In its recent property market assessment, ANZ argues that gains in house prices have been driven by lower interest rates and an increase in household income.

The ANZ Australian Housing Chartbook reports: A combination of lower interest rates, falling house prices and rising household incomes has improved Australian house purchase affordability over the past 12 months.

Despite the continued concerns about significant Australian house price overvaluation from some commentators, housing market fundamentals remain supportive.

This is backed up by ANZ compiled data on international house prices, rental yields and house price-to-income ratio comparisons showing Australian house prices have not deviated from international trends.

HSBC Bank chief economist Paul Bloxham agrees that there is little to fear from a price bubble. In the recent HSBC global research report Australia in 2012, he states there are three main reasons why prices wont plummet: the majority of houses can service their debt; the undersupply of housing is growing at a greater rate than the decline in population growth; and there is strong demand for housing close to major urban centres.

We remain unconcerned about the possibility of a large decline in housing prices this year, concludes Bloxham.

Life insurance, disability insurance and income protection insurance play a vital role in protecting your income and your lifestyle. It provides the financial means to preserve your way of life, or that of your family, in the event of an accident, serious illness or even death.

So whats stopping you from taking it out? Maybe its one of these commonly held myths?

Myth: I have enough insurance in my superannuation

Fact: You may be surprised at how little this amount of cover actually is and how many of the essential insurance extras have been removed. Research shows that almost half of industry super fund members are underinsured by $100,000 for life cover and by $1,000 per month for income protection cover.

Myth: Insurance premiums are too expensive

Fact: They are actually no more expensive than a daily cup of takeaway coffee. The average non-smoking 31 year old male, married with two children and earning $75,000 per annum can obtain $750,000 life cover and $100,000 trauma cover for around $2.80 a day! The other good news is that insurance premiums for income protection, life and TPD (total and permanent disability) can be deducted from your super, which also means they can be tax deductible. To make them even more affordable, consider the difference between taking out cover based on stepped and level premiums.

Myth: I dont earn an income, so I dont need insurance

Fact: Just because you are a stay-at-home parent, doesnt mean you dont need life insurance. If you are no longer around, your family would require a lot of assistance and your partner may have to reduce their working hours to look after the household or employ outside help. Families losing stay-at-home parents may require more than $75,000 per year for child care or home help expenses.

Myth: Im young, healthy and debt free, so I dont need insurance

Fact: A young persons most valuable asset is their ability to earn an income, so it makes sense that insurance should play an integral part in their lives. While its true that a young, debt-free person may not need comprehensive insurance across all products, what happens if they became ill or disabled and couldnt work? This is when income protection, trauma insurance and TPD insurance become options to consider.

What if I buy the wrong property?

Rental yield, capital growth, tenant quality and demand should be upmost in your mind when searching for properties, which means not allowing your emotions or personal preferences to influence your decision.
Think about what appeals to a tenant and what property types are in demand now and in the future. Researching your market is an important part of knowing what features tenants are looking for.

What if I have problems with my tenants?

Screening tenants before signing contracts is the single most important tip for protecting yourself against this scenario. If you choose to hire a property manager to screen tenants, make sure their process is thorough and detailed, like using industry databases that list bad tenants. Conduct as many background checks as privacy laws allow and always ask for the tenants references to include company names (not just mobile numbers) to ensure their legitimacy.

Remain vigilant after the tenant has moved in by conducting regular general property inspections and promptly dealing with any issues that arise. Landlord insurance can cover you against damage by the tenant or loss of rent.

What if I cant get a tenant?

This is a common fear among first time investors but you only need look at the low vacancy rates for rental properties to realise you are unlikely to have trouble finding tenants. Of course nothing turns potential tenants off faster than a run-down, dirty house, so for the greatest tenant appeal ensure the property is in good condition and the rent is on par with other similar properties in the area.

What if now is not the right time to buy?

Many property investors will tell you that when to buy is nowhere near as important as actually buying. With a long term strategy in mind, so long as you take a reasonably cautious approach, a decent property is more than likely going to deliver growth in the long term. The longer you hold off, the more time you spend missing opportunities to enter the market and grow your wealth.

What if I get the wrong advice?

You wouldnt take advice from an unqualified doctor, so dont take property advice from smooth talking sales people. Do your research and triple-check all the fine print before you enter purchasing schemes like rent guarantees and off-the-plan purchases. Remember, if it sounds too good to be true, it probably is!

If you decide to do the same, make sure you are fixing for all the right reasons not just the lure of a cheap rate. Be fully informed of the implications of locking into a fixed rate as you dont want to later regret your decision if variable rates drop.

Your financial situation and personal preferences should always be the guiding factors in whether to choose a fixed or variable home loan. Both loan types have their pros and cons so talk to us for the best advice about what product suits your budget and lifestyle.

The insurance of fixing

Choosing a fixed loan is similar to buying an insurance policy; it gives you certainty over a period of time. In the current climate of global economic upheaval, a fixed rate can be a good option if you are on a tight budget because it allows you to know exactly how much each repayment will be.

On the downside, many fixed loans charge for extra repayments and early payout (break fees). Seek advice before you sign the contract on how the break fees are calculated in case you have to sell or refinance within the set term. The more rates fall, the higher the break cost because the re-financer has to compensate themselves for the loss of re-lending the money at a lower rate.

The ups and downs of variables

Variable loans have more features and greater flexibility than fixed loans but as the rate fluctuates according to various market conditions they can be risky if youve overcapitalised on your loan.

If your variable rate falls, you may be making lower repayments than if you had fixed your rate but if the variable rate rises, your monthly repayments increase. When choosing a variable its important to plan for the possibility of rate rises and be able to adjust your budget accordingly.

Other options

Split rate and capped loans are hybrids between fixed and variable loans.

Split rate loans allow you to divide your loan between fixed and variable interest rates, which gives you a foot in both camps.

Capped loans are often offered as honeymoon or introductory loans and under this type of loan the interest rate is fixed for the capped period. During this period, the interest rate cannot go higher but it may go lower if the lenders standard variable interest rate falls below the capped rate.

Did you know?

If you apply for a fixed rate loan, the advertised rate offered is current only for that day. By the time your home purchase happens, that rate may no longer be on offer unless you opt for a Rate Lock. Some lenders offer this service automatically, while others require you to pay a fee to put the rate lock in place.

Embracing the rapid movement in technology is not always easy but investing the time and effort to take on a new technology almost always pays dividends. Lets look at whats in store for us over the coming year.

Voice Command

The success of Siri (a speech-recognition personal assistant that's built into all Apple iPhone 4S smartphones) will prompt this type of technology to be used in other handsets, computer tablets (mobile computers), PCs and on websites.

Email on the Out

The popularity of social networks and messaging products marks the decline in email usage. Downloading services that allow the sharing of links has also proved quicker and more smart-phone-friendly than email.

App on the Up

App stores will grow in the number of available options as more companies come forward to help free us from content overload.

Windows 8 - Touch

Windows 8 Touch will bring touch into the mainstream PC market, narrowing the gap between notebooks and tablets. Users of Windows 8 devices will be able to tap and swipe their way to touch-based applications via big, touchable panels.

Social media

Social media will continue to grow and insert itself into even more aspects of daily life, particularly those that are geared to photo and video based interaction. Social networks will add more features and get even more competitive, with Google+ trying to dominate the market.

Mobile capabilities

There will be an increase in mobile phone capabilities in every aspect and a growing number of internet users will demand access to content through mobile devices. Phone hardware and software will become more sophisticated and phone video will continue to improve in quality.

Getting Thinner

Our TVS, PCs and tablets are thin so too will our laptops become as thin as manufacturers can allow. The emphasis will be on laptops that look great, run quietly, and are easier to carry.

Your real estate agent may have a strong opinion about which is the better option so be sure to quiz them about the reasons for their preference. It might also help to look at auction clearance rates in your area as market conditions can influence the success of either sales method.

The style of property, its location and the time-frame in which you wish to sell are other factors that should influence your choice. Here are some of the common reasons why sellers choose one method over the other.

