14 Jan January 2013 Newsletter
Welcome to our January newsletter
With the New Year upon us, it?s time to reflect on 2012 and think about what we wish to achieve over the coming 12 months.
The New Year is the perfect time to evaluate your past decisions and assess your plans for the future.
Whether you?re looking to build an investment portfolio this year, renovate your existing home, or simply stay on the financial path you paved in 2012, planning is essential.
When creating your mind map for the year ahead you will need to consider a few factors from the year that was.
First off, the cash rate took a tumble in 2012, and this is expected to remain relatively low for the foreseeable future. In December, the Reserve Bank lowered the official cash rate to three per cent ? the fourth reduction for the 2012 period.
With the cash rate now currently standing at record low levels, there are plenty of savings available, with many lenders opting to pass on some, if not all, of the December rate cut to borrowers.
RateCity spokesperson Michelle Hutchinson said that in the two days following the Reserve Bank’s monetary policy announcement, 13 lenders reduced their standard variable interest rates.
It’s unusual to see this many rate cut announcements so soon after a Reserve Bank rate change,? Ms Hutchinson said. ?It shows lenders are working harder to be more competitive with each other, to attract new customers and retain their existing borrowers.”
We received more good news in December, with new research suggesting Australia?s housing affordability woes are on the mend.
According to the Adelaide Bank/REIA Housing Affordability Report the proportion of income required to meet loan repayments fell by 2.6 per cent in the September quarter 2011/2012 to 31.8 per cent.
This could encourage more buyers into the market, Adelaide Bank?s general manager Damien Percy said. ?Median weekly family income has increased from the September quarter in 2011 by around $250 per month,? Mr Percy said.
?The current low interest rate environment is encouraging many people to re-visit and weigh up the ?buy vs rent? equation,? said Mr Percy.
There are certainly many places in Australia where it is now cheaper to make loan repayments instead of paying rent. All things considered, now may be the perfect time to snag an affordable property with a low interest home loan.
Whether you are applying for your first loan or you want to reassess your current rate, the historically low cash rate and strong lender competition has paved the way for some lucrative savings.
On the other hand, if you?re looking to freshen up your existing property this summer, we look at the top five ways to add value to your home without costing you excessive time and money.
To discuss financial aspirations or new home dreams for 2013, please give us a call today.
Sincerely, Nick Foale
New Year checklist
From managing your assets more efficiently to reining in your spending, make 2013 the year of financial well-being
Once the Christmas pudding settles, it is time to consider your financial goals for the year ahead.
Whether you are looking to improve your bookkeeping skills, your property management technique, or reassess your mortgage, we have you covered with our essential checklist.
Effective property management is a skill best learnt with experience, but there are two factors that will help drive the success of your investment:
? Routine inspections ? It is a good idea to conduct an initial inspection three to four months into the tenancy period, and then approximately six months thereafter. If it isn?t monitored regularly, the property can become damaged and you may end up re-signing a tenant who is not taking care of the property. Setting a schedule from the start will ensure you stay on track.
? Tenancy agreements ? Preparing to re-sign a lease should be considered approximately 10 weeks prior to the lease expiring. This gives you the time to re-negotiate rent and advise the current tenant of any rental increases. Planning ahead will also give you plenty of leeway if your tenant decides to move on.
Don?t let your bookkeeping go astray in 2013. Keeping a tidy ledger of financial records and accounts is a lot simpler than you think ? as long as you start off on the right foot:
? Bookkeeping essentials ? It is important to stay up-to-date with your accounts throughout the year. In addition, it?s worth scheduling a quarterly check to ensure you are on track. This is a great way to control your spending, and to reduce some of the stress of tax returns when the time comes.
? Make copies of your loan statements ? After 30 June, keep copies of your loan statements. This will go a long way to creating a simple and smooth tax return, as well as avoiding unwarranted deductions.
Finally, you?d be surprised just how much money you waste over a 12-month period. Whether you?re blowing cash on your daily caffeine fix, or paying excessive rates on your home loan, 2013 should be the year of better financial management:
? Budgeting basics ? Unexpected expenses can arise at any time, so it pays to have a little extra cash stowed away for safe keeping. Prepare yourself a realistic budget that incorporates a monthly savings regime, and open up a high-interest account to grow your nest egg ? as a general rule, you should be saving 10 per cent of your regular income.
? Home loan check-up ? Re-evaluating your home loan annually can save you thousands of dollars over the life of the loan. You may find you can save money by changing the features of your loan or the loan structure.
The start of the New Year is always a great time to reassess your assets and finances. If you would like to discuss your financial aspirations, give us a call today.
Take the stress out of applying for a home loan with a little preparation. Here are a few things you can expect to encounter when seeking loan approval?
Whether you are applying for your first or fourth loan, the process can seem overwhelming. But it doesn?t have to be.
By familiarising yourself with some of the common home loan requirements and terms, you will immediately feel more confident when applying for your next loan.
Firstly, you will need photographic proof of identity ? a driver?s licence, passport or proof of age card will suffice. You will also need secondary documentation, such as a Medicare card, rates notice or utility bills that are no more than three months old.
Most lenders will be looking for as much information as possible, so it?s not a bad idea to bring as many of these documents as you have available.
When determining your borrowing capacity, lenders will request documents outlining your financial situation. This will include payslips, bank statements and written references from your current employer.
Assets and liabilities
Be prepared to declare everything you own and any outstanding debt you have at the time of application.
This information will go a long way to determining your borrowing capacity, as well as providing lenders with peace of mind, should you find yourself unable to repay the loan.
Remember to take bank statements, any savings accounts and term deposits, as well as details on any current liabilities or financial obligations ? these might include Higher Education Contribution Scheme (HECS) statements, credit card statements and other repayment records.
Establishing your expenses
Your ability to meet monthly loan repayments is paramount for lenders, so be prepared to outline all your current expenses.
Instead of plucking numbers from the air, make a list of your monthly outgoings. Your list should include everything from rent, utility bills and travel expenses to gym memberships and leisure activities.
This will not only help your lender evaluate your loan application, it will also give you a good indication of what you can realistically afford.
While you may encounter some troubles along the way, coming prepared when applying for a loan can make the whole process run a lot smoother.
If you are unsure of what is required, please don?t hesitate to contact us for more information.