hello evan

Welcome to the autumn edition of Haven.

Are you looking to buy your first home or know someone who is? With interest rates low, latest statistics show that first time buyers are confidently dipping their toe in the housing waters. While buying your first home is exciting, letting your head rule your heart is the cleverest way to get into the market. Our lead article runs through things to keep in mind before taking the plunge.

The foundation of our attitudes towards money are laid down during childhood, by lessons taught to us by our parents. In our Making Cents article, we take a look at some practical ways to teach sound financial attitudes to your children as they grow. And moving to the opposite end of the life cycle, did you know that more than 45% of Australians don’t have a will? While making a will might mean acknowledging your mortality, not having one can create untold angst for your family when you pass away. If you fall into that camp, it isn’t difficult to correct the fact and we consider the pros and cons of using a professional to draw up your will versus doing it yourself.

As always, don’t forget to enter our Haven competition. $1,000 could be yours by sharing the best budgeting tip your parents ever gave you.

If you have any questions about your mortgage situation, or have a friend or family member who could use my expertise, please don’t hesitate to get in touch. I’m always available to help run through your financial situation.

Enjoy the read.

Kind regards,

Evan Sourbis
Henley Home Loans

Shop 8/505 Henley Beach Road
Fulham SA 5024
Tel: 08 8353 3322 | Mob: 0412 214 576 | Fax: 08 8353 3388
Email: evan@henleyhomeloans.com.au
Web: www.henleyhomeloans.com.au

Low interest rates, flat property prices and
government grants continue to entice plenty of
first-time buyers into the home market. In fact, one
in seven home loans last year was for first homes, according to the latest AFG Mortgage Index.

While home is where the heart is, savvy first-time buyers are also using their heads. Haven looks at some of the best ways to make your first move.

AN APARTMENT

It’s generally accepted that, on average, units
achieve lower capital growth than houses over the
long haul. However, that average tends to
over-simplify things and ignore the many lifestyle benefits that can come with a unit in a handy
location.

Units generally allow first-time buyers into areas
they couldn’t afford if they were buying a house. The lower capital return is often a trade-off.

The right unit, though, can still provide capital
growth over time and a solid leg-up to something bigger or better, while owners get the benefit of convenience and low maintenance in the meantime.

What to look for:

• Within 15km of the CBD.
• Walking distance to public transport, cafes and restaurants.
• Internal laundry.
• Lock-up garage.
• A complex with a high percentage of other owner occupiers.
• Affordable body corporate fees.
• City views.
• Built-in wardrobes and other storage.

What to avoid:

• Too many stairs.
• Areas with a glut of new apartments for sale.
• Over-capitalising on any make-over.
• High body corporate fees.

Something to consider:

If you decide to trade up to something bigger, you may find your unit becomes an ideal starter for an investment portfolio.

THE FIXER-UPPER

If you’re set on a certain area but find yourself short on the sale price, consider an older house in need of renovation. With property prices flattening, the opportunities for a quick profit with a lick-and-flick have dwindled. But for first-home owners looking to settle for five or more years, a renovator’s delight could still have plenty of upside.

Fixer-uppers generally appeal to buyers who plan to do most or some of the work themselves. If you’re not handy or don’t have time to work on the property, steer clear.

A professional building inspection is a must for all properties, but the devil is always in the detail when it comes to older homes. Read the inspection report thoroughly and seek more information and repair quotes if any issues are highlighted.

What to look for:

• Houses that only need cosmetic work such as a new kitchen, bathroom, paint, floor coverings and landscaping.
• Sound electrical and plumbing.
• A high aspect (views always add value).
• Signs of other renovations in the neighbourhood.
• Excellent local infrastructure, such as public transport, or plans for improvements.
• Good property drainage.

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“Money doesn’t grow on trees,” we tell our kids. But do we help them understand where it comes from and what to do with it? Like most good habits, financial responsibility needs to be taught and modelled. How you handle money probably has a lot to do with what your parents did or didn’t show you. Here are Haven’s top tips for kids of all ages.

