1 00:00:00,080 --> 00:00:02,760 Speaker 1: Welcome back to another episode of Sugar Maamber's Fireplay, the 2 00:00:02,759 --> 00:00:07,680 Speaker 1: podcast where we ignite your financial independence, retire early goals 3 00:00:07,800 --> 00:00:11,080 Speaker 1: and dreams, and help you build a life on your 4 00:00:11,240 --> 00:00:15,440 Speaker 1: own terms, filled with confidence, clarity and intention. I am 5 00:00:15,480 --> 00:00:18,800 Speaker 1: your host financial planner, Canna Campbell, and today we're talking 6 00:00:18,800 --> 00:00:21,640 Speaker 1: about one of the biggest milestones when it comes to 7 00:00:21,960 --> 00:00:25,840 Speaker 1: your financial independence, and that is buying your very first 8 00:00:25,880 --> 00:00:28,920 Speaker 1: home and of course the range of different government support 9 00:00:29,000 --> 00:00:31,800 Speaker 1: schemes designed to help you take that leap onto the 10 00:00:31,840 --> 00:00:35,040 Speaker 1: property ladder. Now, this episode is perfect for anyone who's 11 00:00:35,080 --> 00:00:39,960 Speaker 1: dreaming of home ownership but is feeling naturally very overwhelmed 12 00:00:40,000 --> 00:00:42,440 Speaker 1: by the hurdles, particularly when it comes to the cost 13 00:00:42,600 --> 00:00:44,640 Speaker 1: of entry. But what I want to do in this 14 00:00:44,680 --> 00:00:49,720 Speaker 1: particular episode is talk about strategy, solutions, tools and ideas, 15 00:00:49,960 --> 00:00:52,400 Speaker 1: because when we do this correctly, the right way the 16 00:00:52,479 --> 00:00:55,000 Speaker 1: first time, buying your first home can not only give 17 00:00:55,000 --> 00:00:57,360 Speaker 1: you a great sense of security and stability, but it 18 00:00:57,400 --> 00:01:01,440 Speaker 1: also can become part of a smart investment for your future. 19 00:01:01,640 --> 00:01:04,120 Speaker 1: So what we're going to do is explore and break 20 00:01:04,160 --> 00:01:07,160 Speaker 1: down all the options that are available to help you 21 00:01:07,200 --> 00:01:09,679 Speaker 1: get your foot on the property ladder with a helping 22 00:01:09,760 --> 00:01:11,880 Speaker 1: hand from the government. I'm going to share with you 23 00:01:11,920 --> 00:01:14,959 Speaker 1: the pros and the cons. The cons actually a lot 24 00:01:15,000 --> 00:01:18,280 Speaker 1: of people don't actually talk about, but really should. I'm 25 00:01:18,319 --> 00:01:19,840 Speaker 1: even going to share with you what I think of 26 00:01:19,880 --> 00:01:22,319 Speaker 1: each one and whether I would personally use this myself 27 00:01:22,360 --> 00:01:24,520 Speaker 1: if I was trying to buy a property right now. 28 00:01:24,680 --> 00:01:26,600 Speaker 1: So let's waste no time at all. 29 00:01:26,720 --> 00:01:38,640 Speaker 2: And get all right. 30 00:01:38,680 --> 00:01:41,160 Speaker 1: So, the first cab off the rank is the First 31 00:01:41,200 --> 00:01:46,720 Speaker 1: Home Guarantee, often known under the acronym FHBG. What exactly 32 00:01:46,760 --> 00:01:49,000 Speaker 1: is it? So this is a federal scheme and it 33 00:01:49,120 --> 00:01:53,040 Speaker 1: lets eligible first home buyers purchase a property with as 34 00:01:53,040 --> 00:01:55,920 Speaker 1: little as a five percent deposit without having to pay 35 00:01:56,240 --> 00:02:01,040 Speaker 1: lenders mortgage insurance. Now lmilet's often refer to can easily 36 00:02:01,080 --> 00:02:03,960 Speaker 1: cost over ten thousand dollars, so this is pretty substantial 37 00:02:04,000 --> 00:02:06,120 Speaker 1: savings here. The way that it works is the government 38 00:02:06,200 --> 00:02:09,480 Speaker 1: guarantees up to fifteen percent of the loan. But it 39 00:02:09,600 --> 00:02:11,800 Speaker 1: has to be a new, existing home to live, and 40 00:02:11,840 --> 00:02:15,040 Speaker 1: it can actually be an investment property. And there is 41 00:02:15,160 --> 00:02:18,240 Speaker 1: only a selected number of lenders that actually offer this. 42 00:02:18,280 --> 00:02:20,520 Speaker 1: I believe there's only around about thirty two, which can 43 00:02:20,560 --> 00:02:23,000 Speaker 1: make it a little bit frustrating if the home loan 44 00:02:23,040 --> 00:02:25,880 Speaker 1: product isn't exactly what you need or necessarily the most 45 00:02:25,880 --> 00:02:29,040 Speaker 1: competitive interest rate for you. So that's essentially how it 46 00:02:29,080 --> 00:02:31,400 Speaker 1: works now. To be eligible, obviously you have to be 47 00:02:31,440 --> 00:02:34,600 Speaker 1: a first home buyer, and there are some income caps apply. 48 00:02:34,880 --> 00:02:36,919 Speaker 1: At the moment, it's around about one hundred and twenty 49 00:02:36,960 --> 00:02:39,600 Speaker 1: five thousand dollars per atum for singles or two hundred 50 00:02:39,600 --> 00:02:42,200 Speaker 1: thousand dollars per adum for couples. And of course there 51 00:02:42,280 --> 00:02:46,680 Speaker 1: are property price caps that apply depending on the state 52 00:02:46,800 --> 00:02:48,840 Speaker 1: or the region that you're buying this property in, and 53 00:02:48,840 --> 00:02:51,120 Speaker 1: of course where you live. I'll give you an example. 54 00:02:51,240 --> 00:02:54,480 Speaker 1: So say we take Jane. Jane owns say ninety five 55 00:02:54,520 --> 00:02:56,800 Speaker 1: thousand dollars a year, and she's buying a property for 56 00:02:56,840 --> 00:03:00,959 Speaker 1: say six hundred thousand dollars, say in Sydney. Now, normally 57 00:03:01,160 --> 00:03:05,520 Speaker 1: she would need a twenty percent deposit to avoid mortgage insurance, 58 00:03:05,560 --> 00:03:08,000 Speaker 1: so she'd need approximately one hundred and twenty thousand dollars. 59 00:03:08,080 --> 00:03:10,639 Speaker 1: Now that is a huge amount of money to try 60 00:03:10,639 --> 00:03:13,680 Speaker 1: and save up, and of course that takes a lot time, 61 00:03:13,800 --> 00:03:16,560 Speaker 1: and that can be really frustrating when the property market 62 00:03:16,720 --> 00:03:19,600 Speaker 1: is growing at a faster rate than you can possibly save. 63 00:03:19,800 --> 00:03:22,560 Speaker 1: So this is something that actually could potentially really help. 64 00:03:22,680 --> 00:03:26,720 Speaker 1: Now under the first home guarantee, she would only need 65 00:03:26,760 --> 00:03:30,040 Speaker 1: a deposit of thirty thousand dollars, that is a five 66 00:03:30,080 --> 00:03:33,640 Speaker 1: percent deposit, and she would in fact save around fourteen 67 00:03:33,720 --> 00:03:37,720 Speaker 1: thousand dollars in not having to take out lender's mortgage insurance. 68 00:03:38,000 --> 00:03:41,520 Speaker 1: So she's actually able to really purchase a property with 69 00:03:41,600 --> 00:03:44,120 Speaker 1: a tiny deposit something hopefully be a lot faster to 70 00:03:44,200 --> 00:03:47,040 Speaker 1: save up and secure that property. That is a huge 71 00:03:47,080 --> 00:03:50,040 Speaker 1: benefit I see from this, And fourteen thousand dollars is 72 00:03:50,080 --> 00:03:52,520 Speaker 1: a huge amount of money to save in lender's mortgage insurance. 