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

Paying off your home loan can sometimes feel like an endless journey, but what if there was a way to speed things up? One clever strategy that many people overlook is using an investment property to help repay your mortgage faster. By stepping into the world of property investment, you can create additional income that could make a big difference to your mortgage repayments. Let’s break down how this works and how you can get started.

What’s an Investment Property?

An investment property is simply a property that you buy with the aim of earning money from it, either through renting it out or selling it for a profit later on. For many Aussies, buying an investment property is not just about growing wealth; it’s also about using that extra income to pay off their home loan quicker.

How Can It Help with My Mortgage?

1. Extra Income from Rent:
   As an investor, you’ll collect rent from your tenants. This rental income can be a real game-changer. Instead of just covering the costs of the investment property, you can also use it to make extra repayments on your home loan. These extra repayments can help reduce the amount of interest you pay over the life of your loan, meaning you could be mortgage-free sooner.
2. Tax Perks:
   The Australian tax system offers some nice benefits for property investors. For example, if your investment property costs more to maintain than the income it generates, you might be able to claim that loss against your other income. This is known as negative gearing, and it can lead to a nice tax refund. You can use that refund to pay off your mortgage even faster.
3. Property Value Growth:
   Over time, your investment property might increase in value. If that happens, you could sell it and use the profit to pay down your mortgage.
4. Debt Recycling:
   Debt recycling is a strategy where you use the equity in your investment property to borrow money, which you then invest in other income-producing assets. The income from these investments can help pay off your mortgage faster.

Why You Should Talk to a Mortgage Broker

Navigating the world of home loans and property investment can be tricky, but that’s where a good mortgage broker comes in. They can help you find the best home loan rates, structure your loans in a way that works for you, and make sure you’re getting the most out of any tax benefits. With a mortgage broker by your side, you’ll have the confidence to make smart financial decisions and get the most out of your investment property.

Things to Keep in Mind

While the idea of using an investment property to pay off your mortgage faster is exciting, it’s important to remember that property investment isn’t without risks. Property prices can go up and down, there may be times when your property is vacant, and unexpected expenses can crop up. That’s why it’s crucial to do your homework and get professional advice before taking the plunge.

Wrapping It Up

Investing in property can be a fantastic way to help you pay off your home loan sooner and build wealth at the same time. By generating rental income, taking advantage of tax benefits, and possibly enjoying capital growth, you can make your mortgage a thing of the past faster than you might have thought. Just remember to consult with a mortgage broker to ensure you’re on the right track and to help navigate any bumps along the way.

If you’re interested in learning more about how an investment property can help you pay off your mortgage faster, or if you’d like to explore your home loan options, get in touch with us. Our team of is here to help you make the best financial decisions for your future.

Understanding the difference between a savings account and an offset account can make a big impact on how quickly you can pay off your mortgage. Let’s break down the basics to help you decide which option might be better for you.

What’s a Savings Account?

A savings account is where you deposit money and earn interest. It’s a safe place to grow your money, but the interest earned is usually taxed, and often lower than your mortgage interest rate.

What’s an Offset Account?

An offset account is linked to your home loan. The balance in this account is deducted from your mortgage balance when calculating interest, reducing the amount of interest you pay. For example, if you have $20,000 in your offset account and a $300,000 mortgage, you’ll only pay interest on $280,000.

Savings Accounts vs Offset Accounts:

1. Interest Earnings vs Interest Savings:
   • Savings Account: You earn interest on the money you put in, but keep in mind, interest rates can be quite low, and you’ll also need to pay tax on that interest.
   • Offset Account: Instead of earning interest, you save money by paying less interest on your mortgage. The interest savings here are often greater than what you’d earn in a savings account, especially over the life of your home loan.
2. Tax Benefits:
   • Savings Account: The interest you earn is considered income, so you’ll pay tax on it as part of your regular income tax.
   • Offset Account: There’s no tax to worry about because you’re not earning interest; you’re just reducing the interest you pay on your mortgage, making it a more tax-effective option.
3. Ease of Access:
   • Both accounts are easily accessible, but if you withdraw money from your offset account, remember that your mortgage interest will go up since you’re offsetting less of your loan.
4. Long-Term Benefits:
   • If your main goal is to get that mortgage off your back as quickly as possible, an offset account is usually the better bet. By reducing the interest you pay, more of your repayments go towards paying down the loan itself, speeding up the process.

Which Helps You Pay Off Your Mortgage Faster?

An offset account is the better choice to pay down a mortgage faster. The reduced interest payments mean more of your repayments go towards the principal, helping you clear your debt sooner.

