How will these Super changes affect you?
Did you hear about the recent policy changes that could affect your retirement (no matter how far that is away!)?
From new Stamp Duty policies to new superannuation policies, these could mean changes to your current and future property investment decisions.
We want to make sure you know what these changes, the opportunities created as well as avoiding the risks involved.
Here are the facts:
Retirees are now given incentives to downsize
Australians aged over 65 who sell their home which they have owned for over a decade will be able to put up to $300,000 in sale proceeds into their superannuation.
This incentive to downsize will help free up larger homes for families to move into and offer the sea change lifestyle they might be looking for.
Investors won’t be able to claim travel deductions
Investors who previously has travel expense tax deductions related to their investment property will no longer be able to make these claims, even if travelling to collect rent, maintain or inspect a premises, they will not be allowed as tax deductions.
New Superannuation “transition to retirement” rules have been implemented and there is no longer a compulsory retirement age. Access to your super depends of your super preservation age between 55 and 60 and the age pension age has been increased from 65 to 67.
There are also new contribution caps introduced such as the concessional Contribution Cap is universal $25,000 for all. Non-concessional contribution cap is now $100,000pm (was $180,000pa) as well as the Introduction of Balance transfer Cap at $1.6million per person
New Home Buyers Super Saver
The new super saver scheme will allow first-time home buyers to put up to $15,000 a year, to a maximum of $30,000 into their superannuation.
These funds can later be withdrawn for a home deposit, including any earnings the deposits have made.
This means a tax incentive to save more, and can be taken advantage of as a couple with each claiming $30,000.
For more information of changes please visit your local government’s website.
The easy ways to conserve energy in your home
Saving on energy is certainly a trending topic and more than ever consumers are needing new ways to save. The good news is you don’t have to overhaul your home to make it more energy efficient. There are many simple things that you can do with a small amount of money to save energy at home.
Here’s our 5 top ways to get you started:
1) Full Loads
Only run your washing machine, dryer or dishwasher when they are full and use energy saving settings where you can. By not using heat setting on your dishwasher and washing machine you can save as much as 20% on your electricity bill
2) Turn off when not in use
Did you know that 75 percent of the electricity used to power home electronics is consumed while the products are turned off? And 6% of our nation’s energy consumption is from these unused appliances? (according to a Berkeley University report 2015). Unplug appliances and electronics when not in use to instantly save energy, or for a simpler way, plug your appliances into a power strip that way you only have one power source to remember to turn off.
3) Energy efficient appliances
If you’re in need of some upgrades, especially when it comes to every day appliances such as toasters, kettles and other low cost items switch to energy efficient ones. Same goes for refrigerators and washing machines. Most new appliances come with an energy star rating and can use up to 50% less energy than your old appliance.
If purchasing a new home or renovating, when choosing your toilet, appliances, showerheads, and tap mixers, look for fittings that have a high WELS rating. A 3-star rated showerhead only uses around 6-7 litres of water per minute, while regular showerheads can use up to 25 litres per minute. The money you save on electricity (and water) will make up for the cost of your new appliance!
4) You don’t live in a lighthouse
An oldie but a goodie… remember to turn lights off in unoccupied rooms, something we tell our kids! When replacing bulbs, use energy-saving fluorescent lights for areas of the home that need constant lighting. Fluorescent lights are often brighter than regular lights so you save energy. Using these type of bulbs will save about $30 over its lifetime and pay for itself in about 6 months. It uses 75 percent less energy and lasts about 10 times longer than an incandescent bulb.
If purchasing or renovating a home, go green by installing large windows to bring in natural sunlight and save even more!
5) Keeping cool (or hot)
When the hot weather arrives people usually either open their windows and doors for relief, or those who close up in the early morning to protect against the heat.
If your home is well insulated closing up will save on air-conditioning and energy costs. If it’s poorly insulated it will be better to open up. Either way, you’re best opening up some windows and doors to let your home cool down naturally overnight.
Simply by circulating air, freestanding or ceiling fans can make a huge difference to your comfort and your energy bills in hot weather.
