New year, new you? The new year never fails to give everyone a sense of renewed hope and fresh start. Almost everyone’s excited to start new habits that will hopefully have a positive impact on their lives.
If you’re one of those who are wanting to become financially smarter this year and achieve your goals whether it may be buying a new home or an investment property, we’re here for you. Here are some financial tips to consider in order to set yourself up for success in 2023.
Financial habits for the new year
Consolidate your debts
Paying multiple debts at once can be difficult and complicated. Debt consolidation can help you bring all of your previous debts into a single loan, giving you more control over your financial situation. It makes paying off debts more manageable and can also help reduce monthly liabilities to improve cash-flow.
Set a budget you can stick to
It’s tempting to commit to saving a huge portion of your income during the new year. However, these extreme adjustments can be difficult to sustain in the long run. Instead of doing that, boost your odds of sticking to a budget by implementing sustainable budgeting strategies. For example, automate payments and savings deposits so that money gets to where it has to go before you can spend it. Set aside a budget for all your needs and then determine from there how much you can spend for leisure and other non-essentials. It’s also a good habit to check the status of your mortgage and savings accounts on a regular basis to stay motivated and reinforce good behaviours.
Manage your mortgage and pay it off faster
If you have an existing home loan, now is the perfect time to do a review and re-evaluate your mortgage. Do you have the best rate and credit structure available? Is it preferable for you to have a fixed or variable loan? Do you have an offset account or redraw facility? If you have an offset account, is it linked to the correct loan account, and are all of your funds in the offset account to maximise the benefit? Should you need help in any of these, feel free to reach out to us.
Save for your deposit
Do you want to buy a house this year? Saving for something as large as a house deposit requires time and discipline, so it’s important to start now. A substantial deposit which is at least 20% of the property's value is preferred as it demonstrates to a lender your ability to save and manage money over time. Plus, a 20% deposit will keep you from having to pay lender mortgage insurance.
Establish your Finance, Property, and Investment Goals
Discuss your home ownership and property investment goals with us
Purchasing a home is one of the most significant investments you will make in your lifetime, and it has the potential to provide you with financial security. Talk to us to help you explore options available, take control of your money, and qualify for pre-approval from a lender. We can help you get the best deals depending on your situation and lifestyle.
Know your borrowing capacity
The types of home you can potentially buy will be determined by the amount of money you can borrow or simply put, your borrowing capacity. This should be one of the first things you consider in order to narrow or broaden your property search.
Your borrowing capacity, also described as a lender's willingness to lend you money is influenced by a number of things. These include your income, living expenditures, obligations, assets, savings, and the purchase price of the home you wish to purchase.
Explore the types of loan options and features available
Variable vs fixed rate. Fixed-rate financing means that your loan's interest rate will not change over the period your loan is fixed for. On the other hand, a variable rate loan is a type of home loan where interest rates can change anytime.
The decision between a fixed rate and variable rate loan is based on the borrower's financial situation and preferences. Begin by evaluating your cash flow and financial flexibility. Not everyone is in the same situation, and the range of financial loan options available can accommodate whatever is ideal for the borrower.
Offset vs redraw facility. An offset account functions like a regular transaction account that is tied to your home loan. It allows you to lower the interest rate on your standard variable rate or investment home loan while still having access to your funds whenever you need them. Meanwhile, a redraw facility allows you to access the extra repayments you’ve made on your home loan.
Both redraw facilities and offset accounts can help lower the amount of interest you pay on your home loan. Your circumstances and preferred method of managing your money will determine how you use them.
Lenders Mortgage Insurance. You may still borrow from a lender even without a 20% home loan deposit provided that you pay Lenders Mortgage Insurance (LMI).
IO or P&I. IO stands for interest-only property loan. An interest-only mortgage means that you will pay only the interest on your loan for a predetermined length of time.
Unlike interest-only loans, P&I or principal and interest require you to return both the loan and the interest. You have the option of starting your repayments in this format or switching to it after an initial IO period.
Discover government incentives
If you are a first-time home buyer, you may be eligible for government grants that may help you enter the property market. We can assist you in determining the incentives you are eligible for and guiding you through the application process.
Organise pre-approval with us
Pre-approval is an indication of how much money a lender is currently willing to offer you.
Having us pre-approve financing will provide you peace of mind and remove some of the ambiguity about what financing you will have when the time comes to make an offer. It also demonstrates to sellers that you are a serious buyer who is certain of the amount you can spend and willing to act promptly to get your dream house.
Consider refinancing
Refinancing is the process of switching your current loan for a new loan, hopefully with a lower interest or a more competitive rate.
In addition to securing lower interest rates, refinancing may help you to reduce fees, free up equity for an investment property or another asset, consolidate your debt, or add interest-saving features to your mortgage (an offset account or redraw facility, for example).
Look at other investment options
Despite the challenging market we are currently in, there are still a number of investment options you can take a look at in order to set yourself up for success this year. Talk to our friendly and expert mortgage brokers to learn more.
Get in touch with financial experts
We hope you have a safe and happy festive season, and we look forward to helping you with all your finance needs in 2023.
We’re here to help you whether you’re looking to buy your first home, your next home, an investment property or refinance to a home loan that better suits your needs.
Whatever financial goals you have for 2023, we’re here to support you. Get in touch today.
Contact us through the following channels:
- Phone: (02) 9630 3142
- Email: [email protected]