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In simple terms, equity is the difference between what your home is worth, and how much you owe on it. For example, if your home is worth $400,000 and you still owe $250,000, your equity is $150,000.
Within five to ten years of owning a home, you will have built a sizable amount of equity. If you are looking at purchasing another property, banks will generally lend you up to 80% of a home’s value without having to use Lenders Mortgage Insurance, and you may be able to access a portion of your equity to use for the remaining deposit.
For a closer look at using equity, check out RateCity’s guide to using home equity to buy an investment property.
House and land packages are a great way to reinvest your equity and make a return by using it as a rental property.
Packages offer convenience and the homes are specifically matched to suit the land. Building a house and land package will also result in paying less stamp duty. This is because you only have to pay stamp duty on the value of the land as the home hasn’t been built yet.
Potential investors should also consider the benefits of higher quality materials and construction techniques that new homes offer, resulting in little to no maintenance costs, energy efficient technologies and warranties on the home, its fittings and appliances.
Check out all the latest house and land packages by Hotondo Homes here.
When looking to use your equity, the bank will take into account your age, income, family, cost of living and any additional debt you may have incurred. It is also wise not to use every last cent of your equity so you can give yourself a safety buffer in case of emergencies. Before you start building your property portfolio, it is best you speak to your banker or broker.
*Hotondo Homes is not an authorised financial adviser so please seek professional advice for your banking enquiries.
With open-plan living at the height of popularity, the living room – along with the kitchen and dining space – can often become the focal point of the home. Changing just a few small aspects of this space can help breathe new life into a home.
We have listed seven simple ways to makeover your living room easily:
Lighting has the ability to make a HUGE impact on your interior design. It can set the mood, make a space appear larger or smaller and it has an enormous effect on your colour scheme. For this reason alone, updating your fixtures should be priority number one! Whether you are simply swapping out bulbs for LED energy-saving alternatives, adding a floor lamp to a dark corner or trading in lampshades, take the time to give a little love to the often-neglected lighting.
If your living room structure is spot-on, there are still a few things you can do to instantly update the look.
Reupholster an armchair – if your armchair is still in good nick, reupholstering it is an easy and relatively cheap way to makeover your living room. If you don’t have an armchair, check out a few flea markets – as long as the chair’s structure is good, there is no need to worry about worn or ratty upholstery. Choose a new, bold print to stand out and make it a feature of your home!
Rearrange a bookshelf – baskets and containers are the easiest way to hide clutter but keep items in an accessible space. Try clearing your bookshelf of junk, and keep just a few key items and some books on display!
Reorganise the furniture – already love everything in your home but are still looking for an update? Rearrange the furniture! Sometimes simply moving one item to another location can make all the difference.
Interested in the concept of Feng Shui? Read about it here: FENG SHUI YOUR HOME
Including greenery in your home instantly creates an atmosphere bursting with health and well-being. Plants make a boring corner look instantly chic, and small succulents can be used as coffee table or side table décor. Just be sure to choose plants which will thrive indoors!
Check out our favourite indoor plants here: INDOOR PLANTS FOR YOUR HOME (THAT YOU WILL NOT IMMEDIANTLY KILL)
Like to stay in touch with the current trends? Ensure your larger pieces of furniture like couches and TV cabinets are neutral colours that will go with anything, and instead purchase new cushions, throws, candles and other knick-knacks to achieve the ‘on-trend’ look without a costly financial commitment.
DIY is a unique way to create something nobody else may have. It is your chance to let your true style shine through. Check out Pinterest or other blogs for some amazing inspiration, and get creating!
Have you ever had to makeover your living room? Let us know your tips in the comments!
Working towards a deposit for your home takes time and patience. The best way to approach it is to start with small changes in your life. This doesn’t mean giving up absolutely everything, but rather cutting back on the non-essentials in life. Every little bit counts, and each small contribution can result in big progress.
We have rounded up a list of nine things you can start doing today to help you improve finances and get on track to purchasing a new home in 2017!
Topping almost all financial guides is cancelling subscriptions to magazines or gym memberships you do not use. Another perhaps unnecessary purchase is cable TV. With so many cheaper, alternative streaming options available, it may be worthwhile checking out.
Shop around for your energy, gas, credit card and insurance needs. If you like the company you are with, a simple phone call asking for a reduction will often get you a cheaper price – they want to keep you as a customer! It may be painstaking, but renegotiating your bills could save you some big cash. If you already have a mortgage, it is worth speaking to your bank about an interest rate reduction too!
If you have a high-interest credit card, the first thing you should do is pay it off as fast as possible. Interest-related costs is basically dead money, so working to get rid of the debt should be your priority. Consider transferring the balance to a credit account with a lower or even zero-interest rate to further help your cause and improve finances in the new year!
The Australian Securities & Investments Commission can help you search for unclaimed money from various banks, building societies, credit union, life companies, friendly societies and registered Australian companies. Check out this link to see if you have any unclaimed funds!
Set your bank account to withdraw a portion of your earnings every time you are paid. By doing this straight away, you can never miss the money you never had! If you can transfer it to an online account you cannot touch, or does not have an attached card, even better. Be sure to figure out exactly how much you can afford to save per pay by creating a budget for the week, fortnight or month.
