Broker – Connolly Finance

Riding the rollercoaster: 6 feelings you’re likely to experience as a first-time buyer

There’s no doubt about it – buying your first home is one of the most rewarding experiences of your life! However, it is an emotional journey. Here are 6 feelings you may experience as part of the purchasing roller coaster (buckle your seatbelts – it’s quite a ride!).

1) Excitement at the prospect of buying

You’ve been working hard to save a deposit and it’s finally time to purchase. When that time comes, it’s like someone has opened the door to a whole new world. And it’s an exciting place indeed! At this point, the anticipation is killing you.

2) Confusion about what exactly is involved

You’re a rookie, so of course, the purchasing process can seem overwhelming and daunting. Where does one start? What kind of research is required? What type of loan is right for your needs?

Here’s a quick rundown of the steps involved:

1. Apply for pre-approval

2. Do your research and find the right home

3. Have your conveyancer check the contract of sale

4. Organise building and pest inspections

5. Put in an offer or go to auction

6. Finalise your home loan

7. Do a final inspection on the property

8. Settlement

9. Move-in!

3) Relief when you discover how we can help

Ahhh, you’re not in this alone. That’s right – we can walk you through the buying process, starting with the research component. Our free suburb and property reports offer a wealth of information, from details about capital growth and median values to recent sales data.

Next, we’ll take care of your finance for you. We can:

Explain your borrowing capacity (how much a bank will lend you)
Arrange pre-approval on your finance (so that you’re ready to make offers or bid at auction)
Explain loan features that may save you money in interest (for example offset accounts and redraw facilities)
Line you up with the right home loan for your specific needs
Take care of the paperwork for you.

4) Exasperation as you look for the right property

If you’re one of the lucky ones who finds the right property early, you may escape the exasperation stage altogether. However, if you find your weekends being consumed by inspection after inspection to no avail, it can leave you feeling exhausted and discouraged.

Don’t despair – your dream home is out there. Just remember, with every inspection you’re one step closer to the thrill of finding your very own pad!

5) Nervy during negotiations

You know when you’re at the top of the roller coaster incline and it’s about to drop? Waiting for a vendor to accept your offer or fronting up at an auction can feel a bit like that. There are bound to be butterflies in your stomach – just hold on tight and remember the best is yet to come.

6) Elation when the paperwork is signed and it’s yours!

There’s nothing as rewarding as receiving a shiny new set of keys and walking through the front door into your own slice of real estate. You’ve survived the journey and probably even enjoyed it! It’s at this point you’ll feel pure, unadulterated joy.

Buying your first home is an experience you’ll never forget. The thrill. The adrenalin. And the rush of emotions when it’s finally yours are hard to beat. If you’re ready to purchase your first home, please get in touch. Let us be your conductor; you just enjoy the ride.

Chris Connolly
Connolly Wealth Management
Level 1, 441 South Road
Bentleigh VIC 3204
(P) 03 9591 8000
(F) 03 9530 8375
(E) chris@connollywealth.com.au
(W) www.connollywealth.com.au

Disclosure: Christopher Connolly (280099) and Connolly Wealth Management Pty Ltd (333350) are Authorised Representatives of Wealthsure Financial Services Pty Ltd AFSL 326450.

Disclaimer
The information contained in this email and its links/attachments are general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial products.

Everything you need to know about rentvesting

Rentvesting has become increasingly popular in recent times. Last year, research from the Property Investment Professionals of Australia (PIPA) found that one-third of first-time buyers opted to become ‘rentvestors,’ rather than homeowners.

Here’s what you need to know before deciding whether rentvesting is right for you. But first, let’s look at an age-old question.

To rent or buy?

If you’re wondering whether it’s cheaper to rent or buy, the answer depends on where you buy and your individual financial situation.

Domain Group compared weekly mortgage repayments on a median sale price to median rent for both houses and units in the year to April. The research found that in many capital city suburbs, rents were higher than mortgages (find out where it’s cheaper to buy a property than rent).

But what if you didn’t have to choose between renting and buying. What if you could have the best of both worlds?

What is rentvesting

Rentvesting is where you rent where you want to live and buy where you can afford. Simple.

Pros

A leg up on the property ladder

If like most first-time buyers, you can’t afford your dream home straight away, rentvesting gives you options. It allows you to get started in the property market with a smaller deposit and work towards buying the home you want or to build your investment portfolio.

Lifestyle perks

Want to live in a trendy neighbourhood that’s out of your price range? With rentvesting, you can. Live the lifestyle you want, and invest elsewhere.

Flexibility

Renting gives you increased flexibility to move around if your circumstances change.

Tax benefits

What’s really great about owning an investment property are the tax perks. Most of the property expenses can be offset against your income.

Cons

No FHOG

If you decide to buy an investment property rather than a home, you won’t be entitled to the FHOG and stamp duty exemptions or concessions for that property. These are for first time owner-occupiers.

