Granny flat could boost your property value by 30%

, , ,

Backyard cricket pitch not getting much of a workout these days? Sick of your weekends being taken up with mowing and gardening? Installing a granny flat could be a lucrative solution – boosting the value of your home by 30% and adding around 27% to rental income.

That’s according to a combined analysis by CoreLogic and Archistar, which shows more than half a million east coast homeowners have enough free yard space to build a granny flat at least 60sqm in size.

Constructing a two bedroom granny flat would require an initial investment of up to $200,000, while the outlay for a one bedroom dwelling would be approximately $120,000. The full report is here.

The benefits of a granny flat

The report found that for a house worth $500,000, building a granny flat could add around $150,000 to the value of the property.

It also found that building a two bedroom self-contained granny flat apartment could add an additional 27% in rent each week.

CoreLogic head of research Tim Lawless says building a granny flat is becoming an increasingly compelling proposition for homeowners in a relatively lacklustre market.

“Many properties identified as suitable for a granny flat are in densely populated and traditionally expensive areas,” says Lawless.

Archistar co-founder Robert Coorey says many home-owners “are sitting on a pot of gold” in the form of excess land.

“The family benefits of a secondary residency can’t be overlooked, whether that’s giving adult children more privacy while they save for a mortgage, keeping loved ones close as they become more reliant on care or having additional accommodation for overseas visitors,” Coorey says.

How to assess your property’s granny flat potential

Got a big backyard and want to see what you can do with it?

Granny flats can’t be built just anywhere. The property must have appropriate town planning rules, the land area needs to be large enough, and the existing property must be located in a position that allows for the development.

As it happens, Archistar has developed a platform that can help you view in 3D the potential to add a granny flat on your property.

“Archistar’s platform helps home-owners by instantly assessing thousands of zoning and planning laws and producing a report, so it’s worth taking this step and consulting a local planning expert before you proceed,” says Coorey.

Last but not least – finance!

If you’re interested in ripping up the backyard cricket pitch and adding a granny flat to your property, feel free to get in touch.

As discussed, granny flats require an initial investment of $120,000 to $200,000. So if you’d like to run through your financing options, you know where to find us!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Technological budget killers to watch out for in 2019

, , ,

As technology continues to evolve, so too do the challenges of keeping your family budget in check. This week we’re going to look at a couple of technological trends that could put your family budget under some real strain in 2019.

Sure, having everything there at the click of a button these days is convenient. But convenient isn’t free.

In fact, it can blow out your annual family budget by thousands of dollars each year, which can put strain on more important bills such as your mortgage and utilities.

Below we’ll explore a couple of the technological trends that are really starting to chew up more and more of the average Australian household budget.

1. Uber eats and other food delivery apps

Remember the good old days when you used to ring up your local Thai restaurant and place an order directly with the store?

Sure, you’d have to pick it up, but you paid less and the restaurant got the full cut.

Those days seem long gone since Uber Eats, Deliveroo, Menulog and other food delivery services burst onto the scene.

These days you pay about $5 extra each time you order through Uber Eats, and they claim about a 35% commission.

But it’s not just the extra expense per meal. The thing about these apps is that they make it all too tempting to skip making dinner and order takeaway instead.

More than half of Australians are now struggling to plan and cook meals and turn to these apps instead, according to a survey by Australian Beef, and it’s costing an extra $4000 per year in some cases.

The solution? Spend more time cooking fresh food instead. Rather than thinking of it as a chore, consider it an option to spend more time participating in an activity with your loved ones.

It’s cheaper, healthier and more fun!

2. Entertainment subscriptions

Video and music streaming subscriptions services have exploded in popularity over the last two to three years.

Entertainment giants have realised that the best source of revenue is recurring revenue, so they’re all climbing over one another to win over your hard earned cash.

One or two subscription services obviously won’t have too big of an impact on your bottom line (in fact it may even save you money), however problems start arising if you subscribe to a number of them.

For example, there’s Netflix ($18/month), Stan ($17), Foxtel ($50), Kayo ($25), Spotify ($12) and 10 All Access ($10), to name but a few.

Taking out just Netflix and Spotify would cost you $360 a year – about a dollar a day.

Subscribe to the whole lot however and you’re looking at an extra $1200, not to mention any other services family members may subscribe to such as Xbox Live, Podcasts, Youtube Premium, Twitch and Amazon’s Audible.

Long story short: they can add up very quickly!

The solution? Stick to your favourite one or two.

There’s plenty of free entertainment options out there, such as ABC iview and SBS on Demand.

And sure, it might be a bit old fashioned, but your local library is free and offers an endless stream of entertainment.

Final word

Don’t get us wrong: we’re definitely not saying you should shun technology altogether. After all, it makes everything much more convenient.

Rather, instead of the the technology harnessing you, harness it instead.

If you use it wisely and in small doses you can get the best of both worlds: an enjoyable today and a well-funded future.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Is your interest-only loan about to end?

,

It’s the end of the road for 900,000 borrowers on interest-only loans, as they’ll be automatically switched to principal and interest loans this year. Now’s the time to check whether or not you should start considering other options.

Back in 2014-15 – at the height of the property boom – some 900,000 interest-only loans were taken out, according to reports quoting an analysis by Finder.

Once the five year period on these loans is up (which is imminent for some borrowers) these loans will automatically jump to principal and interest loans.

The analysis finds that this will add an extra $400 a month to a borrower’s repayments if they have a loan of $316,000 – that’s almost $5000 a year.

Additionally, while many economists now predict the RBA will keep rates on hold throughout 2019 – just like they did last year – that doesn’t mean the banks will follow suit.

In fact, every single one of the Big 4 Banks increased interest rates in 2018 and could do so again this year, which could hit mortgage holders even harder.

The smaller players are also moving on rates. Bank of Queensland announced an increase of rates by up to 18 basis points on more than 20 home loan products, while HomeState Finance – a South Australian government-backed statutory authority – is also raising rates on their new seniors equity loan rate by 15 basis points to 6.09%.

So what are my options?

Ok, so if you took out an interest-only loan during this period, first and foremost you should check when it’s due to end.

Now if it is, the obvious option you have at your disposal is to cut back on some other expenses in your life to make ends meet.

However, that’s not necessarily your best option.

Here are three other options available to you that won’t result in you having to make so many compromises elsewhere in life (HINT: we can help you with all three!):

Extend it: Sure, the 5 year period might be ending, but we can always speak to your lender about extending the interest-only period for you.

Negotiate it: If the lender insists on you moving over to principal and interest, it never hurts to ask for their lowest rate possible (which they don’t always advertise).

Switch it: If your lender won’t budge, or you simply want to change things up, we can help you find a principal and interest rate with a lender that’s offering a more competitive deal. You may still have to pay more each month, but your repayments should be lower than those you face when your current loan switches over to principle and interest.

Final word

As they say, forewarned is forearmed.

So if your interest-only loan is rolling over to principal and interest soon, don’t just accept it. Act now.

Get in touch with us and we’ll be more than happy to run through your options with you and help you switch to a more competitive alternative.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Home loans: to lock in the rate or not?

, ,

With some of the major lenders recently lifting interest rates on variable home loans, we’ve had a number of enquiries this week as to whether now is a good time to lock in an interest rate.

As predicted, Westpac’s recent decision to increase variable home loan rates was soon followed by Commbank and ANZ.

NAB was the only Big 4 bank not to hike up rates, citing a need to “rebuild trust” with customers.

Yet with the bulk of the market moving variable rates up, many are asking: is now a good time to lock in an interest rate?

Well, like everything in life, the answer depends on your personal situation.

Fixing the rate

A fixed home loan has an interest rate that’s fixed at the time the loan was taken out and won’t change for a set period – usually one, three or five years.

Having a fixed home loan means that rate rises won’t affect you.

Selecting a fixed home loan can give you a sense of clarity and certainty, and as such, will help you budget and plan ahead.

So, while others are grumbling about rising interest rates, you can be content knowing you won’t be affected. That said, future interest rates rises are never a foregone conclusion.

You might prefer a fixed home loan rate if you:

– Believe interest rates will rise in the future

– Are comfortable with the interest rate you are committing to pay

– Prefer to be able to accurately plan your finances in the short and mid-term

– Are concerned that you would be unable to make your repayments if rates were to rise.

Variable home loan rate

A variable home loan has an interest rate that changes. Instead of staying at a certain fixed level, the rate will move according to market interest rates.

