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With competition for
properties is an all-time high, it's good to have an edge
over other prospective buyers. You can gain this simply
by getting your mortgage pre-approved. In this issue we
discuss some of the steps to arranging pre-approval as
well finding good real estate agents - while there's plenty
out there a few tips will help you find one that best
suits your circumstances.
While on the subject of property, we also consider the
necessary insurances to keep your home protected and take
a look at a new option for older Australians to unlock
the equity in their homes: reverse mortgages.
Your feedback on my newsletter is important; if you have
any comments or suggestions - or would just like to discuss
any of these articles - please feel free to get in touch.
Sincerely,
Capital West.
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Reverse mortgages:
making your equity work for you
If you fall into the category of 'asset rich, cash poor',
then a reverse mortgage may be the answer to help you
tap into your locked-away wealth. But beware the fine
print. |
With the rise in property
prices over the last decade, it's become more popular
to put home equity to use rather than leave it sitting
idle. This has contributed to the growth in reverse mortgage
products, which allows people to unlock the value in their
home by borrowing against its value.
While reverse mortgages are still relatively new to the
Australian mortgage market, they've become a more popular
product among mainstream lenders.
How they
work
A reverse mortgage basically allows you to borrow against
the value of your home. You'll receive either a lump sum
or a regular monthly payment. Your obligation to repay
the loan kicks in when one of the following happens: you
die, sell your home or leave it (to go into aged care,
for example). Then, you or your estate has to repay the
debt (including interest), usually out of the sale proceeds
of your home.
Who's eligible?
If you're 60 or over and own your own home, you should
be able to borrow between 15 and 40 per cent of its value.
If you're part of a couple, how much you can 
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borrow will depend on the
age of the younger of you. The older you are, the more
you'll be able to borrow.
The pros and cons
Reverse mortgages can be great for retirees who have a
limited income but have seen the value of their homes
skyrocket. It's also a good way to free up money for urgent
expenses or otherwise unaffordable purchases - whether
a new holiday, an operation or home improvements.
Bear in mind, however, that a reverse mortgage is still
a mortgage - i.e. a loan. You'll be paying fees and interests
over the loan term. That means the longer you have the
loan, the larger your debt at the end. According to consumer
website www.choice.com.au, at current interest rates it's
likely the amount owed on an average reverse mortgage
will double in less than 10 years. There's also the risk
of falling into 'negative equity': where your loan amount
ends up being more than what your home is worth. You also
need to be careful if you're on a pension, as the loan
may be treated as an asset.
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Capital West Mortgage Group
P/L
ACN: 125 798 852
ABN: 76 125 798 852 |
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| Tel: |
| 1300 765 234 |
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| Fax: |
| (03) 8621 0080 |
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| Email: |
| info@capitalwest.com.au |
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| Web: |
| www.capitalwest.com.au |
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| Postal Address: |
Suite 604 / 103 Oxford St.
Collingwood
VIC 3066 |
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Making your real estate
agent work for you
Choosing the right agent can make the difference to your
buying - or selling experience |
Your home is one of your most precious assets. So when
it comes to buying or selling, it pays to have an expert
representing your interests so you know you've got the
best deal possible.
Seek out a professional
We've all heard stories of unscrupulous real estate agents.
But if you take the time to find a professional, there
are lots of advantages to using an agent.
If you're selling your home, the right agent will be able
to give you sound advice on how best to do it (by auction
or privately), how to present your home for inspection
and will help you negotiate the best price. They'll also
be able to screen potential buyers and use their agency's
resources to help market the property. If you're buying,
a savvy real estate agent will go the extra mile to help
you with your property search.
As a first step to finding one right |
for you, put together a list of possible agents. Check
out the real estate pages in your local paper for agents
who advertise their services. Also look out for listing
agents' details on 'for sale' signs in your area.
Word of mouth is also a good way to choose an agent. Have
any of your friends or family members bought property
recently? Ask them about their experience with the agent
they used. If it was positive, get the agent's details.
Your mortgage broker should also be able to guide you
in the right direction in your particular geographic area.
Ask questions
To separate the serious agents from the fly-by-nighters,
you need to ask the right questions. These might include:
- how experienced they are and their track record
- how well they know the area in which you are selling
or propose to buy in
- what criteria they use to arrive at a selling or
buying price for a property
- how they plan to market the property (if you're
selling) and keep you informed of offers
You might also consider asking them for contact
details of people they've recently represented.
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Remember though that an agent with a good
track record may still not be the right 'fit' for you.
First and foremost, choose someone whom you feel comfortable
dealing with.
Closing the deal
Once you've settled on an agent, make sure you get an
agreement in writing that clearly sets out the agent's
obligations as well as all fees and costs associated with
their representation. To fulfil your side of the bargain,
make sure you give the agent as much information as possible
to help them match you to a property - or buyer.
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| Getting
on top of credit card debt |
Plastic
can be fantastic - but not if you're continually in the
red.
Australians love their credit cards. As at November last
year, Australians owed around $33.2 billion on credit
and charge cards, more than five times what they owed
a decade ago according to Reserve Bank statistics. While
credit cards can come in handy, it's easy to let the debt
spiral out of control. But there are ways to avoid the
debt trap.
Tips and tricks for cutting credit card debt;
- Pay off more than the minimum: If you can't
pay off the entire amount each month, pay the maximum
you can.
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- Spread the debt: If you owe a large amount
on your card, think about spreading the debt between
a number of low rate or no fee cards. That way, you'll
also be able to take advantage of any interest free
or 'honeymoon' periods. Visit www.infochoice.com.au
for a comparison of cards, including interest rates
and features.
- Link your card to your mortgage: You'll be
paying off the debt at a much lower rate
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- of
interest. Offset accounts, where you put all your
salary into your mortgage and live off your credit
card, may save you money in the long run.
