Who do you need on your team when purchasing an investment property?

If you are considering purchasing an investment property, it is often a good idea to seek counsel from experts. This list is intended to be used as a guide and is not designed to be exhaustive. It is important that you conduct your own research and gather your own information.

Lawyer: a lawyer can give you advice regarding property ownership, particularly when more than one party is involved. They can also provide advice about how to purchase a property. For example, when it might be advisable to set up a trust or company.

Financial Planner: a financial planner is trained to look at your complete financial picture. They can look at all of your investments and also weigh up all of your options when it comes to investing.

Accountant: your accountant is best placed to give you specific advice regarding the tax implications of owning an investment property and most importantly, how these relate to your personal circumstances.

Mortgage broker: Brokers can create borrowing scenarios for you and show you how you can structure your borrowing as well as how you can leverage equity.

Settlement agent: your settlement agent can discuss with your options when it comes to property ownership and titles if you are considering purchasing an investment with another party.

First Home Buyers Grant

The WA State Government has put in place some measures to make home ownership more achievable for eligible first home owners. The assistance comes in the form of the First Home Owners Grants and the First Home Owners Rate. If you are unsure about your eligibility, then be sure to speak with your mortgage broker, who can talk you through the process.

The First Home Owners Grant (FHOG) is a one-off payment that is made to first home owners who have met the eligibility criteria. You can choose to use the grant in any way but you should consult with your mortgage broker or financial planner who can discuss ways that you can maximise the usefulness of the grant.

In September 2013, the State Government made some big changes to this grant. Under the current FHOG, this is what you may be entitled to:

  • First home owners building a new property will be entitled to $10,000.
  • First home owners purchasing an established property will be entitled to $3,000.

There are also some concessions on stamp duty. This is referred to as the First Home Owners Rate

  • First home buyers purchasing a property valued at $500,000 or less will pay no stamp duty. This is phased out at $600,000
  • First home buyers purchasing vacant land up to the value of $300,000 will pay no stamp duty. This is phased out at $400,000.

If you would like further information on both the First Home Owners Grant and the First Home Owners Rate, then be sure to contact one of the team at FinanceCorp on 9417 5550.

Tracey Franco, Owner

What are chattels anyway?

In all the excitement of buying a new house, we can often make assumptions about what will be included in the sale of the property. These assumptions can lead to disputes in the time leading up to settlement.

In an offer and acceptance contract, there is typically a clause that will state that property chattels including all floor coverings, window treatments, light fittings, fixtures and fittings will remain in the property.

However, you should be certain what is staying and what is going when you are buying or selling a property. The simplest way to do this is to ask the seller at the time of signing the contract what will be included.

As a buyer, you should always be certain to ask very specific questions. This is particularly important if there are items that you want to be included. Once you have clarified the items that you want included, it is necessary to have all of these individually listed on the offer and acceptance contract. Do not simply take the word of the seller or the real estate agent.

Remember, that being upfront and clear about chattels can save a lot of time and hassle as settlement approaches or even after settlement. Disputes about chattels can make the final handover extremely unpleasant and by being specific early in the process, all of this can be avoided.

How much time should I allow for settlement?

In the transaction of buying and selling there are two parties typically involved. Almost always, the buyer is keen to move in to their new property as soon as possible. On the flipside, the seller in normally eager to access the proceeds of the sale. This can make for two very eager parties. So, it is worth taking a moment to consider this. It is important that an appropriate amount of time is allowed for settlement to occur.

If inadequate time is given for settlement, then there can be delays. If this happens, them both the seller or the buyer can be liable to pay a penalty interest charge. But with the right amount of time and planning, this can all be avoided.