Reasons to choose auctions:

• Quick sale. The fixed date of an auction and fast turnaround of the marketing campaign gives buyers a definite time limit in which a decision must be made.
• Market price. The market decides what the property is worth rather than the seller.
• Competition. An auction is an emotionally charged event and if you have two buyers battling it out, they may end up pushing up the sales price well in excess of the seller's expectations!
• Convenience. A short campaign means fewer times you have to open your house for inspection.
• No cooling off. Unlike a private treaty sale there is no 'cooling off' period, so a buyer can't change their mind after they have signed the contract under auction conditions.

Reasons to choose private treaty:

• Less pressure. There is no official sale date until an offer is accepted, which reduces the sense of urgency.
• Predetermined asking price. The owner nominates the asking price based on market research and in consultation with the agent.
• More time. There's the luxury of time both to attract more interest and to consider offers.
• Test the water. You can dip your toe in the water and see if someone will make you an offer you can't refuse.
• Negotiation. More opportunity to work with interested buyers to come to an agreed sales price.

Renovation, whether major or minor, is no guarantee that youll be able to ask more money for your home. Its important to know what to renovate so that your home appeals to a large number of buyers, and that the renovations wont cost you more than what theyre worth to the value of the home.

Is it feasible?

Knowing how much you should spend is all about research. A good starting point is to estimate how much your home is worth now versus what it could be worth when renovated. Look at other properties that are already renovated and are similar in terms of building style, number of bedrooms and block of land this will give you an estimated sale price.

Take your estimated sale price and subtract your expenses and expected profit in order to work out your renovation budget. Get some quotes on the kind of work you are thinking of having done and make a decision about whether you can do a decent renovation job for this amount.

Overspending on a renovation will eat straight into your potential profit so its important to be clear about how much the work will cost and whether it will be more or less than the value gain.

Will it appeal to buyers?

Focus on renovations that appeal to the majority of buyers such as work done to the kitchen and bathroom. Renovating to sell is a business decision so opt for a neutral look that will appeal to more people rather than making choices based on personal preference. Visit display homes, look at magazines and talk to real estate agents to get a sense of what the current look is in home presentation.

The more labour you undertake yourself, the less risk there is of overcapitalising, so be prepared to get your hands dirty with jobs you can do yourself.

Renovate to highlight your homes best features, focusing on appearance rather than function. If you have a choice between replacing the hot water heater or re-painting the house, for example, its the new paint not the water heater that will impress the buyers.

Did you know?

You can add value to your property with the following features:

1. Good-looking faade fresh paint, tidy garden, roof/fences/ window frames in good repair.
2. Landscape presentable from the street and privacy from neighbours.
3. Deck/terrace an outdoor living space that leads off from the indoor entertainment area.
4. Updated kitchen new fixtures, open-plan style and quality appliances.
5. Bathroom an added or remodeled bathroom.
6. Additional bedroom only if you can add it without overcapitalising.
7. Green features solar hot water, energy efficient lights, energy efficient fittings, grey water system, drip irrigation.

It is not the responsibility of the seller to disclose any problems with the property, which means the risk rests squarely with the buyer. The maxim of caveat emptor (let the buyer beware) is still a guiding legal principle in all property transactions, which means that the party acquiring the property must take reasonable steps to discover as much about the acquisition as possible before committing to the transaction.

Due Diligence is the process of systematic review, analysis and discovery in which a prospective purchaser gathers information about the property. The process is designed to identify any issues that may affect the propertys capital value, income and long term performance. Asking for detailed information from the seller regarding its business operations and finances ensures you know what you are getting into and enables you to make an informed assessment of the risks associated with the transaction.

The complexity of the due diligence will depend on the type of property, location and size, but it is a time-consuming process that requires access to numerous documents. Getting the right professional advice at this stage in the process is advisable in order to help minimise your risk and avoid costly mistakes down the track.

Due diligence should investigate the physical condition of the property, such as the building structure and maintenance, as well as issues like financial resources, legal and tax planning. Start by putting together a checklist that includes documents to be examined like leases, title policy, certificate of occupancy, insurance policies, survey reports, licences, permits, construction/building/fire safety certificates, council development consents, hazardous materials register, depreciation schedule and outstanding orders.

These examples are a starting point only as a comprehensive due diligence checklist can easily number over 100 items! Each property is unique and the information required varies from property to property, so please contact your broker for assistance in putting together a checklist to suit your individual needs.

Your choice should largely depend on what you want the valuation for and how much you are prepared to spend. A professional valuation by a qualified valuer will give you the most accurate indication of what your property is worth but it will cost you a few hundred dollars. In many situations this might be a worthwhile investment, such as if you are trying to decide whether to sell or refinance and you need a clear picture of your options. Qualified, independent valuations are also expected by most lenders if you are borrowing to buy a new property, refinancing or want to access the equity in your home.

By comparison, market appraisals from real estate agents and e-valuations cannot be relied on for their accuracy but they are useful in some situations, such as for increasing your market knowledge of property prices and providing you with a price estimate at little or no cost.

You may decide that you want to use a combination of the following options for figuring out what your property is worth.

1. Compare prices

Compare your property with recent sales in the area and keep an eye on what comparable properties have sold for. Make sure the properties you compare with have similar features like the same number of bathrooms and bedrooms.

2. E-valuations

There are many websites offering automated property valuations, some of which are accurate and others not. Choosing a decent website can be a bit of a lottery so it pays to stick with reputable sources like RP Data, Australian Property Monitors and Residex and look for reports that give information about comparable sales in the area or the historical sale prices of the property.

3. Real Estate Agent Appraisals

Estate agents often provide free market appraisals of what they believe the property will sell for. In many cases you can rely on an agent to give you a decent estimate but keep in mind that some agents might be over-pricing to get the contract or under-pricing for a quick and easy sale.

4. Licensed valuation

A comprehensive valuation includes a thorough internal and external inspection of the property that takes into account the propertys unique attributes. This is combined into a report that includes recent comparable sales in the area and prevailing market conditions.

• Australians remain better placed to cope with their debt levels than borrowers in many other countries. 45% of Australian borrowers are overpaying their mortgage, compared to an eight-country average of 26% (across Canada, India, Ireland, Italy, Mexico, the UK and the US).
• The typical borrower in 2012 is expected to be refinancers and upgraders, with first homebuyers and investors remaining cautious.
• In the past year, WA has seen the largest growth in lending, then QLD, followed by VIC and NSW, with SA and TAS having seen a drop in home lending.
• Of the capital cities, Sydney stands out as a being on track for house price growth of between zero and 4 per cent by the end of 2012, factoring in no interest rate change.

The statistics show us it's not all doom and gloom, with the health of the property market varying from suburb-to-suburb and state-to-state. As your mortgage broker we would be happy to speak with you in person about any lending issues you may be concerned about for the coming year.

Taking out risk insurance to protect your income, your debts and your family is an important part of managing your exposure to risk. Its impossible to know whether your situation will change in the future but risk insurance prepares you for what if scenarios. What if you are injured and can no longer work? What if your family is left without you and they are unable to make ends meet?

Without risk insurance the financial implications are huge if you become ill, injured, or die. Why jeopardise the wealth you have created through property investment by taking unnecessary financial risk?

Lets take a look at what risk insurance options are available to you and what cover they provide. Contact us for assistance with choosing the right insurance for your situation.

Income Protection

This pays you a regular income stream in the event that you are unable to work for a period of time due to illness or injury. It enables you to continue meeting your living expenses and home loan repayments without having to sell down some of your assets to meet expenses.

Mortgage Protection

Your mortgage is taken care of upon your death or should you become disabled.

Life Insurance

Your family is looked after financially if youre no longer there to provide for them it can help take care of debts and ongoing expenses, as well as provide funds that can be invested to generate an ongoing income.

Total and Permanent Disability

Similar to life insurance but also covers medical expenses in the event you suffer a permanent disability.

Critical Illness

Also known as trauma cover, this insurance pays out in the event that you suffer a specific illness such as heart attack, cancer or stroke.