There are many conserving resource websites out there when it comes to designing or renovating your home as well. Making a few small changes to the way you use energy could make a difference to your next energy bill. What could you do differently to conserve energy and save money?
So your home loan has been rejected. What now?
With recent changes to lending requirements and banks sharpening their pencil in regards to the amount of investment and consumer loans their allowing, it’s now becoming harder than ever before to achieve finance.
If you’ve been rejected for a home loan don’t panic! Different lenders have different criteria for mortgages, and one rejection doesn’t mean that you won’t be able to buy a home.
Here are some simple yet effective steps that can assist you getting back on track and achieving a successful outcome on your next application.
1. Ask why you were rejected
Your lender should be able to tell you the reason/s why you were rejected, which will give you the opportunity to change and fix things before your next application. It could be something simple that you missed!
2. Review your options
Create a plan before applying again. Research different home loan lenders – the more you know, the more informed you’ll be to make the best decision on who to partner with to get approved.
3. Check your credit profile
Sometimes lenders decline because of your credit history. You will need to solve any outstanding issues with your credit file before applying again. If you do have late payment, missed bills get your finances in check and have reasons to explain your financial history to your next lender. For the future, ensure you pay bills on time and develop a regular savings plan. The more reliable you are financially, the better you will appear to future lenders.
4. Review other debts
If the reason you were declined was credit card or other debts, look at consolidating or clearing your debt before undertaking any new loans. Reducing your credit limits or even cancelling cards can go a long way in the eyes of your future lender.
5. Don’t give up
Only those who give up fail!
Always try again, there are plenty of lender options out there. There’s bound to be one that matches your budget and needs however you may need to change your expectations in terms of what you can realistically afford in repayments and what you can borrow.
If you are rejected for a loan the key is not to panic. Loan rejection isn’t uncommon and it certainly doesn’t mean you will never be able to secure finance. Provided you show you’re a reliable financial customer with a good credit history and a sound savings strategy, you shouldn’t have too many difficulties obtaining finance.
6. Appoint a broker
I still believe that finance brokers are the best option currently for securing finance. A good broker’s knowledge about the mortgage landscape, current stipulations with different lenders and suitability to your personal circumstances can prove invaluable when trying to access funds. Please as you continue to build your portfolio the broker becomes an advisor on your journey aware of your personal lending history, needs and ultimate goals.
It can be confusing what type of mortgage to get. It’s not only important to check the right rates for you but make sure you’re getting the right features in your home loan.
At CPG our brokers work for you and help whether it’s a simple rate comparison or a full financial health check – talk to one of our brokers today
Moving house can be the answer to streamlining your finances
Moving house is an exciting (and stressful time) but did you know it is also a great time to make financial changes too?
For the start of 2016 when a lot of us are moving house, let’s look at some easy ways you can kickstart your finances using your house move…
1. Use this time to get organised
Take this opportunity to set up your bill pay systems. Create a dedicated shelf, section, or whatever works for you in your office to sort all your bills and receipts. Something as simple as files can keep your financials organised.
2. Go paperless
Reduce the paperwork in your life and get your bills sent electronically instead of by post? Instead of updating your new address, ask to be sent your bills via email. This way it’s great to avoid late fees as it’s sent straight to your inbox.
3. Supplier review
Moving house is the opportune time to review your utility suppliers. It’s easy to find rates and quotes for your gas, internet and other suppliers to make sure you are getting the best deal possible for your needs.
4. Bundle your Insurances
Just like your utility suppliers, reviewing your insurance needs such as home and contents and even bundling your insurance with one supplier can offer better rates, less contracts and saving money.
After the move is a good time to set up automatic payments/direct debits of your new bills so you’ll know exactly when money will be deducted from your accounts. It makes it easier to budget too!
Most of us don’t need multiple savings, checking and separate accounts. Especially if moving in with a partner/spouse now is a great time to review your accounts and look at removing or combining some saving on fees and being able to keep track of your money easier.
