Genuine Savings...time to save!

Genuine Savings: Genuine savings are a requirement where we are borrowing more than 90% of the value of the house and simply put it means savings that have been made and held (preferably in a separate account) for at least 3 months. It shows a capacity to regularly save money and the potential to repay a homeloan as the amount you save and the rent you presently pay may come close to the regu­lar repayment you will commit to. By any token it shows an abaility to manage money, which is what lenders want in all cases. Any gifts or proceeds from the sale of personal items will not be allowed as genuine savings until they have been held in your account for at least 3 months, and where you have m

Capital Gains tax in a nutshell - and why it's not all bad news

The number one reason I hear for not investing in property is “I don’t want to pay capital gains tax”, so I want to explain a little more about how capital gains tax works in Australia right now. I want you to understand that the more tax you pay, the more you’ve kept, ok? Keep this in mind. So very simply, lets have a rough example – and by no means is this conclusive or tax or personal advice If you buy an investment property and some years later you sell it and make a profit – lets say you make $200,000 AFTER all of the costs (legal fees, agents fees etc) just to use round numbers, which was easily done in the last couple of years in Sydney. So, you made $200,000 And if you’ve held the pl

LVR - Loan to Value Ratio

Loan to Value Ratio (LVR): The percentage of the value of the property that you propose to borrow. Why is this important? Well if you are borrowing over a certain percentage value of the property additional costs and rules come into play – the less equity you will have in the home means the more risk your lender is taking on and they adjust the terms accordingly. That makes sense, right? Presently a lower LVR (loan as a percentage of the value of the property) will also attract a lower interest rate, so valuations are very important and you should be realistic – but question a valuation that you think is definitely incorrect.

Interest only loans

Interest-Only Loan: Under an interest-only loan, usually the borrower makes no principal repayments. The repayments are for the amount of interest only, which has accrued on the loan. These loans are usually for a short period of around 1 to 5 years. Why would you choose an interest only loan? Typically used by investors or where cashflow is tight for a short period of time, they can maximise their cashflow which could mean they can hold more properties and hopefully make a big profit from them. its important to understand how you’re going to make the ongoing repayments when you’re thinking about taking an interest only loan. In most cases there’s nothing preventing you from paying principle

Passing on the right advice to your kids

I’m not sure if it’s a throw back to a proper European upbringing or just new Australian etiquette but Australians are both afraid of openly discussing money and finances – but conversely happy to take advice on financial matters from who we in the industry refer to as “Bob, the neighbour over the fence”. Especially if this advice confirms our fears. You know Bob. He knows everything. And he knows someone who’s friend knows someone who’s brother tried that and lost all their money, “wont work mate, I wouldn’t do it”. A very credible source. For many of us our financial education is limited to overhearing snippets of our parents conversations at best, and yet our incomes are of course higher

Equity...the bit of property you own!

Equity: The value which an owner has in an asset over and above the debt against it. Eg the difference between the value of a property and the amount still owed on the mortgage. Ahhh this is a good one. Equity is that bit of the property that you own. In the beginning it might feel like you own the front porch and not a lot more, but quickly this grows as the property market increases in value and your loan balance drops. Quite literally, equity what’s it worth – less what you owe = your equity. This is, however, different to accessible or useable equity. Accessible equity is the portion which you might want to access for future investment or a holiday – lenders won’t generally lend more tha

Solo women are savvy in property

If you’re female and thinking about going solo in a property purchase, you are in excellent company. It could be the type of client I attract (although in a previous business that I sold the ratio was the same); I have more single women clients who are buying property solo than single men doing same. It seems to be the key is saving – the women I work with understand it's not so much about what you earn (although all would have salaries close to $80,000 per annum), it's more about what you keep. They're savvy with their money, building their future is more important than buying 'things', yes even shoes. Travel is perhaps the one exception, these motivated women are living life. These are als

What is a Deposit Bond?

What is a Deposit bond? A deposit bond replaces the deposit you are required to pay when the home you are buying is “exchanged” (that is, when you’ve signed the contract without a cooling off period, or your cooling off period has expired). What it is essentially is an insurance policy that you buy & hand over to the seller with the promise that you will pay them the full purchase price at settlement. As such treat it like actual cash – once you’ve handed it over you are obliged to pay that money & if something goes wrong the issuer will be chasing you to cover the deposit at least. A bond is useful if you don’t have the actual cash available to pay the deposit at that time – which may be be

What does a broker do?

First up – I have an amazing job that I love and even better it’s a win – win, the better I do for you the better it is for me. I’m a mortgage broker and I am pretty sure that most of you know what this means – that I find, compare and arrange your new home loan for you. Really my job only starts here. Did you know we also negotiate for additional discounts with most lenders & lean on the relationships we have to get special rates? This could mean saving hundreds of dollars a month over and above the regular rates on offer. A huge part of my job is assessing lender policies so we don’t submit loans that we believe you wont be approved for, which also protects your credit history. This could

First Home Buyer - are you a potential rent-vestor?

It might sound crazy but the first home you buy – may not be your own. If you’re a first home buyer in Sydney you’re not wrong if you think prices are going crazy right now – they are. And this makes it incredibly hard to keep saving a 5% or 10% deposit when the goal posts keep moving on you. And it’s not a lot better in the other states. The flip side of this, of course, is affordability… if the prices are rising so are your repayments…and this may put it out of reach. So how can you get started without bankrupting yourself?? Have you ever heard me talk about “rent where you want to live, and buy where you can afford?” (gosh really? I thought I was always banging on about this…) For loads o

Understanding capital gains tax

Lets talk about investing and capital gains tax The number one reason I hear for not investing in property is “I don’t want to pay capital gains tax”, makes me want to scream. So lets understand a bit more about capital gains tax, and I want you to understand that the more you pay, the more you earn, ok? So very simply, If you buy an investment property and some years later you sell it and make a profit – lets say you make $200,000 AFTER all of the costs (legal fees, agents fees etc) just to use round numbers, which was easily done in the last couple of years in Sydney. So, you made $200k And if you’ve held the place for more than 12m then currently (March 2016), in Australia, you get a 50%

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Two Red Shoes Copyright © 2020 All rights reserved. Call on 02 9002 0380, 0404 494 929, email us  or 'old school' fax 02 9002 0381

Jarrett Group Pty Ltd atf Jarrett Group Discretionary Trust trading as Two Red Shoes hold Australian Credit Licence No: 428614 and are members of an external dispute resolution scheme. Details of our complaint resolution process can be found here or please see our credit guide. All information contained on this site is general information only, and does not take into account your particular financial situation or needs. You should consider your personal objectives, financial situation along with the recommendations of your trusted advisors.

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