Buy now, pay now: the importance of budgeting for gifts

How much do you think the average Aussie spends on gifts each month? $20, $50 or 100? (hint: we’re a generous bunch). Today we’ll look at why it’s important to budget for these expenses correctly, rather than succumbing to ‘buy now, pay later’ services.

Did you know Australians spend nearly $20 billion a year on gifts?

That’s about $1,200 each per year, or $100 a month, according to a new research report by the Financial Planning Association of Australia (FPA).

It turns out that Gen Y is by far the most generous age bracket (25-39), spending $130 on gifts each month, well ahead of Gen Z ($91), Boomers ($89) and Gen X ($87).

The importance of budgeting for gifts

Ok, so here’s where this feel-good story starts to get a tad concerning: three in four Australians (73%) do not budget for gifts at all.

Now, with the average gift costing between $66 and $137 (depending on the occasion), that’s enough for some households to turn to ‘buy now, pay later’ services.

And make no mistake: these ‘buy now, pay later’ services are booming.

Market leader Afterpay saw its shares rise by 8% this week alone, with the company now valued at more than $7 billion.

In fact, in the 12 months to January 2019, 1.59 million Australians used one of the latest ‘buy-now-pay-later’ digital payment methods, with a whopping 40.6% of its customers being Millennials.

That’s right – Millennials, who are not only by far the most generous gift-givers, but are also seeking to enter the mortgage market for the first time.

So what’s the big deal?

According to recent media reports, lenders are increasingly trawling through bank statements for evidence of outstanding ‘buy now, pay later’ accounts when prospective borrowers apply for a loan.

In one incident, a 21-year-old NSW woman said a couple of hundred dollars worth of Zip Pay purchases, all of which had been paid off, almost prevented her from getting a bank loan to buy her first car.

“I honestly never thought it would impact me being able to get a loan. I am now petrified of using it at all, as I really want a house,” she said.

In another incident, a big 4 bank knocked back a 26-year-old Perth woman’s mortgage application after discovering she had an outstanding Afterpay balance.

These are just two examples of the importance of making sure you factor gifts into your monthly budget to ensure you aren’t setting off a lender’s warning bell by using ‘buy now, pay later’ services.

Need help getting your accounts in order?

If you’ve used a ‘buy now, pay later’ service to buy a gift for a friend, family member or even yourself, there are steps you can take to help minimise the impact it might have on your next loan application.

Your most obvious course of action is to pay it off as soon as you can, and then avoid using the service again in the future.

And look, let’s be honest, no one likes a Scrooge, so your next step would be to ensure you’re including an allocated (and realistic) amount for gifts in your monthly household budget moving forward.

If you’d like to know more, or want a hand getting your monthly budget in order before applying for finance, then get in touch – we’d love to help out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How criminals steal your identity to steal your money

Scams involving identity theft have cost Australians at least $16 million this year, and that figure is likely to be just the “tip of the iceberg”, says the Australian Competition and Consumer Commission (ACCC).

Worryingly, four in every 10 Scamwatch reports so far in 2019 have involved an attempt to gain information or the actual loss of a victim’s information.

“If you think scammers might have gained access to your personal information, even in a scam completely unrelated to your finances, immediately contact your bank,” says ACCC deputy chair Delia Rickard.

“Timeliness in alerting your financial institution is absolutely crucial.”

Identity thieves can empty victims’ bank accounts, take out tens of thousands of dollars in bank loans under victims’ names, and purchase expensive furniture or electronics under ‘no-repayments for 12 months’ schemes.

“Identity thieves can make victims’ lives a nightmare. They’ll change the victims’ phone carrier so they lose service and set up mail redirections so they’re in the dark about what’s going on,” says Ms Rickard.

You might not even know until you apply for finance

Here’s the really scary bit, though.

You might not even know you’ve fallen victim to identity theft until the day you have difficulty obtaining finance due to an inexplicably bad credit rating, points out ASIC.

This is why it’s important to regularly check your credit report, which you can do for free every year via MyCreditFile.com.au (Equifax) or CheckYourCredit.com.au (illion).

ASIC says if you’re a victim of identity theft you should tell the credit reporting agencies so they can note it in your file.

“Check your credit report to see what companies have checked your credit history recently, and let them know not to authorise any new accounts in your name,” ASIC adds.

You can also consider placing a temporary ban on your credit report to give you time to report the matter to police, and then send the police report to the credit agencies.

While the freeze is in place (initially 21 days, but it can be extended), the credit reporting agencies cannot share your credit report with credit providers without your consent.

If you can prove you weren’t responsible for the fraudulent transactions then you’ll hopefully be able to get your credit score fixed.

