Rising property prices have led many people to look for ways to unlock the increased equity in their homes so they can enjoy a comfortable lifestyle in their golden years.

For most of us, our homes represent the biggest or most significant portion of our wealth. But it’s an asset that can’t necessarily be realised quickly. It might take some time to sell your home and, in any case, you still need somewhere to live. And, if you’re selling in a rising market, you’re also buying in a rising market.

There are a number of ways to access the equity in your home, although be mindful of the consequences for your particular circumstances. With such a big decision and the complex financial products available, it’s best to get independent financial advice, we can help clarify how you might be affected now and in the future.

Reverse mortgages

Reverse mortgages are more popular than ever, allowing you to borrow money using the equity in your home as security.

Following the introduction of tougher regulatory requirements, today, reverse mortgages are provided by a number of small bank and non-bank lenders.

The highest amount you can borrow, using your home as security, varies according to your age. At age 60, it’s likely you will be able to borrow around 20% of the value of your home. This amount usually increases as you get older so by 65, you may be able to borrow about 20-25%.

The advantage of a reverse mortgage is that, while you’re living in your home, you don’t make any repayments on the loan. The loan, including interest and fees, is repaid when you move out or sell your home. Interest charged on the loan is usually higher than for standard mortgages. Currently, rates average just over 8 per cent to just under 10%.

The Australian Securities and Investments Commission MoneySmart website provides a reverse mortgage calculator to help you decide if it’s the right course of action for you.

A Government scheme

The Federal Government’s Home Equity Access Scheme is a popular alternative to private reverse mortgages products, with the scheme growing by about 60% a year.

The Scheme provides loans to eligible older people, secured against your home. You can choose to receive a lump sum or a fortnightly tax-free payment.

The loan and any costs must be repaid to the government but you can make repayments or stop them at any time. If you sell the property you can repay the loan on settlement or transfer the loan to another property.

If there’s an outstanding loan after your death, the government will seek repayment from your estate.

The current interest rate is 3.95%.

Home reversion

Slightly different to a reverse mortgage, home reversion is another way of accessing the equity in your home while still living in the property.

You don’t pay interest because it’s not a loan but there are transaction fees. The provider pays you a discounted amount for the percentage of the property you sell based on today’s value. Then, when the property is sold, the provider receives the same percentage of the sale price, meaning that the more your home increases in value, the more the provider receives.

Other options

Another way of taking advantage of the equity in your home is to sell it and buy a smaller one. Downsizing could allow you to clear the mortgage and invest or spend anything left over.

Those aged 55 or older can contribute up to $300,000 (for each spouse) from the sale into your superannuation fund. It’s considered a non-concessional contribution, but it doesn’t count towards the contribution cap.

You could also consider converting your home to a dual occupancy or, if you’re on a large block, subdividing.

Get in touch with us for a review of the options available to you, so you can look forward to enjoying your golden years with confidence.

Given the ever-fluctuating landscape of Australia’s property market and the current uncertainty as to what to expect for interest rates, it’s a challenging time for would-be home buyers and even for those with a mortgage.

Homebuyers are navigating this landscape cautiously, mindful of economic indicators and market shifts.

Throw into the mix the complexities of choosing the right mortgage loan and it’s no wonder many would-be buyers are feeling uncertain.

As uncertainty looms, securing a mortgage or even getting ready to buy can feel like navigating a maze without a map. That’s where it can be helpful to have an expert on your side to help light the way. Here are some of the ways we can lend a hand.

Expert guidance to navigate changing lending conditions

We stay abreast of changes in interest rates between lenders (which are independent of the RBA’s decisions on the cash rate) and keep up to date with changes in lending criteria, ensuring that you receive the most competitive rates available at the time, mitigating the risk of overpaying in a dynamic market.

Certainty in a dynamic market

It can also be helpful to have some certainty amidst a lot of other fluctuating factors so we can help you determine how much you may be able to borrow. We can also help you arrange a pre-approval which is like having a roadmap and a green light to go after your dream home.

Access to exclusive deals and rates

Securing the most favourable mortgage rates requires more than just good timing – it demands insider knowledge and industry relationships. Our extensive network enables access to exclusive deals and rates that may not be available through traditional channels which can translate into significant savings over the life of your loan.

In-depth knowledge of government grants

There’s plenty of government support available to first-home buyers in Australia, such as low deposit schemes, cash grants and shared equity programs, to name a few. We can help determine your eligibility, as well as which grant might be the most appropriate for your circumstances.

The value of expert negotiation

Negotiating terms with lenders requires a nuanced understanding of constantly changing market dynamics and lender practices. We advocate on your behalf to secure favourable terms, including lower interest rates, reduced fees, and flexible repayment options.

Tailored for you

We work with you to understand your financial situation and determine the best solution for your circumstances. Even if you have a unique financial situation—such as being self-employed, having variable income, or previous credit challenges we can offer suitable financing options and strategies to strengthen your mortgage application.