There are a number of instances where it would be prudent to allow additional time for a settlement to occur. Here are just a few reasons that could delay the settlement process:

1. There is a tenant in the property. Depending on the lease in place, there may need to be an additional allowance if the buyer wants to purchase the property vacant. Be sure to find out this information before determining a settlement date.
2. There is a mortgage on the property: Sufficient time must be allowed for the seller to make arrangements and in turn, for their lending institution, to discharge the mortgage.
3. One of the parties is overseas: this can be the buyer or the seller. Being absent can mean that documents need additional time to be signed and returned. Remember, that there are still several documents that need to be original, this means that faxed, scanned or copied documents will not be accepted.
4. Settlement is close to a public holiday or after one. There are certain periods where there may be less staff on board to handle your settlement. Easter and Christmas are the key times to avoid. Be aware that some matters are given a certain number of working days to be completed and public holidays must be removed from this calculation.

If you are uncertain about how to set the date for your settlement, be sure to start a conversation early with all parties involved. Your settlement agent will be able to assist you in providing reasonable guidance about a good settlement date.

Autumn is the new Spring – well it is time for a good tidy up

If your home is still wearing some of the chaos from Christmas and Summer, then the Easter break is the perfect excuse to bring some calm and order to your home. Try and enlist some help from your children who will be on school holidays and have some spare time on their hands.

Here are my top 10 tips for your Easter tidy up:

1: Declutter. Removing extra items from around the house is a great first step. This should involve putting things in the bin or for donation as well as returning items to where they belong.

2: Start cleaning. This is not your regular cleaning but the things that need to be done periodically. You can choose to do this by task – ie wash all the walls in the house or by room so all the additional dusting and cleaning is done for one room. The key is to break it down in to small tasks.

3: Clean outside: jobs such as washing your windows and doors and cleaning the gutters are big jobs to tick off.

4: Clean your front door: this may sound odd but your front door is how you welcome people to your home. Remove any dead or tired plants, remove cobwebs, wash the door and ensure you make a great first impression. Consider wiping the door frame over with an essential oil such as lavender to give it a clean, fresh smell when people arrive.

5: Tackle the pantry and fridge: these are places that become messy over time and you need to sort through them to remove out of date products and also to ensure you know what is in there that needs using up.

6: Bathroom: the cupboards are a great place to start. Items like makeup have very short lives and we should regularly sort through and clean these out. Also spring clean all the walls using oil of cloves to reduce mould and be sure to clean out the fan.

7: Clothes: Many of us hang on to items that are old and worn or no longer fit. Be ruthless and get rid of these. Ask a friend to help if you don’t think you can make the decisions on your own.

8: Hit the laundry room. The cupboards are classic spaces for items to accumulate. You should consider cleaning your washing machine – both inside and out to help it run well.

9: Sort the paper. Despite living in a digital age, we still accumulate lots of paper from bills, statements and the like. Spend some time working through this and determining what you need to keep and what you can throw out.

10: Maintain your good work. Take a photo of the rooms now that they are clean and tidy to motivate yourself to keep it like this.

I hope that you have a go at a big tidy up and all done by Easter Sunday ready to enjoy some quality time with your family and naturally you will need to reward yourself with some chocolate.

What are interest rates likely to do tomorrow?

Tomorrow we will see the Reserve Bank meet for the first time this year. There is a lot of speculation around what decision they may come to regarding the official cash rate.

Currently, the official cash rate in Australia is sitting at 2.50%. This rate is a record-low with it being over 50 years since Australians enjoyed such a low interest rate. This current low rate is great news for homeowners. But what everyone would like to know is – how long will they stay this low for?

The current rate of 2.50% was set in August last year. Since then the Reserve Bank has adopted a “steady as she goes approach” with consecutive monthly announcements of “no change” being the order of the day. This holding pattern that rates have been in has lasted for 6 months. This in itself is a sign of both stability and security for the Australian economy.

Looking in to the future, we could only wish for a crystal ball that might tell us exactly what interest rates are going to do in 2014. There are, however, some indicators that offer some insight in to what interest rates might do this year.