• Develop realistic standards strike a balance between what you ideally hope for and what you are likely to get.
• Work smarter, not harder look for ways you can better organise your time, systems you can develop, or options for using technology to your advantage. It might take time to set up, but once youve made changes youll find yourself working more efficiently and effectively.
• Learn to laugh laughter is a cure for many ills and a great way to provide balance for stressful situations. A daily injection of laughter improves morale, clears the cobwebs from the brain and helps get the creative juices flowing.
• Give yourself praise and encouragement dont wait for someone else to.
• Stop for lunch its tempting to wolf down a sandwich at your desk when youre busy but its actually not a very productive use of time. Even a small break outside in the fresh air will do wonders for boosting your mood and energy levels for the afternoon ahead.
• Banish negative thoughts focus on what is positive and rewarding about your job and relieve mental tension and gloomy thoughts by making exercise a part of your daily routine.
• Turn colleagues into friends start a social club or lunch group.
• Do it now when faced with a difficult task, break it up into a series of smaller, more manageable jobs.
• Give yourself a distraction it might be saving for a holiday, training for a marathon or re-decorating your home. When you have a personal goal to work towards, your job no longer dominates your life.
• Create a list if you are overwhelmed with endless tasks and deadlines, ticking off things from a to-do list can help you regain control and give you the satisfaction of knowing you are making tangible progress.

Houses are often perceived as slightly ahead on price growth than apartments; however, a recent RP Data Property Pulse report states that apartment values are increasing. Over the past five years (July 2006-July 2011) apartment values for combined capital cities have climbed 6.0 per cent, up 1.2 per cent on housing values during the same period.

So where does that leave you? Well, its important to remember that regardless of whether you buy a house or apartment, your ultimate goal is to find a property that will deliver the best return on your investment in the long term. Factors like how much you can afford and what you want to achieve from your investment should drive your decision-making.

Here are some issues to think about that may help clarify which type of property best suits your investment goals:

• Rental demand: do your research about what type of dwelling will be popular in what area. An investment apartment near a university, for example, can allow you to tap into the demand for accommodation by overseas students.
• Affordability: apartments are cheaper to buy, making them a good option if you are a first-time investor and want to break into an up-and-coming market you couldnt otherwise afford.
• Fees: in addition to the usual landlord costs like council and water rates, you will have to pay strata or body corporate fees if you own an apartment. The more facilities on offer - such as pools, gyms or lifts - the higher the strata levy.
• Maintenance: houses generally require more maintenance than apartments but the upside is you can decide when to spend money on repairs. With an apartment, you are locked into a strata levy but at least much of the maintenance is taken care of by the body corporate.
• Capital growth: knowing the median prices and sales history of properties in the area you are considering buying into will give you a more accurate idea of whether a house or apartment will attract more capital growth.

Did you know?

When it comes to a choice between living in a house or apartment, a recent survey by PRDnationwide shows the house comes in as the top choice among Australians.

The survey of 1500 people nationwide found that a detached house on a 600sq m block within the inner 15 km ring of a CBD is the most preferable type of home.

A third of respondents said they would consider a coastal or regional property, 18 per cent wanted to live in a townhouse located six kilometres from the CBD and 12 per cent wanted to live in an apartment only three kilometres from the city.

Proponents of buying old argue that established dwellings are typically more affordable and can be renovated to create equity, whereas those buying new argue that this is outperformed by the tax incentives that new properties deliver.

Confused? Here are the arguments for both sides of the debate, but remember theres no right or wrong answer, regardless of which corner you stand in! Old and new properties both have distinct, unique advantages and what counts as an investor is that your decision matches your individual strategy and goals.

Reasons to buy New

1. Tax depreciation: If youre an investor, one of the big advantages of buying a newly constructed property is that you can claim depreciation as a tax-deductible expense. This includes the depreciation of assets in the buildings and the cost of the building itself, as well as for wear and tear on fixtures and fittings in the property. The newer the property, the higher the level of depreciation.
2. Better quality tenant: Brand new properties tend to attract a better quality tenant, which means a higher rental income and fewer headaches for the landlord!
3. Less maintenance: Unlike new homes that require little maintenance, owners of second-hand properties are often faced with immediate maintenance issues. The costs of repair in older homes can significantly inflate ongoing expenses.
4. Warranty: As a purchaser of a new property you are protected for a number of years against major building defects by home warranty insurance, which all builders of new homes in Australia are required to carry.

Reasons to buy Old

1. Equity: There is little opportunity to add value to a new home, whereas the investment made in an old home can grow in the future should you choose to renovate or extend.
2. Affordable: Its often said that you get more house for less dollars buying a second-hand home than when buying a new one. For entry-level investors, old properties can have the advantage of an affordable price tag.
3. Unique appeal: Older homes often have great features that cant be replicated in new homes. A well-maintained period-style home, for example, will reap rewards in capital growth down the track.
4. Established sales history: Theres less guesswork in buying an established property because youll be able to trace back the propertys appreciation and find out how the suburb has performed. This can help give you the assurance you need that youre buying a good property.

While there is much disagreement about when the rate cut will happen and by how much, the majority agree the Reserve will at least keep rates on hold until the new year.

In a recent survey of 20 economists by the Australian Financial Review, the most popular prediction for the next six months is that the Reserve Bank will leave rates untouched (9 out of 20). Five said they expect rates to be cut by the end of the year, while five tip rates to rise over the next six months.

The Reserve Banks next move is anyones guess, but the progression of Europes debt crisis and Americas economic slowdown may have a part to play. In the meantime a number of lenders are cutting their fixed mortgage rates, so if you are considering taking advantage of the lower rates on offer, call us and we would be happy to talk you through the process.

The recent introduction of the National Consumer Credit Protection Act has strengthened the brokers role as an advisor. Under the Act it is a legal requirement to consider the clients financial position and undertake a detailed analysis of which products best suit the individual needs of the client.

Brokers as an industry are shifting increasingly towards an advice-based service. This means that instead of simply offering a selection of home loans from which you can pick, we are offering advice about the different products so that your decision will be an informed one. There are so many products and loan features to choose from that it helps to have an expert on your side to explain the benefits and drawbacks of each product.

Using a mortgage broker can even make the difference between having your finance declined or approved. This is because we know so much about the lenders different products, loan criteria, borrowing calculators and application systems that we can steer you towards a lender that best suits your situation.

Part of our service is to make sure we are in contact with you on a regular basis, keeping you informed and saving you the time and frustration of chasing up the progress of your loan application. Down the track you may have a query about a change in your home loan or banking statement, and you can be certain we are here and happy to take your call.

Our role is to understand what is important to you, as our client, and then do everything we can to ensure we not only meet your needs, wants and values, but exceed them. Its a step above what you could expect if you go direct to a bank!

Source: Genworth Homebuyer Confidence Index and QBE LMI ImiBAROMETER Report 2011

Interest rate stability, an increase in rents and a lull in house values has given buyers the confidence they need to enter the market. While first home buyers face a tougher economic environment than last year, a growing number have decided not to let this stand in their way.

You too can fulfill your dreams of home ownership and join the ranks of first home buyers. Heres how.

Build knowledge

The more knowledge you build about something, the less fear you have of it. Its the same for buying your first home: it may seem daunting at first, but the more you educate yourself about the process the less difficult it seems. Use the internet, your mortgage broker, your local real estate and any experience friends and family may have, to find out as much information as you can about the property market remember a little knowledge goes a long way!

Be resilient

Know what you are getting yourself into and be equipped to handle a change in circumstance. If interest rates rise, for example, be prepared to adapt your lifestyle to suit higher mortgage repayments.

Use professionals

You dont need to go it alone when there are experienced people to turn to for guidance and advice. The QBE LMI lmiBAROMETER Report found that 41 per cent of first home buyers will use a mortgage broker to help them find the best home loan deal. Seeking professional advice can help you feel a lot more relaxed about the whole home buying process turn to page 4 to find out why it makes sense to use a mortgage broker.

