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Assessing the benefits of an extensive home renovation against selling your property is always a worthwhile exercise. Selling your home is rarely an easy decision. It will often hold family memories, and that makes it tough to leave. It’s also likely to be your most significant financial asset, and you want to be confident you can maximise its value. The process of selling isn’t cheap with commissions, legal fees and taxes. But the alternatives are to tolerate your home in its current condition or to talk to an architect or builder about giving your home a makeover. That’s not cheap, either. Costs can run into hundreds of thousands of dollars, and there’s never a guarantee the work will finish on time and budget. If you think selling is stressful, you should try a large-scale renovation! Regardless of which way you jump, it’s likely you’re going to need finance - whether that’s refinancing your current loan for a renovation or a new loan for a new property - so it’s worth talking to your mortgage broker to understand your options. Here are a few tips to help you think it through. 1. Structural issues Nothing dates a bathroom like colour. You can tell if it was built in the 70s and 80s merely by the colour scheme. Most bathrooms today are based on white, rather than old school creams or browns. If your bathroom can remember when David Cassidy was making hits, then the time to act is overdue as aging bathrooms usually also have waterproofing issues. 2. Money in the bank You can afford to decide whether you want to pour your hard-earned cash into your existing home, or climb the property ladder and find a superior property. Or if you’ve paid down a lot of your current home loan, you may be able to redraw to fund a renovation. 3. You intend to stick around If your home is well located, you may opt to stay and maximise the potential rather than move. However, if you favour a renovation, be aware that upgrades offer the best payback when you sell within a year or so of the work being completed. Your new kitchen doesn’t stay new forever although it is likely to give you a lifestyle benefit for at least a decade. 4. Big squeeze If your current home is getting too small, you’ve got the option of building an extension, but that means you’ll have to battle the planning process as well as the stress of selecting an architect and builders and perhaps paying rent while the work is being done. If the rebuild is so big that you need to move out anyway, a new home might be a more straightforward option here. 5. Living in the 70s Many owners who take the upgrade path want to modernise their homes. They’re fed up with the rabbit-warren design of small, disconnected rooms and yearn for open-plan living, plus a new kitchen and bathroom. Making such fundamental changes are expensive, and it is worth checking out the prices of more modern homes nearby before going ahead with a renovation. That will help you understand the value that you’re adding. 6. Dead space Poor design can result in some rooms being ignored, either because of their size or their position relative to the main living areas. Real estate is not cheap, so this is very wasteful. If fixing the problem is difficult, finding a new, better-designed property will pay off for you financially in the medium to long-term while also helping you take the next step on the property ladder. Give us a call on (03)8657 8664 to have a chat about the best way to fund your home improvements.

Owning an investment property is a little like running a business. It provides a great source of income and builds personal wealth but inevitably comes with a series of costs that hit your bottom line. The excellent news for property investors is that many of these expenses are tax-deductible. Tax advantages are not just available on new properties. While an older building may have limits on what you can claim, you do not have to buy a new house or apartment to qualify for tax benefits. There are two components of a tax claim for a rental property. These are: Capital Works Allowance covers the structure, such as walls and roof tiles; and Plant & Equipment covers the so-called removable assets such as carpets, stoves, and hot water system.  You should always obtain professional accounting and tax advice to understand exactly what can and cannot be claimed according to your own specific circumstances as the Australian Tax Office changes the rules regularly. For example, only investors of new property can make claims under plant and equipment assets. However, exclusions exist for those properties that have been renovated. Those who own older properties can continue to depreciate items that fall under the capital works component, so long as it was built after September 15, 1987. And you may benefit from depreciation even if a previous owner undertook improvements. So, working out what you can claim legitimately requires the eagle eye of a professional. In general, you will find the following items are tax-deductible: Costs associated with a property manager, which are usually 3-8% of rental income Accounting and professional financial advice Advertising if required to find new tenants, plus associated re-letting costs Strata levies Rates and land tax Insurances Loan interest and ongoing loan fees Also, work with your accountant or financial adviser to build a tax depreciation schedule for your property. This document will list all the items in your property that qualify for depreciation. It should only need to be completed once, and it can then be submitted to the ATO each year to ensure you obtain the maximum possible tax benefits from your rental property.

Investing in property isn’t rocket science but there are a few rules savvy investors should follow for success. Here are some things we’ll cover in the next couple of weeks to get you started. Should I invest? Investing isn’t right for every one.The first thing you need to do is make sure you’re in the right financial position to take the risk. How do I build a strategy? Before you start your journey you need to do plenty of research and build a strategy around your specific budget and financial needs. How do I choose the right loan? Once you get your finances in order, start shopping around for a great loan. Make sure you get pre-approval from your lender before you start looking for your investment property. How will I manage my investment? It’s important to remember that an investment property is a long term commitment and you need to know how you are going to manage it over the life of your loan. With the right advice and loan, property investment can be the most satisfying and profitable decision you make. If you have any questions or want to discuss whether property investment is right for you, contact us on (03)8657 8664 or email us at reception@futurefinancegroup.com.au

A redraw facility is a home loan feature you can use to reduce the amount of interest you pay. Here’s how redraw works: When you make extra repayments on your home loan, this money goes into redraw You can ‘borrow back’ (or redraw) this money when you need cash The money in your redraw facility reduces the interest you get charged If, for example, you have $300,000 outstanding on your mortgage and $20,000 in redraw, you’ll be charged interest on only $280,000 (i.e. $300k minus $20k) If you’re thinking a redraw facility sounds very similar to an offset account, you’d be right. But there are some key differences. An offset account is a separate account that’s linked to the home loan – so when you put money into the account, it’s classified as a deposit rather than an extra repayment. That means if you take money out of the offset account, you’re reclaiming your own money. A redraw facility sits within the home loan – so when you put money into the facility, it’s classified as an extra repayment rather than a deposit. That means if you take money out of the redraw facility, you’re technically re-borrowing the bank’s money. This may have tax consequences if you’re a property investor, so seek advice from a tax professional. Some key differences to note: given that redraw is a transfer, it might take a little longer to access that money than if you were to get it from an offset account. Also, some lenders charge fees to redraw, however the home loan itself may have lower fees attached overall compared to a more complex package with an offset account. As your broker, we can weigh these up for you. If you want to chat about redraw, offset or any other home loan features, please call our team on (03)8657 8664 or email reception@futurefinancegroup.com.au to arrange an appointment.