73 00:03:52,520 --> 00:03:54,160 Speaker 1: And it means you're in the market and there is 74 00:03:54,160 --> 00:03:56,360 Speaker 1: an element of for savings if you're sticking to your 75 00:03:56,400 --> 00:03:58,200 Speaker 1: mortgage of payments and paying it down. And of course 76 00:03:58,240 --> 00:04:00,400 Speaker 1: if you're bought well and you brought into a great area, 77 00:04:00,480 --> 00:04:03,760 Speaker 1: that six hundred thousand dollar property can increase in value, 78 00:04:03,800 --> 00:04:05,360 Speaker 1: and of course you can do the things to help 79 00:04:05,440 --> 00:04:07,960 Speaker 1: increase its value, like renovate or update it or add 80 00:04:08,040 --> 00:04:10,800 Speaker 1: value to it. A great thing about this particular offer 81 00:04:10,880 --> 00:04:13,760 Speaker 1: is it can be a house, an apartment, a townhouse, 82 00:04:13,840 --> 00:04:16,160 Speaker 1: it can even be a house and land package, which 83 00:04:16,240 --> 00:04:19,720 Speaker 1: also includes off plan deals, and of course it just 84 00:04:19,800 --> 00:04:22,839 Speaker 1: could include land itself, which I think is quite relevant 85 00:04:22,880 --> 00:04:24,760 Speaker 1: because a lot of people were thinking the limits are 86 00:04:24,760 --> 00:04:26,719 Speaker 1: so low, how could it possibly help me? But you know, 87 00:04:26,880 --> 00:04:29,839 Speaker 1: you potentially can find land under these limits, which means 88 00:04:29,920 --> 00:04:33,560 Speaker 1: this could give you some substantial savings and benefit. Now, 89 00:04:33,760 --> 00:04:37,240 Speaker 1: I want to look at this with a very balanced approach, 90 00:04:37,440 --> 00:04:38,720 Speaker 1: and I'm going to talk about the cons and I'll 91 00:04:38,720 --> 00:04:40,320 Speaker 1: be talking about the pros and cons for each of these, 92 00:04:40,360 --> 00:04:41,719 Speaker 1: but I want to make sure that you understand all 93 00:04:41,720 --> 00:04:43,760 Speaker 1: the different options that are available to you. So the 94 00:04:43,920 --> 00:04:47,719 Speaker 1: downsides are as I'd say, Obviously, there are property price caps. 95 00:04:47,800 --> 00:04:50,000 Speaker 1: That's clear the elephant in the room. Yes, these caps 96 00:04:50,080 --> 00:04:53,239 Speaker 1: are pretty low, and they vary from state to state, 97 00:04:53,480 --> 00:04:55,080 Speaker 1: and you know a lot of people will think, well, 98 00:04:55,200 --> 00:04:57,280 Speaker 1: it's great to have this, but where can I possibly 99 00:04:57,360 --> 00:04:59,920 Speaker 1: find a property for under these ridiculous limits? Their way 100 00:04:59,920 --> 00:05:01,400 Speaker 1: to lo and I do agree with that they need 101 00:05:01,480 --> 00:05:04,480 Speaker 1: to be adjusted and reflect to the true property values 102 00:05:04,520 --> 00:05:07,039 Speaker 1: that we're seeing right now. The other downside of this, 103 00:05:07,160 --> 00:05:09,240 Speaker 1: this is a really concerning one. This is something that 104 00:05:09,240 --> 00:05:11,479 Speaker 1: no one really talks about, and that is taking on 105 00:05:11,880 --> 00:05:15,640 Speaker 1: a larger debt because you haven't had to have the 106 00:05:15,720 --> 00:05:19,800 Speaker 1: full twenty percent deposit. So with this example of Jane, 107 00:05:19,880 --> 00:05:22,560 Speaker 1: you know, using a thirty thousand dollars deposit, she's got 108 00:05:22,560 --> 00:05:25,840 Speaker 1: a substantial mortgage to service on her own. If she's 109 00:05:25,839 --> 00:05:29,000 Speaker 1: buying something for six hundred thousand of excluding stamp duty, 110 00:05:29,080 --> 00:05:31,920 Speaker 1: you know, her mortgage alone is five hundred and seventy 111 00:05:32,000 --> 00:05:34,240 Speaker 1: thousand dollars. So but if you, obviously she had a 112 00:05:34,240 --> 00:05:36,960 Speaker 1: bigger deposit, this would be significantly less. So you are, 113 00:05:37,240 --> 00:05:39,520 Speaker 1: at the end of the day with this taking on 114 00:05:39,720 --> 00:05:42,560 Speaker 1: a larger amount of debt. And obviously the bigger the loan, 115 00:05:42,760 --> 00:05:45,640 Speaker 1: the bigger the interest posts are to you. And if 116 00:05:45,720 --> 00:05:48,400 Speaker 1: interest rates go up, this could be, you know, seriously 117 00:05:48,440 --> 00:05:51,400 Speaker 1: compromise your financial wellbeing. So we need to bear that 118 00:05:51,440 --> 00:05:53,159 Speaker 1: in mind and look at this with you know, a 119 00:05:53,200 --> 00:05:57,239 Speaker 1: practical rational mindset. Also, there is a danger and again 120 00:05:57,279 --> 00:05:59,279 Speaker 1: this is another one that no one really talks about, 121 00:05:59,320 --> 00:06:01,880 Speaker 1: and that is if the property falls in value, you 122 00:06:01,920 --> 00:06:04,279 Speaker 1: could get into a position where you're in a negative 123 00:06:04,320 --> 00:06:07,760 Speaker 1: equity territory. Now because you're buying this property with such 124 00:06:07,760 --> 00:06:10,680 Speaker 1: a small deposit, obviously there's a large loan naturally, which 125 00:06:10,680 --> 00:06:13,200 Speaker 1: you just discussed now say that six hundred thousand dollar 126 00:06:13,279 --> 00:06:15,839 Speaker 1: property that's got a five hundred and seventy thousand dollars 127 00:06:15,880 --> 00:06:18,480 Speaker 1: home loan drops in value, and you say it comes 128 00:06:18,480 --> 00:06:21,080 Speaker 1: off by say ten percent, it's now worth say five 129 00:06:21,160 --> 00:06:23,520 Speaker 1: hundred and forty. This is what we call negative territory. 130 00:06:23,600 --> 00:06:27,560 Speaker 1: You actually owe more money than what that property is worth. Now, 131 00:06:27,600 --> 00:06:31,960 Speaker 1: this can be very frightening and make people feel extremely unstable, 132 00:06:32,000 --> 00:06:33,640 Speaker 1: which is kind of ironic because you a lot of 133 00:06:33,640 --> 00:06:36,880 Speaker 1: people buy property to create that sense of stability. Now, 134 00:06:36,920 --> 00:06:38,800 Speaker 1: of course it doesn't really matter unless you're going to 135 00:06:38,920 --> 00:06:41,320 Speaker 1: sell or you're in a position where you're forced to sell, 136 00:06:41,400 --> 00:06:43,240 Speaker 1: but it's something to bear in mind. You've got to 137 00:06:43,279 --> 00:06:45,840 Speaker 1: make sure that you look at everything with eyes wide open, 138 00:06:45,920 --> 00:06:48,520 Speaker 1: take off those rose tinted glasses. And obviously the other 139 00:06:48,560 --> 00:06:50,400 Speaker 1: downside is you've got to live in this property for 140 00:06:50,400 --> 00:06:53,159 Speaker 1: at least twelve months. You know, you can't just buy 141 00:06:53,160 --> 00:06:55,880 Speaker 1: it as an investment property. However, obviously after the twelve 142 00:06:55,920 --> 00:06:58,800 Speaker 1: month period, yes, you can turn it into an investment property. 143 00:06:58,839 --> 00:07:00,720 Speaker 1: So if you do get stuck where you do fall 144 00:07:00,760 --> 00:07:04,400 Speaker 1: into negative equity territory, you have trouble servicing the loan, 145 00:07:04,680 --> 00:07:07,240 Speaker 1: particularly if there are inter strate rises. There is the 146 00:07:07,279 --> 00:07:09,000 Speaker 1: option obviously of renting it out, but you've got to 147 00:07:09,000 --> 00:07:13,280 Speaker 1: obviously stick to that twelvemonth owner occupied requirement. Now the 148 00:07:13,400 --> 00:07:15,400 Speaker 1: question would I do this myself if I was trying 149 00:07:15,440 --> 00:07:17,720 Speaker 1: to get into the property market, Yeah, I would. However, 150 00:07:18,200 --> 00:07:21,800 Speaker 1: I would be very careful about the dangers involved, and 151 00:07:21,800 --> 00:07:24,400 Speaker 1: I would do my absolute best as soon as possible 152 00:07:24,400 --> 00:07:27,360 Speaker 1: to try and safeguard myself and protect myself from these 153 00:07:27,400 --> 00:07:29,760 Speaker 1: real risks. So what I would be doing is is 154 00:07:29,760 --> 00:07:32,280 Speaker 1: not just settling with a five percent deposit. Obviously, I'd 155 00:07:32,280 --> 00:07:34,000 Speaker 1: be getting all my ducks lined up with a mortgage 156 00:07:34,000 --> 00:07:36,040 Speaker 1: broker as soon as I had my five percent deposit. 