a change in circumstances will impact your finances. Anything from a hike in interest rates to an addition to your family w ill affect your ability to honour your financial commitment.

Talking to a mortgage broker can help you understand what you can and should commit to financially, but the final decision is yours to make.

 

Author:  Alan Faint, http://www.hfcahobart.com.au/

How to Pay Off Your Home Loan Sooner

Are you looking for ways to save on your mortgage? Try some of these tips.

Increase your repayment amounts
The simplest way to pay off your home loan sooner is to increase the amount you repay. By repaying more than the minimum you can cut the overall term of the loan and save thousands of dollars in interest. The more you pay off earlier on in your mortgage, the more you’ll save over time. Some products may charge you an early payment fee for paying your loan in advance. These costs can be large, so it’s best to always check beforehand.

Consider how mortgage features can help
Think about how using an offset account or a credit card linked to your home loan might help you keep your loan balance low. If you’re looking for ways to keep your interest down, it’s worth investigating what other features your home loan comes with.

Take advantage if there are variable rate cuts
A lower interest rate will reduce your repayments, but if your lender reduces the interest rate, consider repaying more than the minimum loan repayment amount. This can help you save on future interest payments.

Don’t pay the interest-only
An interest-only loan might mean you’re able to make lower repayments for the first few years, but this means your repayments will be larger when it comes time to pay off the principal.

Consider re-financing
If you’ve had your mortgage for 12 months or more, re-financing might be able to get you a better deal on your home loan. There may be costs associated with re-financing and it’s important to take this into account.

Consider split loans
A split loan allows borrowers to divide their mortgage into both variable and fixed components. You can lock in a low fixed rate on part of your loan. if you only want to limit exposure to the variable rate.

Explore your options
Before you sign on the dotted line, make sure you’ve explored all of your options. It’s worth looking into whether you can get a discounted loan rate with a financial package that includes special rates on other products and services. With just a few easy steps, borrowers can significantly reduce the length of their mortgage and save thousands of dollars in the process. If you’re interested in paying off your home loan sooner, contact your mortgage broker.

How brokers can help: commercial and asset finance
If you’re looking to finance your business, a broker can help you find and secure commercial and asset finance options. Your broker w ill also be able to leverage their network of lending institutions to find you the right funding from the start. Many brokers have a deep understanding of the commercial sector and the w ide range of products available. Using a mortgage broker means you have a variety of lending options at your fingertips.

Managing cash flow
Managing your cash flow is an important part of running a business. You might be invoice discounting. This is where you access a proportion of your debtors’ unpaid invoices through the lender. Or maybe you’re invoice factoring, where the lender takes responsibility for chasing your business’s debts. Either way, your mortgage broker can help you find a solution that works for you.

Finding the right deal
If your business is involved in manufacturing, you’ll need the right equipment and the best financial arrangement in order to remain competitive. This is something your broker can help facilitate.

Taking advantage of flexible options
If you have a variety of financial needs, it can be hard to choose the right lender for each part of your business. But the solution may be to use different lenders for different assets. For example, a business may need a special type of mortgage for its plant and equipment (known as a chattel mortgage), but a finance lease for other assets. Your broker has the ability to compare different commercial and asset finance products with multiple lending facilities to help find what’s right for you.

Investing in your business’s opportunities
A broker’s understanding of the commercial sector and the wide range of products available means they can help you identify and secure commercial and asset funding in order to grow your business. Your broker can be a one-stop-shop for your financing needs.

 

Author:  Alan Faint, http://www.hfcahobart.com.au/

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