An offset account is a useful home loan feature that can help you repay your loan faster and reduce the amount of interest you get charged. An offset account is a transaction account linked to your home loan. Just like an everyday banking account, you can use it to receive your salary and can spend money via a debit card. Offset accounts reduce the amount of interest you get charged. Imagine you had $300,000 outstanding on your mortgage and $20,000 in your offset account. Instead of being charged interest on $300,000, you'd be charged interest on only $280,000 (i.e. $300k minus $20k). Offset v redraw If you’re thinking an offset account sounds similar to a redraw facility, you’d be right. That said, there are some key differences, which will be discussed in our next blog We can help you compare the pros and cons of offset accounts and redraw facilities. Please call our team on (03)8657 8664 or email reception@futurefinancegroup.com.au to arrange an appointment.

We sometimes get asked whether it's better to buy an established property or something new. Both options come with pros and cons, so there's no one right answer – only what's right for you personally. Here are 10 things to consider: 1. A new home should be free of defects, while an established home might have problems you need to fix after moving in. 2. A new home is likely to have lower maintenance costs than an established home, at least in the short-term. 3. Depending on where you live, you could be more likely to qualify for government assistance if you buy new rather than established. 4. If you're a property investor, a new home offers more tax depreciation benefits than an established home. 5. New homes are more likely to be overpriced than established homes, because there are a range of intermediaries involved in building and marketing new developments, and their fees usually get added onto the sale price. 6. If a new home is one of many identical developments, it might have less scarcity than an established home and therefore experience lower long-term capital growth. 7. For the same reason, mass-produced new homes tend to have less character than established homes. 8. A new home may be harder to finance, as lenders may have caps about the number of new builds they finance in a particular development or suburb. 9. If you buy a new home before it’s built, the finished product might differ from the brochure, whereas you know what you’re getting with an established property. 10. If you’re a property investor, forecasting the rental income on a new home that doesn’t have a rental history will be harder than doing it for an established property that does. If you’d like to discuss your borrowing capacity or home loan options, call our team on (03)8657 8664 or email us at reception@futurefinancegroup.com.au

Think about the last time you went grocery shopping. I bet you spent at least a few minutes comparing brands and deliberating on which products offered the best value for money. If we expect that level of choice in our supermarkets, why wouldn’t we expect the same from our home loans? A broker’s job is to do the comparing for you. Not only are they experts but they have access to a huge database of lenders who are all wanting your business. A broker is in the position to negotiate with those lenders and find you the right value-for-money loan to fit your lifestyle. A mortgage broker: Has access to more lenders, meaning you’re more likely to hear a ‘yes!’ Is specifically trained in mortgages and knows how to structure your loan to suit your goals Acts as your own personal banker, guiding you through every step of the home loan process Will be your broker for life! You’ll receive ongoing help and advice whenever you need it during the life of your loan Helping people just like you to find the right home loan is our passion. If you’d like to talk to one of our brokers about how we can guide you through this journey, feel free to contact me on (03)8657 8664 or email our team at reception@futurefinancegroup.com.au to schedule an appointment.

As a homeowner, one of the best ways to save money is to pay off your mortgage. This both frees you from the serious dent to your income each month when your mortgage payment is deducted and can deliver additional equity in your loan that you can use at a later date. It will depend on your current deal with your lender whether it’s possible to pay off your mortgage faster than the period you signed up to. If you’ve committed to a deal that doesn’t allow you to increase payments, or even make them on a fortnightly basis, you may want to consider refinancing to make this sort of flexibility possible. On a typical 25-year mortgage, five to eight years of your loan goes to paying the interest charge alone – that’s a sobering thought. So, finding a lender who’ll offer a weekly or fortnightly option can potentially save you thousands of dollars. You’ll need to assess your current arrangement and, if necessary, work with your mortgage broker to find fresh solutions that suit your current circumstances. In the meantime, here are a few tips for paying off your mortgage faster. 1. Fortnightly payments By altering your repayment schedule, you can potentially save the equivalent of one month’s mortgage bill each year. Weekly payments make an even bigger dent in the loan but could hurt your cash flow. 2. Extra payments Putting a wedge of cash on your loan will dramatically reduce the amount of interest you’ll pay over the specified life of your loan. Consider setting aside your tax refund, or an annual work bonus, for this purpose. 3. Higher payments Shorten the length of the loan by paying a little extra each month. Not every loan product will let you do this so you’ll need to check if its possible. Some are geared to keep you in the deal for the specified loan period. 4. Find the right deal Most people focus on finding the lowest interest rate. But be careful: you need payment flexibility, and it’s always helpful to access the equity in your loan if you need cash quickly. Sometimes the cheapest deal is not the best deal. 5. Offset account This is a savings or transaction account that’s linked to your mortgage. Its positive balance will reduce the amount you owe on your mortgage each month. That means you’ll be paying less money to service interest, and your loan can be paid off faster. 6. Switching loans Consider switching loans if you have the capacity and need more flexibility in paying back your mortgage.