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When I speak to clients I am often surprised at how much their lives have changed since we last spoke.

Some have married or unmarried, had children, changed jobs, bought a car, got carried away with their credit cards or even changed their financial goals all together!

Sometimes real life gets in the way of our best laid plans and juggling the family finances becomes a challenge.

If your life has changed, it is definitely worth spending a little time for a financial check up. It doesn’t cost anything for me to take a look at your situation and see if there is any way I can help you get set for the next set of changes in your life.

Don’t worry about wasting my time if you don’t need a new loan. My job is to give you ongoing guidance on the lending options which are right for you and your future.

We might not need to change anything at all. However, the banks change their loan offerings constantly and it can be hard to keep track of whether you are in the best loan or could be getting a better deal elsewhere.

Satisfy your curiosity and give yourself some peace of mind.

Give me a call today.

Or if you prefer, you could even just fill out this form and fax or email it to me and then I’ll get back to you with some ideas.

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

Looking forward to catching up with you soon.

One of the keys to success in the property market is TIMING.

So how do you know when the time is right to step up on the property ladder?

For the answer, download our guide to “Taking Advantage of a Buyer’s Market”.

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

Maybe your kids are getting older now and it’s time to find a place with a big backyard.

Most new home owners will make the decision to upgrade before long – but for many young families, a lack of planning can spell disaster when upsizing the family home. Before you start shopping around for a real estate agent, take a few minutes to ask yourself a few simple questions.

Why do you want to move?

Be clear about your reasons for upgrading. Buying an enormous home won’t necessarily mean greater capital growth in the future. Sometimes the greatest growth is in the lower end of the market. If you want to upgrade simply to grow your property portfolio, consider purchasing an investment property instead.

Where do you want to be?

If you’re upgrading to give everyone some space, consider the area that you want to live in. You might be able to afford a much bigger home by moving an extra 15 minutes from the city. It all depends what sort of lifestyle you want to maintain.

What are the real costs?

Investigate all of the costs associated with upsizing your home. That means, not just the additional mortgage payments, but increased utility bills, perhaps a longer commute to work, more furniture to fill the additional space etc. It’s important to know exactly how much the move will cost you – not just the initial purchase.

What about interest rates?

Could you afford to borrow an extra $150,000 if the interest rates were 2% higher? Make sure you take into account some interest rate rises when you work out what you can afford to borrow. Although a lender might offer you the funds, that doesn’t mean that they know everything about your lifestyle and budget.

Will I change my lender?

You might take the opportunity to shop around for a better deal on a loan before you purchase your new property. It’s important to keep in mind though, there could be charges associated with paying out your current mortgage, and there will probably be some establishment fees involved in taking out a new loan. These fees should be part of your decision-making process.

It’s also important to ask your mortgage broker about Lenders Mortgage Insurance. LMI is generally payable when you borrow more than 80% of the purchase price. Depending on your purchase amount, LMI could add up to several thousand.

Did you answer all of the above questions, and still want to upgrade your home? Great! There’s nothing wrong with wanting to move on to greener pastures. But to avoid putting yourself under financial strain, it’s always important to do your homework.

Australian home owners scored a win on July 1 2011 when lenders were banned from charging exit fees on home loans, making it more enticing for borrowers to shop around for a better deal.

Exit fees were generally charged for the first four or five years of a mortgage to discourage borrowers from switching to a competitor before the lender had made a profit on the loan. Unable to now charge exit fees on variable loans, many lenders are making sure they cover their costs upfront with higher set-up fees.

If you are thinking of switching, you should make sure you get all the facts and compare like with like so what you gain in the short term isn’t lost in the long run. Take into account loan establishment fees, ongoing account fees, the cost of any property valuations required by your new lender and settlement fees when doing your sums on how much you will be saving by switching.

Exit fees also shouldn’t be confused with break fees on fixed rate loans. Lenders can and do still charge a fairly hefty fee if you exit a loan during a fixed term.

Break fees on fixed rate loans are usually based on: the interest rate you locked in, compared to the current market interest rate; the length of time remaining on your fixed-rate term; and your original loan amount. They can run into thousands of dollars, and remain a formidable deterrent to fixed rate customers thinking of a switch.

One of the best ways to get a helicopter view of what it will cost you to switch and what you stand to gain is to talk to your local Mortgage Broker. That way you can be sure if you close the door on your current loan, you are stepping forward financially.

Buying near the city vs buying further out is a common dilemma.

In fact, difficulty making this decision even prevents some people getting into the property market. Of course there is a lot to think about but it is not something you need to lose sleep over.

