Many people think that once their mortgage is in place, there is little that can be done or perhaps it is too risky to make a change. In actual fact, with continued competition in the market, you can always negotiate with your lender or potentially refinance to a better deal as other lenders may offer you better terms. The benefits can be enormous. For instance, if you had a $500,000 mortgage and reduced the interest rate by just one percentage point, over 30 years you could save $100,000 in interest repayments. To put things in perspective, that’s enough for a deposit on your next investment property!

Here are 4 benefits of refinancing your mortgage:

  1. You can obtain a better interest rate and save money $$$

If you purchased your property a number of years ago and locked in a fixed-rate mortgage, then it is highly likely there are far better options available now given the continued changes in interest rates.

Or, if you’re currently on a variable rate, you could consider changing over to a low fixed rate.

Remember ,it is uncommon for your lender to come forward with a better offer for you, however a good broker can often help with identifying a better rate for you and save you interest.

  1. You can gain extra features such as off-set accounts

Many loans now come with extra features such as redraw, offset accounts, split loans or line of credit facilities. If your current loan doesn’t offer these benefits and you see a benefit for you to have them, then changing loans might be a good idea.

An offset account attached to your home loan home loan, can assist to reduce interest on your loans, reduce your costs and help to pay the loan down faster. Often savings years off of your loan term.  Essentially, any funds deposited into this account, such as salary or savings, then offset's the loan balance so you pay less interest – whilst still letting you have easy access to your money. This can be a fantastic strategy to speed up the reduction of your loan

  1. You can access equity to buy new property or renovate your property

Renovating your property is a great way to increase the capital growth on your property.

Depending on your property value and current loan amount, you might be able to use the equity in your home to fund such the renovation. Maybe a new pool for summer? Equity is the difference between the market value of your property and the amount you still owe on the home. So it is worth checking the value of your home to see if you can access equity to undertake renovations.

  1. You can also access equity for a deposit on a new investment property

You can use the equity from your existing property, to use as deposit for a new investment property purchase or complete improvements to your current home. What you need to consider is whether the increase in capital growth on your property through renovations or purchasing another investment property outweighs the amount you owe on your loan, then it might be something to consider.

A better rate, extra features and the ability to access equity for renovations or new purchase deposits are just four of the reasons people look to refinance their home loan. Others refinance their loans to consolidate debts from credit cards, car loans or personal loans.

Regardless of your situation, we suggest clients review their their mortgage and investments on an annual basis. This way you can receive up to date advice and consider all options and fees ensuring you find yourself in a better financial position.

We offer a complimentary appointment, where we can review your mortgage. Please contact Mark on direct mobile 0400 632 420 or mark@lovedayfinancial.com.au to book your appointment

Ever wanted to buy an Investment Property?

Late Bloomers

By the time we save for our first home, upgrade to a bigger or better one, earn enough money to pay the mortgage and bills and live life in between, it’s not surprising many of us don’t contemplate investing in property until we are middle-aged or beyond. But like so many things in life, it’s not too late to become a property investor, especially if you have a stable financial base with equity in your own home and plan on working for at least another 10 years (the average property cycle). In fact, many later investors find they have more funds, time and focus to make wiser choices and reap the rewards.

BE CLEAR ON YOUR GOALS Spend some time working out what you want from your investment, and ultimately your lifestyle in the medium and long-term. Are you looking for income generation in the shorter term or capital growth over time?

Many investors, regardless of age, make the mistake of diving in without a strategy. The challenge for those starting to invest later in life is that there are fewer employment years to support cash flow so understanding your end game and developing a plan becomes more important in order not to waste money, time or opportunities.

It’s also critical to remember your circumstances and the lifestyle you want down the track are unique. Your plan needs to suit your goals, not someone else’s.

YIELD OR CAPITAL GROWTH? While both rental returns (yield) and a property’s potential to increase in value (capital growth) are important, property investment strategies can sometimes lean towards one or the other. Properties with high rental returns are often close to a sustainable supply of itinerant workers or students, such as hospitals or universities. Generally the entry price is lower because there are a lot of similar properties nearby, which creates a more saturated market and, in turn, limits the potential for rapid capital growth. But the lower price point and ongoing supply of employees or students means strong rents.

Investors pursuing capital growth can tend to look for a worst-house-best-street scenario and are prepared to cash in down the track when prices in that area ultimately increase or the investor adds value themselves with a renovation.

Many investors aim to strike a balance between both yield and capital growth by looking for properties that meet basic location fundamentals: close to reliable public transport, proximity to a CBD or other employment hub, and good infrastructure.

DO YOUR NUMBERS The best starting point is a complete financial audit. Review how much you owe on your home and how much it’s worth to work out your equity position, then look at your earnings, how many years you expect to continue working and a rough estimate of your annual living costs. At this stage you may benefit from the advice of a financial planner or mortgage broker who can present a number of options based on your situation. Whether you seek advice or manage solo, your numbers are essential to make the right decisions for your circumstances.

