The choice to live together, get married or re-married is a life changing one. And even though it’s easy to be swept up in the excitement of new love and the wonder of feeling we have found the one, there is a number of key questions to ask before joining forces and finances. Because being able to have open, honest discussions about your finances now is a key ingredient to building a great relationship and solid financial foundation into the future.
- Where Are You Financially? – Make time to discuss each partner’s current financial position before jumping into the next stage of your relationship. This means understanding what each brings to the table, including assets, liabilities, income, expenses, savings and ongoing responsibilities. Speak with your mortgage broker regarding structuring joint loans or refinancing existing mortgages if required.
- How Do You Handle Money? – Check out each other’s financial IQ and see where your strengths and weaknesses lie. Is one partner a saver, whilst the other is a spender, does one partner earn a high income whilst the other has built assets or passive income or perhaps one of you is better with budgets and managing money?
- What Are Your Future Goals? – Share your financial goals and expectations for the future and see where you share similar dreams or desire different outcomes. Once you’re clear on these decide upon what you wish to achieve as a team. Set joint goals and agreements on how you will reach these together. Check out our online mortgage calculator to help plan your future property goals.
- What About Children? – Discuss your thoughts around having children or, if you already have them, how you will care and provide for them into the future. It is wise to discuss expectations around when to start a family and how many you would like, who will be mainly responsible for childcare or how you’ll handle a blended family if you already have children.
- What if Someone Leaves? This can be a difficult to imagine, but it’s important to consider what will happen if your relationship ends. Talk about a fair and equitable exit strategy should you break up or divorce. You can put this in writing via a pre-nuptial agreement, especially if you are marrying for the second time.
- How Can We Protect Ourselves? Discuss life and health insurance, income protection, structuring joint property, mortgages, assets and superannuation funds so you have a plan should either of you become ill, incapacitated, unable to earn an income or retire.
- What if Someone Dies? Finally, it is important to share your wishes in the event of your death or your partner’s. This means creating or updating your Wills and considering how assets and finances will be handled for your spouse and children.
Until next time champions… ask the hard questions today to avoid heartache in the future.
As you may know, at Mortgage Coach our coachess get an extra special kick out of helping First Home Buyers (FHB) get into their own homes. So we are always looking for ways to assist them with their goals and smooth the way forward with their home ownership dreams.
So this week, I’m sharing some cool insights from a fascinating and enlightening new research paper by the Reserve Bank of Australia (RBA). * Apparently the RBA have been looking at changes in activity and purchasing success within the First Home Buyer (FHB) sector in Australia over the last 10 to 15 years. Some of the interesting stats they discovered include:
- There was a downward trend across the sector with less FHB actually transitioning to home ownership in the years from 2008 to 2014 forward, as compared with during the previous years from 2001 to 2007
- The biggest fall in numbers within the FHB sector, amongst those who became home owners, was within the 25 to 34 year old age group. This group fell from just under 12% of all FHB to just under 9%, with them delaying purchasing and therefore effectively becoming part of generation rent.
- This delay in entering the housing market seems to be strongly related to increasing house prices within many of the capital cities across Australia, which has been making it more difficult to save for a deposit.
However, the points which stood out most clearly to me from this report were:
- Even though FHB numbers may have fallen during this time, it was noted that those who successfully made the transition to home ownership were likely to be more capable with handling their loan responsibilities. They were also more likely to pay down their loans sooner and reduce their debt more quickly over time.
- However, the FBH across all age groups, who had received financial assistance from their family and/or friends to create their home deposit, were much more likely to experience financial distress and hardship over the lifespan of their loan. They were also more likely to have to later rely upon family and friends to assist them with their mortgages and financial affairs.
Now, from these very salient insights into the current FHB market, I think there are a few important take home points on the benefits of developing the saving habit for FHB.
- Learning How to Save is the Key: At any stage in life, possessing the discipline of saving is a powerful habit to develop. However, when it comes to FHB it is an absolutely essential skill to possess. Not only does it demonstrate that you can live within your means and spend less than you earn, it also shows that you have the ability to manage your money and your financial affairs over time.
- Savings Builds Financial Resilience: Once you have mastered the skill of saving on a small income, this can later be applied to larger amounts as your income and expenditures grow. It also means that you will be more likely to be able to handle your affairs if you ever experience financial challenges because you have a proven track record that you can be responsible with your money.
- Demonstrating that you Have Genuine Savings: Perhaps most importantly for FHB, by having a solid savings history and a healthy self-generated deposit for your home, your lender will see that you are a good candidate for a mortgage. Because, as these stats show, if you can save first and manage your money well to create a home deposit, you are more likely to be able to do so into the future. In this way everyone wins as FHB are better money managers, more financially resilient and more likely to pay off the home loans, whilst the banks and other lenders gain clients who are deemed to be lower risk and good financial managers.
So if you are looking for ways to improve your saving habits in regards to your home deposit or have some questions on how you can get on the fast track to home ownership, feel free to contact us at Mortgage Coach.
Until next time, wishing you happy saving,
* Source report from the RBA
Are you looking for a short commute to the city? You can still pick up a bargain close to the city. Here are some tips.
Nollamara, Cloverdale and Belmont are among Perth’s 10 cheapest suburbs for median house price within 10 kilometres of the city, new reiwa.com data has revealed.
REIWA President Hayden Groves said there was great opportunity for Perth home buyers close to the city.
“Buyers in Perth really are in an enviable position. It’s unheard of in other parts of Australia, particularly in Sydney and Melbourne, for buyers to be able to purchase a house close to the city for less than $530,000.
“We are very lucky in Western Australia that there are still great bargains to be had in and around the CBD. It won’t always be this way, so I advise buyers to act sooner rather than later if they are wanting to secure an affordable house close to the city,” Mr Groves said.
