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5 Ways To Get Out Of Debt

5 Ways To Get Out Of Debt

It can be far too easy to find yourself in debt. Unfortunately, the same can’t be said for getting yourself out of it. It really doesn’t matter what your debt comes from, there is nothing “good” about debt and you have to pay it back either way.

Unfortunately, for many, they can find themselves paying off debt for the majority of their lives. Living with debt can place a lot of unnecessary stress on yourself not only due to the mental but also because of the financial burden.

Recent statistics reveal that there are 14,482,877 credit cards in Australia as of March 2020.

Some believe that you don’t have to simply accept living with debt and it doesn’t have to take you an entire lifetime to pay off.

Having a good action plan when it comes to getting out of debt and following it to a tee can help give you the right track to follow to successfully navigate yourself out of it. There are certain strategies that you will be able to leverage to speed things up. Below are 5 steps to getting yourself out of debt.

 1. Know The Numbers

As your debt continues to pile up, a lot of people look to avoid it entirely. After all, “out of sight, out of mind.” Thus, rather than confronting their debt head-on, they allow it to continue to spiral out of control. If you are looking to get yourself out of debt, the first thing you must do is make a list of everything you owe. Write down the following:

  • Who you owe
  • How much interest you owe
  • The total interest rate
  • The total payment amounts

Having a comprehensive list of everything you owe might make things real and scary, it can really help. By having everything written down, you will have all of the information you need to develop a strategy to pay everything off in its entirety.

 2. Track Your Finances

There are two main factors at play when it comes to paying off your debt.

  • First, you want to try to leverage the discretionary income you do have into paying off your debts before buying anything else.

 

  • Second, you want to avoid taking on additional debt if at all possible. While it is certainly easier said than done, anything you can put towards paying off your debt can do wonders.

 

Finance Analysts at Max Funding say,” by having a crystal clear understanding and overview of your finances, you will be able to figure out where you can start to cut down on your debt without negatively impacting other areas of your life. If you don’t currently budget, you can utilise budgeting software which can help you track everything accurately and make the entire process less time consuming and less of a burden.”

 3. Come Up With A Plan

As soon as you have written out all of your debts and once you have come up with a budget, you will be able to sort through which loans should be paid back first.Whether you want to pay off the home loan or auto loan first, there are two distinct strategies that you can consider:

 Debt Avalanche

This is the strategy of paying off all of the debt that you have that accrues the most interest. This is the strategy that is going to end up saving you the most money over the course of time.

Debt Snowball

This pay off strategy is when you focus on paying off your lowest balance first and continue to work your way up the ladder to your highest. This approach is much more likely to be mentally/psychologically rewarding as you will be able to completely cross off loans and debts earlier than you would with the avalanche method.

No matter which you end up choosing, as soon as you pay off a loan, you will want to utilise the money you would have spent on that loan for another debt on your list. You may even decide to mix the two strategies together and tackle some of the smaller debts first prior to paying off your debt that is accruing the highest interest rates.

4. Always Celebrate Your Wins

The entire process of getting out of debt can be long, tedious, and not fun at all. Because of this, keeping yourself motivated towards the end-goal isn’t the easiest task. As a result, you want to look to create smaller and attainable goals that you will be able to celebrate. By creating these smaller and attainable short term goals, you should be able to continue to give yourself the motivation you need to reach your ultimate end goal of being debt-free.

5. Get Out Of Debt

There are all kinds of things that you should be doing when you are looking to get out of debt quickly. Making significant lifestyle changes is one of the best things you can do to make big gains. You should consider implementing some of the following strategies:

Cut Back On Spending

To increase the amount of money you are able to put towards paying off your debt, you will need to spend less or make more money. You can do this by switching up your lifestyle and really finding small cuts you can make here and there.

Always Look For Deals

While you could cut back on your spending by simply spending less, you could also attempt to spend more wisely. Check to see what you are spending the most money on in terms of your necessities and try to score savings on those items that you are already buying. You can use coupons, shop during sales, or even buy in bulk to score deals.

