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September 2013

 

Welcome to our September newsletter


After last month’s cash rate cut, the Reserve Bank of Australia (RBA) has erred on the side of caution and left rates untouched at 2.5 per cent, as buying becomes more affordable than renting in many areas across Australia.

At the September 3 meeting, the RBA judged that it was prudent to leave the cash rate on hold.

'The easing in monetary policy since late 2011 has supported interest-sensitive spending and asset values, and further effects can be expected over time, including from the declines in rates seen over recent months,' RBA governor Glenn Stevens said.

'The Australian dollar has depreciated by around 15 per cent since early April, although it remains at a high level. It is possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy.'

The RBA has slashed official rates by 2.25 per cent to a record low of 2.5 per cent since the cutting cycle began in November 2011, knocking an estimated $450 off the monthly repayments on the average $300,000 mortgage.

Meanwhile, housing affordability continued to improve in the June 2013 quarter, according to the Housing Industry Association (HIA).

The HIA-Commonwealth Bank Housing Affordability Index increased by 4.4 per cent in the June 2013 quarter, to a level of 72.8.

HIA chief economist Dr Harley Dale said housing affordability is now 16.7 per cent higher than in mid-2012.

'The considerable reduction in interest rates in recent months is more than offsetting recent dwelling price increases,' said Dr Dale.

In the June 2013 quarter, the HIA-CBA Housing Affordability Index increased in all seven capital cities reported. The strongest quarterly increase occurred in Brisbane, with a rise of 10.4 per cent, followed by Hobart (10.0 per cent), Adelaide (7.7 per cent), Canberra and Perth (4.1 per cent), Sydney (3.3 per cent), and Melbourne (2.2 per cent).

These findings support the view that it could be cheaper to buy than to rent in many areas around Australia. It could be worthwhile for renters to consider their rent payments and if they could be better off spending money repaying a mortgage instead. Plus, first home buyers may be eligible for grants towards buying a new home, particularly a home to be constructed, supporting the case to buy rather than to rent.

With lower mortgage rates and tight rental markets resulting in some rental increases and lower home values, it may now be a good time to either re-enter the market or purchase your first home.

If you would like to discuss your mortgage options with us, or you are interested in a financial health check, give us a call today!

Sincerely, the Team at Great Aussie Dream

 
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Caught in the spring hype


With spring well on its way, both sellers and buyers will be out in force. For buyers, spring can be the perfect time to secure your dream property. But before jumping into anything, it is important to prepare yourself for the financial and emotional responsibility of property ownership.

Whether it’s your first time or you’re a seasoned buyer, purchasing a property is probably the biggest financial decision you will ever make. To ensure you end up with the property of your dreams, consider the following factors when making your next purchase.

Budget
Nobody likes to hear the word budget, but it is the single most important factor when purchasing a property.

Before you even start looking at open houses or planning your move, sit down and work out a budget. Be realistic with your expectations and leave a buffer in case the unexpected happens.

Once you have worked out your budget, look for properties that fit the guidelines and be prepared to walk away if the price is going to put a strain on your finances. Even the most extravagant house isn’t worth it if you are eating baked beans and sitting on the floor to pay off the mortgage.

Caught in the hype
Once you have set a budget, it's time to do your research and start looking for that perfect property. Spring is usually the busiest time for open houses and auctions and therefore it is easy to get caught up in the hype of it all and be influenced by other buyers.

Make a list of all things you are looking for in your new property, and keep a tally of how properties stack up against each other. Don’t be afraid to visit a number of open houses, even if you feel the property may not be right for you – getting an idea of the market you are interested in and the type of property you are looking at is beneficial for when the time comes to negotiate price.

Hidden costs
You’ve stuck to your budget and found the perfect property. However, before you go popping the champagne, there are still a number of items to check off your list.

Before signing any contracts, it is important to have a thorough building and pest inspection completed to ensure the building is structurally sound and to make sure there will be no nasty surprises when you move in.

You will also need to consider additional expenses that may need to be paid up front, including stamp duty and lender’s mortgage insurance (LMI), removalist hire and cleaning fees for the property you are leaving.

Spring is the perfect time to hit the streets and see what is available in the property market. But before you go, make sure you have a plan in place and know exactly what you are looking for.

If you would like to find out what loans are available this spring, have a chat with us today!

 
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When not to DIY


While cleaning our own cars or mowing our own lawns can save us a bit of money, when it comes to property investment, sometimes it’s just worth investing in a professional to do the job for you.

Everyone thinks about saving money, but when we reach a crossroads with the option of doing it ourselves or getting professional help, we find ourselves weighing up the options.

You can get help for just about everything when it comes to property investment. From a buyer's agent to buy the property for you, a property manager to run it and a selling agent to sell it, all the way to a painter and a plumber who are on hand to fix things up.

While this may seem easier, the cheaper alternative is to manage these tasks yourself. However, there is an increased amount of risk with the DIY option, especially when it comes to the following tasks.

