If you’ve been looking into property investment, chances are you’ve come across the term negative gearing. What does it really mean?
So, What is Negative Gearing?
Negative gearing happens when the costs of owning an investment property—like your mortgage repayments, interest, and maintenance—are higher than the income you earn from it (usually in the form of rent). In other words, you’re spending more on the property than it’s bringing in.
At first glance, that might seem like a bad thing but many investors see this as a smart strategy because of the potential tax benefits and future profits.
How Does It Work in Practice?
Imagine you’ve just bought an investment property, and you’ve taken out a home loan to finance it. You’re renting it out, so you’ve got some income coming in, but once you add up the mortgage repayments, interest, maintenance costs, and maybe even property management fees, you realise you’re spending more than you’re earning.
This is where negative gearing comes into play. Yes, you’re technically making a loss in the short term, but there are some perks that can help take the sting out of it—like tax deductions.
Tax Benefits of Negative Gearing
One of the biggest reasons people use negative gearing is the tax advantage. If your property is costing you more than it’s making, you can use that loss to reduce your taxable income.
Let’s say you’ve made a $5,000 loss on your investment property this year. You can offset that $5,000 loss against your other income, like your salary. This means you’ll pay less tax, which helps cushion the blow of making a short-term loss on the property.
Long-Term Gains: Is It Worth It?
The big idea behind negative gearing is that, even though you’re making a loss now, the property’s value will increase over time. So when you eventually sell it, the profit (or capital gains) should more than make up for the losses.
Of course, property prices don’t always go up, and factors like interest rates and market trends can have an impact. But if the property’s value increases significantly, those short-term losses might seem like a small price to pay for the long-term gain.
Is Negative Gearing Right for You?
Negative gearing isn’t a one-size-fits-all solution. It works best for people who have the cash flow to handle the losses in the short term and are willing to wait for long-term benefits.
It’s also important to remember that while the tax benefits are appealing, they shouldn’t be the only reason you decide to negatively gear a property. You’ll want to make sure the property has good growth potential and that you’re comfortable with the risks involved.
Before you dive in, it’s a great idea to talk to a mortgage broker. They can help you figure out if negative gearing fits with your investment goals and your financial situation.
Negative gearing can be a useful strategy for property investors looking for long-term gains, even if it means taking a short-term loss. The tax benefits can be a big help, and if the property’s value increases over time, you could see significant rewards down the track.
But like any investment strategy, it’s important to go in with your eyes open. Make sure you understand the risks and talk to an expert to see if it’s the right approach for you.
If you’d like more information or personalised advice on property investment, get in touch with us today! We’re here to help you navigate the world of home loans, mortgages, and investment strategies
Buying or selling a home can be an exciting, yet sometimes overwhelming, experience. One of the key professionals who can help make the process smoother is a conveyancer.
But what exactly does a conveyancer do?
What is a Conveyancer?
A conveyancer is a licensed professional whose main job is to handle all the legal paperwork involved in transferring property ownership. They make sure that everything goes by the book when it comes to the sale or purchase of a home.
Think of them as your go-to expert for everything related to the legal side of buying or selling a property. They look after your interests and ensure that all the legal details are properly taken care of.
What Does a Conveyancer Do?
A conveyancer will assist you from start to finish in a property transaction. Here are some of the main tasks they handle:
Why You Need a Conveyancer When Taking Out a Home Loan
Your conveyancer ensures that everything lines up with what the lender requires. They’ll double-check that all the legal details of the property are in order, helping to avoid any last-minute hiccups that could delay your home loan approval or settlement.
Conveyancer vs Solicitor: What’s the Difference?
While both conveyancers and solicitors can handle property transactions, conveyancers are specialists who focus solely on this area of law. Solicitors, on the other hand, may offer more broad legal services, which can include conveyancing but usually at a higher cost. For most straightforward property transactions, a conveyancer is the more cost-effective option.
Do I Really Need a Conveyancer?
Yes, you do! Whether you’re buying or selling, a conveyancer makes sure the process is stress-free and legally sound. They help to avoid common pitfalls that can arise in property transactions, and they’ll be there to make sure you’re protected every step of the way.
In Summary
When it comes to buying or selling property, having a conveyancer on your team makes the whole process much easier. They handle the tricky legal bits so you can enjoy the journey!
Paying off your mortgage faster is a goal for many homeowners, and combining a credit card with an offset account can be a smart way to achieve this. Here’s how these two tools can work together to save you money and reduce your mortgage term.
What Is an Offset Account?
An offset account is a bank account linked to your home loan. The balance in this account offsets your mortgage balance, so you pay interest only on the difference. For example, if your mortgage is $400,000 and you have $50,000 in your offset account, you’ll only pay interest on $350,000. This reduces the amount of interest you pay over time, helping you pay off your loan faster.
How Does a Credit Card Fit In?
Using a credit card for your everyday expenses allows you to keep more money in your offset account for longer. Here’s the basic strategy:
Benefits and Considerations
Is This Strategy Right for You?