Accept help

Accept that you may need some financial assistance to get your deposit together, which in many cases comes in the form of lenders mortgage insurance (LMI). It is estimated that five out of ten borrowers will require LMI if they are to enter the market without it you may have to wait for years to save the funds needed to get a 20 per cent deposit and by this time, house prices may have risen beyond your reach.

The number one advantage of investing in residential property is its potential for long-term capital growth. Well-located property has consistently doubled in value every seven to ten years, and historically has provided rental yields of around 5% per annum. This equates to a gross return of around 15 per cent per year on a well-purchased investment property.

By comparison, if you decide to simply build savings in the bank for retirement you may find that any gains you make are eroded by inflation and tax. Investing in shares puts you at the mercy of stock market fluctuations and could end in success or spectacular failure (as has been witnessed in recent times).

Once you have made the step to invest in your first property, the gains you make can be used to secure another high growth property. Similarly the gains from these two investment properties can then be used to acquire further property a portfolio of two to three investment properties held for 15-20 years provides the perfect income stream and source of capital growth to enable you to comfortably see out your retirement.

If you are concerned about the costs involved in owning property, keep in mind that the rent from tenants pays the interest on your home loan. Also any costs that are greater than the income generated are tax deductible as expenses.

Self-Managed Super Funds

With the advent of Self-Managed Super Funds (SMSFs), it is possible to enter the property market later and still reap the benefits. In September 2007 the Federal Government changed superannuation legislation so that SMSFs could borrow assets, including investment properties. There are significant tax gains to be made when borrowing through an SMSF to invest in property, including:
Rent taxed at a concessional rate of 15%
Interest costs fully deductible to the SMSF
Capital gains tax is only 10% - or zero if the property is sold in retirement

You should seek professional advice when setting up your SMSF to ensure it meets the requirements of the Superannuation Act and Australian Taxation Office.

Many of us put off planning for retirement, hoping that it will sort itself out or that our super contributions and super growth will be enough. The sad truth is that superannuation can no longer be relied on as a sole source of funds, and its now while you are still working and have equity in your home that you are in the best position to optimise your financial security through property investment.

Over 90 per cent of Generation Y (those born between 1979 and 1990) has indicated that owning a home is a higher priority than buying the latest gadgets or fashion accessories.

Commonly perceived as a materialistic and consumer-orientated generation, their willingness to part with brands and luxuries to buy a home comes as a surprise to many.

The realestate.com.au Housing Affordability Sentiment Index (HASI) tracks the sentiment of Australians concerning housing affordability, and mortgage repayments and how many are willing to sacrifice in order to enter the housing market.

It found the top four sacrifices Generation Y were planning to make (or are already making) to enter the property market were: eating out less and cutting back on takeaway food (65%), cutting back on general day-to-day spending (64%), missing out on a holiday (47%) and cutting back on alcohol related spending (40%).

The HASI report also highlighted that Australians are prepared to spend less on discretionary purchases like brands and luxuries, entertainment and recreation and the upgrade of their car in order to purchase a home.

How much or how little you do is up to you but every improvement benefits your family, your hip pocket and the environment.

Heres how to make a start:

Be energy efficient with appliances

Appliances can account for up to 30 per cent of your home energy use and can have a big impact on your electricity bill. Washing your clothes in hot water instead of cold, for example, can increase the cost of washing by up to four times. Using a tumble dryer and operating a washing machine on half load are other common energy wasters.

When replacing an existing appliance, take note of its Energy Rating Label. The running cost of the appliance will impact on your energy bill for years to come - that old beer fridge in the garage could be costing you hundreds each year.

Turn off standby

The standby mode that allows computers and home entertainment devices to turn on quickly is a common hidden cost of electricity because it can chew a lot of energy even when the appliance isnt turned on. You could save up to 10 per cent of your energy bill by turning appliances off at the wall.

Plug air leaks

Make sure your homes doors and windows dont have air leaks around them. Even if your home is well-insulated, heated or cooled air can leak in and out through gaps and cracks. Cutting down on draughts can save up to 25 per cent of your heating and cooling bills.

Be smart with lighting

Get into the habit of switching off lights when you leave a room and use only as much light as you need. Motion sensors and intelligent lighting systems are a great way to automatically program lights to switch on and off as needed.

Motivated to make a start towards a greener home? Check out www.livinggreener.gov.au for ideas and inspiration to keep you going.

Create a budget

Dont groan at the mention of budget it really is one of the most effective tools for keeping your finances under control because it helps you to set goals and find ways to meet them.

To put together a budget, make a list of all your fixed monthly expenses (home loan, insurance, utility bills, debt repayments, transportation) and compare it against your income. Use one of the free budget planners on the internet to make the job easier.

Track your spending

The process of writing down what you spend over the course of a week or month is a great way to make you more conscious of where it all goes. There are web sites and iPhone apps you can use to plug in an expense as it occurs, effectively updating your budget on the run.

Cut Back

When you see your expenses listed in front of you, it often comes as a shock to realize how much money you waste in an average week.

If your outgoings equal more than your income, you need to look at where you can cut back your spending. Its not as hard as it sounds to cut back on lifestyle wants if you look at the big picture of how much you will save over the course of a month, six months or a year.

Revise

A budget is of no use if its out of date so ensure you revise it once a month and then every three months after that. Revising will help you tighten or loosen up your budget according to your needs, as well as put a stop to any unnecessary costs.

Sourcing income

If you look at all your expenses and find there are none you can do without, you might decide that finding other ways to boost your income is a preferable alternative. Be creative and resourceful many people have made additional income by taking on a second job, setting up an internet business, selling on eBay or buying an investment property.

1. Switch to weekly/fortnightly repayments

Pay fortnightly or weekly instead of monthly. Mortgage interest is usually calculated on a daily basis so the more frequently you pay, the more you will save, even if you are not paying any more than you did previously.

2. Make extra repayments

Extra funds have the immediate effect of reducing the loan balance. Every dollar you put on your repayments will reduce the principal and therefore the interest payable next repayment. This saving then compounds, making a significant impact over the life of your loan. Your loans redraw facility offers an easy and efficient way to apply these additional payments.

3. Open an offset account

Have your salary paid into an offset account, which is linked to your loan account, and allows you to use your savings account balance to reduce the amount owed towards your loan. The balance is deducted from your loan account before the interest on your home loan is calculated which means less interest is charged to your loan. As your mortgage broker we can explain the pros and cons of offset accounts or similar products like line of credit.

4. Align your salary and home loan payments

Align your loan repayment period with your salary payment date in order to maximise the amount you have available to pay onto your home loan.

5. Pay your salary into your home loan

An all-in-one loan account allows you to pay your salary directly into your loan, which reduces the principal amount owing and thereby the amount of interest charged. It acts as a combined mortgage, savings and cheque account, allowing you to access the funds you have left over and above the minimum monthly repayment amount to pay monthly expenses. All-in-one accounts often have higher interest rates than some other products so speak to us about their suitability for your individual circumstances.

6. Cut expenses

List your regular weekly/monthly expenses and find a few that you can remove. Put the savings towards your home loan remember that every dollar counts.

7. Keep repayments up if interest rates fall

When interest rates fall, resist the temptation to reduce your monthly repayments. Maintaining the same repayments is a simple way of helping to pay down your loan.

Flat is a stage in the housing market where little or no growth occurs and there is slightly more supply than demand. Buyers tend to be cautious and sellers tend to hold on to unrealistic price expectations.

Buyers

The biggest message for buyers in a flat market is not to be scared away, because market conditions actually favour the buyer. Its a great time for negotiating a deal because there are fewer buyers, more properties and less competition. While some sellers are unwilling to accept their homes value has dropped, others are prepared to make a deal to get a sale.

Its also a good time to buy an investment property because rents are driven up as people hold off buying and continue renting.

Sellers

For sellers, the message is to keep your price expectations realistic and focus on how best to present your home. You need to ensure your home competes well in the marketplace and stands out against other similar homes for sale in your area.