Acting in your best interests

We act in your best interest, prioritising your financial well-being over lender interests. We streamline the lending journey, offering clarity on fees, and ensuring you understand the implications of each decision. In a complex industry filled with jargon and fine print, we explain mortgage terms in plain language, ensuring you fully understand the commitments you’re making.

Clarity whether you are getting ready to buy – or reviewing your options

In uncertain times it makes sense to have some certainty. Getting help with the lending side of things, which can be complex and confusing, allows you to focus your efforts on finding and securing the ideal property.

If you are getting ready to buy it can be helpful to have an initial chat to get a sense of what you might be able to borrow and if you decide to get serious, we help with sourcing the right loan – and with all the paperwork to ensure everything is submitted correctly and on time.

If you have an existing mortgage reviewing your loan and whether it still suits your circumstances and future goals can be beneficial. Refinancing offers an opportunity to save on long-term interest costs amidst market fluctuations.

As you embark on your homeownership journey or seek to refinance in today’s economic climate, we can help you avoid problems and provide some stability and certainty.

When it comes to investing in shares, it’s often said that time is your friend.

The data shows that investing small amounts consistently over time and riding out the ups and downs of the market by holding onto your investments for the long term, can produce a healthy return.

Over the past two decades, the top 500 US companies averaged a 10% annual return and Australia’s S&P ASX All Ordinaries Index recorded an average annual return of 9.2%.

Those returns have been delivered despite some catastrophic events that sent the markets plummeting including the dot-com bubble crash, the Global Financial Crisis, and the effects of Covid-19.

It takes grit to hold on as the markets plummet, but the best way might be to avoid the hype and tune out the ‘noise’. It can be a trap checking prices every day and week, causing heightened stress and anxiety about your portfolio, a recent example being the mid-2024 Microsoft outage which briefly impacted investor confidence.

The cycle of endless phases of good and bad times is a constant for markets. Most cycles follow a pattern of early upswing after the market has bottomed out followed by the bull market, when investor confidence is strong and prices are rising faster than average. Then the market peaks as prices level out before negative investor sentiment drives a bear market. Finally, the bottom of the cycle is reached as prices are at their lowest.

There are also certain seasonal market cycles that may be helpful in buying and selling decisions. Note, though, that there are always exceptions.

In Australia, April, July, and December have tended to be the strongest months on the All Ordinaries Index. But these patterns have weakened a little over time, with lower average gains in April, July, and December more recently. Performance is usually the lowest in June.

November and April have been the strongest months for US shares for the past 30 years, with average monthly gains of 1.9% and 1.6% respectively.

Keeping a cool head and taking the time to understand what you are investing in, and the potential risks will help you stay focussed on your long-term investing goals.

Get in touch on 03 9723 0522 if you’d like to discuss your investment portfolio and review it in the context of your long-term investment goals.

Stay up to date with what’s happened in markets and the Australian economy over the past month.

While the anxiously awaited release of the latest inflation data at the end of July, showed an increase, it was in line with economists’ predictions.

Given the RBA wants inflation back within a 2-3% target range by the end of 2025, there were concerns about the inflation figures and the implications for the cash rate.

The ASX finished the month strongly with an increase of around 4%, riding out a mid-month plunge and surging to a record high for the ninth time this year.

Click here for our August update video.

Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

Tax breaks are always good news, but for house hunters they can have an added bonus. Not only do tax cuts mean potential buyers have more cash in their pocket at the end of the financial year, but they’re also looking at increased borrowing power.

A typical homebuyer’s borrowing capacity could rise by tens of thousands of dollars after July 1 as a result of this year’s Federal Budget.

Ways the Budget could boost your borrowing power

To put it simply, with lower income taxes you may have more disposable income available to repay your loans. Every Australian taxpayer will get a tax cut from July 1, 2024 under the updated stage three tax cuts – regardless of their income – with the exact amount depending on how much you earn.

Let’s take a potential single homebuyer on a $100,000 income looking at a 30-year loan with a typical interest rate of 6.19% and a loan-to-value ratio (LVR) of 80% or less. Their borrowing capacity will increase by about $25,000 in the new financial year. A future purchaser earning $150,000 could look at borrowing approximately $37,000 more than in the 2022/2023 financial year. Couples will likely be in an even stronger position.

While a tax cut is a much needed helping hand in the midst of a cost-of-living crisis, these tax breaks alone will not significantly improve your borrowing power.

How to improve your borrowing power

Borrowing capacities have fallen by about 30% since interest rates started rising in May 2022. With many top economists forecasting that a rate cut seems unlikely before the end of 2024, it pays for potential buyers to consider all the tools in your financial tool belt to improve your borrowing power and increase your chances of securing a larger loan.

Reduce your expenses

One of the most effective ways to improve your borrowing power is to reduce outgoings and unnecessary discretionary spending. Lenders take a close look at a borrower’s living expenses when calculating borrowing power, so tightening the budget belt can free up more income for loan repayments. Create a realistic budget for your household, track spending with the help of an app or spreadsheet and identify areas where you can cut costs.

