- Low interest rates- interest rates worldwide are at record lows, which will help you as a first home buyer gain a foothold in the property market. In Australia the cash rate is currently held at a record low of only 1.5%.
- Equity- Owning a home is a form of equity which allows you to access a home equity loan. This means that you can borrow against the equity that you have built in your home for many different uses such as renovations, repairs, starting your own business, medical costs and much more. For example, if you owe $100,000 on a home that is worth $500,000 you can potentially borrow up to $400,000 (the amount of equity on your home).
- Buying a property forces you to save. As you will have to be putting a percentage of your salary towards an asset it forces you to invest in your future and avoid wasting money and procrastinating.
- More times than not, the value of your home will appreciate greater than all you’ve paid in mortgage repayments, interest, maintenance etc. This means that when you eventually own your home you can make a profit when you won’t have to be making payments.
- You can’t afford to rent when you’re retired. If you are eligible for a full age single pension which includes energy and pension supplements you will be receiving $888.30 per fortnight, which comes to roughly $23,000 per year. If you’re on a single pension of $23,000 and a one bedroom apartment is $18,000 that gives you $5,000 to live on. As a couple a full age pension comes to $669.60 each per fortnight or roughly $35,000 total for a year. That gives $17,000 a year to live on. Neither situation is a viable way to live. Although if you receive a pension, you may be able to access rent assistance for additional financial support.
- If you are renting you are paying off someone else’s mortgage.
- You can be a rentvestor. This means that if you live in an area like Sydney where it may be too expensive to buy a property, you can buy a property in a more affordable area and rent that property out, using those funds to continue to rent in Sydney. To find out more about rentvesting read our article here: http://www.achl.com.au/rentvesting.html
Experienced property investors understand the importance of claiming depreciation on their property against their taxable income. However, a lot of new investors aren’t aware of just how useful this is.
Investment properties and the items they contain get old and diminish in value. Because of this, investors can claim this loss in value as a tax deduction against their taxable income. With plant and property depreciation you can claim tax deductions on ordinary household items such as ovens, dishwashers, carpets, blinds and air conditioners.
When looking to renovate and replace any old items, these items can be assigned a value that can be claimed as a deduction. So make sure before you throw any old items away you get a quantity surveyor to conduct an inspection that can determine the original value of these items that can then be used to calculate a deduction. Don’t just throw things away because chances are you’ll be throwing money away with them. But remember, you can’t just write off a new item as it has to be depreciated over its “effective life”.
So if, for example you bought a property with an older kitchen that has a dishwasher that is valued at $400 (from when you bought the property). If the dishwasher depreciates at a rate of 20% and you have rented the property out for 2 years, the depreciation at year 1 would be $80, and at year 2 would be $64, using a diminishing value depreciation method. If in year 3 you decide to renovate the kitchen and remove the dishwasher you can claim a 100% deduction on the value left of the asset. So in this case it would be 400-80-64 = $256. This process is called “scrapping” the asset, and it’s easy to see the tax benefit in doing this.
So if you are a property investor or are looking at investing in property, remember that by replacing old items you can not only keep your tenants happy but also take advantage of the tax benefit in doing so.
1. Loan Officer
Description: A loan officer is required to provide lending support as well as top customer service. They are responsible for meeting with prospective borrowers, scrutinising loan applications, checking credit histories, and approving loans within specified limits.
Required qualifications: A high school certificate is all that is required. However, a Cert 4 in Credit Management will help, and some banks may require a Bachelor’s Degree in Economics, Finance, Commerce or a related field.
Average salary in Australia: $62,500
2. Mortgage Broker
Description: A mortgage broker is an intermediary between a home buyer and a lender (usually a bank) who negotiates the best deal on a home loan for you.
Required qualifications: Being a mortgage broker usually requires a Cert 4 in Finance & Mortgage Broking, or a Diploma in Finance & Mortgage Broking Management.
Average salary in Australia: $57,000
3. Financial Planner
Description: A CFP (certified financial planner) works as an advisor for clients to assist them in maximizing their savings, investment opportunities and managing their budgets.