157 00:07:36,120 --> 00:07:38,560 Speaker 1: Whilst I was searching around for the property going through 158 00:07:38,560 --> 00:07:40,920 Speaker 1: the process, I wouldn't stop saving. I'd try and fatten 159 00:07:40,960 --> 00:07:43,560 Speaker 1: up my deposit as much as possible, but also not 160 00:07:43,920 --> 00:07:47,600 Speaker 1: increasing necessarily my budget. I'd try and make my mortgage 161 00:07:47,720 --> 00:07:50,320 Speaker 1: payment as small as possible. My mortgage is small as possible, 162 00:07:50,360 --> 00:07:52,440 Speaker 1: and my deposit as big as possible, so that I'm 163 00:07:52,480 --> 00:07:54,800 Speaker 1: not under that particular stress. And whilst I was going 164 00:07:54,840 --> 00:07:57,520 Speaker 1: through that settlement period, which is you know, exciting but 165 00:07:57,560 --> 00:08:00,360 Speaker 1: also daunting time, and I'd also be working frantic to 166 00:08:00,720 --> 00:08:03,040 Speaker 1: you know, have all my mortgage repayments ready so that 167 00:08:03,240 --> 00:08:05,280 Speaker 1: I'm not actually waiting a month to make my first 168 00:08:05,520 --> 00:08:08,680 Speaker 1: mortgage repayment. I actually make that mortgage repayment a month 169 00:08:08,760 --> 00:08:11,040 Speaker 1: in advance, and that can have a significant impact in 170 00:08:11,080 --> 00:08:13,680 Speaker 1: saving valuable time and interest, particularly in the first five 171 00:08:13,760 --> 00:08:16,120 Speaker 1: years of a home loan. So I would be looking, 172 00:08:16,320 --> 00:08:18,120 Speaker 1: you know, once I was in the property then obviously 173 00:08:18,200 --> 00:08:20,960 Speaker 1: to make extra repayments on a regular basis, but also 174 00:08:21,080 --> 00:08:25,040 Speaker 1: lump some repayments bonuses, tax refunds. If I sold anything 175 00:08:25,120 --> 00:08:27,239 Speaker 1: any sort of windfalls along the way, I'd be putting 176 00:08:27,240 --> 00:08:29,720 Speaker 1: it towards that mortgage, so I never had that risk 177 00:08:29,800 --> 00:08:33,360 Speaker 1: of running into negative territory. And of course, if I 178 00:08:33,400 --> 00:08:36,680 Speaker 1: ever got into trouble after the twelfth month ownoccupied requirement 179 00:08:36,760 --> 00:08:39,560 Speaker 1: had been met, I would most definitely consider renting that 180 00:08:39,600 --> 00:08:42,199 Speaker 1: property out before being put into a position where I 181 00:08:42,280 --> 00:08:44,720 Speaker 1: may have to look at selling, because if you sell, 182 00:08:44,880 --> 00:08:47,360 Speaker 1: you would look at getting back into the market again 183 00:08:47,400 --> 00:08:51,120 Speaker 1: and obviously incurring mortgage insurance potentially gangs. You wouldn't necessarily 184 00:08:51,200 --> 00:08:53,559 Speaker 1: qualify as a first home owner anymore. And of course 185 00:08:53,640 --> 00:08:56,880 Speaker 1: the dreaded stamp duty costs, so yes, I would use this, 186 00:08:57,240 --> 00:09:00,040 Speaker 1: but I would be very very careful to safeguard my 187 00:09:00,080 --> 00:09:05,480 Speaker 1: financial position. Next up is the first Home Supersaver scheme. Now, 188 00:09:05,800 --> 00:09:08,360 Speaker 1: what exactly is this, and again the acronym is quite long. 189 00:09:08,440 --> 00:09:13,599 Speaker 1: Is FHSSS. So is where you use your superannuation account 190 00:09:13,800 --> 00:09:17,240 Speaker 1: to save for a home deposit. Obviously you are leveraging 191 00:09:17,240 --> 00:09:20,559 Speaker 1: off the tax benefits of superannuation. So this is how 192 00:09:20,600 --> 00:09:24,000 Speaker 1: it works. You make voluntary contributions of up to fifteen 193 00:09:24,080 --> 00:09:26,920 Speaker 1: thousand dollars a year or up to fifty thousand dollars 194 00:09:27,000 --> 00:09:29,240 Speaker 1: in total. When I say voluntary, these are typically after 195 00:09:29,280 --> 00:09:33,160 Speaker 1: tax contributions, and you can withdraw these funds plus any 196 00:09:33,200 --> 00:09:36,440 Speaker 1: possible earnings that you may have incurred during this period, 197 00:09:36,520 --> 00:09:39,640 Speaker 1: to put towards your home deposit. So an example of 198 00:09:39,679 --> 00:09:44,120 Speaker 1: this is Michael. Let's say he salary sacrifices in a situation, 199 00:09:44,280 --> 00:09:47,640 Speaker 1: say ten thousand dollars into super over the last two years, 200 00:09:47,679 --> 00:09:50,719 Speaker 1: and instead of being taxed at his marginal tax rate, 201 00:09:50,760 --> 00:09:52,560 Speaker 1: which is say thirty two and a half percent, which 202 00:09:52,600 --> 00:09:55,600 Speaker 1: is the average Australian's tax rate, he's taxed at fifteen percent. 203 00:09:55,679 --> 00:09:57,560 Speaker 1: So this is pretty good. It's almost you know, it's 204 00:09:57,559 --> 00:09:59,560 Speaker 1: cutting in half his tax savings, so it saves him 205 00:09:59,559 --> 00:10:02,720 Speaker 1: approximate three and a half thousand dollars in tax, which 206 00:10:02,840 --> 00:10:07,240 Speaker 1: obviously boosts his deposit. Now, the benefits of this are 207 00:10:07,440 --> 00:10:10,079 Speaker 1: the tax savings straight up, and of course that obviously 208 00:10:10,120 --> 00:10:12,079 Speaker 1: makes it a lot faster to save up because it's 209 00:10:12,080 --> 00:10:14,320 Speaker 1: got an extra three and a half thousand dollars to 210 00:10:14,320 --> 00:10:17,280 Speaker 1: put towards this deposit, which is really valuable. And you know, 211 00:10:17,320 --> 00:10:19,959 Speaker 1: boosts that deposit with a little bit of a lifestyle 212 00:10:20,040 --> 00:10:23,640 Speaker 1: sacrifice because obviously his salary sacrifice to help build that money. 213 00:10:23,800 --> 00:10:26,160 Speaker 1: And of course, you know, if you've been successful and 214 00:10:26,240 --> 00:10:29,560 Speaker 1: smart or even lucky, dare I say with your investments 215 00:10:29,600 --> 00:10:32,280 Speaker 1: within superannuation, obviously you can take some of those earnings. 216 00:10:32,360 --> 00:10:34,920 Speaker 1: But I will say this, be very careful of doing this, 217 00:10:34,960 --> 00:10:38,679 Speaker 1: because typically you would not take investment risk and invest 218 00:10:38,679 --> 00:10:40,360 Speaker 1: aggressively with your super money if you knew that you 219 00:10:40,360 --> 00:10:42,000 Speaker 1: were going to be withdrawing some of this out. So 220 00:10:42,160 --> 00:10:43,920 Speaker 1: it is actually a bit of a double edged short. 221 00:10:43,960 --> 00:10:45,760 Speaker 1: It is fraught with danger. Now that then leads me 222 00:10:45,760 --> 00:10:50,120 Speaker 1: obviously to the cons Okay, this is quite a complicated process. 223 00:10:50,200 --> 00:10:52,920 Speaker 1: You actually need to apply for a determination to allow 224 00:10:53,000 --> 00:10:56,480 Speaker 1: that money to be released and followed some really strict 225 00:10:56,559 --> 00:10:59,240 Speaker 1: withdrawal rules that you also need to be really careful 226 00:10:59,240 --> 00:11:03,240 Speaker 1: because once that determination has been applied or approved, you've 227 00:11:03,240 --> 00:11:06,040 Speaker 1: actually got twelve months to use it. Otherwise it expires 228 00:11:06,040 --> 00:11:07,959 Speaker 1: and you've got to reapply again. So you've got to 229 00:11:08,000 --> 00:11:10,240 Speaker 1: be very careful in thinking about when you're going to buy, 230 00:11:10,280 --> 00:11:14,120 Speaker 1: and obviously the settlement period and the terms and conditions, 231 00:11:14,160 --> 00:11:16,800 Speaker 1: and you know, you really do need an experience mortgage 232 00:11:16,800 --> 00:11:18,800 Speaker 1: broker who's done this more than a few times to 233 00:11:18,800 --> 00:11:21,040 Speaker 1: help guide you through this process so that it's smooth 234 00:11:21,160 --> 00:11:23,520 Speaker 1: and you don't get hit with any nasty surprises. The 235 00:11:23,559 --> 00:11:25,560 Speaker 1: other thing is obviously that you need to plan ahead. 236 00:11:25,679 --> 00:11:27,880 Speaker 1: This is not something you do as a last minute strategy. 237 00:11:28,040 --> 00:11:30,600 Speaker 1: You know, you need to think about maybe if you 238 00:11:30,760 --> 00:11:32,839 Speaker 1: see yourself buying a property in the next five years, 239 00:11:32,920 --> 00:11:35,560 Speaker 1: start looking at doing this sooner rather than later, and 240 00:11:35,600 --> 00:11:38,160 Speaker 1: think about how you want to actually strategically plan this 241 00:11:38,280 --> 00:11:40,160 Speaker 1: so that you make the most of the tax savings. 