Do you want to get on the property ladder and live where you want but the cost of living there is just too high for your budget?  Want a flexible budget and take advantage of tax deductions to increase your take home pay? Rentvesting may be for you.  It’s nothing new, but means you purchase an investment property and rent a property for yourself rather than buy a property to live in.

So let’s consider the basic finances of a lifetime of renting where you want to live versus buying?  Everyone knows rent is dead money right?  Let’s compare these two options below if you could borrow $1,000,000.

• Use your borrowing potential to buy a home for $1,000,000 – no investment properties:

In this option you need to consider the long term costs of finance which includes the mortgage interest of approximately $68,200 per year.  This is based on taking the long term interest only of the average of banks non discounted standard variable owner occupier home loan rates over the last 10 years of 6.82%.

• Rent a home for $1,000,000 and buy two investment properties at $500,000 each

If you chose this option you would return say 4% rental income x 2 = $40,000pa plus you would get tax rebates on stamp duty, mortgage interest and other expenses/losses reducing your income tax payable each year.

If you then rent a $1,000,000 property to live in, it would cost you about the same as the rent you are receiving.  However by choosing to buy 2 investment properties and rent a place to live, your annual cost is NOT the same as it does not include the tax rebates you will receive and it is costing you much less than the $68,200 in mortgage interest as an owner occupier in option 1 with no tax rebates either.

This shows that while both options allow you to live in a $1,000,000 property, in the long term, renting (while investing in property) will cost less.  So it’s worth considering the advantages of property investment.

If you would like to talk to us at The Home Loan Company about this, now is the time while interest rates are low.

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So don’t set and forget… that just costs you money.  Let’s have a look at your mortgage and see what it’s doing for you.  No obligation and it’s easy to do. Don’t miss out on the opportunity while you can.

The post Don’t miss out – Save Money on your Home Loan appeared first on Home Loan Company.

If you have at least 20% equity in your home you can invest in property to build your financial freedom and most likely you need to start now? It’s more achievable than you think.  ASFA has estimated the annual cost of a modest standard of living for a couple is $60,000 a year at retirement age 65 and this does not include funding any debt

The post Using Property to Build Yr Financial Freedom appeared first on Home Loan Company.

Property Investor? Do you know how to structure your new or existing finance so you have control over your assets?

Many property investors believe that their loans are stand-alone and secured by just one of their properties when in fact their loans are secured or cross collateralised with their other properties.

For example; you want to borrow 105% of a property’s purchase price to complete the purchase including costs.  Many lenders (or brokers) will offer multiple properties in your portfolio as security for your next purchase. This is called “cross-collateralisation”.  As an investor in the majority of situations there is little benefit to you.  Just a few of the reasons: the inability to revalue your properties individually to access your equity.  Often one property can be valued up and the other down and as they are linked, your net gains may be neutralized as they offset each other.  You may also not be able to access your funds when you sell a property.  It can also be difficult to change products, lenders and you may have unnecessary fees to pay.

As an investor these considerations are important and need to align with your objectives.  We can help you with this.  So before you buy, talk to us.

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A good article from the MFAA on when and why to refinance.

The most common reason for people to refinance their mortgage is to get a better deal and lower rate. But be careful you don’t become interest rate-fixated.  Your mortgage needs to have the flexibility to do what you need which often isn’t possible with low rate basic home loans eg redraw, offsetting interest without hefty fees for doing so.

Home Equity: When property prices increase in value at a significant rate. e.g. a home you bought for $600,000 five years ago, might now be worth $800,000. Refinancing your mortgage and tapping into that extra $200,000 equity can help you purchase an investment property and help you build wealth.

So let’s have a look at your mortgage and see what it’s doing for you!

http://www.mortgageandfinancehelp.com.au/re-financing/when-would-i-refinance-my-mortgage/

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Offset accounts and redraw facilities work in similar ways as they both allow you to reduce the balance of your home loan therefore reducing the interest charged by applying extra money to your debt.
Deciding between an offset account and a redraw facility on your home loan largely depends on how accessible you need your extra money to be. This is something we help our clients navigate.

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Exit and early termination fees on your mortgage can put the brakes on your plans to sell, to refinance, and to renovate or purchase an investment property.
Consider your future goals. Do you have plans to move city or change your job? Are there any foreseeable disruptions to your financial circumstance likely to take place during the space of your fixed-term rate?
To avoid being caught out by fees and charges, speak to me first.

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Property investors should always be on the lookout for the locations where the greatest potential for capital growth lies.

Some of the signs of potential future growth are: new infrastructure such as new roads and transport, redevelopment of retail centres, and lifestyle amenities such as new recreational centres, café villages and restaurants. Population growth and employment. So where and when do you buy? I can help you with that.

The post Are you a Property Investor? appeared first on Home Loan Company.

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 2.5% effective 7 August 2013. To see the full commentary follow this link

Now is a good time to review your home loan. The Home Loan Company can compare your mortgage against what is available in the market. Let us know if you would like a complimentary review.

The post RBA lowers cash rate to 2.5% Effective 7 August 2013 appeared first on Home Loan Company.