Perhaps this quick guide can help: https://www.mortgageaustralia.com.au/email/files/shouldwebuyorinvestincityorsuburbs.pdf

We forked out more than $28 billion on refurbishments last financial year, with that figure set to jump further over the next three, according to the Housing Industry Association.

But when it comes to remodelling, money spent does not necessarily translate to money made. Unfortunately, many renovators get caught up with lifestyle choices and lose sight of the need to add value.

Whether you plan to live in, rent out or sell a property, you need to consider it an investment, which means avoiding over-capitalising.

The key is to do your homework on local property values, understand your finance and capability limits and stick to them. Sometimes the latter can be easier said than done, so follow our tips to help avoid turning your property into a money pit.

Consider being an owner-builder

The label is a bit of a misnomer as it implies you will be the one with hammer in hand throughout the job. In reality an owner-builder is essentially a project manager. So the first question you should ask before taking on the task is whether you have time, energy and organisation skills.

If the answer to any of these is ?no? then steer clear and hire a licensed builder to take on the project from start to finish. But if you feel you are up to the challenge, there can be significant savings in being an owner-builder, mainly because you choose the tradespeople and materials and have complete control over the entire project.

You can, of course, still work on the project yourself, adding to your savings. Even if you?re not an expert, you might offer to labour for your chosen bricklayer or plasterer, saving time and money.

The key to being a successful owner-builder is having time to manage the project properly. You will need time to find the right tradies and materials at the right price, co-ordinate who is on site and when, and answer any questions along the way, all of which can be incredibly taxing.

You also need to ensure you have approval from your council and State building authority and relevant insurances in place. A visit to your council is your best starting point for any renovation as they will advise on approval and licensing requirements.

DIY vs expert tradies

You know we are a nation of would-be DIYers when renovation-based reality TV out-rates most other programs.

While it?s tempting to take to the tools to save a few bucks, there are lots of things that can go wrong, which is probably why the TV shows rate so well.

Unless you are extremely skilled and have plenty of time, renovating is an area where only qualified experts should dare to tread. Sure, there are some tasks novices can tackle with care ? pulling up flooring materials, stripping old paintwork, dismantling cabinets and painting ? but most trades require experience, expertise and, above all, safety.

In 2011, a National Injury Surveillance Unit reported more than 25,000 hospital visits due to DIY-related mishaps. At Sydney Hospital?s hand unit alone, they claim to see at least one injury from a power tool every week.

Apart from the risk to life and limb, serious injuries can drain your funds, especially if you need to take extended time off work and have no income protection insurance. You may well find what you aimed to save in the first place is soon lost on household bills, sinking you into unforeseen debt.

Designing with your head not your heart

One of the main reasons we renovate is to improve our lifestyle, which is where many remodels go awry. It might make sense to add an ensuite, which is very likely to add value, but do you need the European bidet and Carrara marble vanity?

The answer lies in the demography of your suburb ? who lives there now and who is likely to be living there in the future.

These are the factors that influence property prices and ultimately determine how much you should spend on your renovation.

Do your homework on recent sales of similar homes in your area, taking into account the number of bedrooms and bathrooms, which are the key influencers of price.

You should also consider water or city views, which tend to push property prices up. You will find property types in your suburb have a price ceiling. Your aim is to ensure your renovation doesn?t push the cost of your property through that ceiling, or else you have over-capitalised.

You also need to remember that property cost does not equal property value, which is determined by how much someone is prepared to pay.

Consider how long you plan to stay

This is a key consideration because time can have a big impact on property prices. If you plan on staying in your renovated home for more than five years you may be able to spend closer to your local property price ceiling than if you were looking for a quick turn-around.

That?s because capital gain over those years could eclipse your renovation costs. However, you will also be paying interest on your home loan over that time and when combined with renovating expenses, you may not be as far in front as you had hoped.

If you have bought a fixer-upper and are looking for a fast turnaround, you will need to be quite clever and restrained with your project.

Focus on elements that will add immediate value (see information below) and avoid unnecessary frills, such as expensive curtains, which may only end up getting replaced by new owners.

Limited cash flow and equity mean many first-time property investors feel the need to chase down a bargain to enter the market. But, like most things in life, you usually get what you pay for, which ? in the case of property ? can mean unrealised returns or even losses.

While there?s nothing wrong with paying less in the hope of making more, investors need to understand when a cheap property is truly a bargain and when they could be selling (or rather buying) themselves short.

Here?s our guide to help investors actually get what they bargain for.