242 00:11:40,400 --> 00:11:42,319 Speaker 1: And you know, as I said, you also need to 243 00:11:42,360 --> 00:11:45,080 Speaker 1: be careful of the rules. The rules are very complicated 244 00:11:45,280 --> 00:11:48,040 Speaker 1: and you really do need a professional guiding you. The 245 00:11:48,280 --> 00:11:52,160 Speaker 1: big thing is Also, if you change your mind, bad luck, 246 00:11:52,200 --> 00:11:54,839 Speaker 1: that money is stuck in Super. So you might think, Okay, 247 00:11:54,840 --> 00:11:56,000 Speaker 1: I'm going to do this. I'm going to put the 248 00:11:56,120 --> 00:11:59,400 Speaker 1: extra maximum fifty thousand dollars into Super and buy something. 249 00:11:59,400 --> 00:12:01,160 Speaker 1: But all of a sudden change your mind decide, do 250 00:12:01,160 --> 00:12:02,439 Speaker 1: you know what, I don't actually want to buy a 251 00:12:02,440 --> 00:12:04,520 Speaker 1: property more. I don't want the stress responsibility of that. 252 00:12:04,559 --> 00:12:06,800 Speaker 1: I'm going to do something completely different. You can't get 253 00:12:06,800 --> 00:12:09,240 Speaker 1: that fifty thousand back out. It's stuck, and it's stuck 254 00:12:09,280 --> 00:12:11,520 Speaker 1: there until you meet a condition of release, which is 255 00:12:11,520 --> 00:12:13,599 Speaker 1: typically when you go to retire, which for most of 256 00:12:13,679 --> 00:12:16,800 Speaker 1: us will be between fifty five and sixty five. So 257 00:12:16,920 --> 00:12:20,120 Speaker 1: you know, you really got to keep that in mind. 258 00:12:20,160 --> 00:12:20,360 Speaker 2: Now. 259 00:12:20,400 --> 00:12:22,280 Speaker 1: I will set at the same time, for people who 260 00:12:22,320 --> 00:12:25,000 Speaker 1: don't have any self control or just if they see 261 00:12:25,000 --> 00:12:27,240 Speaker 1: money they tend to spend it, this can be something 262 00:12:27,320 --> 00:12:30,120 Speaker 1: that as a level of self disciplined and self control 263 00:12:30,200 --> 00:12:34,120 Speaker 1: for them. But again, this is only for first home buyers, 264 00:12:34,160 --> 00:12:36,720 Speaker 1: and you obviously need to check all the requirements involved 265 00:12:36,720 --> 00:12:38,880 Speaker 1: to make sure you actually qualify. And if you're wondering, 266 00:12:39,160 --> 00:12:41,920 Speaker 1: once I bought this home by using this particular scheme, 267 00:12:42,000 --> 00:12:44,560 Speaker 1: can it become an investment further down the track. Yes, 268 00:12:44,720 --> 00:12:46,680 Speaker 1: you obviously need to read the terms and conditions and 269 00:12:46,720 --> 00:12:49,160 Speaker 1: make sure you follow those guidelines so that you don't 270 00:12:49,160 --> 00:12:51,760 Speaker 1: get hit with any nasty surprises. But yes, potentially you 271 00:12:51,760 --> 00:12:53,720 Speaker 1: could turn this into an investment property. Now here's the 272 00:12:53,720 --> 00:12:57,680 Speaker 1: big thing. Would I do this myself? Hell no, absolutely not. 273 00:12:57,800 --> 00:12:58,880 Speaker 1: I would not do this. 274 00:12:59,080 --> 00:12:59,320 Speaker 2: Now. 275 00:12:59,360 --> 00:13:02,080 Speaker 1: This is more of a personal thing than a professional thing. 276 00:13:02,200 --> 00:13:05,520 Speaker 1: But the issue I have with this is superannuation is 277 00:13:05,559 --> 00:13:10,120 Speaker 1: actually a really serious and very powerful financial product and strategy. 278 00:13:10,240 --> 00:13:12,480 Speaker 1: It is not a savings account. It is something that 279 00:13:12,559 --> 00:13:17,040 Speaker 1: helps fund your future financial independence and freedom when you 280 00:13:17,080 --> 00:13:18,880 Speaker 1: need it the most, and that is retirement. It is 281 00:13:18,920 --> 00:13:21,439 Speaker 1: not an online savings account. You know, it is invested 282 00:13:21,559 --> 00:13:24,760 Speaker 1: and it should be treated with respect. I find that 283 00:13:24,840 --> 00:13:29,200 Speaker 1: this particular scheme blurs the boundaries and the lines with 284 00:13:29,480 --> 00:13:32,040 Speaker 1: what is for your future financial will being and what 285 00:13:32,120 --> 00:13:33,800 Speaker 1: is more of a lifestyle choice, because at the end 286 00:13:33,840 --> 00:13:36,559 Speaker 1: of the day, I really believe and feel that home 287 00:13:36,679 --> 00:13:39,760 Speaker 1: is a lifestyle asset more than a natural financial asset. Yes, 288 00:13:39,800 --> 00:13:42,280 Speaker 1: it adds value, yes it helps, it gives you options 289 00:13:42,320 --> 00:13:44,280 Speaker 1: to build further wealth, But at the end of the day, 290 00:13:44,320 --> 00:13:46,839 Speaker 1: the interest isn't tax deductible. It doesn't make you income, 291 00:13:46,920 --> 00:13:49,839 Speaker 1: so it's not technically a financial product. I think superannuation 292 00:13:49,960 --> 00:13:52,640 Speaker 1: is one of the biggest and most beneficial strategies and 293 00:13:52,679 --> 00:13:54,880 Speaker 1: tools to have in your toolkit when it comes to 294 00:13:54,880 --> 00:13:57,720 Speaker 1: building wealth. They should be separate. And as I mentioned 295 00:13:57,760 --> 00:14:02,000 Speaker 1: a second ago, your superannuation money is essentially an investment porfolio. 296 00:14:02,200 --> 00:14:05,960 Speaker 1: That money should be invested for long term capital growth 297 00:14:05,960 --> 00:14:07,360 Speaker 1: and income opportunities. 298 00:14:07,520 --> 00:14:08,200 Speaker 2: If you are. 299 00:14:08,120 --> 00:14:10,280 Speaker 1: Doing this, you need to make sure that money that's 300 00:14:10,320 --> 00:14:12,360 Speaker 1: eventually going to be withdrawn to help pay for the 301 00:14:12,360 --> 00:14:15,000 Speaker 1: deposit on your home, that it is not subject to 302 00:14:15,280 --> 00:14:18,920 Speaker 1: market volatility and risk. You'd hate to see that. You 303 00:14:18,960 --> 00:14:21,160 Speaker 1: know that fifty thousand dollars you put into your superinnuation 304 00:14:21,240 --> 00:14:23,000 Speaker 1: that when you went to pull it out the markets 305 00:14:23,000 --> 00:14:25,600 Speaker 1: have pulled back or crashed even And that's not quite 306 00:14:25,600 --> 00:14:28,280 Speaker 1: fifty thousand dollars you're pulling back out at say forty 307 00:14:28,360 --> 00:14:30,160 Speaker 1: or forty five. This is not going to work, and 308 00:14:30,200 --> 00:14:32,160 Speaker 1: I think this is really dangerous. We need to be 309 00:14:32,240 --> 00:14:34,600 Speaker 1: encouraging people to put money into super and keep it 310 00:14:34,640 --> 00:14:36,560 Speaker 1: there because that's how it works for us, and that's 311 00:14:36,560 --> 00:14:38,440 Speaker 1: going to give us the freedom that we all desire 312 00:14:38,560 --> 00:14:41,960 Speaker 1: and we are really worthy of So yeah, I didn't. 313 00:14:41,960 --> 00:14:43,880 Speaker 1: I don't like this one. I don't think it's actually 314 00:14:44,000 --> 00:14:46,720 Speaker 1: appropriate at all, and I question the ethics behind this. 315 00:14:46,920 --> 00:14:50,960 Speaker 1: The third one is obviously the stamp duty concessions and exemptions. 316 00:14:51,000 --> 00:14:54,160 Speaker 1: So this is where some states will actually waive or 317 00:14:54,200 --> 00:14:57,800 Speaker 1: reduce your stamp duty costs. For first home buyers New 318 00:14:57,800 --> 00:14:59,880 Speaker 1: South Wales there's no stamp duty for homes up to 319 00:15:00,000 --> 00:15:02,320 Speaker 1: eight hundred thousand dollars. There's obviously concessions up to a 320 00:15:02,360 --> 00:15:06,400 Speaker 1: million Victoria. You know, there's no duty under six hundred thousand. 321 00:15:06,440 --> 00:15:08,440 Speaker 1: And obviously this is the time of recording this podcast 322 00:15:08,480 --> 00:15:11,640 Speaker 1: and it reduces over time. Same with Queensland as well. 323 00:15:11,720 --> 00:15:14,640 Speaker 1: So this savings when it comes to stamp duty has 324 00:15:15,040 --> 00:15:18,800 Speaker 1: huge upfront savings. I mean, stamp duty is an absolute bitch. 