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Hannah was living with her boyfriend of several years, Sam, and they had been saving to buy a home together in the near future. She had a small amount of money in her personal bank account, but most of her savings were in the joint bank account that they had opened together.

One day Hannah came home to find that Sam had suddenly moved out. His clothes were all gone, and he had taken the television and the computer. There was no warning, although in hindsight she recalled a few small things that she failed to notice. Hannah was left alone with the rent to pay, unsure of what had happened. It turned out that Sam had a gambling addiction, and it wasn’t until a couple of days later that Hannah discovered he had emptied their joint account.

Rather than giving up hope on her dream of buying a home, Hannah took her disappointment in stride and got to work. The lease was nearly up on the unit anyway, so she declined the offer to renew.

A friend had mentioned housesitting as a method of living cheaply, and Hannah saw this as an opportunity to start saving again. Over the next two years, she looked after six houses – all very luxurious homes in great locations near the city, and she saved as much of her wage as possible.

Within two years, Hannah had saved $50k, which was enough for a deposit and stamp duties on a small unit. Although it was a bit of a downgrade from the luxury that housesitting had provided, she was absolutely thrilled to have finally reached her goal of owning a property – and without help from anyone else.

This story is a reminder of how you really can recover from any setback if you’re dedicated enough. Things go wrong, and people lose money all the time, but if you think outside of the square you will find a way to improve your situation in no time.

I hope my one-page Step by Step Guide to Buying a Home has some tips that may help when buying your next home.

https://www.mortgageaustralia.com.au/email/files/astepbystepguidetobuyingahome.pdf

You searched the web for properties that fit your criteria, and one in particular caught your attention. The photographs paint a lovely picture, and the agent swears that this one is something special. But before you get to the open house, be sure to take a moment and remember that you have a job to do…

1. Ignore the trimmings

It’s easy to be romanced by the lovely scented candles, flat screen television or pricey bedspread, but the reality is – you’re not shopping at a department store. This is an important purchase, and when the designer furniture is removed from the house you don’t want any surprises. Make an effort to look past the decorations and really notice the layout, condition, features and drawbacks.

2. Look up, and all around

Take a good look at the ceilings and walls – water damage and leaks can be costly to fix, but the good news is that usually they are difficult to hide as well. Try to use all of your senses and be on the lookout for smells and sounds that might indicate a problem with the property.

3. Check out the neighbours

Your grandparents would probably tell you to buy the ‘worst house on the best street’. There’s a lot to be said for location, and part of the formula is to be surrounded by neighbours who maintain or improve their properties.

Try introducing yourself to the neighbours and see what you find. If the elderly lady next door says “I’m glad they decided to sell that house – we need new fences and they won’t pay up” you might like to leave some room in your budget!

4. What’s most expensive to fix

If the kitchen and the bathroom are a lovely shade of brown and you would like to renovate as soon as possible, make sure you can afford it. These are usually the most expensive rooms to improve, and you need to know what you’re in for. If in doubt, ask a tradesman to inspect the property with you before you make an offer.

5. Ask lots of questions

It pays to ask plenty of questions – a great one is ‘why are they selling?’ If you have twins on the way, and the agent says ‘they want to have another baby’, you might like to consider whether the property is big enough for you.

It’s also a great idea to ask how much the current owners are paying for their utilities. Some houses, by design, tend to generate very large heating and cooling bills, so these are all important considerations.

6. If in doubt – organise a building and pest inspection

Unless you really know what you’re looking at, it always pays to arrange a building and pest inspection. This can be added as a condition when you make an offer on the property. If the vendor is not willing to allow an inspection, you might like to run screaming down the street before making a very costly mistake.

It’s happened to most of us at some point – a few untimely expenses pop up, and suddenly that credit card has a life of its own.

The good news? There is hope. You can get control of your credit card debt today with a few simple steps.

Stop the bleeding

It might sound obvious, but the first step to cutting down your credit card debt is to stop growing it. If you have any direct debits connected to the card, make other arrangements for these to come out of a bank account. Then, use whatever means necessary to destroy the card so that you can stop accruing debt.

Pay more than the bare minimum

If you only pay the minimum amount each month, you’ll see many birthdays waiting for your credit card debt to decrease. In most cases, you will only be paying the interest on the debt without reducing what you owe. It’s time to sit down and make a budget, and look for ways to pay as much as possible off your credit card each month.

Work out your priorities

If you have debts on more than one credit card, your instinct might be to pay the largest amount off as a priority. Alternatively, try focussing on the card with the highest interest rate. It’s also worth knocking over your smaller cards first (and then cancelling them) so that you can concentrate on one monthly repayment.

Try a balance transfer

Many lenders offer great introductory rates on new credit cards. Some even offer rates of 0% for the first 6 or 12 months. This presents a great opportunity to work on getting your balance down, without being charged interest.

Beware though – it’s important to investigate what your interest rate will be after the introductory period. It’s also vital that you do pay as much as possible off the balance. If you don’t reduce your debt, and if the standard interest rate is higher than what you had before – you will only do further damage.