Traders

You are in the winning seat if you can manage to buy and sell at the same time. A flat market can be the best time to trade up because you may be able to afford a home that was previously just out of your reach.

The Senate economics committee inquiry into competition in the banking sector has advised that the ban on exit fees may result in less competition and higher upfront fees. It suggests that instead of an immediate ban, new consumer protection provisions should be given a chance to work.

The exit fee ban was originally meant to apply to loans taken up after 1 July 2011 and wasnt going to include existing home loans, fixed rate mortgages or discharge fees. The aim of the ban had been to increase competition between the big four banks, but this has always been hotly contested.

While the debate continues about the pros and cons of removing exit fees, keep in mind that these fees actually make up a very small proportion of the 25-year cost of a home loan and it is still interest rates that really dictate how much your loan will cost over the long term.

For this reason it pays to do your research to find out whether your current loan provides the best choice or whether by switching to another product you can achieve savings.

More than ever mortgage brokers will play an important role in analysing the options that best suit your individual set of circumstances. We can inform you of the current state of the market and help steer you through the confusion of comparing multiple home loan products.

Start by keeping a time-diary to monitor where the hours in the day actually go. You can then decide if this is the best way for you to spend your time, and develop a set of priorities that will allow you to postpone unimportant tasks and delegate others. There will always be tasks that cannot be delegated, but if you look you can usually find opportunities to ease up your daily routine.

Put your health and happiness first with these four strategies for achieving a successful work life balance.

1. Work smarter not harder

Ask yourself whether you are doing things in the quickest, most efficient manner? Once you have worked out what tasks you can delegate and what you can't, consider how to go about working smarter, not harder. 'Smart strategies' include prioritising your workload, using technology, asking for help and setting yourself time limits and boundaries.

2. Be tech savvy

Don't neglect the convenience of technology, whether it's paying bills online or using apps on your iPod. It might seem daunting or time consuming to take on new technology but investing the effort up-front is worth the time-savings it will bring you down the track.

3. No screen time

Take plenty of 'no screen' time during evenings and weekends - with no emails, internet, phones or laptop. To prevent work spilling over to your personal life you need to set boundaries with staff and colleagues so they know when they can and can't contact you.

4. Schedule hobbies

Chances are you will never get around to your hobbies and interests if you don't schedule them into your day. Whether it's attending a gym class or learning a language, you need to put aside the time and treat it as you would any other important commitment.

1. Be clear on your budget

Know how much you can afford to spend before you begin your search. It's not just the up-front costs of buying the property but also knowing how to manage the mortgage repayments and plan for any unforeseeable changes to lifestyle or income.

Make an appointment with us to talk through these issues and have your finance pre-approved. Pre-approval is recommended because it gives you a realistic budget to go house hunting with and it ensures you are treated as a serious buyer by agents.

2. Save a good deposit

The bigger the better when it comes to the deposit. A decent deposit will give you more loans to choose from and even the offer of a lower interest rate because there is less risk for the lender.

The greater the deposit, the less you'll have to borrow, which means less in interest over the lifetime of the loan and the lower your repayments will be over a set term.

3. Know the hidden costs

When planning your budget you need to factor in all the expenses included in purchasing a property. As well as the deposit, you may need stamp duty, inspections, insurance, legal expenses, valuations and title search fees.

4. Put away your emotions

It's easy to be led by emotion when buying property, but do your best to make sure your decision is made by your head not your heart. It helps to conduct plenty of research and ask lots of hard questions.

5. Engage professionals

Buying a property can be a complex experience and good advice can help ensure you don't make any costly mistakes. As your mortgage broker we can start the ball rolling in applying for a home loan and advise you of the steps involved in closing the deal.

6. Arrange inspections

If you're serious about a property, it's wise to conduct a building and pest inspection. Make sure the person inspecting the home is qualified to do so, such as a licensed builder, architect or surveyor.

7. Seek government assistance

There are various forms of government assistance for first home buyers, such as the First Home Owner Grant. Depending on the state you're in, there may be other forms of assistance like tax and stamp duty concessions. For more information, please contact us.

1. Open an offset account

A mortgage offset account allows you to minimise your tax on interest earned on savings. It is an account that is tied to your loan account and allows you to use your saving account balance to reduce the amount owed towards your loan.

The interest earned on your savings is put towards the amount payable on the loan, enabling you to reduce how much you owe by cutting the time it takes to pay off your home loan.

There are two types of offset accounts: a 100% offset and a partial offset. A 100% offset means that the same interest is earned in the savings account as is paid in the mortgage account, whereas a partial offset means that a lower interest is earned than is paid.

Contact us to find out more about opening an offset account.

2. Consider salary sacrificing

There are tax advantages in salary sacrificing items instead of purchasing them yourself. Under a salary sacrifice arrangement (also known as salary packaging), you agree to forgo part of your future entitlement to salary or wages in return for your employer providing you with benefits of a similar value. The type of benefits might include cars, property, home loan repayments, superannuation, mobile phones, computers and child care fees.

You only pay income tax on your reduced salary, but you receive the reduced salary plus the benefits. You can also make employee contributions out of your after-tax income towards the cost of the benefits and reduce any reportable fringe benefits tax.

To be eligible, first check with your employer regarding their fringe benefit tax policy and items you can salary package as there may be existing policies in place.

3. Check your deductions

Make sure you are claiming all the deductions you can for your specific occupation. There's a useful guide on the ATO website that shows allowable deductions for 20 different occupations. Go to www.ato.gov.au and search for 'deductions you may be able to claim'.

4. Claim income insurance

The ATO allows you to claim income protection insurance as a work-related expense. It is insurance worth considering for anyone in the workforce as it pays a portion of your salary for a while if you're temporarily unable to work because of sickness or injury.

The federal government's ban on exit fees was passed into law on 23 March and will apply to loans taken up after 1 July 2011. The change won't include existing home loans, fixed rate mortgages or discharge fees.

While the removal of exit fees may not provide sufficient reason alone to switch mortgages, it may prompt consumers to shop around for what else is available in the marketplace. When it comes to refinancing to consolidate debt, purchase an investment property, find a home, undertake renovations or minimise mortgage repayments, consumers now have the flexibility to find a product to suit their changing needs.

Keep in mind that exit fees actually make up a very small proportion of the 25-year cost of a home loan and it is still interest rates that really dictate how much your loan will cost over the long term.

For this reason it pays to do your research and not be too influenced by the abolition of exit fees. More than ever mortgage brokers will play an important role in analysing the options that best suit your individual set of circumstances.

It may be that your current loan provides the best choice or that by switching to another product you can achieve savings. Whichever the case we can inform you of the current state of the market and help steer you through the confusion of comparing multiple home loan products.

According to this year's Australian Property Outlook Report by First National Real Estate, even though growth rates won't be as spectacular as they have been in previous years, property is still offering substantial returns and will lure investors back in large numbers.

The report states that throughout 2011 the property market will continue to be supported by strong economic fundamentals such as strong population growth, low levels of unemployment and buoyant consumer and business confidence.

"Some markets may still be flat, but growth will occur, although at more moderate rates than in 2009 and 2010."

"In general, the market is anticipated to gather strength in metropolitan markets in the first half of the year, with improved confidence spilling over to regional markets in the second half."

A First National poll of its 450 agents showed 63 percent expect an increase in investor activity throughout the year as a result of improved returns and increased confidence.

Contributing to the positive outlook are the predictions by many economists of interest rate stability during the first half of 2011. It is expected that the RBA will take a cautious approach as it examines the impact of the floods on the economy as Australia struggles to get its fresh fruit and vegetable industry back on track.

1. Wear your business hat

Treat the management of your property as a business not a hobby. Start with a business plan and organise your operations professionally, with separate bank accounts and a bookkeeping system. Surround yourself with people that can help you make the right decisions like a good accountant and property manager.

2. Screen your tenant

You might be anxious to get a paying tenant into your property but don't be tempted to race ahead without first checking their credentials. Follow up on referees, past property managers and all the details provided by the applicant. Be familiar with your state's laws regarding leases and ensure that you use an appropriate lease form for your state.

