Take control of your finances in 2018
The new year is a great time to take stock of things financially, not in the least because you may have overindulged over the festive season. With a full year ahead and not wanting to fall victim to the pitfalls of the previous year, it’s time to set your financial goals and put in place strategies to achieve them.
At Loan Market we get a high level of enquiry in the first few weeks of the year from people who have decided this is the year they want to become a homeowner, upgrade their home, or buy an investment property.
We try hard to support the enthusiasm of our clients, but also need to remind them of the realities around their home ownership ambitions before we can work with them to make them a reality.
To cut through the new year’s haze the key factors in getting on or moving up the property ladder are equity and serviceability. Do you have the cash to put down up front and can you meet the repayments?
While your deposit or level of equity can be reasonably straightforward to ascertain, in our modern world many our outgoings are automated which can make it harder to understand where you are truly placed financially at any one time. But no matter where you stand or where you’re aiming, taking control of your financial situation will be key in realizing your goals.
Here are 3 tips to help make 2018 financially fulfilling for you in a home ownership sense.
Get clarity with a budget
Taking the time to document income against your expenses is necessary to get a complete picture. A budget will help you truly understand your opportunities to save, or perhaps even make, more money.
Once you’ve entered all your income and expenses, you’ll know your disposable income and can work with a mortgage adviser to calculate your UMI (uncommitted monthly income) for the purposes of obtaining and servicing a home loan. With this figure you can also allocate a regular amount to paying off your debts or to put into a high interest savings account to work towards your deposit.
Make your monthly goal realistic and set up automatic payments into the relevant accounts on pay day. Make it achievable – it’s important you’re still able to enjoy yourself or you’ll likely quit early on and feel guilty about it later.
Save the easy way
One of the easiest ways to save can be by reviewing your expenses to find cheaper options.
Your home loan, if you have one, will likely be your biggest ongoing financial commitment so it’s important to check that it’s still working for you. Talking to your mortgage adviser to organise a home loan review will make sure you are still getting the best deal and your loan repayment structure is matched to your 2018 financial goals. Depending on your situation, you might move towards a loan that saves you money over the long term or structure it differently to free up some cash flow for you to invest in a business, investment property, or travel.
If your goal is to get your first home but you are struggling to save a deposit or qualify for a mortgage due to high levels of personal debt, then debt consolidation may be an option for you. This can reduce interest and simplify your repayments, allowing you to work towards getting into your first home sooner.
Insurance premiums can be another opportunity to save money. Shopping around can free up cash which you can redirect into paying off debt sooner or building your savings.
Be the boss of your credit card
The interest rate on credit cards can be high so look into how you can save money by switching or transferring balances. Some cards have a 12 month interest free period if you switch, or your bank may have a credit card with a lower interest rate available.
While you’re working hard to pay off credit card debt try to use it less. Work towards being able to pay off the total amount owing on your card every month to avoid paying interest.
The best thing about 2018 so far is interest rates are still low and LVR lending restrictions have been eased somewhat. This coupled with steadily rising incomes across most sectors and house prices in most areas slowing down or stabilizing, are providing opportunities for first home buyers, movers and investors.
At Loan Market we have our finger on the pulse with all the lender offerings and funding availability. So if your goal is a new home for 2018, come talk to us and we can help you on the right path and find the mortgage that best suits your current financial position and future goals and aspirations.