Get Another Income

You can always try to add to your income. Either by finding another job, getting a second job, or even by doing a side hustle. By making more money, you will have a much easier time finding the extra money you can use to pay off your debt.

Refinance Your Debts

 If you have good credit now than you did before the loans, you will mostly be able to refinance to save big.

 Balance Transfers

If you qualify, you can find credit cards with a promotional rate of 0% for balance transfers. These cards can earn you extra time to pay off your debt without having to worry about high-interest rates.

By using the right strategies, you should be able to get out of debt quickly and get started on a better financial track. Use some of the tips above and you should be able to get started on your journey to finally being debt-free.

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Written By: Claire Dawson

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7 Reasons Why You Should Hire A Mortgage Broker

7 Reasons Why You Should Hire A Mortgage Broker

Applying for a home loan takes a lot of time and effort. However, with expert guidance and advice from a mortgage broker, you will be in a better position to find not only a lender but also a suitable loan without making expensive mistakes.

Wondering how a broker can help you? Here are seven ways.

1.    A broker clarifies details about the loan you want

How much can you save using an offset account? Will the lender accept your full doc loan? Which interest rates would suit your financial goals – variable, split rate, or fixed?

If you don’t know the answers to these questions, a broker will help you. Experts from Aussem Mortgage Solutions point out that “a broker has the knowledge and expertise to answer all questions you might have. This person will also be able to give you all the information that you probably don’t even know you need.”

2.    A broker gives you objective feedback

You should always have a clear idea of your financial status. You should know just how much you can afford for a loan and when you might exceed your budget.

A mortgage broker reviews your expenses, weekly payments, and income. Based on the review, you’ll get an honest feedback of your finances and what options you have as regards home loans.

3.    A broker simplifies the comparison process

The expert team at Credit Capital state that “comparing different home loans takes a great deal of time and effort. Hiring an experienced broker allows you to use your time on other, more important things.

Since a broker reviews your financial status, she or he has a clear idea which home loans fit your budget. On your behalf, the broker compares discounts, best deals, and various other things. Only the final comparison chart will be presented to you. This streamlines the process for you.

4.    A broker does the paperwork for you

This is probably the biggest reason why you should hire a mortgage broker. You don’t have to worry about handling the paperwork, application, settlement process, or legal work.

The broker takes care of these things on your behalf. All you need to do is focus on finding a house that you like.

5.    A broker helps any type of borrower, even non-traditional borrowers

If you have never taken a loan before, you might find the entire loan process complicated. Moreover, your credit score may be less than perfect. Your loan profile may not be like those of traditional borrowers.

The experts from Metro Bookkeeping say, “a mortgage broker helps you find loans that you will qualify for. The broker will also help you connect with lenders whose home loans do not have high interest rates. In this way, you will come across numerous specialist lenders and banks that have flexible lending policies.

6.    A broker helps you prepare for pre-approval

Ideally, every borrower wants the lender to pre-approve a loan. This allows you to know how much a lender will let you borrow. So, you can search for related properties within the price range that a lender states.

Since a broker handles all the paperwork, she or he can handle all the job on your behalf.

7.    A broker guides and supports you until your loan gets confirmed

As stated above, the entire process of applying for a home loan takes a significant amount of time and effort. However, if you have an expert by your side, the process becomes a lot easier.

A mortgage broker is an expert who knows the industry inside and out. So, a broker can guide you every step of the way and answer all your questions.

People say that an open mind helps you learn from the mistakes you make in life. However, getting a home loan doesn’t fall into this category.

You don’t want to make a mistake with a home loan because hundreds and thousands of dollars are at stake. A mortgage broker can prevent you from making a wrong move. A broker is the best person who can provide detailed information about the loan and explain the process so that you can buy your dream house soon.

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Applying for a Car Loan? Here’s What You Need To Know

Applying for a Car Loan? Here’s What You Need To Know

Are you looking for finance to secure your dream car?

The first thing to note is that car loans are personal loans lent for the specific purpose of purchasing a car.

