We welcome to Femail.com.au our financial guru Cat. Cat has the ability to help with all those things to do with money, savings, homeloans and all the kinds of things most of us wish we were more interested in or knew more about but just don't have the time to look into or quite frankly hate the thought of.
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These are our first round of questions and answers. We hope you will make the most of this free service. It's here for you! What is the best way to save for a deposit for my first home?
Response: Hi Sam,
You want to buy your own home - good for you!! One of the first times we really think about saving is when we want our own home, and once you start saving regularly, it is a fantastic habit to keep.
The first place to start is with a budget. Work out exactly how much you get paid (in hand, don't look at gross figures) and exactly what goes out. Don't forget the little things! (eg - papers, magazines, lunches etc). Once you know what you have left over, break it down to how often you get paid (weekly, fortnightly monthly) and have money set aside for the bills every pay. That way whatever is left is for your day-to-day "stuff."
When you know what is left, you can set aside some of that money for savings on a regular basis.
How much do you want to spend on a house? Usually mortgage finance companies & banks look for about a 20% deposit of the total purchase price. Another important thing to consider are the additional costs such as stamp duty and land title costs. You need to make sure that BEFORE you start seriously looking for a home, you have enough saved up for the other costs as well.
As to what to put your savings into, it all depends on the amount you can save regularly, how much you have saved already, how long you want to save before you buy your home, and most importantly what type of investment are you comfortable with and what is most appropriate to your needs? There's no point putting your money into a high growth/high volatility investment if you are conservative and won't be able to sleep at night! This is where a Qualified Financial Planner is vital. They will help you find the right investment for you, and take into account how you feel about investing, what kind of time frame you want to save, and most importantly, what is RIGHT for your individual circumstances.
Happy saving! I have a house already and would like to buy another property as an investment with my husband. Am I best to go through the bank I already have a "history" with and with who my current loan and credit card is with or can I go elsewhere?
Any advice will be greatly appreciated.
Congratulations on looking seriously at investing.
I have one question for you - what are your reasons for investing in direct property?
Is it really property you need? Do you wish to invest in property for extra income, as an investment towards your retirement, are you looking for legal tax advantages?
The best advice I can give you is to seek advice. I strongly encourage you to sit down with a Qualified Financial Planner, and look at ALL your options, not just in one area. The Financial Planner will sit down with you and work through exactly where you are now, where you want to be, and the best way of achieving those goals. It may well be that direct property is exactly what you need, but would you want to risk investing in the wrong thing? Wouldn't you be happy knowing that you are investing in the right options for what YOU want to achieve?
As far as the best method of borrowing goes, a lot of people, like yourself, feel that as they have a good credit history with one bank, they should organize all the future borrowings through them as well. This does not necessarily have to be the case. The most important consideration when looking for a loan is YOU, not the bank. You want to find a loan facility that is right for your individual needs. It may be that the bank you are with does not have the type of facility or options that is most suitable to what YOU need. There's no point staying with your existing bank if it's going to end up costing you money!
That is why you need to shop around. First thing to consider is what type of loan is suitable for you? Is it more suitable to have a variable rate loan, fixed interest or a bit of both? Is a standard home loan more appropriate, or would you be better with a line of credit facility?
One of the most effective ways to work out your options, and what is most suited to you is by the use of a mortgage broker. They deal with lending facilities as a profession, and so are aware of all the options open to you, and are aware of the costs. They will sit down with you and work out exactly what it is you need, and where the best place is to go to get it.
Another benefit of using a mortgage broker is that they do all the running around and investigating for you. Let them do the work, that's what they're there for - you've got better things to do with your time! Cat is a representative of Winchcombe Carson Financial Planning.