3. Prepare for repairs

Attempting to save money by skimping on repairs and maintenance will only end up costing you more and risking legal liability in the long run. Conducting repairs quickly and keeping the property in good condition will improve the value of your asset and keep your tenants happy (and paying!).

4. Rainy day funds

Although you hope your property will always be rented, you need to be financially prepared for a worst case scenario of months with no tenant paying rent. Before closing on a property ensure you have done a cash flow analysis to show you can cover mortgage repayments for this or other unforseen problems like interest rate rises, the need for major repairs or an unexpected drop in your income. Whether it's 'cash in bank' or a line of credit on your home loan (contact your mortgage broker for more information), you need to know you have sufficient funds to manage these situations.

5. Know your tax

Find an accountant who understands property and can structure your business affairs to maximise your personal tax situation. Be familiar with what is tax-effective and what is not. A depreciation schedule for example can save you thousands of dollars in tax, by enabling you to depreciate items and claim a tax deduction against your taxable income.

6. Take immediate action

Don't delay taking action when tenants don't pay rent or continually slip behind - you want to send a strong message that you have a business to run. Make sure you follow the step-by-step eviction process required under Tenancy Law.

7. Manage your risk

As outlined in the 'Are you Insured?' article below, landlord protection insurance is an important part of successfully managing your investment.

The devastation sends a strong message about the importance of insurance, whether it's for your home, business, motor vehicle or investment property. Not only is it important for your assets to be insured, but also that they are insured at an adequate level and that you are familiar with the terms and conditions of your policy.

It has been estimated that around 70% of Australian homes are under-insured*, which means that the value home owners have insured their home for is too low to actually replace it if it is damaged or destroyed.

To avoid under-insuring your home it is important to understand your policy - is it for a fixed sum-insured, a sum-insured plus margins for increased costs, or a total replacement policy? Each year before you renew your policy, adjust your cover to take into account the household items and possessions you have purchased over the year or any renovations you have done.

Here's an overview of some of the main types of insurance you might want to consider and what each can offer.

Building and contents insurance

The price and scope of these policies vary widely but their general purpose is to provide replacement of your property and its contents in the event of a threat like theft, fire, vandalism, storm or flood.

It is common practice to bundle the building and contents together but you can obtain separate policies for either.

Landlords insurance

This insurance covers for the specific risks of owning a rental property that are not usually included in a standard building and contents policy. Commonly this includes malicious damage by tenants, accidental damage, legal liability and loss of rental income.

Motor vehicle insurance

It's not only when you prang your car that you might need motor vehicle insurance, as many policies will also cover you for fire, storm, theft and malicious or accidental damage.

Life Insurance

Life insurance looks after your family financially if you're no longer there to provide for them, commonly in the form of a benefit to take care of everyday expenses.

Mortgage insurance

Should you suffer an illness, injury or involuntary redundancy, mortgage insurance will cover your mortgage repayments for a prolonged period. The amount of cover is determined by the amount of your loan and loan repayments.

*Australian Securities and Investment Commission, 2005

Last year's trend of solid employment growth is expected to continue this year, with the following five industries believed to lead the charge. Business information analysts, IBISWorld, predict these are the industries expected to demonstrate the strongest employment and wages growth in the years 2011 to 2016.

Child care services

Child care is one sector expected to experience the greatest employment growth as new regulations aimed at boosting staff-to-child ratios and greater child care worker qualification levels create increased demand for skilled workers and force wages up.

Veterinary services

Running a close second to looking after our children comes looking after our 'four-legged' friends. People are spending increasingly more on their pets, which has led a growth in a wide range of services to pets such as chiropractics, ophthalmology, dentistry and dermatology. Both veterinarians and veterinary nurses are in high demand as pet owners do everything they can to increase the longevity of their pets.

Integrated logistics

This is the name given to the industry that transports, stores and distributes goods into, out of and throughout Australia. Limited tertiary courses in this field and growth in international trade has created vast integrated logistics networks that are facing a shortage of highly skilled and well-trained logistics managers.

Health

Our ageing population is driving employment growth in the health sector, with ongoing demand for qualified surgeons, anaesthetists, occupational therapists, medical technicians, radiologists, paediatricians and ambulance officers. Allied health professionals such as physiotherapists will also enjoy strong demand as their services becoming increasingly popular with the elderly.

Finance

The finance sector has made a comeback since the economic downturn and IBISWorld expects growing household wealth, more funds under management and the provision of an increasing array of financial services and products. With the return of investors to the market, the big winner in finance is the securitisation industry, which is expected to experience both employment and wage growth. Other growth areas include mortgage broking, foreign banking and superannuation funds management.

City vs. country

When employment growth is combined with population growth in a certain areas, these areas often become property 'hotspots'. While these hotspots are commonly found in city suburbs, property investors are increasingly considering regional areas, particularly if sustainable job opportunities are available. With the Federal Government poised to spend billions in the bush thanks to the influence of the independents, rural areas may well provide increased job growth in the future.

Shop around for an agent

Talk to at least three real estate agents and compare their commissions, other fees, marketing plans and track records of selling in your suburb (ask them to provide evidence). When interviewing potential auctioneers, ask them for a breakdown of how they intend to advertise your house and their personal preferences regarding the auction process.

Read the fine print

Don't sign an agency agreement until you understand what it means for you in terms of cost and what the agent is committing to do for you. Once you sign the agreement it is legally binding and the auctioneer has no obligation to let you out of the agreement if you are unhappy with the service provided.

Push for promotion

Work out an appropriate advertising budget to ensure your property is widely advertised. Allow your agent to arrange as many inspections as possible - remember not all buyers are available for a weekend open house.

Set a realistic reserve

You have the right to set the reserve price, below which the auctioneer is not permitted to sell. Keep watch in your local area for sales of similar properties and take note of the sale prices to get an idea of how much your property could be worth. With interest rates up and clearance rates down (see box), you may need to be prepared to lower your expectations about how much your home will sell for.

Create street appeal

If a property doesn't look good from the outside, many buyers won't even bother looking inside. Small improvements like a tidy garden and cobweb-free exterior can make all the difference.

Freshen up

Cleaning your home for open house doesn't just mean a once over with the vacuum, it means a thorough spring clean. Pay extra attention to bathrooms and kitchens, as well as taking care of any minor repairs like broken taps or chipped paint. De-clutter your home of personal items and excess furniture - the trick is to give your home enough visual appeal for a buyer to imagine themselves living there.

Have a back up

Decide on a plan if the auction is unsuccessful. If negotiations with the highest bidder don't turn out, you may need to consider a second marketing campaign focused on a private sale either with the same or another agent

The obvious answer is to make sure it looks good, but this is not the only selling strategy that counts. Take a look at our top six tips for attracting a sale.

First impressions last

Buyers often judge properties within 10 seconds of looking at the photographs, so ensure the marketing photographs of your home do it justice. You're better off having a few good quality photos that will attract buyers to an inspection, rather than masses of pixellated images of every room in the house.

Watch your advertising dollar

You don't need to spend a fortune marketing your property through pricey brochures or colourful advertisements, but you do need to ensure your property is exposed in mediums where your real estate agent knows the buyers are. If your agent services the area your property is located in, they should have a good knowledge of where their buyers come from.

Look for negotiation skills

When choosing an agent, look for a good negotiator. The negotiation skill of the agent has to be better than that of the buyer if you want to secure a good price for your property. Take the time to interview agents and be ready with a list of questions to ask that will help identify the skilled negotiators from the unskilled.

Be realistic with price

If your price is not reflective of the current market, you run the risk of not selling the property and wasting the money you have spent on the marketing/advertising campaign. Research or ask your agent to talk you through the comparative market sales in your area and set a price that is realistic and takes into account supply and demand. By not pricing yourself out of the market you are more likely to generate interest and an offer that you can work with until you are happy.

Clean & de-clutter

Make your property look comfortable and tidy without having too many personal things on display. Choose what you can put in storage or give-away that will help you de-clutter the feel of your home.