325 00:15:18,880 --> 00:15:21,200 Speaker 1: It's the part that sucks when it comes to buying 326 00:15:21,200 --> 00:15:22,960 Speaker 1: a property. As excited as you are, when you look 327 00:15:23,000 --> 00:15:24,760 Speaker 1: at that dotted line as to how much money you 328 00:15:24,760 --> 00:15:27,000 Speaker 1: need to pay in stamp duty, you can feel really 329 00:15:27,040 --> 00:15:29,400 Speaker 1: well nauseous, and especially when you know how long it's 330 00:15:29,440 --> 00:15:31,480 Speaker 1: taken for you to save up your deposit to buy 331 00:15:31,480 --> 00:15:34,480 Speaker 1: a place. So I love these savings. Obviously, the downside 332 00:15:34,520 --> 00:15:38,160 Speaker 1: is obviously that the property price caps may not actually 333 00:15:38,160 --> 00:15:40,640 Speaker 1: work for you. You might be actually buying something over 334 00:15:40,680 --> 00:15:42,720 Speaker 1: these limits or just over those limits, which is really 335 00:15:42,800 --> 00:15:45,560 Speaker 1: frustrating to think you just miss out on these potential savings. 336 00:15:45,600 --> 00:15:48,280 Speaker 1: And of course the rules vary from state to state. 337 00:15:48,400 --> 00:15:51,280 Speaker 1: And again I agree, I think these limits, these caps 338 00:15:51,320 --> 00:15:53,840 Speaker 1: are way too low. We need to look at adjusting 339 00:15:53,840 --> 00:15:56,200 Speaker 1: them to make them realistic as to what people really 340 00:15:56,240 --> 00:15:58,680 Speaker 1: have to pay for property these days now, and we 341 00:15:58,760 --> 00:16:01,640 Speaker 1: remind it like stamp duty is actually a sunk cost. 342 00:16:01,720 --> 00:16:04,520 Speaker 1: If you do qualify for an exemption, it obviously makes 343 00:16:04,560 --> 00:16:06,920 Speaker 1: it a lot easier to purchase, and it frees up 344 00:16:06,960 --> 00:16:09,120 Speaker 1: your funds for you know, maybe adding value to the 345 00:16:09,160 --> 00:16:12,680 Speaker 1: property by doing some renovations or helping pay down debt 346 00:16:13,520 --> 00:16:16,440 Speaker 1: or perhaps even you know, starting to include maybe add 347 00:16:16,480 --> 00:16:19,600 Speaker 1: investment strategy through debt recycling. And of course, yes, you 348 00:16:19,640 --> 00:16:22,400 Speaker 1: know you can turn this home into an investment, you know, 349 00:16:22,680 --> 00:16:25,080 Speaker 1: if you've meet the terms and conditions. So these are 350 00:16:25,440 --> 00:16:28,040 Speaker 1: you know, it's worth knowing and understanding how the stamp 351 00:16:28,160 --> 00:16:30,880 Speaker 1: duty concessions and exemptions work so that you can try 352 00:16:30,920 --> 00:16:33,040 Speaker 1: and make the most of them. If they're actually applicable 353 00:16:33,080 --> 00:16:35,440 Speaker 1: to you and your price point. The next is the 354 00:16:35,560 --> 00:16:39,280 Speaker 1: first home owner grant. Now, this is a once off 355 00:16:39,440 --> 00:16:43,320 Speaker 1: cash payment for new bills only new builds or off 356 00:16:43,320 --> 00:16:45,400 Speaker 1: the planned properties, and this is how it works, So 357 00:16:45,760 --> 00:16:49,200 Speaker 1: the amounts vary, and it varies from state to state. 358 00:16:49,280 --> 00:16:50,400 Speaker 1: I believe in you New South, I wass you get 359 00:16:50,440 --> 00:16:52,600 Speaker 1: about ten thousand dollars, and then on Queensland you can 360 00:16:52,640 --> 00:16:54,920 Speaker 1: get up to thirty thousand dollars. You've got to live 361 00:16:54,960 --> 00:16:56,920 Speaker 1: in the property for at least six to twelve months, 362 00:16:57,000 --> 00:16:59,320 Speaker 1: depending on your state, and of course always read you 363 00:16:59,360 --> 00:17:02,600 Speaker 1: know the print. An example of this is Sarah buye's 364 00:17:03,040 --> 00:17:05,840 Speaker 1: a newly built townhouse in say Brisbane for five hundred 365 00:17:05,880 --> 00:17:08,720 Speaker 1: and fifty thousand dollars. Because she's in Queensland, she gets 366 00:17:08,800 --> 00:17:11,720 Speaker 1: up to thirty thousand dollars towards her deposit and pays 367 00:17:12,119 --> 00:17:15,480 Speaker 1: no stamp duty. Woohoo. That's massive. So this extra cash 368 00:17:15,560 --> 00:17:19,000 Speaker 1: can really help boost your deposit number one or which 369 00:17:19,000 --> 00:17:21,560 Speaker 1: obviously then in turn, if you've bought well, helps reduce 370 00:17:21,720 --> 00:17:25,440 Speaker 1: your home loan. Now, the downside of this is obviously 371 00:17:25,640 --> 00:17:29,639 Speaker 1: only available to new properties, and I see this as 372 00:17:29,680 --> 00:17:32,360 Speaker 1: being the risk being for this in particular, is potentially 373 00:17:32,400 --> 00:17:35,840 Speaker 1: overpaying because the benefit of this may be actually built 374 00:17:35,840 --> 00:17:38,879 Speaker 1: into the property price that you're buying. I feel like 375 00:17:39,000 --> 00:17:41,560 Speaker 1: when this scheme came in, the cost of her buying 376 00:17:41,600 --> 00:17:45,080 Speaker 1: a brand new property increase because the developers factored in 377 00:17:45,080 --> 00:17:48,520 Speaker 1: the fact you'd be getting obviously these particular benefits and 378 00:17:48,600 --> 00:17:51,520 Speaker 1: exemptions and grants. So I think if you're going to 379 00:17:51,600 --> 00:17:53,840 Speaker 1: buy brand new, you really need to do your research 380 00:17:53,920 --> 00:17:57,239 Speaker 1: and really compare against other properties in the area that 381 00:17:57,280 --> 00:17:59,639 Speaker 1: aren't necessarily brand new. I would hate for someone to 382 00:17:59,720 --> 00:18:01,640 Speaker 1: over pay for something just to be able to clip 383 00:18:01,680 --> 00:18:04,800 Speaker 1: their ticket with a particular offer or scheme. Be very 384 00:18:04,920 --> 00:18:07,920 Speaker 1: very careful, and of course when it comes to whether 385 00:18:07,960 --> 00:18:10,720 Speaker 1: you can flip it into an investment property, you know, 386 00:18:10,760 --> 00:18:13,919 Speaker 1: obviously after the own occupied period has passed, yes, you 387 00:18:13,960 --> 00:18:15,639 Speaker 1: may rent it out. So again, this can be a 388 00:18:15,680 --> 00:18:20,160 Speaker 1: really strategic way to start building an investment portfolio of property, 389 00:18:20,320 --> 00:18:22,880 Speaker 1: and it's pretty generous, particularly in Queensland. 390 00:18:23,040 --> 00:18:23,200 Speaker 2: Now. 391 00:18:23,200 --> 00:18:27,960 Speaker 1: The fifth one is the family home guarantee for single parents, 392 00:18:27,960 --> 00:18:29,800 Speaker 1: and this is the one I really want to focus 393 00:18:29,840 --> 00:18:32,000 Speaker 1: on talking to you and for anyone that knows a 394 00:18:32,040 --> 00:18:33,920 Speaker 1: single parent that wants to buy a property. Can you 395 00:18:33,960 --> 00:18:36,080 Speaker 1: please make sure you send this episode and tell them 396 00:18:36,080 --> 00:18:38,040 Speaker 1: to fast forward to this particular part because this is 397 00:18:38,080 --> 00:18:42,520 Speaker 1: really important. So the Family Home Guarantee is for single parents, 398 00:18:42,680 --> 00:18:44,879 Speaker 1: so you can buy home with as little as a 399 00:18:45,080 --> 00:18:49,280 Speaker 1: two percent deposit and no lenders mortgage insurance, And as 400 00:18:49,320 --> 00:18:53,159 Speaker 1: I said, is for single parents with dependence that is 401 00:18:53,200 --> 00:18:55,560 Speaker 1: obviously children. To be eligible, you've got to be a 402 00:18:55,600 --> 00:18:58,160 Speaker 1: single parent. Obviously, you've got to have at least one 403 00:18:58,359 --> 00:19:00,719 Speaker 1: dependent and there is an ink come cap of one 404 00:19:00,800 --> 00:19:03,520 Speaker 1: hundred and twenty five thousand dollars a year. Now, you 405 00:19:03,680 --> 00:19:07,000 Speaker 1: can have actually previously owned a property as long as 406 00:19:07,000 --> 00:19:09,600 Speaker 1: you don't currently own a property. So for people who've 407 00:19:09,600 --> 00:19:11,560 Speaker 1: maybe gone through a messy divorce, this could be a 408 00:19:11,600 --> 00:19:13,640 Speaker 1: great way to get back to the property market. You've 409 00:19:13,680 --> 00:19:16,160 Speaker 1: lost everything in you're rebuilding from scratch. So i'll work 410 00:19:16,160 --> 00:19:17,000 Speaker 1: through an example with you. 411 00:19:17,040 --> 00:19:17,240 Speaker 2: Now. 412 00:19:17,400 --> 00:19:19,760 Speaker 1: Emma is a single mom. She's earning say eighty thousand 413 00:19:19,760 --> 00:19:21,720 Speaker 1: dollars per year, and she buys a home for five 414 00:19:21,800 --> 00:19:24,760 Speaker 1: hundred thousand with a ten percent deposit, and she avoids 415 00:19:24,760 --> 00:19:28,400 Speaker 1: having to pay eleven thousand dollars in lender's mortgage insurance, 416 00:19:28,400 --> 00:19:31,080 Speaker 1: which is great. The upside is Obviously it helps make 417 00:19:31,600 --> 00:19:35,199 Speaker 1: home ownership for single parents achievable. And you know the 418 00:19:35,280 --> 00:19:37,600 Speaker 1: thing where they're having a mortgages, there's an element of 419 00:19:37,640 --> 00:19:40,280 Speaker 1: forced savings because you have to make those mortgage repayments 420 00:19:40,320 --> 00:19:42,800 Speaker 1: and if you just stick with the banks prescription of 421 00:19:42,840 --> 00:19:45,240 Speaker 1: thirty years, over that thirty year period, you will eventually 422 00:19:45,280 --> 00:19:47,720 Speaker 1: own your home outright. You've stuck to the repayments of 423 00:19:47,760 --> 00:19:49,600 Speaker 1: the banks given you. And of course, and this is 424 00:19:49,600 --> 00:19:52,439 Speaker 1: probably the intangible value of this particular scheme is it 425 00:19:52,480 --> 00:19:55,720 Speaker 1: helps create a sense of stability for single parents, but 426 00:19:55,840 --> 00:19:58,880 Speaker 1: also the children of single parents. They don't have that, 427 00:19:59,119 --> 00:20:04,680 Speaker 1: I guess, emotional distress and concern and worry of having 428 00:20:04,720 --> 00:20:07,400 Speaker 1: to constantly move homes when the rents are put out 429 00:20:07,480 --> 00:20:09,840 Speaker 1: put up or the property that you're renting is then 430 00:20:09,880 --> 00:20:11,719 Speaker 1: put on the market, and then having to move children 431 00:20:11,720 --> 00:20:14,040 Speaker 1: from school to school to school. I think this one 432 00:20:14,080 --> 00:20:17,280 Speaker 1: is really valuable, really important, and I feel like we 433 00:20:17,320 --> 00:20:19,160 Speaker 1: need to be putting a lot of government money into 434 00:20:19,200 --> 00:20:23,920 Speaker 1: boosting this and helping single parents out, particularly of young children. 435 00:20:24,240 --> 00:20:27,879 Speaker 1: I know how much the impact of moving kids around, 436 00:20:28,040 --> 00:20:31,920 Speaker 1: moving schools, moving into different neighborhoods, having to make new friendships, 437 00:20:32,359 --> 00:20:36,280 Speaker 1: accessing different infrastructure. How that can impact a child well 438 00:20:36,320 --> 00:20:39,639 Speaker 1: into their adulthood. We need to be able to create safe, 439 00:20:39,720 --> 00:20:43,320 Speaker 1: stable grounds for children to thrive and flourish in. So 440 00:20:43,400 --> 00:20:45,480 Speaker 1: I love this one. I really wish we could do 441 00:20:45,560 --> 00:20:49,119 Speaker 1: more here in this space. The downside of this is, though, 442 00:20:49,200 --> 00:20:53,960 Speaker 1: there's only five thousand spots annually available. So if you 443 00:20:54,000 --> 00:20:56,320 Speaker 1: want to do this and you're serious about this, get 444 00:20:56,359 --> 00:20:58,879 Speaker 1: in quick and make sure you get some advice to 445 00:20:58,880 --> 00:21:00,960 Speaker 1: help make sure that you apply for for it correctly 446 00:21:01,119 --> 00:21:04,679 Speaker 1: and your application goes through smoothly and obviously it's approved quickly. 447 00:21:04,760 --> 00:21:07,240 Speaker 1: The downside of this again, people just don't talk about this, 448 00:21:07,400 --> 00:21:09,840 Speaker 1: and that is obviously you're taking out a much larger mortgage. 449 00:21:09,840 --> 00:21:12,280 Speaker 1: If you're buying a property with only your two percent deposit, 450 00:21:12,480 --> 00:21:15,520 Speaker 1: your mortgage is huge. You know you have to say, well, 451 00:21:15,520 --> 00:21:17,400 Speaker 1: hang on, how's that person only been able to save 452 00:21:17,400 --> 00:21:20,000 Speaker 1: a two percent deposit? Can they actually afford to take 453 00:21:20,040 --> 00:21:23,120 Speaker 1: on this massive mortgage? And let's state the obvious. You're 454 00:21:23,160 --> 00:21:26,440 Speaker 1: taking on a massive mortgages on one income. Now, I've 455 00:21:26,440 --> 00:21:28,600 Speaker 1: been a single mum and I've taken on a massive 456 00:21:28,600 --> 00:21:31,399 Speaker 1: mortgage on my own. I know you know you single 457 00:21:31,480 --> 00:21:34,600 Speaker 1: swim and I had to learn myself to swim really 458 00:21:34,680 --> 00:21:36,919 Speaker 1: quickly and keep my head above water for myself and 459 00:21:36,960 --> 00:21:39,240 Speaker 1: my son Rocco at the time. So yes, I believe 460 00:21:39,280 --> 00:21:41,240 Speaker 1: you and you can do it. But obviously, as I said, 461 00:21:41,359 --> 00:21:44,080 Speaker 1: roast in glasses off, eyes wide open, know exactly what 462 00:21:44,119 --> 00:21:47,399 Speaker 1: you're getting yourself into, and understand obviously the impact of 463 00:21:47,440 --> 00:21:50,520 Speaker 1: any interest rate rises. You know, with this big mortgage, 464 00:21:50,600 --> 00:21:53,000 Speaker 1: can you continue to service this mortgage if we have 465 00:21:53,000 --> 00:21:55,879 Speaker 1: a three percent interesstrate rise? Can you still stick to 466 00:21:55,920 --> 00:21:57,960 Speaker 1: your lifestyle and have you still got a good budget? 467 00:21:58,040 --> 00:21:58,199 Speaker 2: You know? 468 00:21:58,359 --> 00:21:59,920 Speaker 1: What are the additional things can you do to help 469 00:22:00,080 --> 00:22:02,800 Speaker 1: pay that mortgage off quickly? How do you avoid falling 470 00:22:02,800 --> 00:22:05,200 Speaker 1: into negative territory? Because this is the same risk as 471 00:22:05,240 --> 00:22:06,800 Speaker 1: the other scheme. You know what if you buy that 472 00:22:06,840 --> 00:22:09,680 Speaker 1: property for five hundred thousand dollars and the property market comes 473 00:22:09,680 --> 00:22:11,600 Speaker 1: off and it's say worth only four point fifty, but 474 00:22:11,720 --> 00:22:14,959 Speaker 1: yet you've got a four hundred and eighty nine thousand 475 00:22:15,000 --> 00:22:18,280 Speaker 1: dollars you know, ninety thousand dollars home loan, you're in 476 00:22:18,640 --> 00:22:21,719 Speaker 1: negative territory. So if I was going to do this 477 00:22:21,800 --> 00:22:25,440 Speaker 1: as a single parent, would I do it? Hell? Yes, absolutely, 478 00:22:25,640 --> 00:22:28,320 Speaker 1: But again I would do the same thing again. I 479 00:22:28,359 --> 00:22:31,680 Speaker 1: would work my absolute backside off to build a buffer 480 00:22:31,720 --> 00:22:33,919 Speaker 1: to make sure obviously I had emergency money, particularly as 481 00:22:33,960 --> 00:22:36,120 Speaker 1: a single parent on a sole income. I would make 482 00:22:36,280 --> 00:22:39,879 Speaker 1: extra repayments above and beyond the minimum repayments. I'd be 483 00:22:39,920 --> 00:22:42,880 Speaker 1: making lumpsalm repayments anytime I could, even it was only 484 00:22:42,920 --> 00:22:45,879 Speaker 1: ten dollars extra per month or a random one hundred 485 00:22:45,920 --> 00:22:48,440 Speaker 1: dollar deposit, I'd just do it. And I would keep 486 00:22:48,560 --> 00:22:50,560 Speaker 1: very close eyes to what the property was worth, and 487 00:22:50,560 --> 00:22:52,760 Speaker 1: obviously keep tracking and monitoring my mortgage so that it 488 00:22:52,800 --> 00:22:55,440 Speaker 1: was actually coming down in the right direction. And the 489 00:22:55,480 --> 00:22:57,840 Speaker 1: biggest and most powerful impact you can have on your 490 00:22:57,840 --> 00:23:00,400 Speaker 1: home loan is in the first five years. So don't 491 00:23:00,440 --> 00:23:02,280 Speaker 1: think when I get a pay rise or a promotional, 492 00:23:02,359 --> 00:23:05,440 Speaker 1: then start increasing my mortgage repayments. No, start sooner rather 493 00:23:05,440 --> 00:23:06,760 Speaker 1: than later. And all you need to do is jump 494 00:23:06,800 --> 00:23:08,360 Speaker 1: on the sugar mom A website and have a play 495 00:23:08,400 --> 00:23:11,240 Speaker 1: around with the extra mortgage repayment calculators. See this impact. 