Property management
Many first-time investors consider self-managing a property. However, there are a number of laws and regulations in place to protect both landlord and tenant which you may not be aware of – and accidentally breaking any of these laws could end up costing you thousands of dollars.

Self-managing your property can also become an emotional challenge when dealing directly with a tenant. You form a friendship with this person, get to know them and then it can become difficult to remain professional, especially when issues such as rental arrears or damages arise.

DIY renovations
DIY renovations are definitely in vogue, with every commercial television station hosting at least one reality series on the practice.

But despite appearances, DIY renovations aren't always all they cracked up to be.

One big consideration is time. If you are looking to undertake a major renovation, you may end up working weekends and weeknights. You're exhausted after a full day at work and the last thing you want to do is pick up a sander and a hammer and gut a room.

A renovation is almost like a full-time job on top of work commitments, a family and your own hobbies, and it is important to consider whether the loss of lifestyle and quality time is worth the dollar savings.

When it comes to actually undertaking a renovation, small cosmetic touch-ups are doable for the everyday renovator. However, if you are considering taking on a major renovation, it may be wise to consult a professional because if you end up causing more damage than you began with, it is going to cost you more in the long run.

Tax
Finally, when financing a renovation, tax is one task that needs to be reviewed by a professional, as there are many laws and feasible deductions that change on a yearly basis. To ensure you make the most of your property investment, it is important to make all the deductions available – and a professional can go a long way to helping you achieve this.

With that said, if you are looking to save some money, organising your expenses into a speadsheet and ensuring you bring all the required documents when you visit your accountant can save you thousands in accountancy fees.

To discuss your renovation finance options, please contact us at the details below.

 
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Is a line of credit right for you?


Most of us have heard the term ‘line of credit’ before. It sounds promising, but what is it and how can we use it to boost our investment potential?

A 'line of credit' (LOC) is a product that allows you to borrow up to a certain percentage of your property value. It is also known as an 'equity line loan'.

Using the equity you have already built in your property, you will be able to achieve a loan structure that will provide access to a certain amount of 'extra' funds to assist with any number of investment expenses.

The benefits
The beauty of a LOC is that you only pay interest on the amount you use. For example, while you may have a $200,000 line of credit, if you've only used $50,000, you will not pay interest on the remaining $150,000.

A LOC is extremely helpful for investors who may require additional funds to help maintain their investment property, while also providing a safety net should you need significant funds to draw from at short notice.

Some examples of the types of situations where you might use a LOC include as a deposit for a new investment property, or when renovations need to be made to a current property.

This is a great option for anyone who owns their home or has a mortgage on their home and wants to take that first step into property investment, but may not have enough cash for a deposit.

The disadvantages
While this feature can be useful for a number of investors, if you are not ready to take a disciplined approach to money management, you may want to look at other options.

Investors need to be disciplined enough to use their LOC for investment purposes only in order to avoid confusion over tax deductibility. If your expenditure is not carefully regulated, you could find yourself in a difficult situation with the Australian Taxation Office (ATO) at tax time.

A LOC can also involve more expensive rates than standard borrowing. It is important to remember that this debt needs to be paid back and the interest capitalises on a daily basis. Unless you're regularly paying it back and are incredibly disciplined, you could find yourself in trouble.

To find out if a 'line of credit' is the best option for you, get in touch. We're here to help.

 
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Wine review

2011 Xanadu Stevens Road Margaret River Chardonnay

Created from hand-picked fruit and fermented with wild yeast, this first-class chardonnay is really something special and well worth the price. Only the best barrels were selected for the final blend put together in November 2011, producing an excellent wine that cellars well.

Xanadu Stevens Road Margaret River Chardonnay is clear and light, despite the power and intensity of the pure hand-picked fruit and its lemon and grapefruit flavours running through the length of the palate. You can also taste some beautiful, but very discreet, oak overtones.

An extraordinary Chardonnay showing fine Margaret River quality. Superb!



Rating : 4.5 stars
RRP : $65

 

App review

Tap Mortgage Australia – Mortgage, Loan & Stamp Duty Calculator

We got some great feedback on our MoneySmart app last month, so here’s another stellar option for Apple – the Tap Mortgage Australia app.

This little app helps you make fast calculations so you can easily determine your loan repayments and savings on any extra repayments you may make. Perfect for anyone looking to get into the Australian property market, it calculates government costs across all states and territories including stamp duty, transfer fees, registration of Mortgage, investment or land, first home concessions and more.

Recently updated to include some great new features including a cool range of easy to read graphs, this app is certainly handy for those quick calculations and estimates to get you started on your home loan research. For more detailed information about loan options, contact us on the details below.



RRP : FREE
Available on :  iPhone, iPod touch and iPad. Requires iOS 4.3 or later

 
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Contact us

 
 

 

 

 

 

 

Great Aussie Dream

T 1300 72 68 48
F 02 4733 4115
E info@gad.com.au

www.greataussiedream.com.au

Australian Credit Licence Number: 387787 | ABN: 84129326352

 

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