Increase your income

Of course, it’s not rocket science, but if you earn more you’ll be able to borrow more. There are the traditional ways of boosting your income such as asking for a raise or picking up a second job. Then there are alternative “side hustle” or “gig” options like taking on freelance work, renting out belongings such as power tools, your car or car space, and selling items online. A higher income can boost borrowing capacity and make it easier to meet lender requirements for loan approval however it’s important to understand any tax implications that come with the additional earnings.

Review and reduce your credit card limits

Even if you keep your lines of credit at $0, lenders consider your limits as money already spent – with interest. High credit card limits can indicate a higher future level of debt with additional payments to navigate alongside a home loan. Review your credit card limits, their interest levels and reduce them where possible.

Reducing your debts

A debt-free (or low debt) mortgage applicant looks great on paper, so think about paying off as many of your existing debts as possible. Focus on those with the highest interest and try to pay them off first. Alternatively, talk to your lender about consolidating debts which will enhance your borrowing power by decreasing the debt to income (DTI) ratio.

Saving a larger deposit

Finally, a larger deposit will always make the biggest impact on your borrowing power as it reduces the LVR and demonstrates financial stability to prospective lenders. If you’re able to save a deposit of 20 per cent or more, there can be other savings. You may be able to access more competitive home loan interest rates and lenders won’t charge lenders mortgage insurance.

To discover how the 2024 Federal Budget’s tax cuts could improve your borrowing power, give me a call on 039723 0522..

Gold fever is in the air and it’s not just the prospect of medals at the upcoming Paris Olympics.

Gold prices have been climbing strongly in 2024 as investors, jittery about the effects of wars in the Middle East and Ukraine, buy up the asset because of its reputation as a safe haven. The spot price has risen more than 18% since mid-February.

Demand for the precious metal is also being driven by central banks adding to their gold reserves to hedge against currency and other market risks.

Turkey, China and India were the biggest buyers of gold in the first half of 2024, aiming to reduce exposure to US dollar movements and to further diversify their reserve funds.The United States remains the largest gold depository in the world by far, holding two-and-a-half times more than Germany, the next on the list.

For investors, gold has been an alluring buy for centuries thanks to its association with wealth and power. As a precious metal and a physical asset, it often attracts a certain confidence, which is sometimes misplaced.

Controversial history

Gold has always played an important and, at times, controversial role in the global monetary system.

For example, during the Great Depression in the 1930s, the US government forced its citizens to sell their gold at well below market rates to help stabilise the economy. Then a new official rate was set at a higher price. It was the beginning of the end for the gold standard worldwide, the monetary system that pegs a currency’s value to gold.

After World War Two, a new international monetary order was negotiated that saw the US dollar pegged to gold with other currencies linked to the dollar’s value. The USD was convertible to gold bullion at a fixed rate of US$35 per troy ounce.

But increasing global financial instability and criticism from European nations eventually led to the system being abandoned by the 1970s when floating exchange rates were introduced.

Patchy performance

Day traders might be lucky enough at times to buy or sell gold for a decent profit by correctly guessing when to get in or out but, generally speaking, gold is not an easy investment to love.

Over the longer term, it hasn’t always beaten inflation, the price can plunge at a time when market conditions suggest it should be rising and its performance against stocks and bonds has been varied.

In fact, there have been long periods of persistently low prices. It languished for around six years from 1988 before recovering and then again for the decade or so leading up to the beginning of COVID-19 in 2020. The uncertainty of the pandemic-era helped spark a rally that has increased the price by almost 38 per cent.

Pros and cons

So, is gold worth considering as part of a portfolio? As with any investment, there are pros and cons.

Like many other asset classes, gold can help to diversify a portfolio and reduce certain risks. During stock market downturns, gold prices often (but not always) begin to rise. Some investors like the idea that it is a scarce, physical asset and, despite its ups and downs, gold has tended to hold its value over time.

At times gold has provided a good hedge against inflation. For example, in the US between 1974 and 2008, there were eight years when inflation was high and during those times, gold prices rose by an average of 14.9% annually. But different periods give different results. While US CPI growth was around 6.8% in 2021 and 2022, gold prices were achieving an annual increase of just over 1%.

How to invest

You don’t need to lug home gold bars and hide them under the bed to have a stake in a gold investment.

Of course, it is possible to own gold bullion by buying online or in person from one of a number of registered dealers in Australia. The actual gold can be delivered to you or held in storage for a fee. You could also own physical gold by buying jewellery although there are high mark ups and resale value isn’t assured.

The ASX provides the avenue to buy shares in one or more of the many gold mining companies. You’ll need to do your homework carefully to consider the credentials of the companies. Some are riskier than others depending on the countries in which they operate and their size.

You could also consider exchange traded funds (ETFs) that are linked to or track the gold price. One advantage is provided by the funds that hedge currency risk so that your returns won’t be affected by differences in the US dollar. Although with any fund, you’ll need to factor in an annual management fee, which will reduce your ultimate return. If you’re interested in achieving a balanced portfolio, we’d be happy to help you.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.