Financial resolutions to keep


Tips for financing a home loan

At the start of a new year, many people like to take stock and think about changes they'd like to make in the year ahead. Resolutions are easy to dream up, but they can be difficult to keep.

Maybe your aim is to get your finances in order. Would you like to move to a bigger home this year or downsize to a smaller one? Do you dream of remodelling the place you live in now or buying an investment property?

Whatever your goals, you'll need a plan to achieve them.

Whether your goals for the year are lofty or modest, the best way to achieve them is to make a plan and start acting on it today.

Financially fit

A good way to start sorting out your finances is to make sure you're getting the best deal on the big ticket items, such as your home loan.

Australian Bureau of Statistics (ABS) data shows that during 2014 the value of mortgages refinanced rose sharply, with many people taking advantage of the low interest rates available.

July was the peak month for refinancing, with $5.6 billion worth of debt switching between mortgage products. January is typically the quietest month, according to the ABS, but why not buck the trend and reassess your mortgage now?

Getting the right home loan to meet your needs can save you money and get you off to a good start for the year. A competitive interest rate is important, but so are other features of the loan. Some mortgages give access to deals on credit cards and other financial products, or loyalty programs that offer rewards.

While you're reviewing your mortgage, also look at transaction accounts and credit cards, as well as home and contents insurance policies. Once you've scrutinised these and made sure the products you have are the ones best suited your current situation, you're well on your way to being able to tick that resolution off your list.

On the move

If moving house is on your agenda for the year, start looking now. Even if you don't plan to buy for months, it's wise to do your research and get a feel for the market. Read widely and pay attention to market forecasts. That way, when you do start to seriously look to purchase, you'll know value when you see it.

Developing an understanding of how much you can expect to pay for the type of property you'd like, in the area you're looking, will help you to budget.

Research can also help you get an idea of how much you may get for your existing home and what to do to maximise its sale price.

If you're upsizing and will be taking out a bigger loan, do the sums on how much you can afford.

If you're expecting to move to a less expensive dwelling, think about how you'll invest any excess capital released from the sale.

Take a similar approach if you're hoping to buy an investment property or a holiday home.

Renovate or demolish

Renovating a home can be exciting and rewarding, or it can be a huge challenge. Adding value with renovations largely comes down to planning, preparation and budgeting.

If renovating is on your radar this year, start planning well in advance – just as if you were searching for a new home.

Keep your eyes peeled for ideas on layouts, storage options, materials and colour schemes that could work in your space. Ask friends and relatives for referrals to reliable tradesmen.

Prepare a project plan and a realistic budget. It's wise to include a buffer amount in your budget too. There will inevitably be surprises when you're renovating an older home but, if you keep a close eye on the parts of the project that you can control, these will be easier to manage.

Importantly, work out how you'll fund a renovation project. Do you already have savings at call or will you be able to save up in the timeframe you have? Could you redraw on your mortgage or switch to interest-only repayments to lower the amount you have to pay each month, freeing up cash to divert to the project?

Whether your goals for the year are lofty or modest, the best way to achieve them is to make a plan and start acting on it today.

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Unless stated otherwise, this information has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL and Australian Credit Licence 237502 and does not take into account your objectives, financial situation or needs. You should consider whether it is appropriate for you. All applications are subject to Macquarie's standard credit approval criteria.