496 00:23:11,359 --> 00:23:13,639 Speaker 1: So yes, one hundred percent, I would do this. I 497 00:23:13,840 --> 00:23:15,760 Speaker 1: love this. I would just wish it was bigger and 498 00:23:15,760 --> 00:23:18,080 Speaker 1: more applicable and there were more than five thousand spots 499 00:23:18,119 --> 00:23:21,480 Speaker 1: annually for single parents. But yeah, be very wise, be 500 00:23:21,600 --> 00:23:24,040 Speaker 1: very safe, don't mess around, and the moment as a 501 00:23:24,080 --> 00:23:27,240 Speaker 1: single parent. I've got episodes on for financial advice for 502 00:23:27,280 --> 00:23:30,639 Speaker 1: single parents. I would remember that your home again as 503 00:23:30,680 --> 00:23:34,200 Speaker 1: a lifestyle choice. It is not everything. I'd start thinking 504 00:23:34,240 --> 00:23:38,399 Speaker 1: about superannuation, salary, sacrificing, investing, building, passive income, all the 505 00:23:38,440 --> 00:23:40,200 Speaker 1: other things that you need to do as a single 506 00:23:40,240 --> 00:23:43,760 Speaker 1: parent to help make sure that you are completely financially independent. 507 00:23:43,800 --> 00:23:46,679 Speaker 1: You never rely on a person or the government, and 508 00:23:46,720 --> 00:23:49,879 Speaker 1: of course you make your children proud by leading by example. 509 00:23:50,119 --> 00:23:53,960 Speaker 1: All right. The last one is is the shared equity scheme, 510 00:23:54,080 --> 00:23:56,840 Speaker 1: which obviously is state based. So this is where the 511 00:23:56,840 --> 00:23:59,960 Speaker 1: state governments co purchase a property with you. Would you 512 00:24:00,160 --> 00:24:03,640 Speaker 1: seeing the amount that you need to borrow? Now examples 513 00:24:03,680 --> 00:24:06,359 Speaker 1: of this Obviously, Victoria has the Home Buyer Fund and 514 00:24:06,359 --> 00:24:09,200 Speaker 1: the government contributes up to twenty five percent. Wa also 515 00:24:09,240 --> 00:24:11,760 Speaker 1: has a Key Start shared Ownership program, and you buy 516 00:24:11,880 --> 00:24:14,560 Speaker 1: say seventy five percent of the property and the government 517 00:24:14,640 --> 00:24:17,000 Speaker 1: owns the remaining twenty five percent. And when you go 518 00:24:17,080 --> 00:24:19,920 Speaker 1: to sell or refinance even you have to pay back 519 00:24:20,000 --> 00:24:22,920 Speaker 1: the government's share. So I'll give you an example. Let's 520 00:24:22,920 --> 00:24:25,000 Speaker 1: take Tom and he buys a property for say six 521 00:24:25,040 --> 00:24:27,560 Speaker 1: hundred thousand dollars in Melbourne under the Vick skin, and 522 00:24:27,600 --> 00:24:30,359 Speaker 1: the government contributes one hundred and fifty thousand dollars towards this, 523 00:24:30,480 --> 00:24:32,600 Speaker 1: So it would mean that Tom is only borrowing four 524 00:24:32,720 --> 00:24:35,159 Speaker 1: hundred and fifty thousand dollars, and you know he pays 525 00:24:35,200 --> 00:24:39,000 Speaker 1: obviously a smaller deposit because the government's contributed. Now, the 526 00:24:39,000 --> 00:24:42,120 Speaker 1: pros of this obviously makes properties more affordable, and because 527 00:24:42,160 --> 00:24:44,679 Speaker 1: he's got a smaller mortgage thanks to the government, his 528 00:24:44,880 --> 00:24:48,240 Speaker 1: mortgage and payments are much lower. However, this is a 529 00:24:48,240 --> 00:24:50,639 Speaker 1: little bit of a trap, and I would hate for 530 00:24:50,680 --> 00:24:52,720 Speaker 1: you to become victim of this and discover this too 531 00:24:52,800 --> 00:24:55,960 Speaker 1: late in life. You don't actually own the whole property. 532 00:24:56,040 --> 00:24:58,879 Speaker 1: Obviously you own seventy five percent of it, but yet 533 00:24:59,080 --> 00:25:01,119 Speaker 1: you are left to cover one hundred percent of the 534 00:25:01,359 --> 00:25:05,679 Speaker 1: outgoing So those ongoing costs, the insurance, the strata, you know, 535 00:25:05,760 --> 00:25:08,920 Speaker 1: any sort of wear and tear body corporates. And if 536 00:25:08,960 --> 00:25:11,520 Speaker 1: you go and renovate that property, don't forget, you're also 537 00:25:12,040 --> 00:25:15,040 Speaker 1: increasing the government's twenty five percent of that value. So 538 00:25:15,040 --> 00:25:17,159 Speaker 1: if I, for example, with Tom, he renovates it and 539 00:25:17,200 --> 00:25:19,359 Speaker 1: turns it into an eight hundred thousand dollars home. The 540 00:25:19,400 --> 00:25:22,399 Speaker 1: government will be taking twenty five percent of that upgain. 541 00:25:22,480 --> 00:25:24,800 Speaker 1: Yet Tom has the one who's paid for it. He's 542 00:25:24,840 --> 00:25:26,880 Speaker 1: done all the hard work to increase its value, taking 543 00:25:26,920 --> 00:25:29,119 Speaker 1: it from six hundred to eight hundred. So you know, 544 00:25:29,320 --> 00:25:31,159 Speaker 1: be very very careful of that. And of course the 545 00:25:31,160 --> 00:25:33,440 Speaker 1: flip side works as well. If that six hundred thousand 546 00:25:33,440 --> 00:25:35,960 Speaker 1: dollars property goes down in value, the government has to 547 00:25:35,960 --> 00:25:39,080 Speaker 1: share in that twenty five percent loss. But this is 548 00:25:39,080 --> 00:25:41,600 Speaker 1: where I see the trap. It's actually more of a 549 00:25:41,680 --> 00:25:45,840 Speaker 1: danger in the element of security. Tom is loving life 550 00:25:46,119 --> 00:25:48,840 Speaker 1: on a four hundred and fifty thousand dollars mortgage, which 551 00:25:48,880 --> 00:25:51,960 Speaker 1: for him may be really easy to service, and therefore 552 00:25:52,280 --> 00:25:55,160 Speaker 1: he's kind of on easy street. Perhaps he thinks it's 553 00:25:55,160 --> 00:25:56,879 Speaker 1: fine the government owns twenty five miles so and I 554 00:25:56,920 --> 00:25:58,919 Speaker 1: don't really care. And he's living life, and so he should. 555 00:25:59,000 --> 00:26:01,560 Speaker 1: And this is not I say this out judgment. However, 556 00:26:02,640 --> 00:26:04,680 Speaker 1: he may wake up one day and go, you know what, 557 00:26:05,200 --> 00:26:08,359 Speaker 1: I have been spending all my money. I haven't actually 558 00:26:08,359 --> 00:26:12,040 Speaker 1: benefited from having a smaller mortgage, and in fact I've 559 00:26:12,040 --> 00:26:14,879 Speaker 1: only just stuck to making the minimum repayments I've never 560 00:26:14,880 --> 00:26:19,080 Speaker 1: actually paid this property off, and he can actually end 561 00:26:19,160 --> 00:26:22,360 Speaker 1: up being not that much better off, particularly if he's 562 00:26:22,400 --> 00:26:25,560 Speaker 1: had large outgoings associated with this property. And you know, 563 00:26:25,800 --> 00:26:27,720 Speaker 1: anyone who's own property will tell you about the cost 564 00:26:27,720 --> 00:26:31,400 Speaker 1: of maintaining it, wear and tear, replacing roofs, getting things 565 00:26:31,480 --> 00:26:35,439 Speaker 1: fixed in the garden, broken walls, plumbing, electrical work. This 566 00:26:35,520 --> 00:26:38,320 Speaker 1: stuff can be really expensive, and you're wearing all of 567 00:26:38,320 --> 00:26:41,240 Speaker 1: those costs. So Tom may wake up ten years down 568 00:26:41,280 --> 00:26:43,040 Speaker 1: the track and go, you know what, I've only paid off, 569 00:26:43,240 --> 00:26:44,800 Speaker 1: you know, a small amount of my home loan I've 570 00:26:44,840 --> 00:26:47,040 Speaker 1: only paid off, you know, say twenty thousand, I still 571 00:26:47,040 --> 00:26:49,880 Speaker 1: owe four hundred and thirty thousand, and my property hasn't 572 00:26:49,880 --> 00:26:51,679 Speaker 1: really gone up in value that much. He's not actually 573 00:26:51,760 --> 00:26:53,840 Speaker 1: any better off. And this is fine if he wants 574 00:26:53,880 --> 00:26:55,800 Speaker 1: to stay remaining in that property, But what if he 575 00:26:55,800 --> 00:26:58,400 Speaker 1: wants to sell. He doesn't really have that much of 576 00:26:58,600 --> 00:27:01,600 Speaker 1: a deposit or equity to sort of carry forward into 577 00:27:01,600 --> 00:27:02,520 Speaker 1: the next property. 