Making the most of your big move by organising your finances will give you one less thing to worry about in 2016. Let this new start in a new home inspire you to get on top of your finances and take control for a great fresh start.
Prepare the way financially before starting a family
Becoming a parent can be an exciting journey. It can also be an expensive one so it’s important to prepare for the new addition in your life.
Here’s some tips to expect financially when you’re expecting:
The upfront costs
Before having a child, it pays to be organised and be prepared for the upfront costs. These may include:
- Baby clothes and equipment
- Upgrades at home—you may need to make baby friendly changes, paint and decorate the baby’s room.
- Doctor’s bills and hospital expenses.
Saving for these well in advance will assist greatly especially if one parent will be taking time off work or a reduction in income.
The ongoing costs
Many parenting blogs out there say new parents underestimate the ongoing costs of raising a child/children.
According to the AMP.NATSEM survey, a first child can cost on average $281 per week. Food, clothes, child care, education, hobbies and a range of other costs can continue growing and impacting your household budgets.
Just like upfront costs, planning ahead and even considering school fees now will only help set you up for success down the track
Taking the time now before baby comes to get your budget in order and creating a long term savings plan will help you in your new role as parents.
When planning to balance your household income and expenses, factor in your household income before and after the baby’s born (taking into account any loss of income) and consider:
- Essential living costs such as loan repayments, mortgage/rent and other regular ongoing expenses.
- The upfront and ongoing costs mentioned above
- Paid parental leave you or your partner may receive from your employer/s
- Any government contributions you may be entitled to.
- Day care and other care expenses.
Your Savings Plan
With a budget in place, you’ll begin to understand the costs you’ll need to be prepared for. Sticking to this budget will be easier if you set up a baby savings plan and automatically save money for these upcoming expenses.
The earlier you start saving the better, even if you’re not starting a family just yet, you can still put a savings plan in place today.
Starting a family is a major life event, so it’s important to seek help in managing your finances if you need to. Getting professional advice ensures you can make the most of any money you earn before the baby’s born and avoid financial stress at a time that can be one of life’s most special events.
What does it really cost to buy your first home?
Buying your first home is an exciting step in your property journey, but it can be a daunting one.
According to financial home loan surveys, four out of five future first homebuyers don’t feel well informed about the property purchase process.
One of the main concerned to get informed about is the costs, it’s not just the property you need to pay for.
On top of your deposit, here are 8 costs every first home buyer needs to be informed of:
1. Home loan application fees
When you get a home loan, it’s likely you will have to pay an application or loan establishment fee. The cost of this fee varies on the lender you go with and can be as much as $1,000.
2. Lenders Mortgage Insurance (LMI)
Lenders Mortgage Insurance (LMI) insures your lender against any loss incurred if you default on your home loan and is needed on all home loans when you borrow 80 per cent or more of the property value.
3. Stamp duty
Stamp Duty is a state government tax .It’s usually the largest cost and is based on the purchase price of the property and paid prior to the settlement. As a first home buyer, you could be entitled to stamp duty concessions, but these vary from state to state.
4. Mortgage registration fee
As a first home buyer, you will need to pay an admin charge by the Land Titles Office. This fee is charged for registering the mortgage on to the certificate of title for the property. The fee differs depending on your state from $85 to $125 per registration.
5. Legal or settlement fees
Your solicitor or settlement agent will charge you a fee to carry out the legal work on the property transaction. Be sure to ask about the costs of searches, settlements and disbursements which could be extra.
6. Pest / building inspections
You will be advised to arrange pest and building inspections by qualified inspectors before exchanging contracts. These inspections will ensure the property is not affected by insect infestations and it is structurally sound and is building regulation compliant.
It is usually a condition of the loan settlement that your lender will require all security properties are covered under a building insurance policy.
8. Other costs
There are some other ‘hidden’ costs that you should be aware of when purchasing your first property including:
- Moving costs
- Home and contents insurance
- Council rates and strata fees
Before buying, it’s wise to work these additional costs into your budget, so you know what to expect and know how much you can spend on your first home.
Is it your time to become a first home buyer?