Repair within reason

There's no doubt that a well-presented property works in your favour, so be sure to do what you can to spruce it up without over-spending. Minor repairs and maintenance like fixing cracked glass and broken lights, cleaning windows and steaming carpets will add value to the property, but be wary of large investments in last-minute renovations that you may never recoup your money on.

The number one benefit is that you will have access to a broader choice of home loan options from a great variety of lenders. When assessing a loan application, lenders look at factors like employment history, income, loan amount and deposit as they want to know whether you can pay back your loan on time. A higher deposit helps in the lender's assessment of your application because it demonstrates your ability to manage and control your finances.

LVR

As a response to the global economic crisis, many lenders have tightened their lending criteria and are increasingly reluctant to provide access to high Loan Valuation Ratio (LVR) loans.

In layman's terms, LVR is the amount you are borrowing represented as a percentage of the value of the property being used as security for the loan. The higher the LVR, the higher the risk is to the lender.

The LVR that you can borrow is dependent on the loan amount you are wishing to take, the location of your property, your credit history and the type of loan you are applying for. Low doc applicants (no income evidence) can generally borrow up to 60 per cent LVR and up to 80 per cent LVR if your financial position is strong. Full doc applications (income evidence provided) can borrow up to 80 per cent LVR, or even up to 90 or 95 per cent if the lender deems you to be in a strong financial position.

LMI

The downside of an LVR over 80 per cent of the property value is that you will be charged Lenders Mortgage Insurance (LMI). This insurance protects the lender in case you default on your loan payments and the lender has to sell your property at a loss. It allows the lender to approve your loan without the risk of losing any of their money.

The best way to avoid the LMI expense is to save a deposit of 20 per cent or use another property as joint collateral. If neither option is available, make sure you know exactly how much LMI you will be paying before you go ahead with the loan. This is where your mortgage broker can be of great assistance in negotiating the best deal with the lender, as well as explaining the fine print and helping you fill out the paperwork.

Here are the answers to the most commonly asked questions by next time buyers.

Can I move my mortgage from one property to another?

The ability to transfer your home loan to another property without incurring exit or entry fees is known as portability and it is a common feature of the vast majority of loans. Portability is useful if you have your home loan set up just the way you like it and you sell your home and move into a new one before the mortgage is fully paid.

Portability cannot be used in all situations because it requires that exchange and settlement for both properties happen on the same day and at the same time. It is also better suited to situations where the loan amounts between the properties are the same - if you need extra funds you may have to make a new home loan application or pay additional fees on top of the increase in mortgage repayments.

Should I sell before I buy?

There are strong arguments both for and against either option. Selling first means that you don't have the financial pressure of supporting two loans until the second property is sold, but it also means you have to find interim accommodation for yourself and your belongings.

Buying before you sell allows for an easier move but you will need to obtain bridging finance to cover the gap between the sale of one property and the purchase of another. The interest rate on a bridging home loan is usually on par with a standard home loan interest rate, with a term of between 6 and 12 months.

Bridging loans can be complex and you need to be sure you understand the fine print and have the finances available to cover the cost. Your mortgage broker can help you choose the right kind of bridging loan for your needs.

Can I use the equity in my existing home as a deposit?

Yes, this is one of the advantages available to next time buyers. It is especially useful if you buy before you sell because it provides you with a low-cost solution to coming up with a deposit. Another option available is to use your redraw to access any extra repayments made on your existing home loan.

The latest BankWest/Mortgage and Finance Association Home Finance Index shows that three quarters of next-time buyers believe it is a good time to buy an investment property, a dramatic increase from the 14.5 per cent recorded during the midst of the credit crisis.

Next-time buyers are replacing first-time buyers, who initially flooded the market when house prices slipped during the economic downturn. Established home owners now see it as a good time to buy again due to a strong economy and confidence in the job market.

The rise in interest rates has not proved a deterrent because buyers are factoring rate rises into their loan structure and decision-making process. Many economists now predict interest rates will remain on hold now until towards the end of 2010.

Buying second time around has its advantages - the wisdom of experience and the ability to use the equity in your existing property - but it also has its unique challenges and this is where your mortgage broker comes into play. Not only can we advise you of your loan options but we can also help you shop around to find the best loan for your circumstance.

Take a long term view

Take advantage of the cyclical booms that occur in property by planning to keep your investment for the long term. Be prepared for the highs and lows by making sure you have realistic financial goals and are comfortable with how much you are borrowing.

Do your homework

Obtaining as much market information as possible about the property will help you make an objective decision. Research the capital growth history of the area and the potential rental income of the property (real estate agents and property research companies are a good starting point).

Maintaining a good occupancy rate is crucial to your investment success, which means it is important to invest in an area with rental appeal, close to transport, schools and shops. A well-maintained, appealing property in good condition and in the right area should not be vacant for long periods, if at all.

Calculate your net return

The net return is the figure you need to know about in order to understand how your investment is travelling. A quick way to calculate it is to determine the gross rental return and then deduct 25 per cent for outgoings such as maintenance, rates and insurance. While rents won't rise quickly, the cost of the investment can fluctuate dramatically, affecting your net return.

If your loan repayments, fees and other costs exceed your rental income you can negative gear your property. This means that its net loss can be offset against other income you earn, reducing the amount of tax payable on your other income.

Make use of equity

You might feel reluctant to use the equity in your home to buy an investment property, but it can be an ideal ready-made 'deposit' that reduces your reliance on savings. You can use the equity in your home or another investment property to buy a property without having to find any cash, even for the costs associated with the purchase.

A good tip is to revalue your property every year so that you can use your additional equity to negotiate a larger loan that you can reinvest in another rental property.

For more advice on property investments, including how to secure the right loan, give us a call today.

Income Tax Rates

From 1 July 2009, the 30 per cent income tax threshold for individuals was increased from $34,001 to $35,001 and the 40 per cent tax rate was reduced to 38 per cent.

From 1 July 2010, the 30 per cent threshold will be increased again to $37,001, and the 40 per cent tax rate will be reduced to 37 per cent. The top marginal rate remains at 45 per cent. If you have an investment property, the income derived from your property is taxed at the individual tax rate unless the property is part of a company (then the company owns the property and not the individual). Your tax liability can be reduced by claiming the costs incurred in earning an income from your rental property.

Deductable expenses

Many tax payers forget they are entitled to claim for deductions like motor vehicle expenses, clothing, telephone costs, tax agents, gifts and donations. Currently $300 can be claimed for work related expenses or the cost of managing tax affairs without needing documentation and this will be increase to $500 effective 1 July 2012. (Expenses above this amount must be substantiated with receipts).

The claimable expenses on your rental property include: advertising for tenants, bank charges, body corporate fees, council rates, decline in value of depreciating assets, gardening, insurance, legal expenses, pest control, maintenance, stationery, phone and water charges.

Superannuation changes

The ability for a super fund to borrow money to invest was introduced in September 2007. The good news is that it is now possible to "gear" your superannuation savings, and thereby gaining exposure to an asset that your fund would not otherwise have been able to afford.

From 1 July 2009, the concessional superannuation contribution cap was halved, which means you can now only contribute $25,000 to super from before-tax earnings.

As announced in the 2010-2011 Federal Budget, From 1 July 2012, if you are aged 50 and over with a super balance of less than $500,000 the concessional super cap will be maintained at the $50,000 level.

Education refund

If you have school age children, be sure you take advantage of the education tax refund, which entitles you to claim 50% of eligible education expenses up to the maximum claimable amounts. Refer to www.educationtaxrefund.gov.au for details.

According to the Westpac ASFA Retirement Standard, a retired couple needs to earn more than $51,727 per year to live 'comfortably' or more than $28,080 per year to live 'modestly'.

Investing in property is one way to help fund a comfortable retirement that allows you to pursue the interests, hobbies and activities of your choosing.

Here are 5 strategies for successfully using property investment to build wealth for retirement.