Just like renegotiating your bills, it is worth checking out your phone plan for cheaper alternative options. These days there are so many options including ‘bring your own phone plans’. These plans require you to purchase a phone outright, but the ongoing monthly cost of the phone plan is significantly cheaper than an all-inclusive one, which could work out cheaper in the long run. Carefully consider all your options and work out what is best for you and your lifestyle.
Plan out your meals for the week, write a shopping list and STICK TO IT. How many times have you gone to the supermarket and come home with items you never intended to purchase?
Not only can this be cheaper and healthier than eating out, but you can also cook extra to have for lunch or even dinner the next day, saving you even more cash.
Saving for a new home will require some discipline and cutbacks, but you still want to live and enjoy life while you do it. Don’t feel guilty for indulging every now and then and treating yourself. If you work hard to stick to improve finances for 2017, there is no reason to not go out, enjoy a nice dinner or hit the shops on occasion. Do not let your finances consume you!
Contact your local Hotondo Homes builder today to find out more and help improve finances next year!
*Hotondo Homes is not an authorised financial adviser so please seek professional advice for your banking enquiries.
An offset account works in the same manner as your everyday banking account with one crucial difference – the balance is offset daily against money you owe on your loan, which reduces the amount of interest you pay.
A reduction in interest means you can pay off your loan quicker. For example, if you have $10,000 in an offset account and you have a $300,000 home loan, you will only pay interest on $290,000. Using this calculator you can see if the interest rate is at 5%, you could save $18,357.69 in interest and cut 1 year and 8 months off the length of a 30 year loan.
Because the money in your account is offset daily against your loan balance, the longer you have money in your account, the more you will save on interest.
There are a few questions that are often asked in relation to offset accounts.
Why not save the money in a high interest account instead?
In almost every case, you will never earn more interest in a savings account than what you are paying in interest on your home loan. Interest earned in a savings account also needs to be declared to the tax office, and tax must be paid on it. Your money will be working much harder for you in an offset account.
Why not put the money straight on the mortgage?
There are benefits to keeping money in your offset account rather than putting it straight on the mortgage. Funds in an offset account can be used like your everyday account. If you have an emergency, or you may be saving for a holiday, it is easy to withdraw funds as necessary. If you put it all on the mortgage, then find you need the money down the track, you may be hit with redraw fees or minimum redraw amounts.
Having a decent amount of savings in your offset account can cut years and thousands of dollars from your home loan. It also offers comfort in the knowledge that you can access these funds at any time, with no issue.
Always beware of extra transaction charges that may surround offset accounts though. It is best you do your research and speak directly to your bank regarding these accounts being used to pay your mortgage faster.
*Hotondo Homes are not financial experts. You should always seek independent legal advice when looking to reduce the amount of your mortgage with an offset account.
It can be that life-changing step towards freedom, but in order to take that step you need a deposit. The more money you save the less you’ll have to borrow, and the less you’ll have to borrow, the less you’ll have to pay in interest.
Sound easy? The truth is saving a home deposit is no walk in the park; it takes discipline, sacrifice, focus and determination. The good news is that we have made it easy for you to do, just follow our 10 saving tips and you could be on your way to save for your first home!
Your home loan is most likely the biggest commitment – and largest amount of debt – you will take on in your entire life.
Paying it off as fast as possible is something many people aim for to help save thousands of dollars in interest and relieve stress associated with debt. For those who wish to tackle their debt head on, we have a few simple tips to start reducing your mortgage now! (more…)
1. RESEARCH DIFFERENT LOANS
Know what you want or need in a loan and shop around. Fixed rates, variable rates, redraw capabilities and the length of the loan are all important factors. Make sure the structure of your loan is right for you straight off the mark – this is a long-term commitment!
2. BUDGET ACCURATELY
Take the time to work out what you can really afford. Many people are excited to buy their first home, but forget the extra fees or underestimate the cost of actually owning one. Find out what may be applicable to you including home insurance, stamp duty, moving costs, council rates and transfer fees. Also, be prepared for maintenance costs which will now fall back on you.
3. BANK APPROVAL
Try not to take out new credit while applying for your home loan. The bank assesses how much they can lend you based on your current financial situation and getting another loan during this time can put a strike against your name. Further to this, try not to change jobs while applying for a mortgage. Banks like to see a stable income. If you are thinking of moving jobs it is highly advised you avoid doing so until after your purchase.
4. THINK ABOUT THE FUTURE
It can be very difficult to predict where the future will take you, however it doesn’t hurt to consider possibilities like future children and pets – it is very likely your family situation will change while you’re living in the same house. An extra bedroom or a bigger backyard not only increases your resell value, but can help increase the length of time you live in your home. Make sure the home you choose accommodates for the future-you too!
5. CONSIDER SELLING YOUR HOME
Having finally built or found the perfect home, the last thing you want to think about is selling it. However, your home is an investment, and it is important to think about a time when you may need to sell it. When searching for your home, consider what other typical home buyers may want and accommodate for this if possible. The location is also extremely important, and while your preferences should be paramount, it does not hurt to think ahead.
For more information regarding your home, contact your local Hotondo Homes builder here.