Does this home loan look cheap on me?

Does this home loan look cheap on me?

Everyone loves a bargain.  And we like that feeling of having something for nothing.  The sort of satisfaction that comes with “take now – pay later” options.

One long-lived example of the don’t-pay-anything-yet initiative is the interest-free payment plan.  Frequently offered by the big home goods retailers like Harvey Norman, these purchases require zero deposit.  They also give you the flexibility to pay off your invoice over time – without incurring any extra fees.  1000 days interest free sounds like a dream come true!

But there’s a catch.  The fine print states that, should you miss a payment, inflated interest rates immediately kick in on your entire outstanding balance.  And that currently stands at around a whopping 26%!  You may also be up for late payment fees.

Credit card providers hit you with much the same thing.  And it’s great for a while.  The benefits of up to 26 months of zero interest are clear.  Pay off your debt at your leisure, without having to pay the bank anything extra. But beware the hidden costs and escalating interest rates slapped on after your interest-free period.

These days, of course, we have the likes of Afterpay.  Their payment plans allow you to access your goods without paying a cent for two weeks.  After that, you pay off your purchase in fortnightly instalments.

The one thing the above all have in common is the need for cash flow.  You still need to budget and ensure you have the funds to pay for your purchases.  It’s easy to get carried away with the rose-tinted notion of owning a fancy new, high-tech 292-inch Samsung TV.  But remember – you will eventually have to pay that $16,000.

This brings us to the government’s latest incentive to open up another 10,000 spots for cheap first-time home loans.  Rather than having to fork out the usual 20% deposit for a home, first-timers have the opportunity to secure a property with just 5%.  While this gives families a shot at the great Aussie dream, what it means is – they essentially need to borrow 95% from the bank.

The thought of owning their own home is extremely appealing for most.  And if they can get their hands on one sooner rather than later (without having to cough up the extra 15% deposit), they’ll take it!  But again, that’s a huge outstanding loan accruing for the best part of their younger lives. Can they really afford it?

So, whether you’re a first-timer, or you’re still paying off your regular mortgage – it’s worth doing it as quickly as possible.  And that’s where GSA can help.

Give us a call, and we’ll walk you through our powerful and rewarding investment strategy.  The consultation is not just cheap – it’s free!

Pay and receive at the same time?

Pay and receive at the same time?

Yes, it is possible to pay your mortgage and earn a passive income from investment in one fell swoop.  Even with regular loan repayments, you can still boost your wealth and set yourself up for a financially secure future.

Never thought this was a viable option?  You’re not alone.

Many homeowners feel stuck in a perpetual cycle of income in – bills straight back out.  It seems beyond their comprehension that they may ever be able to break even, let alone get ahead.

There are several strategies employed by those in financial turmoil, each hoping it will give them some much-needed leeway.  But they’re quite probably doing more harm than good in the long run.  Methods like extending the mortgage to free up cash or shuffling shares to self-managed super funds may end up costing them more in taxes and interest.

So, what’s the plan, Stan?

By the time you’re in your 40s, keeping your financial life on track is more important than ever.  With retirement on the not-too-distant horizon, it would be prudent to start looking at all the feasible alternatives.

The current economic climate provides the perfect springboard to financial success.  Although it may sound counter-intuitive, now is the time to pay down your home loan sooner, rather than later.  Instead of extending your mortgage period to access more investment funds immediately, take advantage of the near-zero interest rates to knock your debt on the head faster.  By doing so, you will own more of your asset.  You then have more at your fingertips to use as equity for investment.  And this cycle creates escalating growth and paves a smooth path to retirement.

The fastest way to earn a passive investment income is to inject your funds into a high-yield, low-risk scheme like property.  And with GSA’s property syndication model, you can expect desirable returns over a short-term investment period.  This means you’re paid generous and consistent rewards, without being locked into long-term contracts.

Want to find out more?  Get in touch with one of our senior consultants as soon as possible.  Why choose between your house or your lifestyle – when you can have both?

Older Aussies add mental stress to list of ailments

Older Aussies add mental stress to list of ailments

It’s official: the unrelenting burden of mortgage debt is leading to significant mental stress for older Australians.  And the strain is not likely to ease any time soon.

According to findings from Curtin University, almost half of 55 to 64 year-olds are still paying off their home loan.  And it’s predicted that in the next decade or so, more and more of these Aussies will be requiring rent assistance as they are forced out of their homes.

Over the past 25 years, the average mortgage debt has risen by a whopping 600%!  One of the main drivers is, of course, the significant rise in housing prices.  Property values have been increasing at a much faster pace than incomes, leaving homebuyers having to take out higher mortgage debt.  Curtin University’s Professor Rachel Ong ViforJ estimates the current mortgage debt to income ratio to be around 200%.  In other words, the average debt is DOUBLE the income of mortgagees.  Compare that to the rate 20-25 years ago at only 70%, and you can see why the Great Australian Dream is rapidly slipping away.

So, you’d have to take your hat off to people for trying to find a way out of this dilemma, though the strategies they’re employing are not exactly doing them any favours.

Many older Aussies are expecting to either work longer or draw down on their super.  But neither plan of attack is a sustainable solution.  The assumption that they can work for as long as they like does not take unexpected illness or lay-offs into consideration.  And those hoping to draw down their super upon retirement are merely eating into their future savings – money which is meant to see them through well into their golden years.

It’s hardly surprising then, that older mortgagees are suffering increased levels of mental health issues compared to those who already own their home outright.  And it appears to be more severe amongst women than it is amongst men.