The strongest indicator as to what the RBA might do with interest rates is inflation. The RBA uses interest rates to manage inflation. Inflation is the rate at which the price of goods and services rise. This is measured by the CPI or Consumer Price Index. The relationship can be simply explained like this. When interest rates are low, people are able to borrow more money and this results in increased spending. This causes the economy to grow and the inflation rate to rise. The RBA uses the official interest rate as a fiscal tool to manage spending and therefore the inflation rate. Inflation rose by 0.8% in the December quarter and is sitting 2.75% higher than a year ago. Looking at things simply, this rise in inflation could prompt the RBA to consider rising interest rates.

There are a multitude of other factors that the RBA considers when assessing the current level of interest rate. There is only one thing that we can be certain of and that is that interest rates are incredibly low at the moment and now would be an excellent time to review all of your spending and borrowing to ensure you are getting the best deal possible.
Tracey Franco
Owner, FinanceCorp
P 9417 550

Christmas lights – how to do it safely

So December is now upon us and for many, the beginning of the month signals a time to start putting up the Christmas decorations. To ensure you do this safely, here are some tips for you:

  • Many people store their Christmas decorations in their loft or roof space or their garden shed or garage. This means that potentially they may have been exposed to water or even rodents and other vermin that like to nibble things. Once your lights are out, be sure to give them a thorough check over. Pay special attention to all cabling and power sockets. If any look remotely damaged, loose or frayed, do not use them. A qualified electrician can easily replace or repair these things for you.
  • Whilst the weather is good, lights still need to be suitable for outdoor use. Many people have reticulation systems that may make contact with the lights. With this in mind, ensure all of your lights are suited to the outdoors and where required, are water proof.
  • Exterior Christmas lights should either be low voltage or protected by an RCD (residual current device). The RCD will automatically spring in to action and break the circuit if an earth fault occurs.
  • Be sensible with your power boards and power sockets. Overloading either of these can cause overheating, short-circuiting and electric shocks. In some instances, this can result in a fire.
  • Think carefully about placement of cables and cords. Trips and falls from cables being draped across walkways or lying in paths can be serious. If you need to have them over a path, use strong tape to fully cover them to minimise the chance of tripping.
  • Don’t be tempted to tidy away cables by winding them up. Cables that are coiled up can overheat and this can result in both short-circuiting and fire.
  • Cables and cords can be easily damaged. Don’t be tempted to push these through doors or windows to enable them to reach a power supply.
  • If you are able to, put all lights on a timer so they do not remain on all night. This will not only reduce your power use but minimise the chance of them overheating from being left on for too long.

I hope these tips ensure you make the most of your Christmas lighting and allow you to keep your family and friends safe whilst they enjoy your festive display.

Is your home safe and secure?

With only a few short weeks until Christmas, now is really the time to start thinking about how you can ensure your home is safe whilst you and your family are off enjoying a holiday. According to police, a large number of break-ins occur over the holiday period. Thieves know that many people are away on holidays and they target homes that can look “less lived in”. So what does this mean and how can you minimise your chances of becoming simply another statistic whilst you are away enjoying yourself.

1. Ensure that you have quality locks on all doors and windows. If any doors can be deadlocked then be sure to do this as well. This means that if thieves are able to gain entry to your home, getting out may prove difficult and this can limit how much they are able to steal.
2. Never ever leave a spare key lying around your home. Many people still have one under a pot plant or stashed in the garden. Thieves know this and if they have the time, can simply scour your home and then let themselves in with your spare key.
3. Ask a trusted neighbour or friend to look in on your home. Get them to come regularly and perform some tasks that can show you are home. Overflowing letterboxes, newspapers left on the lawn and every single blind down and curtain closed all the time are sure indications that no-one is home.
4. Install a timer light. These can give your home the appearance that someone is home. Put it in a room that someone cannot easily look in to and thereby ascertain that no-one is home.
5. Inform your neighbours (that you know) that you will be on holidays so that they can be alert to any unusual or suspicious activity around your property.
6. Install DIY cameras. These are much easier than you imagine to put in and act as a real deterrent to would-be burglars.
7. Install a back to base alarm. This gives you peace of mind knowing that your home is secure and that if the alarm is triggered someone will attend your property to check it out.
8. Tidy up your front garden – an overgrown lawn or garden can be signs that no-one is home.