Always ask ?why?:

There?s always a reason a property is selling cheap. Your job is to find out why.

Some reasons are obvious ? the property is on a main road or backs onto a railway line ? but others may be less overt. There could be termite damage, rising damp or shifting foundations, which perhaps only a property inspection will reveal. While not irreparable, these can be big-ticket fixes and probably beyond your reach if you have limited funds.

Other factors may be even more concealed. For example, a very small property with poorly placed sewer pipes that prevent extensions, a new flight path planned for overhead or a property in a high-risk flood zone. These are variables you can?t control and should probably be avoided.

The best way to avoid being sold a lemon is to do your research, not just on the property for sale but on others in the vicinity. What?s the average price for similar properties in the same suburb? And what do they have that yours doesn?t, or vice versa (as in the case of aircraft noise).

That?s not to say all cheap properties have sinister secrets. Some are under-priced because the owners need a quick sale or the property is part of a deceased estate. Keep in mind, though, these sorts of genuine bargains tend to get snapped up quick, so have your suburb research on hand to be in a position to pounce.

What can and can?t be fixed:

Even in the property market there are lemons that can be turned into lemonade. It?s a matter of knowing which lemons are worth squeezing, which means accepting what can and can?t be fixed.

What you can fix:

– Minor noise (with insulation and double glazing).
– Interior design.
– Configuration of rooms (turning a study into a bedroom or vice versa).
– Storage.
– Natural lighting in a house (add a skylight, windows or glass doors).
– Under-cover parking for a house (add a car port).
– Landscaping.

What you can?t fix:

Location.
– Land zoning and covenants (restrictions on height, building type etc).
– Land size.
– Traffic.
– Infrastructure that imposes on your property (e.g. power poles).
– Flight paths.
– Aspect (which way the property faces).
– Natural lighting in a unit (you won?t be allowed to add windows).
– Unit block exterior (although you can try and influence the body corporate).

Just because a negative, such as traffic, is beyond your control, the property may still be worth pursuing at the right price. You just need to accept it may be harder to rent and harder to sell, and will probably take longer than desired to increase in value.

One of the biggest mistakes investors make when they purchase cheap properties with ?unfixables? is to over-capitalise on renovations (see our story in this edition on this very subject).

There can be a temptation to compensate on what can?t be fixed by over-investing in what can. If you decide to invest in a bargain that has some obvious drawbacks, do your homework on which renovations will give you the best return on investment.

Short-term pain, long-term gain:

As with all investments, you need to weigh up your personal finance goals and individual circumstances before settling on a property. For many investors, a bargain buy (even with some of the unfixables) is going to be their best opportunity to gain a foothold in the market.

It?s worth considering, though, whether settling for something cheaper is the best strategy in the longer term.

A slightly more expensive property in a quality suburb with higher growth potential could be worth the extra stretch up front if the capital gain over time far outstrips a bargain buy elsewhere.

Buyers should also be wary of towns or suburbs billed as the ?next big thing?. Where there?s a boom, there can also be a bust. Towns built on the back of mining are key examples of property markets that can lure investors with promises of high rental returns. But if the mine dries up or goes belly up due to external factors, you could be left with a property that is worth much less than what you paid with few prospects of tenants.

The key to taking a longer term view is patience, and ensuring you are in a financial position to stick to your plan, especially if it means holding onto a property for 10 or more years to realise its growth potential.

Get expert advice:

Your broker can help you assess your individual circumstances to determine what you can afford. Everyone?s circumstances are unique so it?s important your first investment takes into account your earnings now and into the future, plus any significant lifestyle changes that might affect your ability to service a loan.

Are you planning to start a family or travel? Do you have kids in private education?

It?s important to weigh up all of these factors when considering your financial future.

“You’re a parent whose grown up kids want to buy their first home. And because you want the best for them, you probably also want to ensure that they get the correct advice before they sign anything.”

A truer word has never been spoken.

…and I think the best start for first home buyers is to talk through their options with someone who has done it before as well as someone who is directly involved with the process every day.

If you are a parent whose children have grown up, you’ve probably bought a home before.

I’m helping people buy their home every day, it’s my job. This means, together, we are well qualified to point your young adults in the right direction when it comes to buying their first home.

So, why don’t we catch up with your kids and discuss their options together. Between us, we should be able to provide helpful advice and motivation along the way.

I provide home loans for just about everyone and every situation so why not try me out? It doesn’t usually take long and the privacy act ensures our conversation is entirely confidential.

A cuppa and a chat.

It could be as simple as that.