Every lender has their eligibility criteria that they attach to the loan they offer so that means that there are a number of factors that can impact your ability to gain a loan.

In relation to car loans, these can include taking into consideration the state of the vehicle (new or used), the purchase price, the age of the car, whether you are purchasing the car from the private seller or dealership, and much more.

With this in mind, you should conduct your research and find a loan provider and a loan that suits your needs and situation.

Like many other loans, vehicle loans are priced based on risk. You will likely have to pay a higher interest rate if lenders perceive you to be a high-risk applicant. Conversely, borrowers perceived to be lower risk are likely to be charged a lower interest rate.

There are mistakes to be avoided when applying for a mortgage, as well as when buying your first home. And car loans are no different.

So, are you ready to take up a loan?

Begin to check your credit file information and credit score before applying for a car loan. In doing so, ensure everything is error-free and up-to-date. Importantly, reviewing this information ensure you understand your standing before entering negotiations for a car loan.

When it comes to signing your contract, ensure you read the agreement carefully and in its entirety. Double-check everything and, most importantly, read the fine print.

Secured Car Loans

For secure car loans, the borrower needs to offer an asset as the security for the loan. In the case of car loans, security is the car itself.

In cases where borrowers fail to repay their loans, lenders have the right to repossess the security (the car), sell it, and recover their money. In the event the resale value of the vehicle is not enough to pay off the car in full, borrowers are still obligated to repay the remaining amount.

In the case of secure car loans, it is common practice for lenders to require you to take out a comprehensive car insurance covers on the car used as security.

According to the team at Domain Roofing, choosing the right loan type is key. They explain “we use vehicles in our line of work every day. So while a car is necessary, we would need to make sure the loan fit our needs. It’s important not to rush into loans to get a deal, if it can come back to bite you down the line.”

Unsecured Car Loan

For unsecured loans, borrowers do not have to offer security to lenders. This type of loan is typically provided for purchases of older used cars as they tend to have a low resale value.

For this kind of loan, you have to convince the lender of your good financial standing, that you are creditworthy, and therefore, able to repay the loan. Given the unsecured nature of the loan and the lender taking on a higher risk, they will usually charge a higher interest rate.

In the event you fail to repay the loan, the lender has the right to take legal action against you to recover their money.

Other Types Of Car Financing

Specialist Financing

You can get car financing from non-traditional lenders as well. Such lenders include specialist financiers who offer car loans, hire purchase agreements, car leases, business financiers, and equipment financiers.

Just like any other loan, before you sign the agreement, ensure you read the contract carefully and thoroughly.

The finance experts explains, “The most important thing to note when applying for an equipment loan, car loan or similar is the collateral being used to secure your loan. If you are a small business this can have a huge impact on your success should you be unable to pay.”

In addition to this, you need to understand the fees payable, the interest rate charged, the repayment terms and conditions, and any additional terms and conditions may be applicable.

For instance, check with the lender whether a balloon payment is due at the end of your loan term. Balloon payments are lump sum payments due at the end of a loan term that makes regular repayment cheaper.

Dealer Financing

When purchasing your car from a dealer, many will offer to arrange the financing for you.

Undoubtedly, getting everything in one place is convenient.

The small business owners at Driveway Doctors rely on their vehicle for their business, so the right financing is crucial. They had this to say, “Our car is essential in getting us from job to job, so we wanted to get the best deal on our finance for something we use so regularly. As tempting as opting for the simplest package might be, it definitely pays to spend time researching all your options.”

It is essential to note, in this case, that the dealer will receive a commission from the finance company. Consequently, most auto dealers will try to sell you add-ons that you do not need to increase the sale price.

Additionally, it is necessary to check the interest rates and compare with other auto dealers and loan providers.

Ask the dealer whether there is a possibility to negotiate the terms of financing, making sure the possible financing option is available on the car model and brand you intend to purchase.

Is A Variable Or Fixed Car Loan right for you?

The vast majority of car loans lenders charge a fixed interest rate. However, some lenders charge a variable interest rate.