How people fall victim to identity theft

Some of the common ways that scammers obtain personal or banking information include:

– phishing emails and text messages which impersonate banks or utility providers seeking your login details
– fake online quizzes and surveys
– fake job advertisements
– remote access scams in which the scammer has direct access to everything on your computer
– sourcing information about you from social media platforms
– direct requests for scans of your driver’s license or passport, often in the course of a dating and romance scam.

“No one is really selling an iPhone for $1, or rewarding the completion of a survey with expensive electronic goods or large gift vouchers. They’re scams to get your valuable personal information,” says Ms Rickard.

If you’ve fallen victim to identity theft

Be alert to the signs of identity theft, says Ms Rickard.

“If your mobile phone suddenly loses coverage, you haven’t received expected electronic or physical mail, or you receive unexpected notifications from a financial institution, call your bank,” she says.

If you have been the victim of identity theft, contact IDCARE on 1300 432 273. IDCARE can guide you through the steps to reclaim your identity.

People can also report a scam to the ACCC via Scamwatch.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Don’t dive into credit card debt this Christmas

Every Christmas almost half of the population decides to go swimming in credit card debt to get through the festive season. But there’s two big reasons why you shouldn’t do that this year.

Read more

Tips to Purchase a House with a Huge Student Loan In-Tow

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Have you finally finished your higher education? Do you plan to settle down and make an investment in real estate?

Homes can be a costly affair for those who are already encumbered with student loans. But with careful planning, you can find ways to save for and purchase the home of your dreams.

Six ways to plan for a new home purchase when burdened with a student loan

  • Narrow down on what you want in a house
    Homes are available both fully-furnished with state-of-the-art fittings and also with bare minimum furnishings. It’s important that you decide what is essential for you and what isn’t.Choose a house that offers simplistic comforts for the moment. They are less expensive to purchase. You can always have it furnished later.
  • Consider the rent-earning potential of the neighborhood
    At the outset, the property of your choice may be out of your budget. But, if the rent-earning capacity of the home is good, it makes economic sense to invest in it now, given the high ROI potential it offers.
  • Don’t rush into the renovations and makeovers
    It’s possible that the house you purchase requires repair work or an overhaul of some sort. But instead of inconveniencing yourself with the expenses of a home renovation, choose to delay the property makeover.This can help you save yourself from the challenges of paying-off two large loans.
  • Set aside a cash reserve aside for unexpected expenses
    Your property may become the unfortunate victim of a thunderstorm. You may need urgent roof repairs. Instead of tapping into the funds you’ve set aside to pay-off your student loans, keep a separate reserve for emergency expenses.If you can, start saving for contingencies a few months before making your home purchase. It’s better if you start saving right when in college.
  • Consider freelancing when working full-time
    While setting money aside does help, it’s important to add to this reserve constantly. A great way to do this is by taking up more freelance assignments with your full-time job. This will help you make the necessary money to pay up your loans faster.
  • Save a portion of your student allowances
    All citizens of New Zealand, and residents staying in the country for a consecutive period of 3 years, who fall within the age bracket of 18-65, and are engaged in full-time studying, are eligible to receive student allowances which are weekly payments which help you meet the living expenditure during your studies.If you’ve already planned to purchase a house post-graduation, saving a portion of your student allowance can help you create a fund for your property.At Total Mortgages, we can help you plan your new home purchase. Speak to our professional mortgage brokers for more information.

Signs that Show the Time to Sell Your Investment Property is Near

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Real estate property is an excellent investment and a great source of income. But at times, it can become a dangerous asset to hold, one which may not give you the ROI you desire.

Luckily, property always shows certain signs which tell owners that the time to sell is near.

5 signs that indicate your real estate property is ripe for sale

  • When you spend more on your property than you earn from it
    Property maintenance can be a costly affair. While your real estate is earning you rent, it may be that you’re spending a little too much on its upkeep. The point of an investment property is to make profits. But, if you spend all that you earn out of the property and more on maintenance, it defeats the purpose of the real estate.Selling it would be the best option.
  • When you’ve put all your eggs in a single basket
    Having a diverse portfolio of investments is extremely important to ensure you don’t lose all that you’ve saved due to any fluctuations in the market. Assets like shares, bonds, and debentures can change value very quickly, whereas, property (especially land) always appreciates.If you have a property to your name, you can consider selling it to diversify your portfolio.
  • When the seeds of a large property market are sownLet’s say a new string of apartment complexes will be built in the country in the next 5 years. This means, in the next 5 years, the market will be flooded with homes for sale. Sellers will drive down prices to sell their property and buyers still may not purchase purely because they have no dearth of options.If this is the case, it’s best to sell the property when you know there is a shortage of supply. This will help you make wonderful earnings.
  • When you find yourself in need of finances
    Do you have only a single source of income? Are you worried that your source of income isn’t going to help you towards a better life? If yes, then selling the property you own can be a great way to cushion yourself from harm and debt.
  • When tax laws are revised
    In New Zealand, mortgage interests are tax deductible for investment properties. So are costs incurred for any maintenance work that landlords carry-out when the property is occupied by tenants. This is why some buyers may decide to purchase a property for investment, rent it, out and get tax deductibles when tax laws change in favor of property.