Our wealth creation and finance specialists will sit down and go through each step of the process in a simple and easy to understand manner presenting you with options.
Why People Struggle in Retirement?
Recent research has found that 95% of working Australians are not financially prepared for a comfortable retirement and a significate number continue to delay planning for life after work. There is usually a gap in what they envisage for their retirement and what the reality is.
Around 87% will be dependent on welfare so if the pension age is increased to 70, many of us will need to consider working longer to have an income and build more retirement savings.
Think you’re too young to start worrying about retirement? Decisions you make now regarding life style and financial choices will make your retirement what you want down the track.
Whether it consists of golf club memberships, living in your dream home or luxury holidays, here’s our top tips to ensure you’re retirement ready:
Think about retirement when you think about saving
It really does pay to start thinking about your retirement when you save today.
Although in Australia if you’re employed a percentage of your income is paid to prepare for this, it’s not always enough for your future needs. The more of your income you set aside for retirement, the easier it’ll be to retire comfortably. By saving early you can ensure your retirement benefits from the value of compound interest.
Have a plan
When it comes to retirement most people don’t have a plan or retirement strategy. The success of this plan is the cumulative effect of the small steps and decisions you make each day.
By evaluating this plan, you may need to adjust your lifestyle choices of today to make it a realistic one. Living a champagne lifestyle today may get you a beer budget come retirement.
What age will you retire?
Do you know how many years your retirement savings need to provide enough income for? These days it can be safe to assume that many of us will live to the age of 90 or beyond.
With many of us wanting to retire in our 60’s, there is usually a big difference in the age people say they want to retire to when they actually do.
Insurance is important
Taking out insurance to protect your retirement plan is an important part of your strategy.. There are many types of insurance that should be considered include life insurance, health insurance and long-term care and can make the difference between a comfortable retirement or financial stress and worry.
The exciting part of getting ready for retirement
When transitioning from work life to retirement, we work less and play more. It’s more than just money we’ll need, but the reality is all retirement dreams need money — to a degree. Thinking about things like relationships, health and a life that engages your interest and fulfils you can help you save more.
Once your financial goals are in place and your retirement plan filled with motivating interests, you’re find yourself one step closer to a comfortable retirement in all areas!
Want to retire earlier? Do you know how much you need?
If you need assistance is creating a retirement plan and strategy, contact one of our wealth creation specialists today. They can help you create what you really want; a financially secure future, a retirement to look forward to and to enjoy life’s luxuries along the way.
Start your plan now
Going from home owner to Property Investor
If you are currently a home owner getting ready to take the leap toward your first investment property, there a number of important differences you will face when stepping from home buyer to property investor. Property investing can be a completely different ballgame with different rules, lending and requirements.
Here are some important factors to consider when jumping from your PPOR into an investment property for the first time.
1) The right loan
Property investment loans come in many different shapes, sizes and options, such as interest-only repayments, principal and interest etc.
Interest only are generally the most popular with investment lending. This means your repayments are for the interest portion of your loan only, and not the principal or the purchase price. This allows you to maximise your cash flow and are tax deductible, whilst not paying down the original debt.
2) Your deposit
Again your deposit requirements vary greatly depending on location, risk rating, rental return and valuers comments. With their recent changes to investment lending nationwide you will generally need a 10% deposit in most locations.
This amount will vary depending on the cost of the property and the terms of the loan. If you don’t have enough for a cash deposit, you may consider using equity from your home as security for your loan.
3) Using Equity
if you’ve owned your home for 5+years, there’s a chance you have potential usable equity, and this is a valuable resource when it comes to property investment.
As an investor you can generally access up to 80% of your home equity (without the need to take out Lender Mortgage Insurance).
Alternatively some lenders will lend up to 95% of the property value less the existing mortgage, where LMI would be paid on the amount borrowed over 80%.
4) Other Options
funding from family members has become a popular option, such as a parent or a sibling who guarantees your loan. They must have enough cash or equity to cover the minimum deposit requirements of the purchase price of the investment property. Having assistance can make it easier and quicker for you to get started in property investment.
