Home deposit or wedding?  What come first?

2018 is going to be a big year for love and marriage in Australia – if you’ve found the one, congratulations! But what’s next – a home or a wedding?

It’s a common scenario facing many couples – do you prioritise the wedding over the home, buy the home first and get married later, or save for both at the same time? The answer depends on your own personal preferences, financial situation and goals. Here are some useful tips to help you decide and maybe get there sooner.

Ensure you and your partner are on the same page

Money matters are a common cause of stress in any relationship, so it pays to ensure you’re both on the same page about your finances. Discuss your short-term and long-term goals, and set your priorities together. It’s important to be open and transparent about your income and debts, so that you can work to make the most of your finances – and to help make your wedding and home ownership goals a reality. Talking about merging your credit cards and bank accounts to save money on interest and fees, is a great place to start. 

Create a budget 

Sit down with your partner and put together a budget and set some goals. Work out how to make the most of your joint income. You may like to seek advice from your financial planner about your long-term finances, but in the short-term there are plenty of tools around to help you budget and save, including budgeting apps. We like the simplicity of TrackMySPEND available on the ASIC MoneySmart website, or you can go online and find one designed for couples.

Establish a savings plan

Set measurable goals and be prepared to make a few lifestyle adjustments to save, save, save. That may mean axing your gym membership, cutting back on restaurant meals and finding free entertainment. It’s easy when you’re in love and all you want to do is spend your time together – so pack a picnic or go for a romantic walk on the beach!

You may also like to chat with us about setting realistic savings goals and planning how much you need to save for your wedding and home deposit. Establishing good savings habits will not only help you save more quickly, it will also hold you in good stead when it comes to applying for a home loan and paying back a mortgage. We can also help you set your budget, and savings plan!

Be willing to compromise

You may have always dreamed of a lavish 250-head fairy-tale wedding with doves, drone photography and a 10-piece orchestra, but the reality is it may not be financially viable, especially if you’re saving for a home deposit at the same. The average cost of a wedding in Australia is now $65,482, according to a survey run by Bride to Be magazine, but the big day can be as inexpensive as you like. You may decide to opt for a more simple affair, so that you can channel the rest of your savings into a home. At the end of the day, it’s about you and your partner committing to each other – that’s the bit that matters! 

Consider buying your home first

For some couples, buying your home first could make good financial sense. Once you’re on the property ladder, you can save by making extra home loan repayments to build equity in your home. (When you save money in a savings account, you pay tax on the interest – which could mean it takes longer to save the amount you need). 

The potential for your home to grow in value could also help you build up your equity. Once you have enough equity in your home, you can talk with us about refinancing your home loan and potentially withdrawing some of the equity to pay for your wedding. It’s a strategy that might not work for everyone, so do talk to us to see if it could work for you. 

Call us to chat about your plans!

So, which comes first – the wedding or the home? There’s no right or wrong answer. If you’d like us to help you weigh up your options, find out your joint borrowing capacity and make your dreams a reality sooner, then give us a call! We can help with many aspects of your financial life together, from explaining whether you qualify for the first home owner’s grant and other incentives, to helping you set savings goals and determine your borrowing capacity, to getting a suitable loan to buy your first home together or a personal loan for your wedding.
Please get in touch with us today!

Will buying a smaller investment property provide a good ROI?

A small property could potentially make a great investment, provided you choose the right one. The key to success with any investment property is thorough research. In this article, we take a look at how to research and choose the right small space property to give you the investment returns you’re looking for.

Pros – why choose a small space apartment or unit?

There are lots of benefits to buying a smaller property such as an apartment or a unit. Houses often have a higher entry price point due to land value, so you could potentially buy an apartment or unit with a smaller deposit. Ongoing costs for apartments and units can be a lot less too – council rates are usually higher on a house and in many states, you’re also required to pay land tax on an ongoing basis. With a unit or apartment, costs are limited to strata and body corporate fees.

Maintenance is also a cost that must be taken into consideration. If you purchase a house, all maintenance issues are your responsibility, whereas with an apartment or unit, many of these costs are covered by the body corporate.

These factors mean that a unit or apartment may be more favourable from a cash flow perspective – which is great, particularly for first time investors. Additionally, if you do your research carefully, you could potentially locate an apartment or unit in a location set to make both great capital gains and solid rental returns.

Cons – how small is too small?

Some developments offer studio and one-bedroom apartments of less than 50sqm. Many lenders are reluctant to finance these properties, and also some small space properties in high rise, high density developments, so it pays to discuss any property you may be considering with your mortgage broker before you sign a contract or put down your deposit.

Research is the key to success.

So how do you know for sure that a location will be in high demand for small space renters in the long term? Small space apartments and units are often in high demand in locations that are close to the action for singles! These may include the city centre and other busy employment hubs, universities, areas with vibrant nightlife, or excellent public transport facilities that provide fast and easy access to these amenities. To find out what you need to know about a particular location, start by talking with local real estate agents and property managers. Essentially, you’ll want to find the answers to these questions about your chosen location:

• How is the local economy doing? Is there employment growth?