Repayments on fixed car loans do not change throughout the loan term even when the interest rate fluctuates. As such, fixed interest rates are easier to budget monthly. The only downside is that some lenders will charge a fee for early repayments and extra repayments.

This is important to consider if you believe you will be able to pay off your loan early.

Local entrepreneurs from Any Rubbish are aware of this and had this to say, “You would assume that paying off a loan early would be a good thing, but that is not always the case. Extra fees charged for early payments can put an added financial strain on your business, simply by trying to be proactive in your payments. It’s important to ask your lender if they have this policy, so you can decide how you would like to pay off your loan”

Repayments on a variable loan changes from time to time as influenced by interest rates. Variable car loans do allow borrowers to make extra repayments and or repay your loan early without incurring penalties. However, such loans are harder to budget for every month.

Fees

– Establishment Fees

Most lenders will charge borrowers a one-off establishment or application fee once you accept the loan. The fee covers the cost of arranging for and administering the loan.

–      Ongoing Fees

Some lenders charge a regular and ongoing administration and or service fee to cover the cost of loan administration and maintenance. Such fees are charged on a yearly, quarterly, or monthly basis.

–      Early Exit Fees

Some lenders charge borrowers early exit fees for repaying all of the loan or part of it before the end of the loan term. If you plan to repay your most or all of your loan early, check if the lender charges an early exit fee and how much it is. Ensure the benefit of making early repayment do not cancel out with the fees.

As you can see, there are a number of different options when it comes to taking out a car loan. Although this can seem overwhelming, once you start doing your research on these options and understand how to calculate your borrowing power you will be much more confident that you are receiving the best possible loan option.

Now, it’s time to get started on your financing process and watch yourself get even closer to that dream car you’ve had your eye on.

Need help with financing? Speak to the experts at Aussem Mortgage Solutions and get the experienced help you need!

 Author Bio:

Phil Randall
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Getting Started in Property Investment: The Beginners Guide

Getting Started in Property Investment: The Beginners Guide

Are you looking to turn a dream of property ownership into reality?

Property investment may seem like a big leap at first.

But with some careful preparation and expert advice, you can invest in property with confidence. While there will always be obstacles to overcome in the Australian housing and property market, by knowing what to expect and how to position yourself for success, you can take the steps you need today to wake up in your dream property tomorrow.

Don’t do a single thing without reading this beginner’s guide to investing in property in Australia.

1. Be Clear About Your Real Estate Goals

Being clear about your real estate investment goals is the first step to become a successful investor. Preparing yourself to invest in real estate can be a real challenge at times. You should be aware of your emotions because you cannot become successful in real estate investment with emotions running high.

The property you plan to invest in isn’t a property that you plan to live in. So you don’t need to feel a personal connection with the property. The return the property will give you is more important than the property itself.

Decide what your end goal is – whether it’s capital gain, cash flow, a home for your family or something else. You should create a plan to get to the goal once you have decided upon the final goal. You should have a realistic timeframe for this purpose. Make sure you review the plan on a regular basis since the property market will often change.

2. Decide On The Ideal Property Type

If you plan to invest in an investment property, you should look for something that will give you a high rental demand. You should do enough research to see what type of property that the renters are snapping up quickly and what property is languishing on the market. Do you plan to go for something that is a renovator’s delight or market-ready property or do you plan to invest in an apartment? It is a dream come through if you are able to buy a property that you can rent out immediately.

But you shouldn’t discount the properties with minor renovations. According to the renovation experts from KJ Concreting, “the amount you invest in renovating the house can be recuperated within a short period of time with higher rental returns. Look out for houses that stand out from the pack with a special feature such as a second bathroom, good outdoor space or a garage. These extra features will let the property stand out in the real estate market.”

3. Zero In On Your Location

Location is the most important factor to consider when investing in property. You will have to narrow down your search to find the best location before investing in real estate.

Which areas are performing well in the rental market right now? Are local property prices increasing at the moment? You should separate the heart and head when investing in real estate property.