If arbitrage is an option or if you are experiencing any of the above situations, then selling your property is a great way to make the best out of the situation.

At Total Mortgages, we can advise you on the best time to sell your property. Our professional mortgage brokers can also help your buyers find suitable home financing options through our friendly-loans.

Top 5 Tips to Rain-proof Your Property

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With spring in full swing and monsoon in the wings, homeowners need to get started on rain-proofing their properties to avoid any nasty surprises later on. If you’re interested in getting started on rain-proofing your home, this article will be a great read for you.

5 easy ways to make your home rain-ready
At Total Mortgages, we have seen many homes that have become victims to rain. Use our 5 brilliant tips to rain-proof your home and keep your property safe:

  • Get your rain gutters, drains and downspouts de-clogged and fixed
    Run-off from the rain needs to go somewhere and this is where your gutters, drains and downspouts come in. Clogged gutters, drains and downspouts can lead to rainwater and debris clogging up in your roofs and pipes. This can lead to major leaks and may result in electrocutions. Additionally, stagnant water can lead to malaria and other infections.Have the gutters, drains and downspouts cleaned thoroughly and have all debris removed. If there is stagnant water, have it removed too. Fix any cracks and replace elements that are beyond repair.

  • Re-seal your doors and windows
    Over time, the seal on your windows and doors can break and disintegrate, letting in cold air, sleet and rain from outside. Contact a professional to re-seal your doors and windows before the rain comes calling.
    You should also check out your property’s aluminum and wood sliding and wood shingles. Have the property inspected for wood rot and get it cleaned immediately. When the rot doesn’t build-up your wood remains in good condition.
  • Have your home re-painted with water-proof paint
    One of the leakiest spots of a house, after the roof, is the walls. An indicator that you may need a fresh coat of paint this monsoon is the large, splotchy wet marks on your walls.When re-painting your property, choose paints with thick finishes. The tough and enduring finish in the paint will keep water out of your walls and also add a bright aura around your property.
  • Get the switchboards and wirings in your home checked
    Monsoon brings with it the threat of electrocutions. If you’re overdue for a wiring check at home, we recommend you get a once-over done of your electrical devices immediately. Have loose contacts tightened and replace worn-out wiring.We recommend that you purchase silica gel pockets from your local electrician and place them down around your electrical devices. The gel pockets absorb moisture from the air and prevent any condensation from forming on your devices.
  • Stock on your tarpaulin supplies
    Tarpaulin sheets are a godsend during monsoon season and it’s essential that you have an extra stock of tarpaulin sheets to cover your roofs during heavy rains. Tarpaulin sheets are also great as insect-repellant nets and as covering for sheds, barns and animal shelters.Waterproof and non-flammable, they are the best materials to have at hand during the wet season.

5 Things You Need to Do to Your Property Before Heading Out on a Holiday this Summer

With summer upon in flight, you may be planning your next family holiday. But before you head out the door, there are some important maintenance checks that you need to conduct to ensure that the heat doesn’t take over your home when you’re out.

Image Credits: Wikimedia Commons

Keep your home cool this summer in 5 easy ways

Make for a welcoming home post-vacationing, by conducting these 5 maintenance checks:

  • Repair and plug-in broken window seals
    Window seals keep out wind, heat, and dirt from your house. But wear and tear can affect their performance. When this happens, your heating and cooling systems need to work overtime to keep your home at the ideal temperature.Before you go on a holiday, have a professional come in and take a look at your window seals.
  • Check and clean the HVAC system
    From debris accumulation to simple overworking, your heating, ventilation, and air conditioning systems may become faulty due to numerous reasons. Often, a faulty HVAC system doesn’t stop working; instead, it works inefficiently, drawing in more energy and electricity than necessary, leading to high bills and a very large carbon footprint.A scheduled maintenance check of the HVAC systems during summer can do wonders for your home.
  • Ramp up your home insulation features
    The insulating materials in your walls may wear out with time. This can result in your home being drafty during winter and extremely hot during summer. Be sure to have your walls re-insulated with foam insulation before you leave for your vacation.Foam insulation is very light and creates an air barrier within your walls. This layer of air is what keeps your home constantly cool while keeping out dirt and wind from outside.
  • Check and repair the air ducts
    The air ducts are an integral part of the air conditioning and ventilation system in your home. An air duct that is clogged with dirt and debris will hinder the flow of air through the house, resulting in your home becoming an ‘oven’ during summer.Have a specialist come in to take a look. This will ensure that your home is summer-ready.
  • Switch over to CFLs and LEDs
    Light and heat go hand-in-hand. This is why it’s important to have your light bulbs changed before you go on holiday. Replace your traditional incandescent and halogen tubes with cooling CFLs and LEDs.Not only will your electricity bills go down but so will the temperature in your house.Speak to a mortgage broker at Total Mortgages if you are looking for assistance with home financing!