Nollamara was the most affordable suburb on the list, with a median house price of $410,000 and a lower quartile price of $375,000.
“Buyers only have to look 10 kilometres north of the Perth CBD to find great value. Nollamara is currently undergoing a lot of change, with infill redevelopment rejuvenating the well-established suburb and attracting a lot of first home buyers to the area,” Mr Groves said.
The 10 cheapest suburbs within 10km of the Perth CBD
Year to June 2017 data for suburbs filtered for more than 20 sales.
Of the 10 suburbs that made the reiwa.com list, seven were located east of Perth.
Mr Groves said the eastern corridor of Perth’s inner city area held a lot of opportunity for home buyers.
“The median house price in suburbs like Cloverdale, Belmont and Redcliffe is hovering around the $450,000 mark, which is notably lower than the Perth median house price. First home buyers in particular will find good opportunity here, especially if they look to these suburbs’ lower quartile prices, which are even more affordable,” Mr Groves said.
“With the Perth Stadium and surrounding infrastructure nearing completion, the opportunity is there for savvy buyers and investors to purchase in a fast growing area at an affordable price.”
Now go and find yourself a new home close to the city.
With the Real Estate Institute of Western Australia’s (REIWA) recent snapshot of the local real estate market for the month ending September 2017, there are some solid indicators that it’s a good time to buy property in Perth. *Combine this with the most recent Worldwide Cost of Living Report 2017, which places Perth as the least expensive capital city in Australia in which to live, and you have some exciting signs which all point to Perth becoming one of the most affordable cities in the country.**
What Are these Positive Market Indicators?
- The Perth metro sales market has held relatively steady for the third straight month in a row, with median house prices adjusting only slightly downwards by 1% to $510,000 for September 2017, as compared to the relative high median price of $550,000 recorded in Sept 2014.
- In the Rental market, the Perth metro median rent price has also held up at $350 per week, which is good news for Landlords and Investors.
- Linked with these figures, there has been a continued reduction in the stock levels of both listings for sales and rental properties. This is demonstrated by sales listings reducing by 1% in September for the 5th month in a row, with listings down 8% compared to September 2016. In the rental sector, properties for rent declined by 3% over the month, with a reduction of 9% from the same time last year.
- And in the Worldwide Cost of Living Report 2017, Perth was positioned as 49th on the list of around 130 countries ranked from 1 to 133 for being the most expensive to least expensive cities in the world to live. This placed Perth well behind the other Australian cities with Adelaide at 35th, Brisbane 31st, Melbourne 15th and Sydney ranked 14th.
And I think that REIWA’s President, Hayden Groves, sums up the more positive mood in the market with his statement, “It’s very encouraging to see stock levels across the market continue to reduce, especially when we compare levels for both sectors on an annual basis. If this trend continues, we should see a better balance between supply and demand of stock start to emerge.”*
Which is great news for all of you looking to get into a new home of your own, whether you are a First Home Buyer, Down-Sizer, Up-Sizer or a recent arrival to the city. In the case of Investors and Developers, housing and land is more affordable and with the added bonus of new R Code and Residential Zoning changes in some Perth suburbs, perhaps now is the time to enter the market to capitalise upon these opportunities?
So, if you are thinking about entering the market or purchasing your next property, feel free to contact us at Mortgage Perth on ………………..and speak with one of our fully qualified Mortgage Coaches. Your next home or property purchase could be closer than you think.
Until next time Champions, here’s to finding opportunities within the market,
As the saying goes, “All’s fair in love and war.”
Whilst, I think its fine for the poets and playwrights to make this bold statement, how does this idea translate in the real world when your marriage or relationship breaks down and suddenly ends? Because we all know that what’s fair for one person, may not be so for another. And even though every relationship does not necessarily end badly, it can get tricky when you discover that the person who was once the love of your life has just turned into the one of your greatest learning experiences.
Usually, at this point in the story the question on most clients’ minds is, “What happens when I’m still connected to my ex through our joint ownership of a property and the shared mortgage we have with the bank?”
Believe me when I say, this is a common question and one which we regularly get asked as Mortgage Coaches. Admittedly, it can be a challenging situation for some when you have to deal with the loss of your relationship and sort out your joint finances at the same time. However it doesn’t have to be this way and with the help of an experienced Mortgage Coach a solution which works for both parties can be found without too much stress and difficulty.
This was definitely the case for a couple of our clients recently when their nine year marriage broke down leaving them with a large mortgage on the family home and neither party able to fund the loan repayments on their own. In this instance, Kirsten and Mick, (not their real names) had ended their relationship amicably but with a loan of over $700,000 left owing on their large and well located home, neither was able to buy the other party’s share of the property.
Therefore it was decided that they would put the home on the market, pay out the loan and share the remaining funds once the sale was complete. In the meantime, however, they still had to come to an agreement on how they would manage their mortgage, new living arrangements and care of their young son. With the help of their Mortgage Coach they were able to shift their loan to an interest only repayment plan whilst they handled the sale of their property. This enabled Kirsten to find a short term rental property whilst Mick stayed in the family home and managed the lower repayments. Luckily, due to their flexible working arrangements, they were able to co parent their young son and share the childcare responsibilities.
Ultimately, their home sold for a good price. They were therefore able to pay out the mortgage, reach an agreement on the remaining funds and each move forward with their lives with as little stress and disruption as possible for themselves and their son. Now their Mortgage Coach is assisting Mick with a new loan on his next property and Kirsten is renting whilst she considers her options. This was a great result all-round.
So if you find yourself at the end of a relationship but still share a mortgage with your ex, a workable solution could be possible. For an obligation free discussion with one of our experienced Mortgage Coaches, feel free to contact us on 08 6279 1459. We’re here to help.
Until next time champions, remember to play fair.