Recently a Narre Warren family were looking to sell their home.

It had been many years since they had purchased this, their first and only property.  They were scared. They didn’t know how much their property was worth. They didn’t know which agent to choose.  They didn’t know how they were going to get through this daunting part of the process.

They approached me and asked if I would help them. Firstly, in doing some research on local market sales and secondly, help finding an agent and negotiating the appropriate fee.

The first part of the equation was quite simple.  There had been 7 sales on similar properties in their area and so we deduced their property was within a certain range.

The next stage was to discuss the 3 proposals they had received from 3 different agents.  We reduced this number to 2 when one agent was not even close to the ball park figure undertaken in our research.

Once this family had selected the agent they wanted to sell their home I came in and negotiated a selling fee.  This negotiation resulted in this family saving almost $1,200 in commission costs to the agent.

Not only do we arrange finance options for people we go that extra mile to ensure you receive the best possible outcome for your circumstances.

This is one strategy that I have been pushing for many years.

Often people get paid and start thinking about which bills and utilities need to be paid. Then they think about entertainment, car payments and before they know it their entire pay has been accounted for.   Nothing is left in the kitty to invest.

Whilst they may be getting by they are not thinking about or creating wealth for their future.

This is why it is so important to pay yourself first.  It doesn’t have to be a massive amount however a guideline to work with may be 10% of your net amount.  (eg. if you net $1,200 per week you are investing $120)

To some this may seem like a significant amount but I am sure if you did an in depth analysis of you expenditure you would find area’s which could be eliminated or reduced.

The key message here is to have a savings and investment strategy in place. Besides creating future wealth it also assists when dealing with loan applications.

Many lenders when assessing your application are looking at your ability to save on a regular basis. If you have a regular savings pattern you increase your chances of a successful approval. Pretty simple really.

Please contact me at Power Financial Solutions if you want to discuss this strategy further.

 

 

 

Upgrading? Boost your home’s sale price

Upgrading to a new home is almost as exciting as becoming a home owner in the first place.

The difference is that now you are a home loan veteran, fresh from your first tour of duty and ready for some new action!

If you are looking for some extra ammunition this time around, some simple home improvements may help you to boost your current home’s selling price.

Here are some ideas to get you thinking.

 

Street view

How does your home look from the street? If it doesn’t seem inviting or attractive, many buyers might not give it a chance – it won’t matter how great it is inside.

For this reason, it pays to put some effort into sprucing up the parts of your house and property that are visible from the footpath.

Grab some paint and touch up any bits that are looking a bit tired, sweep paved areas and give some attention to plants and green areas. Adding some pot plants near the entrance can also make your place seem instantly more homely.

 

Light fixtures

Lighting is another aspect which should always be given priority when preparing your house for viewing.

If you have old or broken light fixtures, replace them with new ones and consider adding additional lamps or light sources in particularly dim areas of your home.

Light is your best friend, as it enlivens rooms and shows your house at its best – have a look at property websites and you’ll see pictures of rooms with every light on!

 

A good clean

Now isn’t the time for a superficial tidy up; roll your sleeves up and get really stuck in to cleaning every surface in your home.

This will take a bit of effort, yet is possibly the most inexpensive way to make it more attractive to buyers.

Do a big declutter at the same time and your home will look immaculate and significantly more inviting!

Power Financial Solutions has a great range of mortgage calculators to help with all those tough decisions that come with finding the right loan. Have a look at our calculators on our website to help you further. www.powerfinancialsolutions.com.au/calculators/

 

These 7 mistakes can cost you thousands of dollars over the life of a loan.  If you are unsure of anything or need advice to avoid these mistakes please contact me and we will ensure you are on the right path.

 

1.Paying too much Lenders Mortgage Insurance (LMI)

This is an insurance to protect Lenders against borrowers defaulting on their loans.  This insurance will kick in when the Loan to Value (LVR) ratio is greater than 80%.  In other words, if you cannot put forward at least a 20% deposit then this insurance will apply.

The amount of insurance payable changes in two different ways.  That is either the size of the loan or the LVR%.  An example of this is where someone only has a 5% deposit and want to borrow around $330,000.  The insurance payable in this case is around 3% or nearly $10,000 as a one off charge.

