CHOICES. in this issue ISSUE 3, 2017

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1 CHOICES ISSUE 3, 2017 in this issue What will tomorrow bring? Why 'paying yourself first' is so important To help or not to help? The home of the future is here

2 News from... The team Mortgage Choice Calculators Use our suite of popular mortgage & home loan calculators to work out your borrowing capacity, home loan repayments, stamp duty, savings targets and more. Borrowing power Calculate your borrowing power based on your salary and financial commitments. mortgagechoice.com.au/how-much-can-i-borrow Wayne Smith Karen Schneider Now is the time to act In this edition, we will show you how you can integrate the latest technology into your home without breaking the bank. We also explain the different ways you may be able to help your child achieve their dreams of property ownership - from going guarantor on their loan to financial gifts. In addition, we show you how to easily ramp up your savings so that you can achieve your financial goals today, not tomorrow. If you would like more information on any of the articles you read, or would like to provide us with some feedback on the stories included in this edition of CHOICES, please let us know. The information provided in Choices is for general education purposes only and does not constitute specialist advice. MONTHLY Home loan repayments Work out your minimum weekly, fortnightly or monthly home loan repayments. mortgagechoice.com.au/repayments-calculator Achieve savings target Find out how much you need to save weekly, fortnightly or monthly to achieve your savings target. mortgagechoice.com.au/achieve-savings-target-calculator How long to repay? Work out how long it'll take to repay your home loan. mortgagechoice.com.au/how-long-to-repay Want to know more about what s happening with property in your local area? As your Mortgage Choice broker, I can help simply call me today. $ Compare loans Compare home loans from different lenders based on interest rates, loan terms, fees and more. mortgagechoice.com.au/compare-loans wayne.smith@mortgagechoice.com.au MortgageChoice.com.au/wayne.smith Suite 2, High Street, Wodonga, VIC 3690 $ How much do you need to retire? Calculate how much money you'll have to spend in retirement. mortgagechoice.com.au/retirement-income-calculator Mortgage Choice Limited ACN Australian Credit Licence Mortgage Choice Financial Planning Pty Limited ACN , AFSL

3 What will tomorrow bring? John Flavell, CEO Mortgage Choice No-one really knows what the future will bring. As such, it s impossible to predict what will happen tomorrow, let alone one year from now. The best way to predict the future is to look at the past. And history has made one thing very clear: property is cyclical. Any and every property market goes through highs and lows. There will be periods of strong growth and periods where property prices may fall. History has also shown us what events can cause property prices to fall and what events can cause prices to rise. What we have learned from history is that property prices are driven by four key factors: supply versus demand; the cost of credit; access to credit and overall employment levels. At present, property demand remains relatively strong across the country. In Sydney and Melbourne specifically, the level of stock coming on to the market has fallen over the last 12 months. When you combine falling stock levels with clearance rates above 75%, it's clear that demand remains strong in both of the capital cities. Furthermore, despite the latest spate of interest rate increases, home loan rates remain historically low, keeping the cost of credit at affordable levels. And, while many of Australia s lenders have tightened their lending policy over the last 12 months, they remain hungry for business in both the owner occupied and investor space a trend that will continue for the foreseeable future. Added to this, unemployment remains low by long-term standards. Data from the Australian Bureau of Statistics shows the unemployment rate has not risen above 6% once this calendar year. With all of this in mind, it's likely that property prices especially in markets like Sydney and Melbourne - will continue to rise. And that is one prediction that economists can hang their hat on. Why? Because this prediction is based on historical data, rather than expected trends. Stay informed about market news and changes that may impact you. Visit MortgageChoice.com.au/News

4 Why paying yourself first is so important Do you know where your money is going every month? If the answer is no, you re not alone. If you re looking to build your savings and be in greater control of your finances, an effective strategy is to pay yourself first when you receive your salary. Here are six tips to help you start paying yourself first. 1 Set a goal It s always easier to save when you have a larger goal in mind, whether that is to save for a holiday, a car, a house, or retirement. 2 Look at your spending habits Look at your fixed expenses for each month, including your rent/mortgage, utilities and transport, as well as variable expenses such as entertainment and food. Deduct this from your monthly income and this will give you an indication of you how much you could potentially save each pay cycle. 3 Set an amount to save Once you know how much you could potentially save each month, try and put that exact amount into a savings account on pay day. If you find it relatively easy to live off the remainder of your income, you should try and step up your savings so that you re putting more money aside. 4 Set up automatic transfers Once you ve worked out 'the sweet spot for your savings, it s worth setting up a separate account that can be used to store this money. The benefit of channelling your savings into a designated account is that you ll able to watch it grow each month, which can motivate you to reduce your spending and increase your savings even further. 5 Adjust how much you save and spend If you want to increase how much you re putting away, look at areas where you can reduce your expenses, such as cancelling unused memberships, switching mobile providers, or finding another home loan product with a lower interest rate. Did you know we have Mortgage Choice financial advisers on our team? We d be happy to introduce you and we ll even cover the cost of your first meeting. Call us to find out more 6 Speak to an Adviser If you want additional assistance with your expenses and savings goals, speak to a financial adviser. They can create a tailored budget and a savings plan that can help you meet your current and future financial goals.