As a result, your repayments will either rise, fall, or fluctuate over the term of your loan. This means that sometimes you’ll pay more than a fixed loan, while other times you’ll pay less.

Variable loans can come with advantages linked to their flexibility.

For example, it can be cheaper and easier to switch loans if you find a better deal elsewhere than it would be if you had a fixed loan.

Often you’ll also be able to make extra repayments on your loan at no additional cost, which can help you pay off your loan more quickly.

You might prefer a variable home loan rate if you:

– Suspect interest rates will stay put or fall over time

– Are unsure about interest rate movements and would prefer to go with market rates

– Are confident you could manage a rate rise

– Don’t mind having some unpredictability in your financial planning.

Still on the fence?

With so much at stake it can be difficult to decide on the best option. The solution? Come and have a chat with us.

Discussing your individual circumstances and financial goals can help you decide whether a fixed or variable loan is right for you.

And if a fixed loan is not right for you, we can look into other refinancing options to see if there are other lenders out there offering a better home loan rate than the one you’re on.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Breaking up is hard to do

, ,

On top of the emotional impact, there are practical ramifications as well. We look at how to make the transition a little less stressful.
When there’s a separation or divorce, debts you’ve accrued during the relationship unfortunately don’t go away. The longer a couple is together, the harder it can be to unravel all the financial connections.
Here we outline some of the issues facing both de facto and married couples when dealing with what is usually their most significant debt:the mortgage. Used alongside professional legal and financial advice, it’s possible to make this difficult transition a little less stressful.
Get advice from the experts
The end of a relationship is one of life’s most stressful events. You don’t have to handle it alone – there’s emotional, legal and financial support out there.
Counselling: Visit a counselor to work through the emotional weight of breaking up – it’s hard to make decisions when you’re angry or sad. You may want to access a Family Dispute Resolution (FDR)1 mediator to assess whether both parties are emotionally ready to negotiate on money matters, and to help resolve disputes.
Legal advice: Lawyers who specialise in family law can provide legal advice. Initially, they can advise whether you’re eligible for legal aid, and help with timelines and deadlines for your property settlement. Importantly, they should help you to set realistic expectations.
Financial advice: Talk to your lender or broker to understand the current state of your mortgage, and to learn what options are available regarding mortgage repayments. You may be able to defer payments, giving you time to get back on your feet. Your lender or broker can also help you review your finances before you decide whether you can refinance and take on the mortgage yourself. It’s a sad fact, but they’ve probably dealt with this situation before.
Sort out your living arrangements
Some separating couples are able to continue living in the same house, while for others that simply isn’t possible. If one of you needs to move, sort that out first, before turning your attention to the mortgage. Again, financial advisors, lawyers and brokers can help you plan a budget and figure out how your mortgage will be paid until you sell or settle.
Settle your finances
When you divorce or separate, your assets will be divided. To help you understand your financial situation, have all your documentation at hand – bank statements, tax returns, superannuation, and so on. With professional advice, you can figure out your assets and liabilities, what each person is entitled to, and whether one of you can afford to take on the mortgage alone, or if you have to sell.
One option: Sell the property
You might decide to sell your property, divide any assets and move on. The first step is to have your property appraised so you know the market value. From there you can figure out your total equity. For example, if your house is appraised at $800,000 and you owe $200,000 on the mortgage, your equity is $600,000.
Things can become complicated if there’s a disagreement about how and when to split your assets and liabilities. Legal expertise or a mediator may be needed.
Another option: Sell to your partner, or buy them out
If one of you wants to remain in the house, it might be possible for that person to refinance the mortgage and take it on alone, depending on their income and other assets. This is sometimes the preferred option if there are children involved.
Again, agreement must be reached on the value of the property and whether it’s a 50-50 split. Professional property valuers, financial advisors and lawyers are all able to provide advice and information.
It’s difficult figuring out who gets what and when, but getting the right legal and financial advice can help you both break up the mortgage and move on with your lives.
Relationships Australia’s A Fair Share provides a good summary of your options and of the Family Dispute Resolution process. You can also get great information on the legal process from the Family Court of Australia.

Sources:
1 www.ag.gov.au/FamiliesAndMarriage/Families/Family
DisputeResolution/Pages/default.aspx
2 www.relationships.org.au/relationship-advice/publications/
a_fair_share
3 www.familycourt.gov.au/wps/wcm/connect/fcoaweb/home