It is important to note that different Lenders set their own premiums and use various tiers in calculating this insurance.

And one more issue with LMI.  Be careful when using more than one property as security to a new home and/or investors loan.  If your LVR is greater than 80% then you will pay insurance on the whole loan.  This could mean you are out of pocket in the thousands.

 

2. People Chasing Best Interest Rates of the Day

With the current Lending market so fluid with new and various products the ‘interest rate’ is only part of the whole equation.  What might be the lowest interest rate one day may not be the next.

It is important that whatever loan you choose it meets your needs and objectives first and foremost.  Lenders fees and charges do vary and can change from time to time.  These factors and more are used determine the most suitable loan for you.

All of our clients are provided with an annual review for this reason.

   

3. Not Shopping Around

In today’s market it is paramount you shop around.  You may have 10 different Lenders who all have differing ‘borrowing power’ outcomes. This means that simple things like income and expenses are treated differently.

One bank might lend you $450,000 whilst another may lend up to $600,000.  This could be the difference in whether you purchase your dream home or not.

One of the advantages that we have is the access to many lenders and their products.  We can ascertain who has the best deal at that time and can even negotiate further.

 

4. Being Enticed by Short Term Interest Rates

This enticement is almost always targeted to First Home Buyers through ‘Honeymoon’ rates.  The attractiveness is the lower repayments during the initial stages of the loan so they can purchase more ‘homely’ items early on.

One of the major pitfalls in this strategy is that after this ‘honeymoon’ period has elapsed it often reverts to a higher rate which in many cases is higher than life of loan discounts.

Statistical data shows that most people retain their first home loan on average between 4-5 years before re-financing.  So it makes sense that when you make a decision as big as this you take into account the overall costs for a period of let’s say 5 years rather than the 1 year ‘Honeymoon’ rate period.

 

5. Don’t make your Home Loan a Prison Term

In days gone by many people would commence a home loan with one lender and some 25-30 years later still be with that same lender.  (And this applied to employment too!!)

Now in the 21st Century times have changed.  People no longer stay with the one employer throughout their careers and likewise many people no longer stay with the one lender.

Often people will refinance for personal use, to invest in other assets or to chase a better product.  Whatever the reason it is prudent to analyse the hidden costs etc. in making these changes.

Our business is to ensure you are aware of all costs in switching and to ascertain the overall benefits to you.

 

6. Failing to look at the Big Picture 

The Home Loan is only one part of your financial landscape.  Some people like having a loan with one lender and all other saving accounts and credit cards with another.  And for investors with larger portfolios they may have loans with a number of lenders.

The key here in the time poor world we live in today is ‘automation’.  With access to internet services bills can be paid on line, money transferred between accounts, direct debits created etc.  The more you can automate the more time savings you achieve.

So it is really worth looking at your loan as part of the bigger financial picture to really get great benefits.

 

7. Choosing the wrong Loan Strategy and Structure

This is probably the most important point to remember.  To get it right from the beginning will ensure you maximise your savings and reduce unnecessary costs in the future.

Here is just one example where the loan wasn’t set up correctly.

A Borrower was concerned with rising interest rates and therefore decided to fix the interest rate on his loan from Day 1.  He thought he was on a winner here when after 12 months he had emerged unscathed from 3 rate rises.

Shortly after this period he received a significant inheritance, which he knew was coming prior to setting up his loan.  He wanted to use most of this to reduce the balance on his loan.

His first problem was because the loan was on a fixed rate option,  he was capped as to how much could be invested without suffering any penalties. And the penalties were quite steep.

So he had two basic options. He could pay the penalty and move forward OR he could invest the proceeds into a term deposit/interest savings account.  If he takes the latter option and invests in a term deposit/interest savings account he will be required to pay tax on the income.

Either way he will suffer some financial loss simply because the loan wasn’t structured correctly from Day 1.

Now, this is an extreme case but you can see how important it is to get the structure right from the very beginning.  Seeking professional advice is one way to avoid these pitfalls.