If you’re disciplined with your spending and can manage your finances well, this strategy can be highly effective. However, if you’re unsure, a mortgage broker can help you decide if it’s the right approach for you.
By using a credit card and offset account wisely, you can pay off your mortgage faster.
If you have any questions or need personalised advice, get in touch. We're here to help you make the most of your mortgage and move closer to owning your home outright.
Understanding the world of mortgages, and home loans can be tricky, especially when you're faced with terms like "offset account" and "redraw facility." Lets break down the key differences between the two.
What’s an Offset Account?
Think of an offset account as your regular savings account, but with a twist—it’s linked to your mortgage. The money you keep in this account offsets (or reduces) the amount of your home loan that’s charged interest. For example, if you have a $400,000 mortgage and $50,000 in your offset account, you’ll only pay interest on $350,000.
Why It’s Great:
If you’ve got some savings sitting around, an offset account is a smart way to cut down your mortgage costs.
What’s a Redraw Facility?
A redraw facility is like a little safety net. When you make extra repayments on your mortgage, you’re reducing the overall loan amount, which means you pay less interest. But if you need that extra cash later on, you can "redraw" it.
Why It’s Handy:
A redraw facility is perfect if you’re focused on paying off your mortgage quickly but want the option to access your extra payments if needed.
So, Which is Better?
It really depends on your needs. If you like the idea of having instant access to your savings while reducing your mortgage interest, an offset account might be for you. On the other hand, if you’re keen to pay down your mortgage faster and don’t mind having a bit less flexibility, a redraw facility could be the way to go.
In short, both options can help you save on your mortgage.
Got questions? Get in touch with us today! We’re here to help you navigate your mortgage options and find the best solution for your needs.
In today’s property market, buying your dream home where you want to live can feel impossible. However there is a strategy called rentvesting that’s helping people get into the property market sooner while still living where they love.
What is Rentvesting?
Rentvesting is when you rent a home in a location that suits your lifestyle, like a trendy city suburb, while buying an investment property in a more affordable area. This way, you can still own property and start building wealth without having to sacrifice living in your favourite spot.
Why Rentvesting Makes Sense
Getting Started with Rentvesting
Thinking rentvesting could work for you? The first step is to chat with a mortgage broker who can help you understand your options. They’ll assist in finding the right home loan and guide you through the process.
Is Rentvesting Right for You?
Rentvesting isn’t for everyone, but it’s definitely worth considering if you want to start investing in property without giving up your preferred lifestyle. With the help of a good mortgage broker, you can make an informed decision that sets you up for success.
Get in Touch with Us
If you’re ready to explore the benefits of rentvesting or need expert advice on home loans and property investment, get in touch with us. Our team is here to help you navigate the process and find the right strategy for your financial goals.
Investing in property is a dream for many Australians. Did you know you can use your superannuation to help make it happen? Let’s break down how this works and why it’s worth considering.
Can You Really Buy Property with Your Super?
Yes, you can! But there’s a catch—you need to set up a Self-Managed Super Fund (SMSF). An SMSF lets you control your super and invest in different assets, including property.
The Ups and Downs of Investing Super in Property
Upsides:
Downsides:
The Bottom Line
Using your super to buy property is a great way to grow your wealth, but it’s not without its challenges.
How a Mortgage Broker Can Help
Buying property through an SMSF isn’t as simple as getting a regular home loan. This is where a mortgage broker comes in. We can guide you through the process, help you find the right home loans, and make sure everything ticks the legal boxes. Get in touch with us today, and let’s start your journey towards property investment!
Did you know that changing how often you make your home loan repayments could save you thousands? Switching from monthly to fortnightly repayments is a simple change that can lead to paying off your home loan faster and saving thousands in interest.
Why Fortnightly Payments Work
Many people pay monthly on their home loan – they make 12 monthly payments each year. By switching to fortnightly payments, you make 26 smaller payments a year. This is like making one extra monthly payment annually, which helps you pay off your loan faster and reduces the interest you pay.
A Quick Example
Let’s say you have a $500,000 home loan at 6% interest over 30 years:
That’s a potential saving of around $80,626 in interest!
How Does It Save You Money?
Interest on home loans is usually calculated daily. By making repayments more often, you reduce your loan balance faster, meaning less interest accumulates over time.
Should You Make the Switch?
If you want to save on your home loan and pay off your mortgage sooner, switching to fortnightly repayments is something to definitely consider and easy to do.
The Bottom Line
If you want to pay your home loan down faster, switching to fortnightly repayments is an easy way to do so. It can save you thousands of dollars and help you own your property sooner. If you'd like to explore your options further, get in touch with us today! We're here to help you make the best choices for your financial future.
Paying off your mortgage faster is a fantastic way to save money and gain financial freedom sooner. Whether you're working with a mortgage broker or managing your home loan on your own, here are some simple, effective strategies to help you get there quicker.
