Buying your First home can be a daunting task. But millions of people have been there before you and survived. If you do your homework or speak to “Suresh” your senior mortgage broker at DBIJ Finance, you’ll have the best possible chance of finding a place you can afford for a price you can pay. The big surprise for many first-timers is that they need to finish the first five steps on this list before they can even begin to look for a home.
1. Review Your Financial Health
Before clicking through pages of online listings or falling in love with your dream home, do a serious audit of your finances. First look at savings. Don’t even consider buying a home before you have an emergency savings account with three to six months of living expenses. Look at how much is left over in your savings and investment accounts that could contribute towards a 5-10% initial deposit.
Investors face this dilemma of whether to pay down debt with excess cash (e.g. Bonus, salary increase & other windfall) or invest that money to turn it into even greater amounts of wealth. If you pay off too much debt and reduce your leverage, you may not be able to garner enough assets to retire. Conversely, if you’re too aggressive, then you may end up losing everything. In order to decide whether to pay down a debt or invest, you must consider your best investment options, risk tolerance and cash flow situation.
Pay Down Debt or Invest?
All debt is not equal. The type of debt you have can play a vital role in the decision making of whether to pay it off as soon as possible or put your money toward investments.
From a numbers perspective, your decision should be based on your after-tax cost of borrowing versus your after tax-return on investments. Suppose, for instance, [...]
Whether you’re planning to buy your first home or an investment property or just want to upgrade to a larger dwelling, then it’s essential to maximise your borrowing power by fully considering your income source.
Banks and other lenders assess your supplementary income streams quite differently to your base salary. And each bank employs their own unique set of policies and criteria to determine how much they’re willing to lend.
A detailed appraisal of all your incomes sources is necessary to secure the most appropriate loan for your situation. All possible income sources need to be reviewed. Whether these income streams are assessed correctly or not, could mean the difference between securing your dream home, or missing out to another buyer. 9 Income Sources That will help you Boost Your Borrowing Power
Here are 9 income sources that you need to assess:
Do you earn a regular bonus at work? If you do, [...]
Property prices don’t always go up and many markets that investors are encouraged into today are actually at the peak of their growth cycle. There are a number of suburbs listed in the negative growth report that might surprise you as they may have been touted as a hotspot for investors.
We identify the controversial suburbs that despite popular opinion have experienced a fall in values. Plus, we take a look at the areas in each state that have been hit hardest.
State by state: the areas that got hit the hardest
Nine house markets in Tasmania and 12-unit markets recorded negative price growth, the worst being the Launceston suburbs of Rocherlea and Trevallyn which respectively delivered a 12.5% decline in house prices, and a 25% drop for unit prices.
There seems to be a real phenomenon of investors driving the growth of some of the locations in Tasmania and, not local buyers. This can create a significant [...]
Most personal finance experts spend a lot of energy trying to prevent us from using Credit Cards – and with good reason. Many of us abuse them and end up in debt. But contrary to popular belief, if you can use the card responsibly, you’re actually much better off paying with a credit card than with a debit card and keeping cash transactions to a minimum. Let’s examine why your trusty credit card comes out on top.
Signup Bonuses (aka Money for Nothing)
There’s nothing like a welcome-aboard perk. Applicants with good credit can get approved for credit cards that offer signup bonuses worth anywhere from $50 to $250 (and sometimes even more). Other cards thank newcomers by bestowing on them a large number of reward points that can be redeemed for fun stuff (more on those below). In contrast, a standard ATM/Debit card that comes with a bank account offers zero money [...]
A deduction is any item or expenditure subtracted from “Gross Income” to reduce the amount of income subject to Income tax. It is also referred to as an “allowable deduction.” For example, if you earn $50,000 and claim a deduction for $2,000, then your taxable Income is reduced to $48,000.
BREAKING DOWN ‘Deduction’
The Internal revenue system offers a host of deductions. In the United States, tax payers have the choice of claiming the standard deduction or itemizing their deductions.
Return on Investment (ROI) is an accounting term that indicates the percentage of invested Money that’s recouped after the deduction of associated costs. For the non-accountant, this may sound confusing, but the formula may be simply stated as follows: But while the above equation seems easy enough to calculate, with property [...]
If you’re looking to borrow a sum of money then chances are that you’ll look to take out personal loans rather than any other type. The term personal loan is simply used to describe standard types of borrowing – i.e. a loan taken out by a consumer rather than a business for general purposes (but not for a mortgage which is obviously dealt with by a mortgage loan).
The majority of personal loans can be used for any purpose and the chances are that your lender won’t even be hugely interested in what you want the money for. Their primary concern is checking that you’ll be able to repay your loan! This situation can be different with specialist loans (which also fall under the banner of personal loans) such as home improvement loans and car loans, for example. These loans are expected to be used for their specified purpose – i.e. a major DIY project [...]
Taking out a secured loan can have far reaching consequences for your finances, and so it pays to take your time over the decision. This article discusses some of the potential drawbacks that you should be aware of before committing to a loan.
Secured loans are a popular way of raising funds for homeowners, and there’s no denying that taking one out can be a great way of organizing your finances. Debt consolidation, financing home improvements, even paying for a new car – secured loans can be used for all of these. However, as with any financial agreement, it’s only sensible to take your time when deciding whether to proceed. After all, with a secured loan, you could be betting your home on a successful outcome. As the name indicates there is an exchange of a security home / Business / an asset which is secured by the lender as the first mortgagor, So what [...]
When considering secured loans it is important to remember that if you have bad credit and a low credit rating you are an increased risk to the lender because of your financial history, and this means that the lender has to take extra precautions.
This is why many lenders will only offer Secured loans on a secured basis, so that they have some form of security in the event that you default on your loan repayments. You will also find that the interest rates on Secured Loans are higher, than that is offered on loans for people with poor credit rating than that offered on loans for people with good credit. However, you can still get some very competitive rates on Secured Loans, and the choice of Secured Loans are better as it includes more and reputable lenders offering this facility.
You can use Secured Loans for a range of purposes, and provided you make [...]
According to Veda Advantage or Equifax, a credit score is a number that lenders use to help them decide: “If I give this person a loan or credit card, how likely is it I will get paid back on time?” The information from your credit reports is used to create your credit score. Your credit score will always be a key ingredient for low interest rates when qualifying for mortgage or home equity loans.
Before getting a line of credit, get your free credit report from each of the three major credit reporting agencies (CRAs): Veda Advantage or Equifax, under federal law, you are entitled to one every year. Order online at https://www.mycreditfile.com.au, or call 13 83 32. Check to make sure someone else’s information isn’t mixed into your report. If so, contact the CRA immediately and have them delete it.
Then, follow these tips to help you establish credit and build your credit score: