CHOICES. The best compliment you can give us is to refer a friend. talk to us today. in this issue. Why choose Mortgage Choice?

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1 The best compliment you can give us is to refer a friend CHOICES ISSUE 3, 2018 Graham Baxter Do you know someone who's 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. in this issue How does the RBA affect your home loan rates? talk to us today graham.baxter@mortgagechoice.com.au mortgagechoice.com.au/maroubra1 Suite 1, Level 1, 830 Anzac Pde (Cnr Boyce Rd) Maroubra, NSW 2035 Mortgage Choice Limited ACN Australian Credit Licence Mortgage Choice Financial Planning Pty Limited ACN , AFSL Setting your property investment goals Houses versus. units - which is better? Increasing your property's street appeal Will you be mortgage free by retirement age?

2 News from... Graham Baxter 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 Graham Baxter What a complex world we live in. Last year, the Australian Prudential Regulation Authority (APRA) introduced initiatives that saw interest rates for investment loans rise. Yet, the Reserve Bank of Australia (RBA) has now noted that it s game on again for investment lending, with some lenders cutting their rates. It goes to show that the world of money never stands still and that s why your home loan shouldn t be a set and forget product. The new financial year is always a good time to review your mortgage. A home loan health check can show in just a few minutes if you still have the right mortgage for your needs, or if you could do better. It s possible your lifestyle has changed over the past year, and your home loan isn t keeping pace. Whatever the case, we make things easy by doing all the legwork and completing the paperwork on your behalf at no cost to you. To make the world of money just a little less complex, this edition of CHOICES looks at a number of issues our customers often ask about such as setting your investment goals, whether houses or units offer better investment opportunities and tips on being debt free by retirement. Like to know more? As always, if you would like more information or you would like to provide feedback on any articles you read in this edition of CHOICES, please let us know. We value your feedback. $ MONTHLY Home loan repayments Work out your minimum 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 Compare loans Compare home loans from different lenders based on interest rates, loan terms, fees and more. mortgagechoice.com.au/compare-loans The information provided in Choices is for general education purposes only and does not constitute specialist advice graham.baxter@mortgagechoice.com.au mortgagechoice.com.au/maroubra1 Suite 1, Level 1, 830 Anzac Pde (Cnr Boyce Rd) Maroubra, NSW 2035 Mortgage Choice Limited ACN Australian Credit Licence Mortgage Choice Financial Planning Pty Limited ACN , AFSL $ How much do you need to retire? Calculate how much money you'll have to spend in retirement. mortgagechoice.com.au/retirement-income-calculator

3 How does the RBA affect your home loan rates? At the start of nearly every month, the Reserve Bank of Australia (RBA) meets to decide the official cash rate. Perhaps you ve heard mentions of the cash rate in the news and have wondered what exactly it is and how it actually affects you. To begin, it's helpful to provide some context by explaining what the RBA is and what it does. The RBA is Australia s central bank and it is responsible for establishing monetary policy that ensures a stable, healthy economy and maintains our strong financial system. It does this by setting a cash rate, which is the interest rate at which Australian banks can borrow from the Reserve Bank and other institutional lenders, and it acts as a benchmark rate for the rest of the country. Except in January, the RBA Board meets on the first Tuesday of every month to decide whether to lift, drop or hold the cash rate, and any moves are usually made in 0.25% increments. The RBA's decision is influenced by various economic factors, including consumer confidence, business confidence, the property market, and the performance of the Australian dollar. Is your home loan due for a health check? Get in touch with us and find out if we can save you time and money on your home loan through a free home loan health check. The RBA s cash rate sets the interest rate that one institution charges another to borrow money and this base rate has a direct impact on how much interest banks charge their customers on their loan products. When the cash rate is low, like it is currently, the interest rate on your mortgage will feel more affordable, as you are paying less interest each month on the money you have borrowed. On the other hand, when the cash rate is high, banks' interest rates may follow, making the cost of borrowing money more expensive, which often results in consumers spending less. Whether you re a homeowner paying off a mortgage, or you are looking to upgrade or invest, keeping up with the cash rate is important, as any changes mean banks interest rates may shift. If interest rates are low, it may spur you to purchase an investment property, or if you are a homeowner and you have a variable rate loan, you ll enjoy a reduction in the amount of interest you have to repay. When interest rates go up, mortgages become more expensive unless you have a fixed rate mortgage, in which case, you won t be affected during the fixed rate period. Now that you understand how the cash rate works, you should be ensuring that you have a home loan with the sharpest rate and the most appropriate features for your unique situation. Speak to your local Mortgage Choice broker who can assess your mortgage and determine if you re in the right product for your needs.

4 Setting your property investment goals Property investing is a long-term venture and the key to ensuring success is having goals set in place. Your property investment goals should not be a general statement such as growing your wealth. Rather, they should be SMART: Specific, Measurable, Attainable, Relevant and Timely. Both first-time and seasoned property investors should establish what they want to achieve with their property. This stops them taking a set and forget attitude and instead, gives them a focus and a roadmap that will inform their decisions down the track. Here are four tips to get your started on creating property investment goals. 1. Do the maths Property investing is all about the numbers. You need to understand your budget and your cashflow. You should understand what you can afford to borrow for your investment property and what your monthly repayments will be. You also need to factor in other expenses such as renovations, repairs and maintenance costs. The total costs will allow you to see if you need to make any lifestyle changes to be able to afford the investment property. 2. Set a timeline Consider how long you plan on owning the investment property. It could be five years, 10 years or 30 years. Will you be purchasing other properties in that time? If so, you should specify when you ll buy and how long you intend to keep each one. 3. Think about why you re investing Are you looking for capital growth or rental income? Perhaps you re looking to build a portfolio of properties. Make sure your strategies and goals are in line with the bigger picture of what you want to achieve. 4. Preparing to be a landlord As a landlord, there are various decisions you have to make. You need to think about whether you employ the services of a property manager, the type of tenants you want to attract, and the rental price you want to achieve. Our free, downloadable investor guide explains the steps associated with the purchase of an investment property - MortgageChoice.com.au/investor-guide Setting goals for your investment property is important as they will provide a framework in which to succeed. Your local Mortgage Choice broker can help you with your property investment goals and walk you through your options, so why not get in touch with them today.

5 Houses versus units - which is the better investment? Once upon a time, the idea of investing in a unit instead of a house was unheard of. When you buy a house, you re buying land which has more inherent value than air, right? This idea is slowly being dispelled as lifestyles change, spurring investors across Australia s capital cities to opt for units. House prices in capital cities have risen over the years, leading more buyers to compromise on land and the size of their homes in order to live close to the CBD, pushing up the demand and value of units. While there s no definitive answer regarding which is better, there are a number of factors you should consider before pursuing any investment strategy. Namely, your aversion to risk, what you can afford, property market conditions (both current and historical) and where you choose to buy. Houses One of the benefits of buying a house as an investment is that if you want to change things like the colour of your walls or undergo more extensive work like a major renovation, a house is generally much more flexible as you don t have to abide by strata regulations. That being said, if you live in Australia s metropolitan areas, you may find that the purchase price of a house is significantly more expensive than a unit with the same number of bedrooms in the same suburb. Of course, this is usually down to the cost of buying land and the fact that the value of land will generally appreciate over time. Another benefit of buying a house is that some tenants will look for outdoor space, which means you may be able to attract a larger number of tenants. Conversely, tenants who prefer not to maintain a garden or lawn may steer clear of houses with a backyard. Units Location is often what matters most to tenants and if your aim is to generate rental income, you ll need to seriously consider this when making your decision. One of the main benefits of buying a unit is that they are usually constructed close to city centres, public transport, amenities and entertainment. Indeed, many apartment complexes feature gyms and pools. Facilities which are sure to attract tenants (but possibly higher strata fees). Unit dwelling values have been out-performing house values across the country. CoreLogic s Hedonic Value Index showed that unit values outperformed house values over April, with unit values trending higher, up 1.9% compared to a 1.0% fall in house values There are a large number of newly constructed units on the market. Newer units are often much easier to maintain which means you won t have to spend as much on upkeep. Furthermore, you may not have to pay for garden and lawn upkeep although, keep in mind you will probably have to pay strata levies. Another advantage of buying a newly constructed unit is that you may be able to benefit from tax concessions relating to depreciation. Do your research No matter what the investment, the key is to make an informed decision. Property is a significant investment so in order to avoid buying with your emotions, ensure you do as much of your own research as possible. Have your say Is it better to buy a house or unit? Tell us what you think here: MortgageChoice.com.au/house-or-unit When you re ready to buy, contact your local Mortgage Choice broker and they can compare a variety of home loan options to find one that suits your unique financial situation.

6 Increasing your property's street appeal We all know that first impressions are the most impactful and never is this more true than when dealing with property. Purchasing a new home is one of the most significant investments you can make so when you decide to sell your home, you ll want to ensure the exterior has a wow factor. Read on for tips to bring instant street appeal to your home. Give your garden a makeover To start with, you ll want to make sure your garden looks tidy. Be objective about it, stand on the other side of the street and take a good look at your home before you make any changes. Mow the lawn, prune overgrown hedges and trees. It s no secret landscaping is a great way to improve the aesthetics of your home. Replace lacklustre grass. Visit your local nursery to pick up some native flora, evergreens or succulents to plant in your garden. Native plants tend to be more robust and are a low maintenance way to keep a garden looking fresh throughout the seasons. Take the time to replace any split cement or stone in your driveway or pathways. You might also want to hire a highpressure hose and give hard surfaces a good clean. If your home has a deck you ll also want to make sure the timber is in good condition and apply a new stain if needed.. Brighten up your front doors and windows The great thing about a wooden door is that they re fairly easy to customise. Whether it s staining the wood or painting it an entirely new colour, this is a great way to update your home s exterior. Alternatively, another great way to spruce up an existing door is by adding a new statement door handle and/or knocker. Ensure your windows are clean and if your window frames are wooden, you may want to freshen up the polish or paint. Clean out the gutters If you haven t done this in a while, now s a great time to give your gutters a thorough clear out. If you spot any rust or peeling paint, you may want to consider repainting the gutters and downpipes around the home. Ensure you properly remove the old colour before applying the new paint and depending what the gutters are made of, you ll need to apply a quality primer before adding colour. Render your brick home Adding a render to existing brickwork will completely transform a home. Rendering can bring an outdated brick colour into the 21st century, however this is a significant change and you can run the risk of overcapitalising, so get cost estimates before you proceed. How you will fund the improvements? Depending on your financial position, you may be able to use home equity to cover the cost of works. The beauty of this option is that cash savings can be kept intact for other uses (like unexpected emergencies). To find out more, why not give your local Mortgage Choice broker a call?

7 Will you be mortgage free by retirement age? In an ideal world, we would all retire debt free with enough assets to enjoy a comfortable retirement. Unfortunately, this isn t always possible. The high cost of housing means that more Australians have had to take on large debt and may retire without having paid off their mortgages. If you re nearing your twilight years and think you might be heading in this direction, there are a number of strategies you can adopt now to get out of debt in time for retirement. To start, take stock of any personal debt you have This may include your mortgage, car loan or credit card debt. Factor in any interest and/or fees you are paying on those debts so you know exactly what your financial situation is. Pay down your high-interest rate debts first If you have any credit card debt for example, it s a good idea to try to pay this debt down as soon as possible as it s costing you the most in interest repayments. Get a home loan health check Don t be complacent with your home loan and ensure you re in the right product for your needs by getting a home loan health check. It s possible that you re missing out on a more competitive interest rate and/or home loan features.? Make extra repayments Try to make extra home loan repayments where possible. If you receive any extra income, put it towards your home loan, as the faster you pay down your mortgage, the less interest you ll pay over the long term. You may also want to consider making the most of home loan features such as an offset account attached to your home loan, which reduces the amount of interest you pay on your loan over time. Of course, not all loans have an offset feature so it s best to speak to your local Mortgage Choice broker to ensure this is an appropriate strategy for you. Consolidate your super Your superannuation is the nest egg for your retirement but If it's scattered across multiple funds you re likely to be paying more than one set of fees, which can eat away at your retirement income. Before consolidating multiple super accounts into one, do your research and look out for termination or exit fees, ensure the new fund aligns with your appetite for risk and offers insurance options that matter to you (death and disability insurance and income protection etc.). As is the case with any investment, your super should be chosen with care and this is even more important as you near your retirement years. A MORTGAGE CHOICE FREE HOME LOAN HEALTH CHECK IS A SMART OPTION. We ll evaluate and compare your home loan with hundreds of others to make sure you have the loan that s right for you. Ask your local Mortgage Choice broker for a free home loan health check today

8 Super contributions Make voluntary super contributions to boost your nest egg. If you look at your superannuation as a forced savings account, it s not a bad idea to make extra contributions where possible as you ll not be able to dip into it for discretionary spending. Invest You may want to consider investing your savings in order to grow your wealth for retirement. Your investment strategy will vary depending on your proximity to retirement and appetite for risk. Generally speaking, the closer you are to leaving the workforce, the less risk you should take when approaching investments. Downsize Chances are as you near retirement you'll require less living space as your children move out of the family home. Downsizing into a smaller and less expensive home could free up a decent amount of cash, which you can put towards paying off your mortgage or invest in your superannuation. Seek professional advice While there s a wealth of information online, it s important to remember that most financial service providers will typically offer general advice, which does not cater to your specific financial objectives and situation. Here at Mortgage Choice, not only can we help you find ways to pay off your home loan sooner rather than later, our financial advisers can help you grow your wealth, develop strategies for paying down debt and prepare for the retirement you want. NATIONAL HOUSING MARKET KEY STATISTICS Change in dwelling values Total Median Month Quarter Annual return Value Sydney -0.6% -1.1% -5.4% -2.5% $863,769 Melbourne -0.9% -1.8% -0.5% 2.4% $709,568 Brisbane 0.1% 0.5% 1.2% 5.2% $494,634 Adelaide -0.1% 0.7% 0.7% 4.9% $438,163 Perth -0.8% -1.5% -2.3% 1.6% $457,274 Hobart 0.0% 1.1% 11.5% 17.1% $435,833 Darwin 0.4% -1.0% -6.2% -0.8% $439,596 Canberra 0.2% -0.2% 2.4% 7.0% $590,229 Combined capitals -0.6% -1.1% -2.4% 0.8% $650,165 Combined regional -0.4% -0.2% 1.6% 6.6% $367,067 National -0.6% -0.9% -1.6% 1.9% $554,263 Source: CoreLogic Index results as at July 31, All figures are current and based on data available at the time the report is published. Housing market Outlook Since peaking in September last year, the Australian housing market has recorded a cumulative 1.9% fall in value; a relatively mild downturn to date considering values remain 31% higher than they were five years ago. The weakness in dwelling values is being driven by the long running declines in Perth and Darwin along with an acceleration in the rate of decline across Sydney and Melbourne and slowing growth rates across most of the remaining regions. The premium end of the market has seen a more substantial decline. The surge in first home buyer activity evident since stamp duty concessions has propped up demand across the more affordable end of the housing market, while a new focus on borrowers with a high debt to income ratio is likely to be dampening the amount of funds available for purchasing expensive dwellings. We can t see any factors that may halt or reverse the housing markets trajectory of subtle declines over the second half of While dampening factors are at play, consistently low mortgage rates will continue to provide a support buffer which should help to keep a floor under housing demand. Source: CoreLogic Hedonic Home Value Index July 2018