CONSIDER A BUYER’S AGENT Buyer’s agents are licensed professionals that specialise in searching for, evaluating and negotiating on property on your behalf. They are not real estate agents.

A buyer’s agent can take the leg work and emotion out of your investment search, while working to your brief. Most charge either a flat fee or a percentage of the property purchase price, but some may charge a mix of both.

A buyer’s agent can be helpful if you are time poor or unsure where to invest. Many investors use a buyer’s agent for their first one or two properties and then feel confident to go it alone.

PORTFOLIO REACH If you plan to acquire a portfolio of properties, you will probably need to think beyond your neighbourhood. While many investors like being familiar with where they invest, it may be difficult to create diversity if you just stay local – and diversity, as with any investment portfolio, is important if markets shift.

If you do look further afield, do plenty of research and take the time to visit the property yourself, or the development if buying off the plan.

If you would like further information, or would like to discuss how you can buy an investment property, we are happy to help.

Mark Loveday

Direct Mobile: 0400 632 420

Email: mark@lovedayfinancial.com.au

Source: HAVEN Newsletter/Spring 15

Budgeting on the Brink

Australia has again become a nation of savers, according to the Reserve Bank. The GFC, higher living costs and continued uncertainty around interest rates have prompted many of us to pay more off our mortgages or fill our piggy banks. Apparently we are now squirreling away about 10 per cent of our disposable income, our highest savings rate in 20 years. But how are you meant to stash some cash if you're still spending everything or more than you earn? Don't despair. Haven has some tips to help you budget, even when you're broke.

BILLS: This is your starting point. The longer you ignore paying bills, the harder it is to get out of debt and into savings. Prioritise bills by their due dates and set up a schedule to have them debited from your bank account when you get paid. If you're already behind, contact your billers and set up a realistic payment plan, again with the funds debited from your account on pay day. If you have a few big bills that always arrive around the same time, chunk them down by setting up small direct debits for each pay day. By the time the bills are normally due, you will just about have them paid.

SAVINGS: Contrary to the nation's newfound habits, those struggling to get out of debt should forget about saving for now. It may sound like irresponsible advice, but you are actually going backwards financially if you are socking away funds instead of paying down debt on credit cards or non-depreciating assets, such as cars. To get back on an even keel, schedule to have more than the required minimum repayment debited from your bank account each month, and then pay off more again with anything left over from your budget. Essentially, you will be using your ‘savings' to pay down bad debt. Once you have your unhealthy debt under control, you can join all those super savers who are putting away 10 per cent of their disposable income.

GROCERIES: Supermarket aisles can crucify a budget, unless you're equipped with two things: a meal plan and a list. The Australia Institute reckons the average household bins more than $600 of food a year. While most of this comes from our fridges, there are also countless cans, jars and packets of non-perishables sitting idle in pantries. The bottom line: stop buying things you don't need! Make a meal plan for the entire week, including snacks and lunches, and check your fridge and pantry to see what's already on hand. Add to your food list only those items you need for your plan. Stick to the list when you shop and you will save.

SHOP AROUND: It takes time but looking around for better deals can reap big rewards. Start by shopping around on the following household expenses: Home loan Talk to your broker to see if you can get a better rate on your home loan. A 0.5% saving in interest on a $300,000 loan puts $1,500 in your pocket each year, instead of the bank's. Car and home insurance Increased competition around car insurance means savings. If unhappy with your premium, shop around for a better deal. But before you take it, go back to your insurer to ask if they can better it. Chances are they will come to the party. Home insurance is not quite as competitive, thanks to the increased cost of natural disasters, but you can save significantly on your premium by increasing your excess, if you don't mind paying a bit more in the event of a claim. You should also, where possible, take out cover for your car and home insurance with the one company to cash in on multi-policy discounts. Credit card Buy yourself some breathing room by switching your debt to a new credit card that offers 0% rate for the first six months. Use the six months to get ahead of hefty interest repayments and make a real dent in what you owe or, better still, pay it off. The trick here is not to rack up debt again once the honeymoon offer ends.

TECHNOLOGY: Twenty years ago, Australians didn't have bills for the internet, mobile phones and cable TV. New technologies have eaten into our wallets, but there is still plenty of room to save. Switch to a pre-paid deal for your mobile phone and limit data downloads.  Bundle your home phone and internet. Set up free voice-over technology, such as Skype, on your PC to talk to friends and family who are interstate or overseas. Can the cable. You can catch plenty of reruns of Friends on free TV.

FIND TIME: My final tip is to find time to follow through on some or all of the above suggestions. Time spent on getting your finances in order is as good as money in the bank.

source; Haven Newsletter,  Sept 11 - Blackfish

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