Added responsibility

Being a renter and a landlord at the same time means you’ll have multiple expenses to cover. In addition to paying your rent, you’ll have costs including council rates, body corporate (if applicable), property management fees, maintenance, other running costs, and of course, your mortgage repayments. Keep in mind that if your investment is tenanted, the rental return may cover some, if not all, of these expenses.

You won’t own your home

Renting means you won’t be able to make the property your own. You also won’t have control over how long you can stay. Leases usually tend to be 6 or 12 months, so you may end up having to move regularly.

Capital Gains Tax

If your investment goes up in value, you may be subject to Capital Gains Tax when you decide to sell.

Steps for purchasing your first investment property

Step 1: Talk to us about your borrowing power and get pre-approval on your finance

Step 2: Formulate your investment strategy (it’s a good idea to talk to a financial planner or accountant)

Step 3: Create a purchasing budget, factoring in all the costs associated with owning an investment property

Step 4: Do your research (for things like capital growth potential and rental yield)

Step 5: Once you find a property, organise building and pest inspections

Step 6: Get us to finalise your investment loan.

Like to know more?

If you think rentvesting is right for you, we can help you explore your finance options. We’ll hook you up with a competitive investment loan that’s right for your needs. Please get in touch.

P.S. Have you seen our Facebook, Instagram and Twitter page? Check them out by searching @connollyfinance

Disclosure: Christopher Connolly (280099) and Connolly Wealth Management Pty Ltd (333350) are Authorised Representatives of Wealthsure Financial Services Pty Ltd AFSL 326450.

Disclaimer
The information contained in this email and its links/attachments are general in nature and does not take into account your personal circumstances, financial needs or objectives. Before acting on any information, you should consider the appropriateness of it and the relevant product having regard to your objectives, financial situation, and needs. In particular, you should seek the appropriate financial advice and read the relevant Product Disclosure Statement or other offer document prior to acquiring any financial products.

How Do your Living Expenses Affect Your Borrowing Power?

You may be surprised to discover that how much you spend on day-to-day living can considerably reduce the amount you are eligible to borrow, even if you are a high-income earner. So, if you’re planning to buy a home, it may be time to cut back on some of life’s little luxuries and set yourself a strict weekly budget. Here’s why.

Why do living expenses matter?

Under the National Consumer Credit Protection Act (NCCP), mortgage brokers and lenders are required to meet ‘responsible lending’ guidelines. These guidelines are designed to ensure a borrower can afford to make the repayments on their loan without suffering ‘substantial hardship’.

That means by law, a mortgage broker or lender must ensure that you have plenty of money left over from your income to repay your loan after you have covered your regular financial commitments. So, we must perform a thorough living expense and income assessment to determine your true financial position before you can apply for a loan.

What are living expenses?

A living expense is anything you spend your money on. It could be a $500 monthly payment for your personal trainer, the $5 coffee you buy every morning on the way to work and everything else in between.

According to a survey by UBank in 2018, 86% of Australians don’t know how much money they spend every month on their living expenses. If you don’t track your purchases, it’s very easy to spend more than you earn without even realising that it’s happening – particularly if you buy everything on your credit card.

Tips for controlling your expenses

The MoneySmart Budget Planner is a great way to see where your money is going. It’s available free from the ASIC MoneySmart website here.

The MoneySmart TrackMySpend app is another handy tool for budgeting and working out where your money is going. It helps you record your weekly household budget, nominate spending limits for different categories of expenses, separate your ‘needs’ from your ‘wants’, and kickstart your savings goals.

How do we perform a living expense assessment?

As your mortgage broker, we will provide you with a Needs Analysis Questionnaire to help you figure out your living expenses. It divides them into simple categories, so it’s easy to see that you’ve remembered to include absolutely everything. These categories include:

Frequently asked questions about living expenses

Is rent a living expense? You don’t need to include your rental expenses as part of your living expense assessment if you’re buying a home you intend to occupy.

How about debts? Any debts you have will be included in the liabilities section of your living expense assessment and loan application.

How do we check all of this? We are obliged to ask to see your transaction account and credit card statements, so we can check your spending corresponds to your declared living expenses. We must also ask for proof of income – like copies of pay slips for example.

Cut back on your expenses to increase borrowing power

Whether you’re considering purchasing your first or next home, it’s important to have a solid understanding of your living expenses. Remember, a lender will only give you a loan for an amount that you can afford to repay – cutting back your everyday spending could help to increase this amount and improve your borrowing power.

We will be happy to run through your living expenses and help you find ways to budget and save to increase your borrowing power if you need help. We’ll also prepare your loan application to maximise your chances of getting your loan approved the first time.

Disclosure: Christopher Connolly (280099) and Connolly Wealth Management Pty Ltd (333350) are Authorised Representatives of Wealthsure Financial Services Pty Ltd AFSL 326450.