Required qualifications: Currently a diploma in Financial Planning is all that is required however under new legislation from 2019, certified planner’s will be required to have a relevant Bachelor degree in Finance, Economics, Accounting or something related. Currently qualified planners will have until 2024 to upgrade their qualifications.
Average salary in Australia: $90,000 (CFP)
4. Insurance Broker
Description: An insurance broker provides advice to clients about which insurance product from a range of companies best suits their needs.
Required qualifications: A cert 4 in General Insurance is all that is required, however some insurance brokers will have a Diploma of Insurance or a relevant Bachelor Degree in fields such as Finance or Economics.
Average salary in Australia: $63,000
5. Entrepreneur/Business Owner
Required qualifications: None. If you have the skills, the creativity, the work ethic, and the persistence required to make it in the world of entrepreneurship, starting your own business in the financial industry may be the right thing for you. Remember, you can hire someone with a degree to do the things you can’t!
Average salary in Australia: $90,000 (small business)
1. Cook your own meals and avoid eating out when possible
There’s always that one person at work that never brings their own lunch and is always buying take-away.
Don’t be that guy (or girl).
Whether you’re going in to work, or are spending the day at the beach, make sure you always bring your own food with you as eating out is out of the biggest killers when it comes to accumulated expenses.
2. DON'T invest in shares without getting professional advice
Investing can be a lot like gambling. Everyone loves to talk about their wins, but no one ever wants to mention their losses.
How many times have you been approached by someone you know who tells you all about the great new investment strategy they’ve discovered that will turn them into the next Warren Buffet? They might even have two monitors displaying all sorts of fancy looking charts, which they obsess over trying to find just the right indicator that they’re looking at the next big growth stock.
And how often is that same person buying shares two years later? The answer is hardly ever.
Remember, Warren Buffet did not acquire wealth by investing in the secondary market. He acquired wealth by starting businesses and providing consumers with products and services they desired.
This is not to say the investing in the secondary market can’t provide some reasonable returns, however, you are best off contacting a professional who knows what they’re doing.
3. Invest in yourself and your professional skills
Rather than investing in someone else’s wealth (by buying shares), why not invest in your own skills and abilities so you can create your own?
This could involve teaching yourself how to code, or learning how to harness the power of social media, or anything else that is relevant to your career and your interests.
This is the best long-term investment anyone can make. Sure, it’s not a quick fix and won’t give you those fast returns that you desire, but it will help you get that promotion or that new job, or start that new business that will put you on track to achieving financial success.
4. Keep track of your finances
This one is pretty obvious. Keeping track of your finances helps you identify what you’re spending too much money on.
You don’t have to pay for any fancy budgeting software to do this. All you need is to do is open up an excel spreadsheet and start typing.
5. Browse jobs even when you have one
Even if you already have a stable job, you should always be keeping an eye out for any opportunities that may arise by spending 10-15 minutes every day browsing job search sites. The two sites I would recommend are www.seek.com.au and au.indeed.com.
Cool story- when I got this job I was not looking for a new job, but was procrastinating by scrolling through job search results. After seeing this job opportunity and realising it was the perfect fit for me I decided to apply and was hired the following week!
With less than 12 days until Christmas, spending for food, gifts and decorations is in full swing! Here are 12 ways according to ASIC’s Money Smart guide that you can save money for Christmas. This could be a great way to save money for your next home loan deposit.
1. List EVERYTHING.
Start by listing everything you want to buy, including presents, supplies for Christmas Day, and any travel costs. This will help you plan your budget, and prioritise spending for the most important costs. If you are worried about saving money, just do a little extra planning. You don’t have to be stingy with money, you deserve a guilt-free Christmas!
2. Find Christmas Bargains
Christmas bargains are everywhere! Look at your catalogues in the mailbox and check your emails for online offers. ASIC advises that “some stores match or beat competitors' deals”, so compare and contrast their offers, and have all the details with you when you go in their stores.