578 00:27:02,600 --> 00:27:04,159 Speaker 2: So do I like this? 579 00:27:04,600 --> 00:27:06,560 Speaker 1: I don't mind it, but I think you need to 580 00:27:06,640 --> 00:27:08,880 Speaker 1: use it very very carefully. And of course you can't 581 00:27:08,920 --> 00:27:10,960 Speaker 1: actually use this as an investment property. You've got to 582 00:27:10,960 --> 00:27:13,840 Speaker 1: remain in the properties of primary residence at all times. 583 00:27:14,040 --> 00:27:16,520 Speaker 1: So in a nutshell, would I use this. I would 584 00:27:16,520 --> 00:27:18,440 Speaker 1: if I had to, But this is what I'd be doing. 585 00:27:18,560 --> 00:27:21,000 Speaker 1: I'd be paying it off as quickly as possible and 586 00:27:21,080 --> 00:27:23,920 Speaker 1: at the right time. I would get out of this 587 00:27:24,080 --> 00:27:26,320 Speaker 1: as quickly as possible, so the moment I could see 588 00:27:26,320 --> 00:27:28,600 Speaker 1: that I had enough of a deposit, if I solved 589 00:27:28,600 --> 00:27:30,960 Speaker 1: this property, paid back the government that twenty five percent 590 00:27:31,000 --> 00:27:33,399 Speaker 1: share plus officely any gains. I would then go on 591 00:27:33,480 --> 00:27:36,080 Speaker 1: and try and do this on my own independently. I 592 00:27:36,080 --> 00:27:39,119 Speaker 1: would try and make extra mortgage repayments, both regular and 593 00:27:39,400 --> 00:27:42,400 Speaker 1: ad hoc lump sum because obviously that increases the equity. 594 00:27:42,440 --> 00:27:44,400 Speaker 1: It means you have a smaller deposit to carry into 595 00:27:44,400 --> 00:27:46,120 Speaker 1: the next property. So I think it's a great way 596 00:27:46,160 --> 00:27:47,800 Speaker 1: to get into the market. It's a great way to 597 00:27:47,840 --> 00:27:50,480 Speaker 1: create a sense of stability in the short, medium and 598 00:27:50,560 --> 00:27:52,879 Speaker 1: even long term. But I'd be very careful not to 599 00:27:52,920 --> 00:27:54,959 Speaker 1: put all my eggs in one basket just in that property. 600 00:27:54,960 --> 00:27:56,560 Speaker 1: And if I did stay in that property, I would 601 00:27:56,560 --> 00:27:58,679 Speaker 1: most definitely be doing a range of other things to 602 00:27:58,840 --> 00:28:01,360 Speaker 1: build my wealth, to build all my financial dependence, such 603 00:28:01,359 --> 00:28:04,800 Speaker 1: as my superradiation. Having emergency money, and of course investing 604 00:28:04,840 --> 00:28:07,399 Speaker 1: in long term growing passive income streams. Now, as I 605 00:28:07,440 --> 00:28:09,760 Speaker 1: wrap up today's episode, I would obviously make it very 606 00:28:09,760 --> 00:28:13,000 Speaker 1: clear government support can help you give the leg up 607 00:28:13,119 --> 00:28:15,720 Speaker 1: that you need and you are entitled to, but it 608 00:28:15,840 --> 00:28:20,320 Speaker 1: is definitely not a substitute for planning, budgeting or even 609 00:28:20,400 --> 00:28:23,400 Speaker 1: self discipline that you need to build within yourself. Plus, 610 00:28:23,560 --> 00:28:27,040 Speaker 1: financial freedom isn't just about owning a home. It's about 611 00:28:27,080 --> 00:28:31,320 Speaker 1: emergency money, having investments, having passive income, superannuation, and of 612 00:28:31,359 --> 00:28:35,560 Speaker 1: course having wealth protection via personal insurance such as income Protection, 613 00:28:35,680 --> 00:28:37,960 Speaker 1: Trauma Cover, Life and depty Cover. Having a home is 614 00:28:38,000 --> 00:28:39,360 Speaker 1: just one thing, and really it is, at the end 615 00:28:39,400 --> 00:28:42,120 Speaker 1: of the day, a lifestyle choice and asset. Now, these 616 00:28:42,200 --> 00:28:45,280 Speaker 1: schemes can most definitely help reduce costs and they accelerate 617 00:28:45,400 --> 00:28:47,880 Speaker 1: the entry into the market which is really important, and 618 00:28:47,880 --> 00:28:50,920 Speaker 1: build a future investment portfolio potentially, but you've got to 619 00:28:51,000 --> 00:28:53,800 Speaker 1: use them wisely. You've got to follow the rules, the 620 00:28:53,880 --> 00:28:57,080 Speaker 1: terms and conditions, read the fine print, and get professional 621 00:28:57,080 --> 00:28:59,520 Speaker 1: advice along the way. So if you are serious about 622 00:28:59,520 --> 00:29:02,080 Speaker 1: buying your our first property, that's awesome. I'm so proud 623 00:29:02,120 --> 00:29:03,800 Speaker 1: of you and I'm so excited for you let me 624 00:29:03,840 --> 00:29:05,840 Speaker 1: know how you're going. I love hearing from everyone who 625 00:29:05,840 --> 00:29:07,720 Speaker 1: listens to my episodes. And of course, go and speak 626 00:29:07,760 --> 00:29:10,560 Speaker 1: to a licensed mortgage broker. If you need a recommendation, 627 00:29:10,680 --> 00:29:12,520 Speaker 1: just send me a DM on Instagram or come back 628 00:29:12,560 --> 00:29:15,040 Speaker 1: to you. Of course, speak to a financial planner, spend 629 00:29:15,040 --> 00:29:17,120 Speaker 1: some time listening to them, what they think, what could 630 00:29:17,120 --> 00:29:18,720 Speaker 1: be good for you, and what other things you could 631 00:29:18,720 --> 00:29:21,040 Speaker 1: be doing other than buying a home. You may actually 632 00:29:21,040 --> 00:29:23,080 Speaker 1: realize that buying a property is actually right for you 633 00:29:23,160 --> 00:29:24,720 Speaker 1: right now, And of course they are going to help 634 00:29:24,760 --> 00:29:28,040 Speaker 1: give you a strategy that will suit your needs, your goals, 635 00:29:28,320 --> 00:29:30,960 Speaker 1: and your understanding and actually see whether you're actually eligible 636 00:29:30,960 --> 00:29:32,720 Speaker 1: for this in the first place, and which option is 637 00:29:32,760 --> 00:29:35,160 Speaker 1: best for you. So promise me this. You don't wait 638 00:29:35,240 --> 00:29:38,800 Speaker 1: for the perfect moment. Use these tools now to understand 639 00:29:38,840 --> 00:29:40,480 Speaker 1: how they work and how they can actually help you 640 00:29:40,520 --> 00:29:43,240 Speaker 1: make smart, informed decisions when it comes to getting on 641 00:29:43,240 --> 00:29:45,960 Speaker 1: the property ladder as a first home buyer. Now that 642 00:29:46,080 --> 00:29:48,400 Speaker 1: is it for today's episode. Thank you everybody for listening 643 00:29:48,400 --> 00:29:51,280 Speaker 1: to Sugarman's fireplay. If you found this episode helpful, please 644 00:29:51,320 --> 00:29:53,000 Speaker 1: can you take a moment to share it with someone 645 00:29:53,040 --> 00:29:55,360 Speaker 1: who is dreaming of buying their first home. And of 646 00:29:55,400 --> 00:29:57,680 Speaker 1: course don't forget to subscribe so you never miss a 647 00:29:57,760 --> 00:30:00,840 Speaker 1: chance to fire up your financial future with Sugar Mamas. 648 00:30:00,880 --> 00:30:04,640 Speaker 1: Fireplay all right until next time. Stay intentional, stay empowered, 649 00:30:04,680 --> 00:30:07,320 Speaker 1: and keep that financial fire burning bright with you. 650 00:30:07,800 --> 00:30:09,640 Speaker 2: This is Sugar Mamas to fire