Now that your home is looking lived in and nice and secure, be sure to enjoy your Christmas or Summer holidays.

Our top tips to get your home ready for Christmas

Christmas is often a stressful time as we have lots more booking up our calendar and on top of this, around the home we need to put up decorations and have it looking clean and ready for lots of visitors. To minimise the stress, here are some tips for you;

1. Consider your Christmas decorations – get them out and give them a clean and sort. Throw out anything looking tired or tatty. Now you know what you have, determine where you will place all items. With a clear idea of what you need and for where, purchase additional decorations.
2. Create space – you now know what decorations you will be putting out so it is important you make some space for them. Don’t be tempted to push ornaments back to make way of Christmas items. Put things away so your house does not look too cluttered and also to minimise the risk of breakages.
3. Get on to your cards early. Make a list of who you will be sending cards to. Get to the post office early to buy your stamps as well as purchasing the right quantity of cards. Now that you have all you need at home, set aside a little time over a week to get them done. This takes the pressure off closer to Christmas.
4. Start planning presents – knowing what you need to buy and for whom eliminates the need to overbuy or overspend. Set a budget for each gift and stick to it. Create a space in your home to store presents ready for wrapping.
5. Purchase wrapping paper, gift tags, ribbons and extra sticky tape. Once you have these store them with your presents. If you have all the items you need, it is easy to start wrapping and simply do a little at a time.
6. Grab a few “just in case” gifts. This can be something like a bottle of wine or a box of chocolates. Have these wrapped and under the tree in case someone drops over with an unexpected gift for you.

My last tip is to get started NOW. If you get lots crossed off your list in November, you can really enjoy all the fun of the silly season and not be rushed and stressed shopping and worrying when you could be enjoying yourself.

What do low interest rates mean?

Last week was the beginning of the month and this can only mean one thing. Whilst most of the country was focused on the Melbourne Cup, a few were watching the Reserve Bank to see what decision they will be making.

So what is the cash rate which the Reserve Bank (RBA) sets?
The official interest rate is the cash rate. The cash rate is the rate charged on overnight loans between financial intermediaries and is determined in the money market as a result of the interaction of demand for, and supply of overnight funds.

In Australia, the Reserve Bank is responsible for setting the official cash rate and it meets on the first Tuesday of the month to decide how the cash rate will be set. The setting of interest rates is the key tool that the RBA has to effect monetary policy. For the broader economy, monetary policy should seek to create stability, maintain employment and protect the economic prosperity and welfare of the nation.

So what do low cash rate mean?
The official cash rate in Australia is currently sitting at 2.5%. This represents a 50 year low for the country. It is highly unlikely that they will drop any lower and we can expect a holding steady approach in to the New Year.

The low cash rate naturally flows on to the wider economy via financial institutions. A low cash rate is designed to stimulate the economy. A low cash rate allows borrowers and investors to confidently borrow money. This in term stimulates the economy as well as employment.

For the real estate industry, low cash rates have a huge impact. The current low interest rates are luring new buyers and investors in to the market and also encouraging people to swap up to a larger property.

One of the bonuses of low interest rates is that we can often save you money. The low rate has created competition on other fronts such as fees and packages meaning there are some great products to choose from. We can also look at refinancing your mortgage for a lower rate, saving you thousands on your loan.

If you would like to discuss anything related to finance, please contact us. You can call the FinanceCorp office on 9417 5550 and we will put you in touch with your local broker who will be happy to assist you.

Tracey Franco,Owner