3. Be thorough with Online Shopping
Online shopping can be a great way to save money. Look for discount/coupon codes and consider shopping days when companies offer free shipping. Make sure you do your research first. Look at customer reviews of items purchased from websites, speak to friends who have used the website, and check the terms and conditions. According to ASIC, “If you are travelling at Christmas, shop around online to get the best deal on flights and travel insurance". Try to book early to avoid paying a premium for last minute bookings or peak season increases.”
4. Pay for Gifts with Rewards Points
Those rewards points you’ve been accumulating all year is another way you can save money on spending for Christmas.
5. Social Networks for Christmas Deals
Look at your social networks, check what discounted offers are available from your favourite brands. Facebook, Instagram, LinkedIn, Twitter, even YouTube. There are many discount and deal applications that you can download to find bargains on things for your Christmas list. Always check the terms and conditions to make sure you know what you are getting and make sure the website is legit.
6. Christmas gift hacks
Here are some creative tips from ASIC to save money on Christmas gifts:
7. Use time to your advantage.
Here are some tips from ASIC to use your time effectively in Christmas shopping and avoid unnecessary spending on expensive items:
8. Track your spending
Always track your spending to make sure it stays within your budget. Remember, a little careful planning is all you need to be good with your money and avoid being stingy.
9. Give to those less fortunate
The Christmas spirit can be spread by giving to those less fortunate. Besides donating money, you can donate household items, such as clothes and perishable goods. Time can be another great donation at homeless shelters.
Donating blood is another valuable way of helping others during Christmas. The holiday season is when blood banks need the most donations.
10. Earn some cash and make someone else’s day!
Look around your home and see what you can sell to someone who would love your old stuff. It could be furniture, clothes, jewellery or old books. Also check out second-hand sale websites, and local buy-swap-sells in your area.
11. Lighten the Christmas Day Load
Get help with the load by asking others to bring or make something. And don't go overboard on food for Christmas - it's just oned day, after all.
12. Prepare for next Christmas
You can make sure your next Christmas is just as enjoyable and cost-effective. You can start saving now, shop the sales and use Layby for expensive gifts you want to give next Christmas.
But remember – Christmas is a time to make wonderful memories. You deserve a guilt-free, enjoyable time to celebrate with friends and family.
We hope ASIC’s 12 money tips help you save money on Christmas.
With all that money saved, call Australian Capital Home Loans in 2017 to look at getting your next home loan.
1300 797 338
Australian Securities and Investments Commission (ASIC). (2016) 12 Money Tips for Christmas. Posted Decemeber 5th. Retrieved from https://www.moneysmart.gov.au/tools-and-resources/news/12-money-tips-for-christmas
Deloitte has produced new research indicating the reasons why customers appeal to brokers. A survey was conducted on more than 1000 borrowers who took out a home loan in the last two years.
(474 broker customers, 543 direct to lender customers).
Here were some of the key takeaways from Deloitte’s analysis.
(1) Broker customers tend to be more satisfied with their experience than direct to lender customers.
(2) Relationships were important to both broker and direct to lender customers
(3) Brokers customers valued support, lender customers valued price
Brokers Customers Lender Customers
19% valued support 7% valued support
18% valued best price 29% valued best price
(4) Brokers rated as more likely to be acting ‘in the best interest’ of customers
(5) Customers have high loyalty to their channel of choice
Brokers Customers Lender Customers
73% would stay with same broker 65% would stay with same lender
12% would use different broker 20% would use different lender
As the research shows, customers are seemingly most satisfied with the service of brokers.
Speak to your mortgage broker today to see what more you can achieve. If you don’t have a mortgage broker, call Australian Capital Home Loans now on 1300 797 338.
Author: Hannah Wadley
Deloitte. (2016) “Customer Experiences of Using Mortgage Brokers – Market Research Report prepared for the Mortgage & Finance Association of Australia”. Published October 2016. https://www2.deloitte.com/content/dam/Deloitte/au/Documents/financial-services/deloitte-au-fs-home-loan-preferences-041116.pdf
Millennials understand the difficulty they will face in buying their first house the longer they leave it. Industry research shows that 50.8% of investors were 34 years of age or younger in 2016, showing a 17% increase from 2013.