The sad news is a number of older Australians are likely to need the government’s help with housing and rent assistance after mortgage stress tips them out of homeownership.  Studies anticipate that about 650,000 older Australians will need this financial assistance by 2021, with a likely risk of insufficient or secure housing in the private rental sector, and an increase in homelessness a very probable outcome.

The idea of vagrancy or even carrying unsustainable mortgage repayments into retirement is enough to bring you to your knees.  Luckily, GSA has a two-pronged solution: pay off your debt sooner AND grow your retirement nest egg faster.  Think of us as your financial shrink. Call us to find out how we can help end your financial anguish.

How much can I afford?

How much can I afford?

Have you ever daydreamed about having your perfect home in the ideal location?  Or maybe you’ve been hoping to embark upon a lucrative investment portfolio.  While these musings may get your pulse racing, you still need to ask yourself just how much of this sort of outlay you can actually afford.

I hate to say it, but once again, the banks seem to have the upper hand.  It is up to them to determine your borrowing capacity and to dictate the terms of their lending agreement.  It’s certainly advisable to gain an understanding of the kind of loan you can comfortably repay.

With most household budgets under pressure, how do you find enough room between the purse strings to make ongoing mortgage repayments?

You can take several preliminary steps to work out what you can afford.  Let’s look at a few of the basics.

 

1. Balance income and expenses

It’s fairly self-explanatory – work out how much money you currently earn, and deduct every cent you spend.  This includes any outstanding debt, such as credit card payments. Be ruthless.  Are you wasting money on unnecessary sundries?  Could you make a few adjustments?  Keeping a thorough account of your incoming and outgoing finances is paramount.

 

2. Use an online calculator

A mortgage calculator is a nifty tool that can help you better understand your financial situation.  It works out your estimated loan amount, monthly repayments and upfront costs.

 

3. Check your credit rating

Your credit score can affect your borrowing power.  A lender needs to factor in your ability to meet potential repayments on other loans, and whether you have applied for credit in the past and potentially defaulted on any payments.

 

4. Don’t forget about interest rates

Lower interest rates are a great incentive to service a loan at a lesser expense.  It usually means you can borrow a little more too.  However, you should also be aware that an increase in rates could significantly impact your repayments.  And once you convert to principal payments on top of interest, you could be hit with more than you can handle.  A lender will factor all of this into the equation.

 

5. It’s good news for savers

The bigger your deposit, the more you can afford.  Savings, gifts and equity on your existing property will all work in your favour.  If you can borrow under 80% of the home’s value, you’re already ahead.  Needing to borrow any more than that will require you to take out lenders mortgage insurance.

 

Of course, even without insurance, there will always be other expenses to factor in such as stamp duty, legal fees, agent fees etc.

That’s a lot to consider.  A property purchase can be a life-changing event, and you should approach it with caution.  But if you’d like a way to pay off your mortgage sooner or fast-track your investment portfolio – without all the extra expenses – GSA has the answer.  Call us to find out how.

Wind up these key priorities before winding down your mortgage

Wind up these key priorities before winding down your mortgage

As exciting as the prospect of being completely debt-free is – there are a few things you should review before making that last home loan repayment.

After all your efforts to reach this coveted destination, the last thing you want is to have to deal with a heap of loose ends that could leave you high and dry.

Here are three practical steps you should take well ahead of cracking open the champagne.

 

1. Check your insurance

When was the last time you reviewed your home and contents insurance?  Research shows that 40% of households are underinsured, and a whopping 29% don’t have insurance at all!

The chances are – your home and contents worth has changed over the years.  Save yourself any financial setbacks by attending to this early.

 

2. Revise your title

Get on top of this sooner rather than later, particularly if you are hoping to sell your property quickly.

The bank holds the Certificate of Title until you have repaid the full loan – essentially meaning the lender has ownership of your property.  As you approach the tail end of your mortgage, you need to discharge your home loan and get that piece of paper in your hot little hands in your name only.

 

3. Review your estate plan and will

If you don’t yet have a will, it’s advisable to get one.  Even if you do have a plan, you should be reviewing and updating it regularly, according to any significant life changes.

If you don’t get this sorted, the court will appoint an administrator to handle your affairs – which can end up being a timely and expensive exercise.  Similar to insurance, it’s a good idea to protect your assets now and in the future.

 

Attending to these factors should be relatively straightforward and easily accomplished.  Because when that crate of champas hits your doorstep – you want to savour the moment, knowing you can truly take a load off.

In the meantime, come and have a chat with us about ditching your mortgage sooner than you think.  Cheers!

Stop!  Don’t spend more!

Stop! Don’t spend more!

The latest fall in interest rates is excellent news for homeowners.

The government is hoping the cut will stimulate the economy by seeing Aussie households spend more now that their purse strings have loosened a little.  But before you go splashing out on diamond rings from Costco, take a moment to ponder how that money could be better spent.

The short of it – get rid of your mortgage!

Now is the perfect time to eliminate your debt like never before.  With rates not looking to rise again any time soon, you have the distinct advantage of paying off larger instalments each month.

Seriously – you’d be mad not to!

Sure, feel free to splurge on an extra pack of gourmet choccies in the weekly shop – but don’t go overboard.  Use this rare opportunity to get ahead.  The more you can pay off now, the better.

And while you’re at it, get in touch with one of our senior investment strategists to find out how you could smash the remainder of your home loan within 5 years.

Here at GSA, we build lifestyles – so, you definitely have the green light from us to accelerate your financial freedom.