Consider the distance between your chosen property and the city centre or the local business area. How far is the nearest public transport?

Are there local shops within walking distance? Check the proximity to schools.

These are important things to consider when investing in real estate.

According to the home renovation experts at Glen Gilbertson Floor Sanding, it also pays to do your homework, they note “areas that may look as though they don’t offer amenities may be hotspots for growth in the future. Enquiring about plans for the future, especially in regards to major developments, can help you snap up a bargain that will return major dividends.”

4. Get Your Finances In Order

Speak with a mortgage broker to get free advice on a mortgage loan. Make sure you check how the loan repayments would correspond with your likely rental returns. You should be 100% clean on what your upper limit is – after taking all extra costs into consideration such as conveyance, insurance, inspections, taxes, and property management. You should have a financial buffer in case there are months where your property is vacant.

The experts at Metro Bookkeeping offer an exclusive tip, explaining “getting your finances in order requires a 5 step plan. First create a budget, next save money by starting with a narrow focus and expanding as you build discipline, automate your finances so the decision is out of your hands, pay off high-interest debt first, and finally set a long term goal and start working towards it.”

You should set up the purchase so that it benefits you the most when investing in real estate in Australia. You can purchase the property in your name through the superannuation fund or a trust. But you should also understand how the purchase will affect you and your family. You should get expert advice in order to make a smart choice in this regard.

5. Succeeding In Your Investment

Learning the basics of real estate investment can be a real challenge. Although there are real estate investment opportunities available out there, some market conditions can be more favourable than others. Timing is the key to your success. You are making a big decision when you decide to invest in real estate. So you need to get expert advice for the process.

You should get in touch with an experienced financial service provider who is able to advise you on all aspects of real estate investment. In fact, it’s hard to find good accountants, financial planners, real estate agents, lawyers, conveyancers, valuers, and other professionals. But these are the professionals who can help you to make the best decisions when investing in real estate in Australia

Author Bio

Fiona White is an Australian freelance writer and Sydney-based university student. As an accounting student, she has a passion for learning about global changes in business culture and specialises in entrepreneurship and innovation-related topics. When Fiona isn’t at her desk, you’ll find him exploring National Parks.

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Top ten tips for first home buyers

Top ten tips for first home buyers

It is a long journey from saving up the first deposit to actually owning your own home, but it is certainly a rewarding one! Your first property is an important financial and emotional investment into your future, so you want to make the most of every opportunity to make your dream home a reality.

Start budgeting like a home owner

The journey starts with saving for your deposit. This takes a great deal of discipline, especially in the beginning when the dream of owning a home seems so far away. Once you own your home, you won’t have so much disposable income, so start limiting your disposable income now, and put this money aside to build your deposit. And when you establish a realistic and practical budget, you will have a better idea of what you can afford once you take on a mortgage.

Save the biggest deposit possible

The larger your deposit, the more equity you will have in your property right from the beginning. This also means you are paying less interest. Place your growing savings into a fixed term deposit or a high interest savings account so you can grow your deposit through accumulated interest.

A larger deposit will also have the bonus of making lenders look more favourably on your loan application. When they see that you are disciplined and committed to owning a home, they will know you are a good risk.

Minimize your debt

Accumulating debt through credit cards can undermine all your efforts to save up for a deposit. When you are ready to apply for a home loan, the lender will be examining your credit history, so if you do have ongoing debt, stay on schedule with payments so your credit rating is not adversely affected.  Cut down on the credit card use, and pay off your car and any personal loans so you can concentrate on saving for your first deposit.

Remember to calculate the costs of purchase

Once you feel you have saved a sufficient deposit to buy the property you want, don’t forget to double check your figures to make sure you can also afford all the related purchasing costs. Many first home buyers disregard or under-estimate expenses such as inspection reports, stamp duty, Lenders Mortgage Insurance (LMI) and legal costs. When you fail to account for these expenses, you run the risk of reducing your deposit when you are ready to buy.