• What is happening that will affect supply and demand of small space property in the area in future? Are there many new developments in the pipeline?

• What is the historical growth of property prices in the area?

• What are the current rental yields on properties similar to the one you are considering?

• What is the median price of properties in the area?

We can also provide you with a comprehensive report on any location or suburb of interest. We have access to specialised data from Australia’s leading property market data supplier, CoreLogic that specifically targets small space apartments and units.

How to analyse the market data.

You’ll want to analyse the data you collect to find a location with positive capital growth and solid rental yields to maximise the profit potential of your investment. (If you need help, please ask us as we have a great deal of experience!) Some other good indicators of these include:

• Days on the market. How quickly do properties sell in the area?

• Vacancy rate/demand to supply ratio. Is there much competition amongst renters?

• Rental yield. What percentage of the price of the property can you collect in rent?

• Auction clearance rates. Do sellers need to reduce the price to get a sale?

• Limited available property. This could suggest that demand exceeds supply and this is likely to drive future capital growth.

Ask us to help you crunch the numbers!

There are always reasons for and against investing in any type of investment property. The right investment choice for you will depend on your financial position and investment strategy. If you’re considering in investing in property for the first time, a small unit or apartment could be a good way to start, so talk to us and we’ll help you crunch the numbers to see if they add up!

Remember, a good mortgage broker can be an invaluable resource when investing in property. We’ll help you choose the right loan that will not only serve your needs now, but set you up for further investments in the future. Talk with us today – we’d love to help you get started with a little property investment today!

6 questions to ask your mortgage broker

Did you know that your mortgage broker can help you with a lot more than a home loan? Mortgage brokers are qualified as ‘credit advisors’, so we can be of great benefit to you in a variety of different ways when it comes to your finances. To start you thinking about maximising your financial goals this year, here’s 6 questions you might like to ask us in 2018!

1. How can I clear my debts faster?

According to the Australian Bureau of Statistics, about 29% of Australian households are classified as ‘over-indebted’. The most common form of debt is credit card debt, which is currently a real bother to about 55% of us!

If you want to clear your debts faster, particularly credit card debts, the trick is finding ways to save on interest, so your money goes towards paying down your debt rather than maintaining it. This could mean rolling all your debts into one loan with a lower interest rate. We could help you do this with a personal loan, or perhaps by refinancing your home loan to pay off your debts. Call us if you want to talk turkey on debt consolidation!

2. What’s the best way to save for my child’s education?

Dreaming of your child becoming a Nobel Prize winner one day? Then a great education is key. Paying for something like a four year university degree twenty years from now is not so much a question of saving your extra pennies, but putting your money to work for you so it generates money for the future. Ideas? Use your home as a money tree – put any extra money you’ve got into your home loan now, then access the equity to invest as soon as you can. Or if you already have plenty of equity, talk to us about refinancing now to get a deposit for an investment property or some other form of investment.

3. How can I take a year off work to travel when I’ve got a mortgage?

Ah-ha! A tricky one, but talk with us because there are a number of things we could do to help, depending on your personal financial situation and how much equity you have in your home. For example, we could crunch the numbers for you to see if renting out your property would cover your repayments while you’re away. Or to make that strategy work for you, potentially negotiate with your lender so you could switch to interest-only for a while to reduce the size of your loan repayments. We may even be able to refinance your loan to help you cover some of your travel costs, and at the same time, extend your loan period to reduce your repayments so a renter could cover them.

4. My car loan repayments are a killer! What can I do about it?

Refinancing your car loan is not out of the question. If you got your car loan from a car dealership, chances are you’re paying a whopping interest rate – we recently heard of a client who was paying as much as 14.5% pa. If this is the case for you, we could potentially find you a loan with a lower interest rate, or extend your loan terms to reduce your repayments. It may even be possible to roll your car loan into your home loan. Talk to us and we’ll see what options are available for you, or if you want to purchase a car this year – we are here to help set you up for success.

5. I’ve always wanted a jet-ski. Is it possible to get a loan for that?

Yes! Even though we usually specialise in home loans, we can also access great loan options for other large purchases. We call these ‘lifestyle assets’ – which covers everything from jet-skis and boats, to other items you may need like cars, caravans, campervans and even horse trailers! Give us a call – you’ll be surprised how quickly we can get it organised.

6. I work for myself. Would I still be able to get a loan?

If you are self-employed, there is no reason why you can’t get a home loan if you have a steady income. We can also help you with finance for commercial vehicles, equipment you may need for your business, or insurance to cover your business and personal needs. Why not talk to us now? The right way forward for you depends on your current personal financial situation and future goals.

We’re always available to help you with managing your finances and credit facilities. We’re very much looking forward to helping you get ahead in 2018, so if you have a question, please give us a call.