1. Make Extra Payments
A little extra goes a long way. Consider making extra payments whenever possible:
2. Use an Offset Account
An offset account is a smart way to reduce the interest on your mortgage. Your savings in an offset account directly reduce the balance on which you pay interest. For example, if you have $20,000 in an offset account and a $300,000 mortgage, you’ll only pay interest on $280,000.
3. Stay on Top of Your Budget
Cutting back on small, unnecessary expenses can free up extra cash to put towards your mortgage. Whether it’s skipping a few takeaway coffees each week or reducing your subscription services, every little bit helps!
4. Speak to a Mortgage Broker
Refinancing to a lower rate can help you pay off your mortgage faster. A mortgage broker can help you find the best rates and guide you through the process to ensure it fits your budget.
Final Thoughts
Paying off your mortgage early doesn’t have to be complicated. By making extra payments, refinancing, and staying disciplined, you can save thousands and enjoy the peace of mind that comes with owning your home outright.
Get in touch with us to explore how we can help you manage your home loan more effectively and achieve your financial goals sooner.
When it comes to budgeting, there’s no shortage of advice out there. If there’s one tip that stands out above the rest for making a real difference in your financial life, it’s this: Pay yourself first.
What Does “Pay Yourself First” Mean?
Paying yourself first means making sure you prioritise savings and investments before any other expenses. Instead of paying everyone else first and then waiting to see what’s left over at the end of the month to put into savings, you set aside a predetermined amount as soon as you get paid.
Why Is This Tip So Effective?
1. It Creates Consistent Savings Habits
One of the biggest challenges in budgeting is maintaining a consistent savings routine. It's easy to let savings fall by the wayside when unexpected expenses arise or when you simply spend more than planned. By paying yourself first, you automate your savings and make it a non-negotiable part of your budget.
2. It Reduces the Temptation to Overspend
By allocating a portion of your income to savings or investments right away, you’re left with less income to spend on other things. This reduces overspending and impulse buying.
3. It Prioritises Your Financial Goals
We all have financial goals, whether it’s building an emergency fund, saving for a house deposit, or investing for retirement. Paying yourself first ensures that these goals are funded before anything else.
How to Implement the “Pay Yourself First” Strategy
1. Set Clear Financial Goals
Before you can pay yourself first, you need to know what you’re saving for. Set clear financial goals, whether it’s an emergency fund, retirement savings, or a dream holiday. Having specific targets will make it easier to determine how much to set aside each month.
2. Determine the Amount
Decide on a percentage of your income that you’ll pay yourself first. Start with 10% of your income and then slowly build up from there. The key is to choose an amount that’s both challenging and realistic.
3. Automate Your Savings
The easiest way to ensure you pay yourself first is to automate the process. Ask your employer to pay your chosen amount to a separate savings or investment account on payday. By automating your savings, you remove the temptation to skip a month.
Paying yourself first is the #1 budgeting tip that can truly change your financial life. By prioritising your savings and investments, you set yourself up for long-term success and ensure that your money is working for you, not the other way around. Start today, and watch as this small shift in mindset leads to big rewards.
Entering the property market can feel like a daunting task, especially for renters who are used to the flexibility and lower financial commitment of renting. However, with some planning and smart decisions, making the transition from renting to owning can be within reach. Here are some simple tips to help you enter the property market.
1. Understand Your Financial Position
Before considering buying a property, it's crucial to have a clear understanding of your financial situation. Review your income, savings, and existing debts. Prepare a budget to track your expenses and see how much you can realistically save each month. This will give you an idea of how much you can afford to spend on a home, including the deposit, ongoing mortgage repayments, and additional costs like stamp duty and legal fees.
2. Set a Realistic Savings Goal
Generally, you’ll need at least 5-20% of the property’s purchase price for a deposit. Setting a realistic savings goal is key. To do this, calculate how much you need for a deposit on the type of property you want to buy. Then, create a savings plan. Consider automating your savings by setting up a direct debit into a dedicated savings account each payday.
3. Consider Government Schemes and Grants
The Australian government offers several schemes to help first-home buyers. These include the First Home Owner Grant (FHOG), the First Home Super Saver Scheme (FHSSS), and various state-specific incentives. These grants can significantly reduce the financial burden of buying your first home.
4. Get Pre-Approval for a Loan
Before you start house hunting, it's wise to get pre-approval for a mortgage. Pre-approval gives you a clear picture of how much you can borrow and shows sellers that you're a serious buyer. It can also help you narrow down your property search to homes within your budget. Speak to a mortgage broker or your bank to understand the different loan options available and get a pre-approval that suits your financial situation.
5. Start Small
If the thought of buying your dream home seems overwhelming, consider starting small. Purchasing a more affordable property, such as a unit or a home in a less expensive area, can be a stepping stone to your ideal home. This approach allows you to enter the market sooner, build equity, and eventually sell or upgrade to a larger property as your financial situation improves.
6. Seek Professional Advice
Investing in professional advice can save you money in the long run and make the process of buying your first home smoother and less stressful.
Your dream of owning a home could be closer than you think.
