Have you considered seeking advice from a Financial Adviser before purchasing a property?
There is a misconception these days that you only seek financial advice if you have lots of money to invest. That might have been the case earlier on, but is no longer.
Since starting out my own business as a financial adviser, the majority of my clients have been in the wealth accumulating stage. Here, I feel I added the most value by helping my clients structure their financial obligations, making them aware of what they are entitled to (grants) and educating them that there is a way to save without compromising on their current lifestyle.
One big concern for the younger generation (myself included!) in this day and age is "how do I enter the property market?" We all know that this concern is exasperated by the surge in property prices, but also with a change in mindset. Travel, freedom and enjoyment of lifestyle are the goals many of my clients share - the message is loud and clear. But how do we ensure that the goals are met in the long term - past their working life? We need to establish a ways to generate passive income. This includes investments INSIDE and outside of super.
There are so many types of investments out there: term deposits, Australian & International shares, property to name a few. In this article, I will focus on property - good old bricks and mortar. Mortgage Broker - Alan Lavocah has shared with us his two ways to enter the property market if you do not have a 20% deposit.
1. Borrow more from the bank. If you want to borrow more than 80% of the purchase price, lenders usually apply Lenders Mortgage Insurance (LMI). This once of fee can be captialised into your loan. What this means is less upfront funds from you to purchase a property. Some lenders allow you to borrow up to 95% of the purchase price, so you would only need a 5% deposit*. Whiles some may consider LMI another expense, but sometimes it is necessary. Why? Because the rate the property price increases is much higher than your savings capacity!
2. Guarantor. If you don't have a deposit this many be an option for you. A guarantor is a third party to a home loan. They help you to get a loan by offering additional security (property) to the lender. An accepted guarantor is linked to a loan by a guarantee. This guarantee can be released without the loan being repaid in full meaning the guarantor no longer has a responsibility. If your property has increased in value and / or you have paid down part of your home loan, then you can look at releasing the guarantee. To use a guarantor, you must be able to service the entire loan on your income.
BENEFITS TO LOOK FORWARD TO
You don't need to save a deposit
You can borrow up to 100% including the purchasing costs (e.g. stamp duty and other fees)
You can avoid paying lenders mortgage insurance
How can a financial adviser help you?
Get expert eyes to review your cashflow, set you up with a disciplined savings plan, structuring investments in a tax effective manner, or there might be a much more efficient way to help you save on tax whilst building your wealth? As a financial adviser, I will guide you on every step of the way - if you are looking to get married, start a family, buy a new car, start a new business - whatever it might be, it pays to speak to a financial adviser.
Now that you have purchased your property - have you thought of insuring yourself? You don't spend a lifetime trying to build wealth only for it to be taken away due as you can't service the debt due to unforeseen events (think: death, illness, injury). You take out insurance for your car and financially, the car holds less value than your life and ability to earn an income. Complete protection is worth the peace of mind. Knowing that your financial goals will still continue beyond your ability to work and most importantly, to secure your family's future.
To speak to me about how I can build a financial strategy that is unique to your goals, please contact me on 0413 887 591 or email me: firstname.lastname@example.org or;
You may also get in touch with Alan to discuss your financing options on 0431 915 025 or by email: email@example.com
This article contains general advice only.
Liz Chevel is an Authorised Representative of Dover Financial Advisers Pty Ltd