5 Things to Do to Improve Your Credit

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The decision to buy a house is monumental. Not only is it an expensive process but one which is fraught with multiple challenges. For one, if your credit standing isn’t great, your mortgage application may be rejected.

However, with care and good planning, you can make yourself loan-worthy in no time. Here are our top 5 tips for converting your credit standing from good to great:

  • Get the inaccuracies on your credit report fixed
    Your credit report is a summary of your entire credit history, which indicates your spending habits and earning potential and informs the lender whether you are a safe investment or not.Sometimes, due to some technical errors in data input or calculation, you may have some inaccuracies in your credit report. Your earnings may not have been updated or your expenses may have been exaggerated by mistake. When lenders see such poor numbers, they are less likely to lend you money.It’s best to have your credit report reviewed by experts and have these errors corrected.
  • Cut down on the number of cards
    The more number of Debit/Credit cards you have, the more likely you are to use them and rake up debts. Paying off your card debts immediately is one great way of maintaining a good credit. Another is to cut out the cards entirely.When there is less temptation, you have a greater chance to save. Choose to have one card, instead of say, 3.
  • Pay your bills and EMIs on schedule
    Lenders want to be reassured that you’ll pay back the loan in due time. This is where a steady repayment cycle will help. Make sure you pay your monthly bills before the last date of payment and never miss the payment of an EMI.
  • Keep a low O/D balance
    Just like cards, a large overdraft balance is a dangerous temptation. Our first recommendation is that you avoid getting a large O/D balance approved by reducing your spending. However, if you already have a large O/D account, then try not to tap into it.Remember, O/D is an indication that you’re spending more than you can afford; which looks terrible on your credit report.
  • Avoid making big purchases
    Ideally, it’s best to avoid making big purchases like vehicles, television sets, and foreign trips at least a year before you purchase the property. This will not only help you save money but it’ll also help you avoid unwanted loans and expenses from accumulating.Large savings and limited expenses are the best to make your credit absolutely perfect.Total Mortgages offer home loans at highly-attractive interest rates. Get in touch with one of Total Mortgage’s mortgage brokers, who would take a look at your credit report and advice you on the best way to proceed.

How to Select the Ideal Investment Property?

 

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Have you always wanted to buy an investment property? If yes, you may have had a lot of questions about selecting the right kind of building. To help you make an informed decision, we’ve set down some cardinal tasks that you need to perform when choosing an investment property.

  • Narrow down on the ideal renter
    Before you think about the property, envision the type of people you want renting it. Do you prefer students or working professionals? Are you okay with families with children or do you prefer retirees?Each type of person has specific requirements; for example, a parent will want the house to be close to a school. Select the property based on the profile of your potential renter.
  • Calculate the mortgage you’ll need to borrow
    Properties can get expensive, especially those in prime neighborhoods. Before you narrow down on your choices, visit a housing loan provider and check how much mortgage you will need to borrow.Total Mortgages offer housing loans at extremely borrower-friendly terms. Talk to a Mortgage Broker at Total Mortgages for more information.
  • Check for property maintenance concerns
    It’s always best to choose a property that doesn’t require too much fixing-up. Maintenance and repair work can be extremely expensive, the costs of which may force you to raise rental prices and risk losing out on customers.A well-maintained property will also fetch you better mortgage terms.
  • Tally your potential rental earnings and expenses
    When selecting an investment property, calculate the potential expenses you may rake up from utilities, maintenance & upkeep costs, taxes, housing insurance, homeowner association fees, vacancy rates and more.Next, estimate the potential earnings that you’ll make from the monthly rental you’ll receive from your tenants. You can always check the market value of the neighborhood your property is in and the value of the amenities you offer, to analyze how much earnings you can expect from them.
  • Determine the appreciation rate of the property
    There are very few assets which appreciate like property. Before making a choice, check whether the property has a potential for increasing in value of its own accord or if you need to revamp the property to increase its value. This will tell you if it’s worth the investment or not.Remember, it’s also okay to invest in property that can generate huge cash-flow, without actively appreciating in value.
  • Identify the rate of capitalization
    Finally, one of the most important considerations you need to take into account is the amount of time it will take for you to recover the investment you’ve made on your property. It’s good to choose a property which can help you break-even at the earliest, at the lowest possible costs.