Stay within your means

House hunting can be an extremely emotive business and it is easy to get carried away about a dream property and forget that you can’t actually afford it. You need to maintain strict self-discipline so you don’t become tempted to purchase a property that is priced beyond your means.

Apply for the First Home Owners Grant early

The First Home Owners Grant is a government initiative designed to assist Australians in purchasing their first home. This grant can save you thousands in fees and duties. The conditions and benefits vary from state to state so visit the First Home Owner Grant website to learn how this can help you.

Research incentives and concessions

Each Australian state and territory also offer their own incentives and grants to first home buyers, including stamp duty concessions. So it pays to do your research on what financial assistance you are eligible to receive where you live.

Choose a property that suits your needs

Stay objective when you are looking at houses, and write up a list covering all the essential requirements of your ideal property. The list will generally centre on property size, location and price, although you may have other key requirements that need to be included on the list. You can also include a list of “wants” but these should be negotiable.

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Top Six Reasons why your home loan might be declined

Top Six Reasons why your home loan might be declined

You’re ready to buy a home, but you can’t find a lender who will approve your home loan.  While this might seem discouraging and frustrating, it is not necessarily the end of your dream to become a home owner. Once you know the reason that you are considered a bad risk, you can improve your eligibility. Usually, it just takes a little more time and to improve your eligibility.

Here are the top six reasons lenders might decline your loan application:

Low deposit

If you can only place a small down payment on the property of your dreams, the lender might conclude that you are not financially prepared to take on the long term responsibility of a home loan. The lower the deposit, the more you need to borrow, creating a higher risk for the lender. A larger deposit not only lowers your repayments, it also demonstrates your long-term financial commitment.

Bad credit

Again, if you have a poor history of paying bills or repaying credit card loans for frivolous items, a lender is not going to trust you to pay off a home loan. Clean up your act by settling your debts and paying off credit card bills promptly, so you come across as a more realistic prospect for lenders.

Employment history

Lenders will be looking closely at your employment history to confirm whether you have steady employment and a regular income. If you have only been employed in your current role for short time or if you have been self-employed for less than two years, you will be perceived as a higher risk and your loan application may be declined on these grounds. If you are currently unemployed, your chances of being approved are extremely low, as you cannot repay a home loan if you do not have a viable income – and do you want that additional financial stress while you are out of work?  Once you have a steadier employment history, lenders will look at you more favourably

Your age

It might seem unfair, but your age can count against you when you are applying for a home loan. If you are extremely young, lenders might be concerned that you won’t commit to the long term responsibility of paying off a home loan. If you are older and close to retirement age, they might assume you won’t have the income to manage home loan repayments. You can counteract this impression by demonstrating to the lender that you have a solid plan in place and that you are committed to repaying the loan.

You want a unique property

When you want to purchase a unique or unusual property, your potential lender will be looking ahead to when you want to sell it. When a property falls outside the mainstream, there is a limited market of potential buyers, so your lender will be wary of investing in a property that may not sell easily.

Already applied to a lot of lenders

If a lender can see you have already sent out a lot of applications and been knocked back every time, they might save themselves the effort of further research and decide that you are a bad risk. When you are knocked back by a lender, ask them why they turned down your application, then fix the issue before trying again.

For more information about how you can secure a home loan, contact us today, so we can help you follow the right path towards owning your home.

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Are you planning to purchase a home or land? A checklist can help you hunting without hurdles.

Are you planning to purchase a home or land? A checklist can help you hunting without hurdles.

  1. Do you use trains & buses to get to work? Check whether there is a public transport nearby.
  2. Do you have children attending school or going to school in the near future? Check for good local schools nearby.
  3. Check whether or not there are good Cafes and Restaurants nearby.
  4. Check the crime rates for the suburb in which you intend to purchase the property. You may be able to check this through the state’s crime statistics bureau. You could also talk to the locals and potential neighbours regarding the area.
  5. Check the area at night time to observe whether or not it is a loud area.
  6. Properties beside a housing commission property can experience the consequences of declining value. Remember, you shouldn’t disregard rising suburbs that are currently in the process of restoration.

For purchasing Land

  1. Check whether the block of land is on a slope or not. Find the location of storm water and sewage pipes as you may run the risk of overflow through your property if drainage hasn’t been properly installed. Some real estate agents keep this information hidden from buyers.
  2. If you are concerned about the noise from traffic, it is better to avoid land which faces the main road.
  3. Check the quality of the soil as it may affect the growth of plants and grass.
  4. Check whether the land is affected by landslips or not. This is potentially dangerous and can cause awful destruction to your home.
  5. Complete your check for easements with help from a conveyancer because sometimes they are unregistered and this can affect your ability to use and access of the property.
  6. Check the size of the land and consider if it is suitable to fit your dream home plan in it.
  7. Check whether there are any council imposed restrictions on the land such as any restrictions to constructing a driveway in front of the house.
  8. Is the land is affected by landfill?

For Purchasing an existing home

  1. Is the house bright and spacious?
  2. Is the kitchen functional? Is there enough space to freely move around? Do the cupboards open and close properly? Does the sink work properly? Is there enough space to fit a large Fridge?
  3. Check for any water damage in the bathrooms.
  4. Are the bathroom/s and toilet/s separate?
  5. Is the toilet joint to the living room?
  6. Is there enough storage space and/or wardrobes in the bedrooms?
  7. Is the property connected to both electricity and gas or only electricity?
  8. Does the property have enough garage space or any other space for parking? For example; street parking, carport etc.
  9. Are the bedrooms large enough for your needs and requirements?
  10. Does the property require renovations?
  11. Are the renovations minor e.g. repainting, changing floorings etc.
  12. Are the areas which lead outdoors; such as balconies, facing north?
  13. Which direction does the property as a whole face? The direction the property faces may affect the amount of sunlight the property is exposed to. The positioning of the property will affect its price, is getting a good deal worth it if the property is not positioned well?
  14. Does the property have carpet? If so, what sort of flooring is under the carpet? Timber flooring in particular is highly valued, especially in older properties and the vendor may not have factored this into the price. This could ultimately affect the overall price of the property.
  15. Does the property allow for pets e.g. for a unit/townhouse?
  16. Is it viable to live at this property for the next five years? Is it spacious enough to accommodate for a growing family?

Good luck for your hunting.
If you need any help with your finances please Contact us on 0432 297 651.

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How to choose the right property for you

Your home is perhaps the biggest investment of your life – particularly as it is not just a financial investment, you are also investing in your future lifestyle. Yet many people have a tendency to “fall in love” with a particular property, and they forget to remain logical in their thinking. As a result, they find themselves owning a property that does not suit their current lifestyle or their future financial plans.

So how do you choose the right property for you?

Find a property that fits your real-life needs, not your dream lifestyle

You might have fantasies of living by the beach or in a small inner-city unit within walking distance of all the pubs and cafes, but how will this choice fit your budget and your long-term lifestyle? Your first home should fall within your budget and it should be compatible with your work and family life. There is no point purchasing a dream property that requires a two-hour commute to work or takes up all your spare money reducing your quality of life.

Is it a good investment for you?

Investigate the economic possibilities of the location and the property itself to see how it will appreciate over time.  Also consider how the property will grow alongside your lifestyle choices – perhaps you want to “flip” the investment property by doing a few renovations and selling for a profit, or perhaps you want to live for a few years in a small house before extending the property to make room for a family. Whatever your plans, your property is an investment tool that you can use to provide for your future.

Is the property value accurate?

If you fall in love with a particular property, you may trick yourself into wanting to spend more than necessary just to “win” it. However, it is important to check that you are paying what the property is actually worth. Look at the purchase history of the property and neighbouring properties to see how their value has appreciated, and how much they are all perceived to be worth now. Consider what needs to be done to the property in terms of renovations or repairs in order to make it right for your purposes.

Will you need a home loan?

Before you commit to a property, look carefully into the financial aspect of the deal. Find out how much you will need to borrow in order to secure the property, and whether you can still maintain your quality of life while paying off the loan.

