Australians simply love property. We like to have our own home, and possibly an investment property or two as well. The property market at the moment is going through a slight lull, interest rates may rise slightly next year and the market overall is rather flat.

Australians simply love property. We like to have our own home, and possibly an investment property or two as well. The property market at the moment is going through a slight lull, interest rates may rise slightly next year and the market overall is rather flat.
This type of market gives you TIME - there is no need to rush into hasty purchases because prices are rising rapidly. It is a good time to buy giving you better value for your dollar. As time goes on, governments are reducing the taxes they impose on property acquisitions. All you have to do is decide how to use the market to benefit YOU.
Most of us will fall into one of four categories:
- We don’t own property and want to
- We own property and want to own more
- We want to use our existing property to improve our   overall financial position either in terms of wealth creation   or improving cash flow
- We want to own a different property
The key question for all of us is - can we afford to do what we want?

Affordability
If you can get into the property market the song “Don’t worry be happy “ applies to YOU. Here are some interesting facts you should consider:
Ø Over the last 10 years the standard variable interest rate has   ranged from around 5.7% - 7%.  With inflation set to remain   low, a similar trend should prevail over the next 5 years - that   is modest rises in interest rates overall.
Ø The key to affording your mortgage is having a stable income   over a long period of time. You may need to take out income   protection to insure against any unforeseen events hurting   your financial security. 
Ø First homebuyers can receive grants of up to $12,000 from the   various Governments to assist them in buying their first home.
Ø The fixed interest rates offered in 1996 for 10 year terms have   only been reached now. Unless you are on a fixed income or   the trend for interest rates looks like skyrocketing do not   enter into a fixed rate mortgage.

A Good time to Upgrade
In a flat market, it pays to upgrade because the changeover works in your favour. In a flat market, the people who own property at the lower end of the market lose less than those at the higher end.
Let’s assume that the market has dropped by 5% and you want to move into a bigger house.
Decline in Market Value
Your house is worth   $200,000  $10,000
The house you want is worth  $350,000.  $17,500
Savings if you changeover    $7,500

Improving your financial position
How to improve your financial position requires a review of your individual circumstances. 
From a wealth creation perspective you may wish to consider:
i) Positively Gearing Property
- There is a boutique market in holiday rental properties. It is   promoted via the Internet and property held in the right
 location will return a positive cash flow. What a great way to   buy a property that you can retire to and create a financial base   now!
- There are specialist companies that research the property   market for you and select properties that suit your needs. A fee   is involved but the savings are substantial.
ii) Obtaining a line of credit
- This means using the existing equity in your current property to   obtain the money to acquire other financial investments. i.e.   shares, managed funds.
- If you need to improve your cash flow because of other debts   then use the equity in your home to refinance all debt.
 This will only improve your overall situation if:
- You control your spending thereafter; and
- Make more than the minimum repayment.
Lets assume you have $15,000 of debts on your credit cards.   Repayments are $450 per month.
If you increase your mortgage, your mortgage repayments will   rise by approximately $100 per month. Any repayments above   that reduce the term of your loan.
If you increase your mortgage repayments by $450 per month,   you will reduce your mortgage term by nearly 14 years*
 
 *  This assumes your loan increases from $150,000 to $165,000 and that you    continue to make the same level of repayments.

Be Careful
When looking at property and entering into a contract, please take care to protect yourself.
Ø Always sign any contract of sale subject to finance
Ø Make sure you have the finance
Ø For an investment property, ensure that both the capital return   and income return you require are locked in over the long   term (by long term I mean 10 years or more). Properties in   Southbank have lost value in real terms over the last 5 years.
Ø Once you have signed a contract of sale, obtain insurance on   the property.
Ø Know the area you are buying in and be aware of any
 developments that might hurt the value of your property.

Just say “Yes” to your dream
Whatever your situation, there is always a solution provided you either have equity in existing property and/or income.  All you have to do is ASK, how can you help my dream come true?
Please contact Kerri King of Home Loans by Kerri on
0412 442 508 or 9898 2425 to seek professional advice at your
convenience.