Save for a rainy day

Many of us get into trouble with credit cards because we don’t have adequate savings when something unexpected comes up. While you work hard at reducing that credit card debt, try to put a little bit in savings each month and build up a buffer. That way if you suddenly need a new set of tyres or a hot water service, you won’t undo all of your good work by whacking it on the credit card.

Put your hand up

If you can’t seem to get control of your finances and you feel like the situation is getting worse every day, it might be time to ask for some help. There are experienced financial counsellors and legal representatives who can help you to make a plan and get back on top of things again.

1) What’s the difference between an investment loan and an ordinary home loan?

Most of the same types of home loans and loan features apply for investors as for owner occupiers. Some lenders may charge higher rates for investment properties if the associated risks are higher.

2) Can I use equity in my home as a deposit for an investment property?

Many an investor has started out by utilising the equity of their own home. Banks will usually accept equity in a home (or other property) as additional collateral against which they are prepared to lend.

This means you could potentially borrow the full purchase price of the property, as well as all costs (stamp duty and other fees) without having to contribute any cash. The risk in using your home as collateral is that if you can’t fund the mortgage for the investment property, the investment property and your home are at risk.

When we meet, we can go through the options you have available.

3) What is negative gearing?

This is when the cost of owning a property is higher than the income it produces. If the rent you get for an investment property is less than the interest repayments, strata fees, maintenance and other costs, your investment is negatively geared, or making a loss.

This loss can be offset against your income, reducing your income tax bill.

4) How much money can I borrow?

We’re all unique when it comes to our finances and borrowing needs. Get an estimate on how much you could borrow with our fast and clever loan options tool. Or contact us and we can help with calculations based on your circumstances.

5) How do I choose the loan that’s right for me?

Our guides to loan types and features will help you learn about the main options available. There are hundreds of different home loans available, we can recommend the right loan(s) for you.

6) How much do I need for a deposit?

Usually between 5% – 10% of the value of a property, which you pay when signing a Contract of Sale. Talk to us to discuss your best options for a deposit.

You may be able to use the equity in your existing home or an investment property.

7) How much will regular repayments be?

Go to our Repayment Calculator on our website for an estimate. Because there so many different loan products, some with lower introductory rates, contact us for all the deals currently available and the right loan set-up for you.

8) How often do I make home loan repayments – weekly, fortnightly or monthly?

Most lenders offer flexible repayment options to suit your pay cycle. Aim for weekly or fortnightly repayments, instead of monthly, as you will make more payments in a year, which will shave dollars and time off your loan.

9) What fees/costs should I budget for?

There are a number of fees involved when buying a property. To avoid any surprises, the list below sets out all of the usual costs:

– Stamp Duty – This is the big one. All other costs are relatively small by comparison. Stamp duty rates vary between state and territory governments and also depend on the value of the property you buy. You may also have to pay stamp duty on the mortgage itself. To find out your total Stamp Duty charge, visit our Stamp Duty Calculator.
?- Legal/conveyancing fees – Generally around $1,000 – $1500, these fees cover all the legal rigour around your property purchase, including title searches.
– Building inspection – This should be carried out by a qualified expert, such as a structural engineer, before you purchase the property. Your Contract of Sale should be subject to the building inspection, so if there are any structural problems you have the option to withdraw from the purchase without any significant financial penalties. A building inspection and report can cost up to $1,000, depending on the size of the property. Your conveyancer will usually arrange this inspection, and you will usually pay for it as part of their total invoice at settlement (in addition to the conveyancing fees).
– Pest inspection – Also to be carried out before purchase to ensure the property is free of problems, such as white ants. Your Contract of Sale should be subject to the pest inspection, so if any unwanted crawlies are found you may have the option to withdraw from the purchase without any significant financial penalties. Allow up to $500 depending on the size of the property. Your real estate agent or conveyancer may arrange this inspection, and you will usually pay for it as part of their total invoice at settlement (in addition to the conveyancing fees).
– Lender costs – Most lenders charge establishment fees to help cover the costs of their own valuation as well as administration fees. We will let you know what your lender charges but allow about $600 to $800.
– Mortgage Insurance costs – If you borrow more than 80% of the purchase price of the property, you’ll also need to pay Lender Mortgage Insurance. You may also choose to take out Mortgage Protection Insurance. If you buy a strata title, regular strata fees are payable.
– Ongoing costs – You will need to include council and water rates along with regular loan repayments. It is important to also take out building insurance and contents insurance. Your lender will probably require a minimum sum insured for the building to cover the loan, but make sure you actually take out enough building insurance to cover what it would cost if you had to rebuild. Likewise, make sure you have enough contents cover should you need to replace everything if the worst happens.

10) What is landlord’s insurance?

Landlord’s insurance provides standard building and contents cover plus cover for theft or malicious damage to the property by tenants and covers loss of rent in certain circumstances.

It also covers the owner’s liability (e.g. if a tradesperson is injured while working in the property). Landlord’s insurance is an affordable extra safeguard and strongly recommended for all investors.

You’ve made the decision to purchase an investment property, and you’re ready to tackle your new role of ‘landlord’ with diligence and enthusiasm. So it would make sense to buy the property first, then hire an agent, decide on the rent and interview tenants – right?

No, actually. If you want to attract the ideal tenant, it’s quite the opposite.

1. Purchase the investment property with your ideal tenant in mind

Before you purchase your investment property, it pays to think about who your ideal tenant is. Are they a professional couple, a family, or someone in their older years? Once you have a firm idea of who you would like to rent to, you can start to put yourself in the tenant’s shoes and think about what the property should offer.

If your ideal tenant is a professional person, look for properties with good access to transport, an easy commute to the nearest CBD.

If you prefer a young family, then schools, kindergartens, shopping centres and sporting facilities will be on the menu.

2. Presentation pays off

The best tenants are not likely to be impressed by a mouldy smell coming from the wardrobe, or a bright yellow toilet seat from 1970. Try to make some inexpensive improvements if you can, and present the property as a clean and comfortable home. Ensure that everything is in good working order, and try to keep colours neutral.

3. Price for the market, don’t increase the rent too much

Research other properties for rent in the area, and price your rent accordingly. Once you do manage to find that dream tenant – don’t increase the rent too often, or too much. This will only encourage tenants to look elsewhere. A $10 per week rise might seem like a good idea in the long term, but if your property sits empty for months between tenants that will represent a far greater loss.

4. Screen agents and tenants carefully

Before you sign up with a real estate agency or property manager, find out about their track record and the way they like to do things. How do they handle complaints about the property, or tenants who default on the rent? How often will they carry out inspections?

Make sure they have a rigorous process in place for screening tenants, and make your wishes clear from the beginning.

5. Invest in landlord’s insurance

If all else fails, landlord’s insurance can really save the day. Make sure you invest in a good insurance policy that covers you for any damage by tenants, unpaid rent or liability claims.

With household costs on the rise, many mortgagees are struggling to balance their budgets. It’s not surprising more Australians are skipping mortgage payments to help make ends meet.

However, missing loan repayments could land you in a bigger hole. Not only will you be up for late fees – ranging from a manageable $9 to a stinging $195 per overdue payment – but you could be adding thousands of dollars of extra interest to your debt.

At worst, a string of missed mortgage payments could see the bank recalling your loan, forcing a fire sale of your home. Even a couple of missed payments could put a red flag on your credit history, which is going to cramp future borrowings.

One of the best ways to reduce the risk of mortgage stress is to give yourself a buffer on your budget. In Australia, it’s recommended borrowers’ mortgage repayments make up no more than 30% of household income. The problem is many home owners borrow to the edge of the threshold when interest rates are low – as they are now – leaving no room for inevitable rate rises and other increased living costs.

Instead, budget for mortgage repayments at a 9% interest rate, a long-term average that accounts for peaks and troughs over the long run. When rates are low, stick the extra funds into your mortgage. You will not only save on interest but will have established a safety net, which you can draw on if needed when rates run high.

If you are already feeling the pinch and struggling to make payments, talk to a Mortgage Broker sooner rather than later. A Mortgage Broker can help negotiate with the lender on your behalf and can look into other loan options to ease the squeeze.

Do you buy your movie tickets before you leave the house? Do you like to book a table at a restaurant to make sure you don’t miss out?

There is a certain comfort in knowing what’s going to happen, especially when it comes to planning your financial future.

If you worry about the ups and downs of the official cash rate, and the possibility of your home loan repayments increasing without warning, a fixed rate loan could be your new best friend.

Fixed interest rates are a kind of insurance policy that protect you against the financial pressure caused by interest rate movements. Depending on your personal situation, you might struggle to meet your repayments if interest rates were to rapidly increase. If you opt for a variable interest rate, you have no control over fluctuations in the market.

Ideally, you should have allowed for a few rate rises when deciding how much to borrow. But if you stretched your limit in order to buy your dream property, then fixing your interest rate is a great safety net.

Fixed rate loans allow you to be sure about your exact repayment figures for a fixed period of time. This is great for borrowers on a tight budget – because you never have to worry about interest rate fluctuations during the fixed period.

The purpose of a fixed rate loan is not to save you money on interest. Generally, these loans will cost you more in interest. Fixed rates are usually higher than variable rates, so the only way this approach will save you money, is if there is a rapid fluctuation in interest rates, and the standard variable rate climbs significantly above your fixed rate.

A fixed rate could cost you money if interest rates fall. You will be locked into a higher rate when other people are enjoying a reprieve. You need to decide if you’re happy to take this risk and fix your rate for a period of time.

The biggest risk of going fixed is the penalties that you will incur if you need to get out of the loan. Many lenders charge enormous discharge fees for borrowers leaving during the fixed interest rate period. It’s also very difficult to change your loan during the fixed period, and generally you can’t make any lump sum repayments.

If you have a variable rate loan, it’s a great idea to regularly review your needs every few months. You might decide that the time is right to fix your rate, depending on your circumstances, and the fixed interest rates on offer.

Beware of sitting on the fence. Many lenders promote the concept of 50/50 fixed and variable rate loans. Some borrowers see this as a risk-free alternative to choosing either fixed or variable rates. Keep in mind – if you choose to fix part of your loan and leave the other part variable, you will still be locked in because of the fixed portion of the loan.