5 To help or not to help? Buying property in Australia has become increasingly difficult for many first home buyers. One of the biggest challenges is saving a sufficient property deposit. According to the Australian Bureau of Statistics latest Wage Price Index 1, wages grew only 1.9% between March 2016 and March 2017 quarter. Meanwhile, CoreLogic figures show that the mean dwelling price in Australia has risen 11.2% in the 12 months to March If you re the parent of a first home buyer, you may be thinking about how you could potentially help your child achieve their home ownership goals sooner rather than later. There are a few things you can do - which we've outlined below. 1 Let them stay at home longer By having your child live at home for longer, they ll have the ability to save more money. With fewer bills and little to no rent to pay, your child will have a greater capacity to build a deposit. 2 Giving a cash gift You can help your child overcome the challenge of saving for a deposit by giving them a monetary gift. It s important to note that any cash gift you give your child will have to be kept untouched in their savings account for at least three consecutive months to prove to a lender that your child is a reliable saver and can service the loan. 3 Go guarantor on a loan You may choose to go guarantor on your child s loan by using the equity in your property as extra security. As long as your child is able to service a mortgage, this strategy could allow them to buy a home without a 20% deposit, thereby avoiding Lender s Mortgage Insurance. Please note that there are also some pitfalls of which you need to be aware. For example, should your child default on their loan, as the guarantor you ll be liable for the mortgage. It s therefore important to have a serious discussion and ensure you have a plan of attack should your child end up struggling with the mortgage. Find out more about the pros and cons of guarantors by visiting mortgagechoice.com.au/guarantors 4 Buy together If you re not comfortable being a guarantor, you may want to purchase together. Make sure you and your child talk in detail about how this loan will work. For example, how much are you each going to contribute to the deposit and the monthly repayments, and will your child eventually take over all the payments? You need to be clear with your strategies from the start so that the mortgage does not become a cause of disagreement down the track. 1 Australian Bureau of Statistics latest Wage Price Index, May CoreLogic Hedonic Home Value Index, April 2017

6 The home of the future is here Technology is changing the way we interact with our homes and the idea of a smart home is no longer a dream for the future. Not only do these smart technology developments make things more efficient in a home, but they can also help a home owner significantly reduce their electricity and energy consumption. Regardless of your needs, there is probably a suitable product on the market that can help you achieve your goals. Think ahead If you re building a house, consider implementing smart tech from the beginning. This will help you reduce installation and wiring costs down the line. Talk to a professional Home automation can be a costly endeavour, particularly if you plan on installing wiring throughout your house. Any internal wiring you decide to do should be done by a certified electrician who will guarantee the workmanship and provide you with a warranty. Here are just some of the ways you can automate your home today: Security Cameras and motion sensors can be set up throughout your home and accessed through your mobile devices. These systems will send you an alert if there is ever a security breach, with some devices actually programmed to take photos and/or videos of your intruders. You can set up door and garage locks to open or close as you (and your phone) approach. Lighting Trying to ward off thieves? Most systems will allow you turn on lights remotely to give the impression that you re home of an evening. In addition, these systems can allow you to see whether or not you left the lights on after you left for work. You can also install sensor lights that switch on automatically as, and when, they detect activity in a space. On a budget? There are several options out there if you have a limited budget. Automating your home will cost anywhere from a couple of hundred dollars to several thousand. It will depend entirely on your budget and what s most important to you. The convenience and comfort these features bring to the family home could not only improve your day to day life, they are also likely to increase the value of your home should you decide to sell.