Here are some amazing success stories of millennial Australians in the property market.
1. Nathan Birch, 30 years old, 200 properties
(Sourced: The Daily Telegraph, 2016)
Nathan Birch (30 years old) is one of the most successful young property investors in Australia. With a property portfolio of $50 million, Nathan earns a turnover of $3.5 million in gross rental income per year and a net profit of around $500 000. Nathan never went to university. He started his career as a ‘gofer’ in a real estate office, placing ‘For Sale’ signs outside properties. He quotes his strategy as, “I buy below market value in lower-priced suburbs and the rent has to be enough to cover my mortgage costs”. Read the rest of this story here…
2. Emily Sharp and Luke Rogers – Mid 20s, 22 properties
(Sourced: The Daily Telegraph, 2015)
Emily Sharp (26years) and Luke (25years) purchased 22 properties with no financial support from friends or family. Emily was working as a marketing graduate, and Luke was serving in the Army. Read more about their amazing story here…
3. Andrew Morello - 29yrs with 9 properties
(Sourced: News.com.au, 2016)
Andrew Morello is another young successful Australian who tapped into the property market early. At 18 years old, Andrew saved up for a $50 000 deposit from after-school jobs. He bought his first apartment in Melbourne for $300 000, and received no financial help from his parents. Since the age of 14 years old, Andrew has worked in his dad’s service station, run an under 18s events company, worked in real estate and auctioneering, and became a reality TV star on The Apprentice. Throughout his career, he continued to purchase investment properties. Now at 29 years old, he is the proud owner of nine properties. Read his story here…
4. Stephanie Brennan - 25yrs, 6 properties
(Sourced: Daily Telegraph, 2015)
In 2015, the Daily Telegraph interviewed Stephanie Brennan, who owned six properties worth more than $2.3 million at age 24 years old. Three on Sydney’s Northern Beaches and two in Queensland. Stephanie received no financial assistance from her parents and dropped out of university - yet she plans to retire at the age of 30. At 14 years old she worked at Pizza Hut. At 20 years old she worked as a policy advisor to politician Bronwyn Bishop. At 22 years old, she worked as a real estate agent. And now at 25 years old, her career and saving habits have landed her in a position most millennials would dream of living. Read this rest of her story here….
Property investments can have amazing results based on the right advice. This is why Australian Capital Home Loans is consistently ranked in the top 10 Mortgage Management companies in the nation.
To start making lifestyle changes for yourself with property investments and home loans, give us a call today! 1300 797 338
What is the ideal investment strategy?
This is an important question about investment strategy. Investing in property is best as a long-term investment strategy. At Nationalcorp, we recommend a minimum of five years, and preferably seven to 10, to be a suitable timeframe.
Buying an investment property involves substantial upfront, ongoing expenses, and exit costs. In order to make a profit, the value of an investment property needs to grow by more than the value of these costs, as well as the after-tax costs associated with holding onto the property.
How long do I need to hold an investment property?
The best long-term investment strategies really require time for the investment property to increase in value. Time is also important if you are targeting capital growth from your property investment. With investment properties, you may need to endure occasional years of low or even negative growth throughout the course of your investment.
Beware of the small, but loud minority of people, in the real estate industry spruiking ‘Get Rich Quick’ schemes and claiming they can make you an overnight millionaire. This is simply not realistic. What is realistic is the ability to achieve long-term financial security by making well-researched, and carefully considered, property investment decisions. Ask us how to build a property portfolio, and find research advice on our website.
Be prepared for the ups and the downs as you build a property portfolio. If you achieve strong growth in a short period of time, consider the growth a bonus, but always keep your long-term investment strategy in mind.
How to build a property portfolio?
There may be other factors influencing how long you invest for – including your tax situation, and your age until retirement.
In addition, you may wish to explore an investment strategy through your self-managed super fund (SMSF). A professional adviser can assist with advice in regards to these considerations.
Call us for more information on investment properties.
