Spring Clean your Finances with these Expert Tips

First home owner: Saving for your deposit

Saving for a deposit for your first home should be high on your priority list right now – follow these steps to keep you one step ahead of the game:

• Set a budget – Make sure you really understand where you are spending your money; set aside an evening to review your recurring expenses and see if there’s any way you can reduce them. Start by removing costs that are not entirely necessary, then negotiate better rates on your utilities and other recurring bills like health insurance and be prepared to switch providers to get the best deal. The ASIC Money Smart budget planner is a great tool you can use to create a budget and track your spending.
• Make a savings plan – Commit to a certain amount of savings each month – and stick to it. Not only will this be the beginning of your healthy home deposit, it will also show banks and lending institutions that you are capable of repaying a set amount each month – you’ll thank yourself when the time comes to organising your home loan. Refreshing your finances can help you achieve your savings goals faster. Use our Home Loan Deposit Calculator to determine the deposit amount you’ll need and stay on track as you tidy up your budget.  
• Speak to your parents about your goal of building a home – It’s important to share your goals with loved ones - not only does this make you accountable for those goals, they may be able to help bring them within reach. Parents may be able to assist with your deposit, go guarantor against your loan or just provide their sage advice on budgeting and saving.

Investors: Making the most of your portfolio

In light of the Royal Commission recommendations banks have tightened their lending criteria. But that doesn’t mean investing in property should be off the table, it just means you need to be smart about where your money is going to set yourself up in the best financial position:

• Consider your living expenses – just like the first home buyer saving for a deposit, you need to go through your everyday and recurring expenses with a fine-toothed comb to assess whether anything can be reduced. Try to remove any liabilities such as credit card debt prior to applying for an investment loan.
• Reassess your current loans – Look at any existing assets you have. Do you have any equity in existing properties that you can use against your investment? The way most banks look at existing home loans has tightened up a lot in the last 12 months. This means that if you’re trying to buy your third or fourth property, for example, it’s more important than ever to ensure your existing home loans are structured correctly to help free up borrowing capacity for the next investment.
• Find the most suitable product for you – Make the most of increasing competition and ensure you shop around to find the absolute best loan rate for your investment.
• Negative gearing changes – The Royal Commission has led to some changes in how banks and lenders view negative gearing, so the sooner you get your finances in order the better.

Home Upsizers: Considering all your options

Changing circumstances and growing families mean you may need more from your current home. Now is the time to consider all options available to get the most from your next home. Here are some tips to help with your decision:

• Sit down and create a clear list of your wants/needs. Start documenting all options that would suit your requirements – is it additional bedrooms or bathrooms, a separate study, more efficient heating and cooling, a kitchen upgrade, separate living areas or an area for the kids for example? Once you’ve got your list, decide which solution will best suit your needs - remembering that a new build offers the best in energy efficiency, fixed pricing and a set build time.
• Consider any equity that you might have in your existing home - get a formal and up to date appraisal and keep an eye on the market to get a clear understanding of what your budget will buy you in today’s conditions.

A final tip from the experts: There has never been a better time to be clever with your finances. Online payment services such as Zip Pay and After Pay are popular and seem convenient, however they are now treated like credit cards and will impact on your loan capacity. So think twice before you use these services and remember luxuries can wait till you’re in your new home!