7 Making money as a stay at home parent Carly Welburn, Mortgage Choice in Berwick. New parents often face the decision of whether they should leave full-time work to become a stay at home parent. There are many things you need to weigh up, the biggest being how you will replace that full-time income and whether you can live without it. I understand this all too well. Three years ago, when my first child was born, I made the decision to become a stay-at-home parent. However, I still wanted to make money and these are some great tips that I implemented. Selling unwanted goods Grab a box and go room to room collecting items you no longer need. Use your phone (or camera) to take detailed photos and list your items on ebay, Facebook Marketplace or Gumtree. Be honest about the condition, realistic about the price and be prepared to haggle! Domestic services There are lots of busy people looking for help with their domestic tasks. Ironing, cooking and washing are all things that can be done by a stay at home parent for a decent hourly rate. Tap into your social network for customers or list your services on Mystery shopping If you re out and about shopping anyway, you may as well be paid for it! Mystery shopping companies will pay you to go to specific stores, purchase specific products and report on your experience. You can choose which assignments you would like, based on your availability. Try or Catalogue distribution Catalogue distribution has the added advantage of being a great source of exercise. As long as your children are young enough to be pushed in a pram, this could work well for you. Check out and for available rounds. Online surveys There are a number of survey companies that will pay you for your opinion about goods and services. The hourly rate works out to be quite low but these surveys can be completed from anywhere with an internet connection. Try www. valuedopinions.com.au and

8 GREAT AUSTRALIAN DREAM While the Great Australian Dream is evolving, it's clear home ownership and financial security are still fundamental components of the 'dream'. Some Australians are choosing to buy where they can afford then progressively upgrade into bigger and better homes Meanwhile, others are employing tactics such as; Rent-vesting Some just have to push back home ownership indefinitely or get a new dream altogether... Buying property with friends and family Moving in with the parents to save 43% 2017 whitepaper MOVING STUFF list travel as the most achievable dream At Mortgage Choice, we have surveyed more than 1,000 Australians, investigating their thoughts and opinions on home ownership and whether or not it remains the Great Australian Dream. To see the results go to: mortgagechoice.com.au/the-great-australian-dream REGIONAL VIC HOUSING MARKET KEY STATISTICS Statistics Houses Units Median sale price $326,299 $286,610 Change in median sale price (12 mths) 5.10% 5.5% Change in median sale price (3 yrs) 11.90% 9.3% Change in median sale price (5 yrs) 14.5% 9.0% Median asking weekly rent $304 $260 Source: CoreLogic RP Data Market Trends (Standard, National), July 2017 (all data is to 31 March 2017). All figures are current and based on data available at the time the report is published. Figures are indicative only and subject to revision. Average of VIC data (excluding Melbourne). Housing market update While the housing market remains relatively robust, certain areas like Sydney and Melbourne have started to cool slightly. Looking ahead, we would expect to see continued softer housing conditions, which supports the notion that house price growth has moved through its cyclical peak. The softer conditions can largely be attributed to both the time of year and the latest announcements made by the Australian Prudential Regulation Authority (APRA). At the end of March, APRA unveiled a new round of lending measures aimed at slowing the pace of interest-only lending. Subsequently, mortgage rates trended higher, particularly for investors. Consumer sentiment towards housing, as measured by Westpac and the Melbourne Institute 1, has shown a marked downturn. In particular, the Westpac time to buy a dwelling index, fell 6.5% in recent months. According to Westpac, "consumer sentiment towards housing shows an increasingly negative view". Other market indicators are also suggesting a slower pace of growth, including a reduction in market activity, a moderating trend in auction clearance rates and rising advertised stock levels. If property prices continue to cool in some markets, and interest rates continue to hover around record lows, this can only spell good news for potential buyers. Source: Tim Lawless, Head of Research, CoreLogic RP Data 1 The Westpac Melbourne Institute Index of Consumer Sentiment, May 2017.

9 The best compliment you can give us is to refer a friend Wayne Smith Karen Schneider Do you know someone thinking about getting a new home, car or personal loan? If you ve been happy with our service, please pass on our contact details. We d love to help! Why choose Mortgage Choice? We care about helping Australians afford to live the life they want to live. Did you know Mortgage Choice can help you with more than your home, car and personal loan needs? If you re after insurance or want some direction with financial planning, our experts are here to help. We can even help you with the financial needs of your business. At Mortgage Choice, we believe better choices lead to a better life. Contact us today to find out more. talk to us today p e wayne.smith@mortgagechoice.com.au w MortgageChoice.com.au/wayne.smith Suite 2, High Street, Wodonga, VIC 3690 Mortgage Choice Limited ACN Australian Credit Licence Mortgage Choice Financial Planning Pty Limited ACN , AFSL