- Roll over the debt: Think about consolidating
your credit debt via a personal loan. Don't just look
at what banks have to offer. Building societies and
other non-bank lenders can also offer competitive
rates.
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Smart insurance
Insurance is a must-have for protecting your most valuable
assets. It can also be expensive. Here are a few tips
to insuring wisely. |
If you drive a car, are paying off a mortgage or take
holidays, chances are you hold an insurance policy of
some sort. Most of us need insurance in our everyday lives
to deal with a multitude of situations. There are policies
to cover a range of events, from income protection when
you're unable to earn a living due to illness or an accident,
to health insurance to cover your expenses when you have
to go to hospital for an operation.
There are around 5,000 registered
Tips for
insuring well |
- Work out how much insurance you need
- Take out multiple policies
- Pay your insurance annually
- Know what you're insured for
- Start early to take advantage of concessions
- Take advantage of extras
- Consider using a licensed broker or agent
Source:
www.seia.com.au |
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insurance products in the Australian market. With so many
forms of insurance available, how do you choose what's
best without breaking the bank? There are a number of
ways to help make the choice easier.
What
do you need to insure?
Think about how you live and what your needs are. If you
only insure for what you really need, you'll save money.
You might also want to consider factoring insurance into
your purchases. As a general rule, if you can't afford
to insure an item, you shouldn't buy it.
Multiply
your policies.
Your insurer might offer discounts on your policies if
you choose to insure a number of different items with
them, for example your car, home and contents or life
insurance. Having multiple policies with one provider
will also save time in the event you need to make multiple
claims.
Start early.
The younger you are when you take out insurance, the more
you'll save in the long-term. As you get older, premiums
go up. Many health insurance providers require you to
pay an extra premium if you join them after you turn 30,
for example. If you've started early, you may be able
to benefit from premiums or discounts available to long-term
policy-holders.
Pay more, annually.
Paying your premium annually |
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rather than in monthly instalments
may save you thousands. Increasing your excess (the amount
of money you pay to make a claim) will also reduce your
premium. It means you'll pay more for each claim, but
you'll save in the long run. Also remember to take advantage
of the many extras that policies offer to get the most
out of your premium.
Read the policy.
Make sure you read the fine print. Know what your obligations
are and when the insurer will pay out on a claim.
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maximize
your tax deductions
A good accountant will help maximize your tax deductions. Here
are three sure-fire ways to find one right for you:
Find a specialist - each and every profession can claim
a variety of deductions from The Australian Tax office (ATO);
it's just a matter of knowing which ones. Your accountant should
be familiar with your profession or industry and what you're
able to claim outside the standard deductions that are applicable
to all workers.
Good communicator - the size
of your tax return will be affected by your capacity to understand
where you can claim deductions and keeping track of your |
expenses. For a lot of us
financial terms and phrases can confuse; but a good accountant
should be able to communicate to you accounting principles and
terms in simple, plan language. They should also be proactive;
if you're having trouble understanding, let them know...
Trust - as soon as you sign the required forms to
submit your tax return to the Government all liability will
be born by you. That means that if any deduction is questioned,
and found to be inappropriate, you'll need to take responsibility
- which means the possibility of incurring a fee, or worse.
Just ensure that you feel confident your accountant is pushing
the boundaries to get you the maximum return possible while
completing your form within the guidelines stipulated by the
ATO, not outside.
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Pre-approval packs a punch
Getting your home loan pre-approved lets you put your
money where your mouth is |
With competition for properties at an all-time high, it's
good to have an edge over prospective buyers. Whether
you're looking to buy a rural retreat, your first home
or an investment property, pre-approved loans can give
you that edge.
Most banks and mortgage brokers recommend that first homebuyers
get pre-approval or 'pre-qualify' for a loan. Why? If
you're buying your first home, it's good to be able to
make an offer knowing you've got the money behind you.
It also shows real estate agents - and vendors - that
you're serious about doing a deal, which can help in negotiations.
If you're an investor, having a pre-approved loan not
only means knowing your top price, it also gives you bargaining
power. It also means that you can act quickly once you've
seen a property you like.
Who offers it?
Most banks and lending institutions. It costs nothing
to arrange and your mortgage broker can help you secure
it. Some lenders offer on-the-spot pre-approval that can
last up to two months. The period of approval will vary
from lender to lender however. So work with your broker
to explore which lenders and products best suit your situation
before you settle on a property.
How it works.
The lender will look at how much you earn and your credit
history in assessing your ability to repay the loan. On
that basis, they'll decide how much they're prepared to
pre-approve. Again, work with your broker to explore all
your options.
How it's provided.
Usually via a letter or certificate verifying that your
finance has been approved and for a certain length of
time. You can show the letter or certificate to a real
estate agent or vendor as evidence that a lender is prepared
to loan you a certain amount.
How much will
you qualify for?
That will depend on your financial circumstances and the
lender's criteria. Your broker will help you to work out
roughly how much you can borrow based on your salary and
your existing financial commitments.
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Three reasons to get pre-approved
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Gives you certainty and bargaining power |
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Agents and vendors will take your offer seriously |
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No cost to apply |
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Disclaimer. This newsletter does not necessarily reflect the opinion
of the publisher. It is intended to provide general news and information
only.
While every care has been taken to ensure the accuracy of the information
it contains, neither the publishers, authors nor their employees,
can be held liable for any inaccuracies, errors or omission. Copyright
is reserved throughout. No part of this publication can be reproduced
or
reprinted without the express permission of the publisher. Readers
are advised to contact their financial adviser, broker or accountant
before
making any investment decisions and should not rely on this newsletter
as a substitute for professional advice.
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