IS IT POSSIBLE TO GET AHEAD FINANCIALLY WHILE STILL ENJOYING LIFE?

Reception • Jul 09, 2018

Getting ahead financially doesn’t have to be a choice between living life to the fullest or being tied down in your own home with a huge mortgage.


Did you know you can possibly get your foot in the door of the investment property market without having to save for a huge deposit? The tax man and your tenant’s rent could help you pay off your investment loan.


Be a little more disciplined with your budget and finances, and before you know it you may be sitting on a nice little investment property – a property which is making you money until you are ready to buy your dream home.


Have you heard of the saying, ‘making money while you sleep’? Well, it could happen.



Yes, you can buy an investment as your first property!


Purchasing a small house or apartment in a low-cost area and renting it out can be a good way to build equity over the next few years. You can even repeat the process before eventually buying your own place in an area where you want to live.


It is an increasingly appealing strategy for many young Australians. With their lifestyles and work commitments are flexible, so too can be their living habits.


You can buy an investment property in another suburb, city or even state while you keep renting in a convenient area where you prefer to live. Even staying at home for a while longer can be attractive while you purchase your first investment property.


Home ownership is a goal for most of us but it can seem out of reach when you are struggling to save a 20% deposit. However, property ownership can be realistic if you consider starting out with an investment property.


How it works


  • Lending institutions include a percentage of the expected rent from your tenants as part of the income towards servicing your investment loan (so you can probably borrow more than you could if purchasing a home)
  • Loans for 90% (or higher) of the property value are available for property investors, meaning you don’t need to have such a big lump sum available. This may require you to only fund the legal costs, stamp duty and lenders’ mortgage insurance (often around 4-5% of the purchase price) in addition to your small deposit. When you talk to us we can calculate this figure for you and work out your most suitable options.
  • Investors have typically used interest-only loans, making mortgage payments much lower – allowing you to gain equity while minimising cash outflow in a medium to longer term capital growth strategy. However, lenders have introduced restrictions on interest-only loans over the past year so it’s worth having a chat to us about this.
  • Negative gearing tax benefits are available in cases where the costs of your borrowing to invest are greater than your income from the property. This means a rebate from the tax man. Way to go!



But you don’t want to miss out on the First Home Owner Grant?


The First Home Owner Grant (FHOG) is a national scheme funded by states and territories and administered under their own legislation. Changes to the FHOG took effect from 1 July 2017 – some states and territories provide additional grants and subsidies under certain conditions. In some states you need to live in the property first to qualify for the FHOG so this may rule out the FHOG as a future option if you elect to go ahead with an investment property strategy.


This is a reasonable concern. Ultimately, you need to weigh up whether being in the property market could be better than not being in it. You may find that the capital growth you could experience over time is well in excess of the FHOG.


Alternatively, you could focus on the potential for capital gain and rental income to help you start building wealth now. You may find that by investing this way you will be ready to buy your own dream home sooner. With possible additional tax advantages you might even get back more than the amount of the grant! You should seek advice from your accountant to confirm your individual tax position.


On the other hand, in some states, if you purchase an investment property first and have never occupied it, you may still qualify for your FHOG later on. We suggest you visit www.firsthome.gov.au to see if this applies to you. If that’s too confusing, we encourage you to call our office for a chat.

05 Oct, 2023
The Power of Pre-Approval: Your Key to Home Buying Success
01 Aug, 2023
Navigating the World of Mortgages: What borrowing capability do you have? Deciding to buy a house is an exciting milestone, and we're here to accompany you through the intricate world of mortgages. With the changes to interest rates that have happened over the last twelve months, it's essential that we are prepared and approach borrowing with a healthy attitude, as your choices now will have long-lasting implications, so let's ensure you're well-prepared for this homeowner journey. What should I consider when considering my borrowing limits? First, let's figure out how much you can borrow without sacrificing your peace of mind and daily joys. The key here is to measure your income against your expenses, including the potential mortgage repayments. A general rule of thumb: try to keep your mortgage repayments to no more than 35% of your gross monthly income. When it comes to borrowing generally, the higher your deposit and the higher your income, the more they should be willing to lend. The good news is we have more flexibility as mortgage brokers than the big banks, so we can look at your circumstances closer. Now, let's discuss some essential factors to consider when figuring out your borrowing limits. How much debt can you handle? Think about your lifestyle and what you're willing to give up versus what's non-negotiable. Be realistic about your dream home. Start with something affordable and gradually work your way up as your earnings grow and your equity increases. Think about the future. Are you planning to start a family, change jobs, or experience significant life changes? Factor those possibilities into your calculations. Keep an eye on interest rates and consider how further rises might affect your ability to make repayments. Reminder; A reminder that when purchasing a property, you will also need to factor in further expenses, such as, pay stamp duty, pest & building inspections, conveyancer fees, application fees, council rates, possible strata or body corporate costs, and utility bills to factor in. In Summary We'll help you evaluate your financial situation, research and compare over thirty lenders and loan options, and gather the necessary documentation to help you whether you are purchasing your first home or refinancing. What should I do next? Our dedicated team is committed to nurturing your financial well-being and helping you achieve a stronger and more secure future. Call our office on (03) 8657 8664 to organise a time to chat, and we also invite you to take advantage of our free resources by heading to our website. https://www.futurefinancegroup.com.au/
By Bree Jones 19 Jun, 2023
At Future Finance Group, we understand that financial hardship has become a pressing concern for many homeowners across the country, including Melbourne. We want to help you explore the benefits of refinancing your mortgage. By assessing the right time to refinance and understanding the steps involved, we can guide you to potentially save money, access improved loan terms, and secure a more favourable financial future. What are the Benefits of Refinancing? During these challenging times, refinancing your mortgage can bring meaningful advantages. Firstly, it may allow you to take advantage of lower interest rates, reducing your monthly mortgage payments and offering much-needed relief. Additionally, refinancing allows switching from a variable-rate to a fixed-rate mortgage, ensuring stability and protection against future rate increases. By consolidating high-interest debts, you can streamline your finances and gain more control over your monthly obligations. Also, refinancing can unlock equity in your home, providing funds for essential expenses or other financial goals. Assessing the Right Time to Refinance Working out when to refinance can be challenging, mainly because we do not know what the future will bring. We are here to look at your personalised options and work with you to ensure your financial security. We can consider many factors, such as your credit score, home equity, and employment stability, to give you informed options. Steps Involved in Refinancing and Potential Cost Savings : We are here from the beginning to the end and strive to simplify the refinancing process for you. We'll help you evaluate your financial situation, research and compare over thirty lenders and loan options, and gather the necessary documentation. Our ultimate goal is to help you secure better terms, rates, and long-term cost savings to ease the pressure on you and your family. In Summary In these challenging times, exploring refinancing options can provide much-needed relief and open up financial opportunities for you as a homeowner. What should I do next? Our dedicated team is committed to nurturing your financial well-being and helping you achieve a stronger and more secure future. Call our office on (03) 8657 8664 to organise a time to chat, and we also invite you to take advantage of our free resources by heading to our website. https://www.futurefinancegroup.com.au/
MORE POST
Share by: