If you are between the ages of 35 and 50, chances are you have a mortgage. It is an important part of your financial picture, but it does not have to be overwhelming. Navigating your mortgage during these prime years can be both empowering and financially rewarding if you take the right approach.
UNDERSTANDING YOUR MORTGAGE
The first step in mastering your mortgage is understanding the terms of your loan – the interest rate, the type of rate (fixed or variable), the term, and any associated fees or penalties for early repayment. Knowledge is power, and understanding these basics is key.
2. CONSIDERING REFINANCING
The world of interest rates is ever-changing. If interest rates have fallen since you took out your mortgage, refinancing could save you a lot of money. But refinancing is not just about lower rates; it can also help you pay off your mortgage faster or free up cash for other investments.
3. EXTRA PAYMENTS: A LITTLE GOES A LONG WAY
Making extra mortgage payments can significantly reduce the amount of interest you pay over the life of the loan and shorten your payment term. Even small additional payments can add up over time.
4. BALANCING MORTGAGE WITH OTHER DEBTS
If you have other high-interest debts, such as credit cards or personal loans, it may be more advantageous to pay these off before making additional mortgage payments. It all comes down to prioritising your debts according to interest rates and financial impact.
5. UTILISING MORTGAGE OFFSET ACCOUNTS
Take advantage of any offset accounts that your mortgage may provide. Money in these accounts is used to offset the balance of your mortgage, lowering your interest payments while not committing to a longer repayment schedule.
6. EXPLORING MORTGAGE BREAK OPTIONS
Life can be unpredictable, and financial situations can change. Know your options for deferring mortgage payments if you ever need to, whether due to job loss, illness, or other major life events.
7. BE MORTGAGE-SAVVY WITH TAX
Learn how your mortgage affects your tax situation. There may be tax benefits associated with your mortgage for some people, particularly those who own investment properties.
8. SEEK PROFESSIONAL ADVICE
As a mortgage broker, we can be a valuable resource for you. We can provide tailored advice, assist you in understanding your options, and even assist you in obtaining a better mortgage deal.
9. PLAN FOR THE FUTURE
While you are focused on your current mortgage, do not forget to plan ahead. How will your financial situation look as you approach retirement? What role does your mortgage play in this picture?
10. CELEBRATE MILESTONES
Paying off your mortgage is a marathon, not a sprint. Celebrate the milestones, like reaching the halfway point or getting below a certain balance. It’s important to recognise and celebrate your financial achievements.
Managing your mortgage during your prime years requires a combination of strategy, knowledge, and foresight. You can transform your mortgage from a financial burden to a key component of your financial success by understanding your options and making informed decisions.
If you want to know whether your home loan is working effectively for you and your personal finances contact me at karen@harkenfinance.com for a chat.
Here are 9 ways to make your dollar go further and relieve some stress.
If you are looking for ways to tackle the rising cost of living, here are some things you can do TODAY to put money back into your pocket. Every dollar saved can make a difference!
1. Take a look at your major costs.
When times are tight, it can make a world of difference to take a look at your subscriptions, recurring payments, gym memberships, and even your home, car, and health insurance. We recently went through the process of reviewing all our insurance policies, and we were actually surprised that we were able to save money and cut down on areas where we were over insured. As life changes, you need to review the major expenses in your household and see if you’re paying for things that you needed years ago but don’t now.
2. Look at how you’re paying for things.
You could save money in the short term by switching some of your subscriptions or payments from monthly to yearly, or you could temporarily reduce your spending by putting these items on hold to free up some cash in the short term. Once you have more surplus cash, go back to yearly payments for subscriptions, as you can get a deal or save by paying for the full year.
3. Check your home loan rate.
If you want to save money, your home loan is a great place to start. Now is the time to review your home loan if you haven’t already. There are many features within your home loan that can make a BIG difference to the interest portion your bank or lending institution charges at the end of the month. One example is that if you have an offset or redraw facility, learn how to maximise to take full advantage of how using these can save you money on your regular mortgage repayments.
4. Review your online streaming services.
I often review my online streaming services to see if we’re using them as often as we think and a month back cancelled those that I barely used. There are so many out there, and do you really need them all? By cutting down on one or two, you could save up to $20 – $30 per month, and that’s a big saving when money is tight. So think about canceling subscriptions to some of the streaming services you no longer regularly use.
5. Cut down on take-away food
One of the biggest expenses for most households is buying takeout. Take away food outlets are a time saver for busy people, but they are one of the biggest expenses in many households. By saving $50 – $100 per month and not buying takeaway food, this can make a huge difference to your bank balance and can be used to pay down potential credit cards or other debt, which in the end will enable you to have more cash flow.
6. Plan your meals and think outside the box.
Sorry to be the bearers of bad news, but it is true: sticking to a reasonable meal plan can save you dollars at the checkout. Make a week long menu with everything from breakfast to dessert planned out, and include the family in what they’d like to eat. By getting them involved in the process, they are more likely to enjoy the food you’re cooking. Make it a family event and teach your kids the power of saving by preparing and cooking meals the whole family will enjoy. Cook a little extra and freeze it, so on the days when you don’t feel like cooking and want to order take away, you can grab what you cooked the week earlier for dinner or lunch.
7. Shop for groceries online.
You can stick to your budget and meal plan when you shop for groceries online. Wednesday is a good day to shop at the supermarket because that is when many stores update their weekly specials.
8. Look at separate spending and savings accounts.
With your regular bills, put aside a set amount for your ongoing expenses into a separate account and have them directly debited from that account so they are paid automatically without you having to think about it. All you need to do then is put regular money into that account at payday to ensure the amount is in there when the bills are due.
By having a separate spending account for bills, this stops you regularly dipping into your savings for non-essentials
And last but not least, the costs of fuel today are so high that it’s sucking every dollar from you just to fill up your tank today!
There are apps that you can get on your smart phone to check daily fuel prices, so I would encourage you to do this when your tank is around ¼ – ½ left to go, so you don’t fill up at the last minute and have to pay a higher price.
Want more help managing your money? Then check out this course that helps you budget and save your hard earned money.
So you want to buy your first or even second home…but not sure if you are Home Loan ready?
Here are 8 “Must HAVES” in place to ensure you are home loan ready before applying for a home loan.
STEP 1: Your Income
If you’re looking at changing your job, DON’T until you have been approved for the loan and setted on your new home.
If you are on probation, you will need to wait until you’re off probation before a lender will consider you for a home loan. There are exceptions to this and will depend on your current employment and work history.
Ensure your payslip represents the income you are earning, including the year to date figure, as lenders will look at this figure to calculate your annual income.
If you are self-employed or looking at setting up a business, lenders will require 2 x years financial history plus 2 x years tax returns to verify your income. There are exceptions to this, if you have started a busines and going doing the same work as when you were a PAYG employee, reach out and I can explore lending options.
STEP 2: Your Deposit
Have you saved up a minimum 10% deposit, or have you saved up more?
Or are you looking to use the equity in another property to fund the next purchase? ➤ This can be done if your property is worth more than the outstanding debt owing. ➤ A quick and easy way to check this is to obtain a valuation on your home. ➤ As a mortgage broker, I have access to free valuations, so I am able to assist you with this.
You will require generally a minimum 10% – 20% to be able to afford getting into your own home as there are costs associated with purchasing your home for eg; govt costs as stamp duty, property registration costs, possible lenders application fees and settlement costs. However, there are exceptions to getting into your own home with as little as a 5% deposit, reach out so I can expand and explore you own personal circumstances.
Does your bank account statement demonstrate to the lender that you have savings? As they check over a minimum 3 x months bank statements to show genuine savings? ➤ One option a lender will look at if you haven’t been able to save the full deposit is paying rent and having a lease agreement in place. Some lenders consider this, as it can show you are able to meet your regular liabilities on time, which is what they are looking at when looking to loan you money. ➤ Another option is that if you haven’t been able to save up the minimum deposit required, gifting is acceptable with the majority of lenders. Gifting is where a family member provides a cash amount to assist with obtaining a home loan and does not expect this to be paid back. Lenders will require a stat dec (statutory declaration) signed by the person giving the amount to verify this is a gift and not a loan.
STEP 3: Check Your Credit Report
You will want to look over your credit file to ensure there are no nasty surprises, and when it comes time to assesing your loan, if your score is low or there have been any missed payments on any bills or liabilities, they will pick up on this and may stop your chances of obtaining the loan.
Checking your credit report is easy and free to download from one of the credit check companies online.
Or alternatively, you can request a copy of your credit report from me and I will look over it for you to ensure your chances of getting your loan are not decreased.
At the end of the day, lenders are looking for good credit conduct and seeing before they decide to loan you the money that you are able to pay your bills and other commitments on time.
A low credit score or any missed payments on any bills or liabilities may stop your chances of obtaining the loan.
STEP 4: Bank Statements
The majority of lenders will look through your bank statements line by line to see how you manage your money.
They are looking to see your spending habits as to whether there is money left at the end of your pay period and verifying whether there is more going out than staying in your bank account.
They will require the last 3 months of statements, so make sure they look clean and have no surprises for a lender who will question why something doesn’t appear to look like a normal transaction on the statement.
STEP 5: Identification Verification (ID)
Lenders will require a minimum 2 x pieces of identification to verify who you are, and the ID will be in the form of: ➤ A current Drivers License ➤ A Current Passport and/or ➤ Birth Certificate, and i. Any visas, if not an Australian Citizen or Resident
STEP 6: Your Borrowing Potential
Your borrowing potential looks at whether you can actually afford to purchase the new property and this is where your deposit comes into the equation.;
It looks at the purchase price of what you are looking to buy, plus the costs to purchase and get into the property, less your deposit, which equals the actual percentage of how much you’re looking to borrow. ➤ Where you are borrowing less than <80% from a lender, you will not incur lender mortgage insurance, or LMI, as it’s known. i. LMI is the lender’s insurance policy in case something occurs during the term of the loan and protects the lender’s investment in loaning you the money. ii. There is an additional cost added to the loan when in LMI territory, ie; borrowing more than 80% ➤ If your borrowing potential is higher than 90% and even up to 95% then this may limit the lender’s choices available to you, as some lenders do not loan above 90% – 95% (including LMI), while others put a premium on their interest rate for loaning above 95%
➤ So if you are considering a loan, it is best to save as much as you can to access a lower interest rate and lower costs of getting your loan.
STEP 7: Your Affordability
At the end of the day, are you applying for a home loan that you can really afford?
Lenders take careful consideration when you apply for a home loan to ensure you are not going to go into mortgage stress
When a lender considers you for a home loan, they factor in higher interest rates and higher monthly ongoing living expenses, as during the loan term interest rates may rise and the ongoing costs to live increase throughout the years.
STEP 8: Consult With a Specialist Mortgage Broker
As a Mortgage Broker, it’s my job to assist you in successfully being eligible for a home loan.
I have the tools and resources to work out if you are home loan ready, and;
It’s my job to ensure it goes as smoothly as possible so that, at the end of the day, you get your home loan.
Are you home loan ready?
Buying your first home is a BIG and important step in your life. Learn 8 essential must-haves in this guide that will help you in becoming home loan-ready before applying for a home loan. Get your free copy today!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or 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
When life suddenly throws you a curveball whether the signs were there or not and you haven’t prepared yourself for what’s about to come, it can send you into a spin and see you experience massive stress and anxiety.
Financial & Relationship stress go hand in hand and it’s still the number one trigger point for most.
When a relationship breaks down and you’re left to sort out where to go and what to do – money stress is ever-present.
Not only are you dealing with the emotional stress of the relationship breakdown, but you’re now having to deal with where to live, how to survive and then there’s the issue about money which is about to get very messy.
Then if children are involved a whole other issue about custody arrangements and financial support start coming into play.
It’s like you’re in the middle of a soap opera and left emotionally drained.
When an event like this is triggered a person will feel a whole bunch of overwhelming feelings like sadness, anxiety, or even experience panic attacks.
What happens next is that our body goes into one of the “fight, flight or freeze modes” and our heart beats faster and our senses go on high alert. Also our brain stops some of its normal functions to deal with the threat we may be feeling or experiencing.
If this has happened to you or you can see life is about to dramatically change then get some help.
Firstly, find someone who is unbiased and independent and someone who doesn’t know you or the situation that you’re about to experience.
When people are feeling overwhelmed and stressed out they sometimes don’t make decisions that are in their best interests or health.
If you know of someone or you yourself, are feeling any form of stress then get some help. You don’t have to do this alone. There are people and organisations that can help.
Be on the lookout for the SYMPTOMS that stress can produce:
PHYSICALLY
Tiredness, headaches, accidents, tightness in neck and shoulders, restlessness, ulcers, hypertension, respiratory problems, diarrhoea or constipation, chest pain, back pain, upset stomach, skin problems, weight loss or gain.
If stress is experienced for long periods of time it can result in physical, mental and emotional exhaustion or ‘burnout’.
STAY CONNECTED
We need to look out for one another, stay connected and ask if we’re ok.
If your gut is telling you that you’re not ok or that someone close to you is not, then make sure you’re there for them. More often than not they’ll say they’re ok and will remain silent while living with their pain.
SUPPORT
Here in Australia, we have an organisation called Lifeline which is a national charity that has been providing assistance to Australians experiencing difficulties for over 55 years.
If you’re reading this and not in Australia then seek out your country’s support network to ensure you get help and are not dealing with this alone.
In Australia, you can call Lifeline on 13 11 14 anytime as they’re available 24 hours a day.
WHAT TO DO NEXT
I have created a tool kit to help you identify when you’re feeling overwhelmed about what to do.
Other resources I have available is my monthly coaching program which is a fraction of the cost than other coaching programs at $37 per month and with no lock-in contracts. You can exit whenever you choose.
Also, courses teaching you money management skills and how you can build financial muscle. You can check out what’s available HERE.
In the meantime, here’s to your financial health, wealth & happiness.