If you need assistance working out how to find the right property for your lifestyle and budget talk to us today

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Why the banks will decline your business loan application

Why the banks will decline your business loan application (and how you can best prepare yours)

Need to stabilise your cash flow? Keen to expand your capabilities? If the time has come for your business to engage in strategic borrowing there are some important steps you’ll need to take, to boost your chances of getting the business loan you need.

The challenge of bank finance

You’re probably aware that since the 2008 GFC, Australian banks are very risk-averse. Only a small percentage of loan applications from small businesses get approved – and the majority of those that do are for well-established SME’s with several years’ trading history, consistently high turnover and plenty of juicy assets to offer as collateral.

Unfortunately, banks tend to have numerous criteria that you’ll need to satisfy before qualifying for a business loan – fail to cross the line on any one, and the chances are your application will be rejected without a second glance.

Here are the top 3 reasons banks turn down business loan applications from SMEs:

  1. No collateral

 

Above all else, banks want to know that if they lend you money, they’ll get it back – one way or another. Securing a loan against an asset, whether it be property, a vehicle or a marketable piece of equipment, gives them solid reassurance that if you fail to meet your obligations for any reason, they have nothing to lose.

Bear in mind that 60% of small business loans are for less than $100,000. For a major bank the amount they’ll make in fees and interest on a loan that size is barely significant – which means it simply isn’t worth the risk for them unless the loan is fully secured.

  1. No track record

 

The last thing the bank wants is for you to default on your loan. Yes, their interests may be protected by the collateral, but they’d still have to go through a potentially lengthy and expensive process to recover their money – as well as missing out on all the interest.

Banks go to considerable lengths to check that the businesses they lend to are likely to survive, and to generate enough profit during the period of the loan to cover repayments, fees and interest. Unless you can show that your market is stable, your business is thriving, your management knows what it’s up to and your cash flow is steady, you may just look too risky.

Any of these scenarios are likely to raise red flags to a bank:

  • You haven’t been around long enough to prove your business model is viable
  • Your industry is weakening, or you occupy a weak position within your sector
  • The majority of your revenue comes from just a few suppliers
  • Your income is seasonal or inconsistent
  • Your clients are slow at paying, leaving gaps in your cash flow

 

  1. Weak credit rating

 

While it’s obvious that any black mark on your credit record can get your application rejected, you may be surprised to learn that other factors can have a serious negative impact. Believe it or not, having no credit history at all can count just as heavily against you, because to a bank it means you’re a big unknown. It’s far better to build a history of borrowing and repaying smaller amounts (e.g. by using a business credit card)  to show you know how to handle debt, than to remain debt free.

Too much activity on your credit record can also raise flags, so beware of contacting multiple institutions about potential financing – wait until you’ve narrowed down your options and identified the lender that’s the best match for your needs.

My business meets the criteria – how can I prepare?

None of these issues apply to you? Great! The key to securing bank finance with the minimum hassle is solid preparation – so before you apply, take these 5 important steps:

  1. Prepare a thorough business case for the loan. This is for your own benefit as much as the bank’s – identify how much you need to borrow and for what period, how the money will be used to grow or stabilise your business, and how you intend to handle repayments.
  2. Update your business plan. Give the bank a clear picture of your business position and capabilities by including SWOT analysis, performance analysis and details of your current business model and strategic plans.
  3. Compile comprehensive financials. You’ll need 3 years’ P&L statements and balance sheets plus robust cash flow forecasts.
  4. Take advice. The type of financing you select and way you structure your loan can have a big impact on the overall cost, so it’s wise to seek professional financial advice before you apply.
  5. Choose your lender. Rates, terms and conditions – as well as appetites for lending to different types of business – vary between banks, so research your options before selecting a product to get the right package to suit your needs.

 

Not sure I’m right for a bank business loan – what’s the alternative?

If you think your business might not meet the big banks’ criteria, all is not lost. There are an ever-growing number of alternative finance providers in Australia who are willing to offer unsecured loans and other types of business finance to SME’s.

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