Tips for building your financial resilience

September 01, 2014
Ashley Arrowsmith

What would happen to you if you lost your job or suffered a major illness?  How long could you survive financially if you encountered a major set-back in life?

 

With interest rates at historic lows, home loan repayments are manageable.  How high would interest rates have to rise before the repayments became a worry?

 

Below are some ideas to explore to protect yourself against these unplanned life events by increasing cash flow and reducing expenses.  If you find these tips useful it may be an ideal time to speak to a Mortgage Choice financial planner to get the right advice about your personal strategies.

 

For the home owner

 

  1. Build a cash flow buffer by setting up an offset account with your home loan.  Pool additional funds in the offset rather than making extra repayments to your home loan.
  2. Speak to your mortgage broker to ensure your current interest rate is competitive.  Now may be a good time to switch and we would love to help.  See how much you could save with our home loan calculators.
  3. Make sure you have adequate income protection and life insurance.  This could be the difference between keeping the family home or having to sell in the case of major illness or loss of job.
  4. Consolidate your credit cards and/or personal loans into your home loan to reduce your monthly commitments.  You may end up paying more interest in the long term but it may assist with your cash flow.
  5. Watch your spending!  Do the simple things like take a packed lunch to work and cut back on those take away coffees.  It may sound simple but the savings can really add up.

 

For the investor

 

  1. If your investment property is negatively geared, arrange to have your weekly tax withholding reduced rather than wait for tax time to claim the refund.
  2. Keep those receipts.  Make sure you have the receipts to claim expenses come tax time.  Why not have your property manager pay your rates, repairs etc so everything is included in your monthly statement.
  3. Have a depreciation schedule prepared and claim depreciation expenses at tax time.  We can assist with a referral to Real Property Matters who are experts in this field.
  4. Regularly check the rent you are receiving from your investment properties to ensure they are inline with market rates.  If not, it may be time for a review.
  5. Protect  your investment property with adequate landlord insurance and use an experienced property manager.  Speak to local agents and look for value, do not shop on price alone.
 

If you would like a complimentary home loan or investment loan review in the Heidelberg, Ivanhoe area or surrounds, please call Ashley on 0425 826 967 or 9432-2121.  If you would like to speak with a financial advisor, we can refer you to our Mortgage Choice Financial Planner – Jason Sibio 

Posted in: Financial planning

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