It’s one of the most frequently asked questions of home buyers; how much deposit do I need? Well, the truth is that nowadays there are many ways to finance your home. Even if you only have a small deposit, it can be enough to get you on the path to owning your own home. The majority of lenders will provide a maximum of 95% of the value of the property including LMI (Lenders Mortgage Insurance). But there is a small handful of banks that do 95% plus fully capitalized LMI, where the LMI is added on top of the loan, allowing you to borrow more than 95% of the purchase price.
What is LMI?
LMI is a compulsory insurance for borrowings of over 80% of the property value. This protects the lender, in case the borrower defaults on payments, or worst-case scenario the bank needs to repossess the property. This insurance enables mortgagees to lend high percentages of the property value, whilst only requiring a small deposit.
LMI Included and Added
While most lenders offer 95% of the purchase price including LMI, only a handful can do 95% plus LMI, which reduces your deposit even further. To show the difference between 95% including LMI and 95% plus LMI, here is an example of a property sale with the same figures and costs, but using the two different LMI options.
95% including LMI
- maximum lend: $368,000
+ stamp duty (QLD) $ 6,292*
+ average set up fees $ 1,000
95% plus LMI
- maximum lend: $380,000
+ stamp duty (QLD) $ 6,292*
+ average set up fees $ 1,000
* This figure is discounted for first home buyers depending on the state
As shown above, there is a significant difference ($12,000 in this example) between deposits, when LMI is included or added. So the deposit that you require to complete the purchase may be lower than you expected! Additionally, with first home buyer grants from the government of up to $15,000 in Queensland for new or constructed properties, owning your own home may not be as difficult as you had imagined.
ACHL offers both 95% including LMI and 95% plus LMI products to our clients, as just one of the many financing options we can provide for your home loan. If you would like to enquire or find out your borrowing capacity and how much deposit you need, call 1300 797338 today!
Suburbs across the eight states and territories have experienced significant quarterly growth, with six locations recording growth in excess of 30 per cent – but how much does this really tell us?
According to the figures, released by CoreLogic RP Data, NSW dominated the list of fastest-growing suburbs, with four suburbs recording quarterly house price growth of over 30 per cent.
Beechwood, a suburb west of Port Macquarie, experienced the most growth over the quarter, recording 32.84 per cent growth based on a median house price of $428,750.
This was followed by Wallacia, with 31.58 per cent growth ($775,000), Valentine with 30.68 per cent ($600,000), and Coolongolook with 30.61 per cent ($320,000).
Two other states are home to suburbs that recorded quarterly growth over 30 per cent, with Largs Bay in South Australia recording 30.91 per cent growth ($517,500) and Victoria’s Burnley experiencing 30.66 per cent growth ($957,500).
Across the rest of the country, the top suburbs for quarterly growth in each of the states and territories were Curtin, ACT (24.4), Beaudesert, Queensland (24.2), Forrestfield, WA (21.16), Cressy, Tasmania (20.83) and Parap, NT (18.54).
With almost half of the 11 fastest-growing suburbs based in regional areas, Jo Vadillo, buyers advocate and principal of Advocate Property Services, said that while property data like this is a good indication of growth in areas, it isn’t the only information investors should be looking at.
“I would always look to the ABS [Australian Bureau of Statistics] in terms of what the growth looks like for younger age brackets and demographics, for long-term growth reasons,” she said.
“My biggest concern [with a regional town] is if it’s having its glory days now, what’s going to happen in five years, 10 years, 15 years?
“Some of those regional areas might have had a burst of activity in the 80s and 90s, but then it reaches the university age bracket and they all skip town and go to the city where there could be more jobs and more money circulating.”
Ms Vadillo says it is also important to look at whether any roads are planned.
“Is there going to be a bypass, and therefore is the industry going to fall off?
“If the road systems improve or if there are plans in the next 10 years to improve the road systems, does this mean that it effectively becomes a ghost town?
“For me, I’d be looking at all those factors to make a judgement on investing in a regional area.”
Originally Sourced from: http://www.whichinvestmentproperty.com.au/
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This information is general in nature and may not be relevant to your individual circumstances. You should refrain from doing anything in reliance on this information without first obtaining suitable professional advice.