AGES 4-7

Needs vs wants

In a world of instant everything, the idea of a treat is fading fast. But, it’s never too early to learn we can’t always have – or afford – everything we want. In fact, it’s one of the most important financial lessons you can teach your child. Use ‘wants’, such as new toys and junk food as a treat or a reward and explain in ways your child understands why you sometimes say “no.”

Spare change

Give kids your coins at the end of the work week to put in a jar or money box and help them to count it once a month to see how much their stash has grown. When the jar is full, take them to the bank to deposit it in an account of their own. This is one of the simplest (and oldest) ways to teach kids about savings because it shows them first-hand how a little eventually adds up to a lot.

AGES 8-12

Earn and learn

While some families believe children should help out around the house for nothing and others think kids should get paid without lifting a finger, the fact is that pocket money teaches children about earning and budgeting – both necessary in adult life.

Set a consistent amount of money for certain tasks and be specific about what you want done. Your idea of a tidy room may differ to your child’s so show them what you mean by “clean.”

Game of life

Use Monopoly money to talk about the cost of living, spending and saving. Count up $5,000 - roughly an average gross monthly income. Start by taking out the income tax – about $1,200 (whoa!). Then pay for household bills, mortgage or rent, groceries and other necessities, all based on realistic amounts. Once all the expenses are covered, ask the kids what they think should happen with the remainder, so you can talk about saving and spending. Kids will be shocked by how much life actually costs.

AGES 13-16

Texting and tunes

Pester power cranks up a notch with teenagers, especially when it comes to mobile phones. The smartest move is a pre-paid account, which keeps a lid on costs while teaching kids restraint. Get them to research the best deal and then discuss the fairest way to pay for it. Mobile phones are as valuable as oxygen for teens so parents have an excellent bargaining chip.

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Australians’ “she’ll-be-right” attitude to life may be creating unnecessary angst when we die. More than 45 per cent of us don’t have a will, which means we risk any assets being distributed according to a government formula, not necessarily our wishes.

If you want to make sure everything you have worked hard for is passed on to loved ones as intended, you need a valid will.

There are a few ways to get your affairs in order. The simplest and cheapest is a DIY will kit, available from post offices or online for up to about $50. But beware, elaborate calligraphy and fancy parchment do not maketh a legally binding document. You need to be sure it is legible, up to date, completed accurately and witnessed correctly (family members or beneficiaries cannot be witnesses). Even small errors can cause big problems. Essentially, DIY documents are designed for the most basic estates – such as a house and contents only, left to a partner or children.

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With household costs on the rise, many
mortgagees are struggling to balance their
budgets. It’s not surprising more Australians
are skipping mortgage payments to help
make ends meet.

However, missing loan repayments could land
you in a bigger hole. Not only will you be up for
late fees – ranging from a manageable $9 to a
stinging $195 per overdue payment – but you
could be adding thousands of dollars of extra
interest to your debt.

At worst, a string of missed mortgage payments could see the bank recalling your loan, forcing a fire sale of your home. Even a couple of missed payments could put a red flag on your credit history, which is going to cramp future borrowings.

One of the best ways to reduce the risk of mortgage stress is to give yourself a buffer on your budget. In Australia, it’s recommended borrowers’ mortgage repayments make up no more than 30% of household income. The problem is many home owners borrow to the edge of the threshold when interest rates are low – as they are now – leaving no room for inevitable rate rises and other increased living costs.

Instead, budget for mortgage repayments at a 9% interest rate, a long-term average that accounts for peaks and troughs over the long run. When rates are low, stick the extra funds into your mortgage. You will not only save on interest but will have established a safety net, which you can draw on if needed when rates run high.

If you are already feeling the pinch and struggling to make payments, talk to your broker sooner rather than later. A broker can help negotiate with the lender on your behalf and can look into other loan options to ease the squeeze.

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THE BEAUTY BOOK

2,000 Australians are diagnosed with brain tumours each year. After losing his 35-year-old friend Natalie to brain cancer, Australian photographer Darren Tieste set about producing this stunning coffee table portfolio featuring local and international musicians, celebrities and models.

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