There are many other things to consider when deciding if buying a second property is right for you such as cash flow, estimate rental income and allowing for a safety buffer, which I will cover in my next blog.
If you are able to answer what deposit you need to buy an investment property and know how you will fund it, you can start exploring the different loan and repayment options.
We have registered brokers available to have your questions answered with a free no obligation financial health check. Click here to find out more.
Investing tips for the self employed
Running your own business or being self-employed is becoming more and more popular with investors and entrepreneurs alike. I often hear the common misconception that being self-employed can be a barrier to owning property. However this is not always the case, even though there are usually extra hoops to jump through with the banks, with a bit of forward planning you can successfully secure home and investment loans.
Here are my top tips for maximising your ability to invest.
1. Supplying full financials
You need to be organised and up to date with tax returns as most lenders require the past two years worth of tax returns. This will show lenders a consistency of income. Banks want to see that the business has been maintaining a level of income that is suitable to meet their minimum servicing requirements for the loan.
By being able to provide these tax returns, means that you could potentially borrow up to 95 per cent of the property’s value. It gives the self employed person the best possible chance of having a loan application approved
2. Supplying your business activity statements (BAS)
Some lenders allow self employed applicants to apply for a home loan by providing 12 months of BAS statements.
A disadvantage of applying for a loan using your BAS statements is that you may only be able to borrow a maximum of 80 per cent of the property’s value.
3. Build up a savings history
By having a solid savings history of at least 6 months it can work in your favour for applying successfully for a property loan. By showing you can regularly save you increase your chances of passing the banks strict loan serviceability criteria.
4. Consult a home loan expert/accountant
Prior to applying for a home loan consult an investment property specialist mortgage broker – http://www.crawfordinternational.com.au/professional-services This way you’ll have a clear idea of how much you can borrow and from which lender/s, before you even begin the process.
With their help you can establish what taxable income level you need to apply for the requested loan to confirm your borrowing power and eligibility for finance.
Keeping good records is important for self-employed people looking to buy property, so when the investment opportunity comes, you are ready to capitalise on it.
Financial resolutions worth making in 2015
It’s a new year and many of us are making resolutions – again. Here at CPG we have just celebrated our 6 year anniversary and every year we see the top 3 financial resolutions our clients make include saving more, spending less and reducing debt.
Many resolutions seem to get broken throughout the year but it is logical that those who set out with goals to improve their finances at the start of the year will realise more of their goals by the end and will generally be better off financially.
Here are our top resolutions to make and keep for 2015:
1) Track spending and make a budget
It might sound obvious but checking the status of your savings and evaluating your monthly expenses is key to managing your cash flow and creating a budget that you can actually stick to.
If you are spending more than you make then how can you reach your financial goals? Make sure you include a fixed amount for discretionary expenses – a budget is only as a good as how well you can stick to it.
2) Open a savings account and close accounts you don’t need
Just like tax is taken out of your wages (if you’re an employee), pay yourself first in a separate savings account. If it’s not there – you can’t spent it and these types of savings accounts usually offer better interest rates as well.
And while you’re opening a new savings account, it’s the perfect time to close accounts you don’t need and save money on bank fees and charges – those few $ every month can add up to hundreds quickly.
3) Create a pay down debt strategy
If you have a lot of bad debt, you will probably save more by paying this down first than investing. Start with high interest loans first and pay more than the minimum payments. I have seen many clients become debt free very quickly using this strategy.
If you want to learn something new -research, read and source experts in that area. For example if you want to cook you read cookbooks and attend cooking classes. If financial resolutions are a priority for you this year commit to perhaps reading a financial book or attending an investment seminar once a month.
Applying yourself on a consistent basis to learn more is essential to creating wealth.
(note: I will be doing a blog on my top ten property, investing and mindset books very soon!)
No matter what your financial goal, whether paying down debt or saving for retirement – making a financial commitment will help you reach your goals quicker. The key to sticking to your resolutions is to Take Action, track your progress and check it often.