The Bottom Line

If your goal is to pay off your mortgage quickly, an offset account is likely the smarter choice. However, everyone’s situation is different.

Need help deciding between a savings account and an offset account for your home loan? Get in touch with us today! We can guide you through your options and find the best strategy to help you pay off your mortgage faster.

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:

• Monthly Payments: You’d pay $2,998 a month, with a total interest cost of $579,190.
• Fortnightly Payments: You’d pay $1,499 every two weeks, reducing your total interest to $498,564.

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:

• Fortnightly Payments: By paying half your monthly mortgage amount every two weeks, you end up making one extra payment each year. This can shave years off your loan.
• Round Up: Round up your monthly payment to the nearest $50 or $100. It’s a small change, but it can make a big difference over time.
• Lump-Sum Payments: Got a bonus or a tax refund? Put it towards your mortgage to knock down that principal faster.

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.

Purchasing a home is one of the most significant financial commitments you'll ever make, and securing a home loan is a crucial step in this journey. Whether you're a first-time buyer or looking to upgrade, understanding the key considerations before applying for a home loan can help you make informed decisions and ensure a smoother process. Here are three essential factors to keep in mind:

1. Your Financial Position

• Credit Score and History: Your credit score is a critical determinant in the home loan approval process. Check your credit report for errors and address any discrepancies before applying.
• Savings/deposits: Having a substantial deposit can significantly improve your loan application. Most Australian lenders require a minimum deposit of 20% of the property's value to avoid paying Lenders Mortgage Insurance (LMI). The more you can save for a deposit, the less you'll need to borrow.
• Income and Employment Stability: Lenders prefer borrowers with a stable and consistent income. If you're self-employed, be prepared to provide additional proof of income, such as business tax returns.

2. Understanding Loan Types and Features

• Fixed vs Variable Interest Rates: Deciding between a fixed or variable interest rate is a crucial decision. A fixed-rate loan offers stability with consistent repayments, shielding you from interest rate fluctuations. In contrast, a variable rate loan might offer more flexibility and potentially lower rates but comes with the risk of interest rate increases.
• Loan Term and Repayment Structure: The loan term affects your monthly repayments and the total interest paid over the life of the loan. While a longer term can mean lower monthly payments, it results in more interest paid overall. Conversely, a shorter term increases monthly repayments but reduces the total interest cost. Consider your financial situation and future plans when choosing a loan term.
• Additional Features and Fees: Home loans come with various features, such as offset accounts, redraw facilities, and the ability to make extra repayments. While these can provide flexibility and potential savings, they often come at an additional cost. Evaluate the fees associated with each loan product.

3. Market Conditions and Property Considerations

• Current Interest Rates and Economic Climate: Interest rates in Australia can fluctuate based on economic conditions and Reserve Bank of Australia (RBA) decisions. Stay informed about the current interest rate environment.
• Property Location and Value: The location and value of the property you intend to purchase play a significant role in the loan approval process. Lenders assess the property's market value to ensure it aligns with the loan amount.
• Future Financial Plans: Consider how the home loan fits into your broader financial plans. Are you planning to start a family, change jobs, or make other significant financial commitments in the near future? Ensure the home loan you choose is flexible enough to accommodate these potential changes without causing financial strain.

Applying for a home loan is a complex process that requires careful consideration of your financial health, loan options, and market conditions. By thoroughly evaluating these three key areas, you can make informed decisions that align with your financial goals and increase your chances of securing a favourable home loan.

Do you find that when you do the groceries you always shocked at how much the bill comes to? You look at the trolley and think how does all that cost so much!  

Well here are 3 simple ways to help you reduce your grocery bill next time you go shopping

Always shop on a full stomach

How many times have you gone grocery shopping on an empty stomach and bought things you do not need? I know I have! Shopping on an empty stomach will prevent you from buying unnecessary things.

Set a budget and stick to it

This is my favourite as I know it works if you do it. Every time I set budget for groceries; I walk out not spending more than that. By setting a budget you force yourself not to buy things that you don’t need. Take a calculator with you if you need to. Theses your phone will do the job anyway.

Buy homemade brands

If you're not loyal to a particular brand, try the homemade brands. I know for some things I will only buy the brands that I like. However, for other things I am happy to buy the homemade brand. For example, I am very particular when it comes to honey and therefore, I will only buy my favourite brand. However, when it comes to butter, the homemade brand suits me just right. Buying the homemade brands will help cut the bill.

Next time you go shopping try the above things and let me know if your grocery bill has reduced as a result.