1. Think long term

Retirement strategies are all about investing money wisely over many years, building wealth through compound interest and re-investment. Think long term and have a realistic game plan that has built in buffers to ensure you remain in a comfortable position in future years.

2. Aim for capital gains

It is the capital gains that make property investing so attractive for retirement, so buy your property with capital growth in mind. This means choosing a home with resale potential that is of maximum appeal to tenants. Property experts often recommend new-built family homes because they usually have fewer maintenance costs, are attractive to the ideal tenant, and are tax effective for the investor.

3. Diversify

Property should play a big part in your investment portfolio but avoid putting all your eggs in the one basket. Diversify and spread your risk among a number of different sectors including property, shares or managed funds.

4. Consider taxation laws

Rental income may be taxed at a higher rate than superannuation unless you set up your own super fund and acquire property via your fund. Seek expert advice to best understand taxation laws and make the most of superannuation concessions.

5. Start now

It's never too soon to begin planning for your future. While you are still working and have equity in your home, now is the time to use property investment as a way to optimise your financial security for the time when you plan to put your feet up!

Data recently released by the Australian Bureau of Statistics shows the floor area of freestanding houses (a measure of the useable space) has also reached a record high at 248 square metres, making Australian houses 10 per cent larger than a decade ago.

Over time the typical house has evolved from having three bedrooms, one bathroom and separate living areas into a more open plan layout, a fourth bedroom and ensuite facilities. Around 20 years ago only one in every six homes had four or more bedrooms. By 2006 it was one in every 3.5 homes.

Popular extras like home theatres, family rooms, studies and walk-in wardrobes and pantries all contribute to the modern home's expansion.

Sydney's homes are by far the nation's biggest, with new free-standing houses typically spanning 269.5 square metres, giving each occupant an average of 100 square metres of personal space.

By contrast, the size of the average US home fell from 212 square metres before the financial crisis to 202 square metres in September. In the rest of the world, homes are much smaller still. Denmark tops the ranking for homes in Europe at 137 square metres and Britain the smallest at 76 square metres.

Does size really matter?

The trend is towards bigger homes, but size is only one factor to consider when buying or investing in property. As your mortgage broker we can advise you on the steps to take when buying a new home, such as the following key considerations.

Finances: decide how much you can afford and what you can afford to spend. A large home can give you the extra space you've always wanted but it will cost you more to maintain, furnish and decorate.

Priorities: Consider what is important to you - does the size of the home have a higher priority to the home's access to schools and shops, its proximity to your work, its backyard, privacy or views?

Location: Location is the number one rule in real estate. You can change almost any imperfection in a home but, once bought, you cannot change your home's location. Think about your target neighbourhood - is it close to services and transportation? What are the property values like in the area?

Should you suffer an illness or injury, Mortgage Protection Insurance will cover your mortgage repayments for a prolonged period, allowing you to concentrate on getting better or re-entering the workforce.

Your mortgage is paid out in the event of death or permanent disability. The amount of cover is determined by the amount of your loan and loan repayments, and you generally have the choice of opting to cover the loan amount either in the event of death or inability to work, or both.

Keep in mind that mortgage protection insurance will provide protection for your mortgage, but you will need to also take out life insurance and/or income protection to cover yourself against other financial commitments like ongoing income and medical expenses.

Some insurance companies have mortgage protection insurance policies available to cover your mortgage for a certain period if you are made redundant, but these are hard to find and can be expensive.

When you consider that mortgages usually extend to 20 years or more, it is a long period of time to not suffer a brush with illness or injury. Having these insurances in place gives you the peace of mind of not needing to worry about the prospect of losing your family home.

Is mortgage insurance similar to lenders mortgage insurance?

Don't confuse mortgage protection insurance with lenders mortgage insurance (LMI) - they are two very different products. One is mortgage protection for the borrower, while LMI protects the lender in case the borrower defaults on their loan.

LMI is a requirement by lenders where borrowers don't have a deposit of more than 20 per cent for the property. It allows lenders to protect themselves against loss should a borrower default on their loan and the money raised from selling the house fails to cover the debt. If this happens, the lender is entitled to make an insurance claim to the LMI provider for the amount outstanding.

What's in the fine print?

When taking out any mortgage related insurance, make sure you are comfortable with the details of the policy before you sign on the dotted line. Look for answers to questions like:

• How long will a claim be paid for?
• How long is the policy term?
• What are the eligibility criteria? (e.g., what illnesses does the policy cover)
• For what period do you have to wait before a benefit is paid?

It was found that in 94 metropolitan and regional suburbs, the monthly cost of rental outstrips the monthly mortgage repayment on both houses and units. This news has left many renters doing their sums to determine whether paying off a mortgage is actually cheaper than paying a landlord.

For those of us having this debate, there are some strong pluses that fall squarely on the side of buying your own home. Perhaps the strongest is that it gives your family an asset to call their own that can be passed down through generations or downsized tax-free to fund retirement.

Another great advantage is that the family home is not subject to capital gains tax. Unlike other assets such as shares, you don't have to pay any additional tax when you sell your home.

It's true that when you rent you don't have to spend money on the home's maintenance, but you do have to go through the landlord for permission to do simple things like hang pictures, replace a hot water system or own a pet. When you own a home it's under your control - your own little piece of Australia!

Ultimately the decision to buy your own home will be determined by your financial goals. It's important to make sure you can meet the monthly mortgage repayments, and this is where we can help - by tailoring a home loan suited to your lifestyle and financial position.

The truth is that risk is unavoidable, whether you express opinions, change jobs or undertake any activity where the outcome is not certain. Many of us have trouble facing risk for fear of exposing ourselves to discomfort or loss. By focusing on negatives we give ourselves a reason to avoid risk, allowing us to remain in our 'comfort zone', where nothing ever challenges so nothing can go wrong.

By trying to play it safe and keep the lows in check, we also rob ourselves of the opportunity to experience the highs. It is only by accepting life's challenges that we can grow and experience all the wonders that life has to offer - including owning a property!

The rules of risks

1. Clarify your goals
Write down your goals and the steps that are required to achieve them. Mark these steps on your calendar as a 'must do' and reward yourself each time you tick one off.

2. Improve the odds
Obtain as much information as possible to gain more control over the outcome. Know if you are getting a good deal by inspecting many properties in the suburb/s you want to buy into and documenting all relevant features. When you find a property you are serious about, ensure you organise a building and pest inspection.

3. Evaluate the alternatives
Sort out your choices by evaluating the pro's and con's of the situation. Consider possible alternatives that might provide a better solution.

4. Know yourself
Everyone's an expert when it comes to property, so it's important to be able to separate the good advice from the bad. Ask the right questions, use your own judgement and ensure that the action you take is in keeping with your finances, goals and priorities.

5. Leave your emotions at home
'Gut feelings' do not always lead to the best decisions if they are contrary to what your research, finances and common sense tell you. Lead with your head not your heart.

6. Make a commitment
Put yourself in the right 'head space' to stay motivated to achieve your end goal. The commitments and time constraints of daily life will always get in the way unless you tell yourself that you will find a way to make it happen.

A cash buffer gives you the security of having money on hand if your personal finances take a turn for the worse. A hike in interest rates, job change, car troubles or even health issues can leave you strapped for funds if you don't have savings to fall back on.

Where to start?

If your money just seems to disappear and you're not quite sure where it goes, start by keeping a record of how much you spend. Get yourself a notebook and every time you spend money, write it down - keep this up for at least a month or even longer until a clear pattern emerges.

Look through your spending record and decide what you're willing to cut-back or whether there is a cheaper alternative. Don't just focus on the big ticket items; sacrificing a small expense like a takeaway coffee or sandwich per week could save you up to $2,000 a year. Remember, every dollar you put away brings you a step closer to feeling more financially secure.

Where to put it?

If you have a loan with a redraw facility, putting extra money on your home loan is an effective buffer as you reduce the size of your loan now (and the interest charged over the length of the loan) but you can still redraw the excess payments if you need the cash.

A similar option is an offset, which works like a savings account connected to your home loan, where you deposit money into it and use it to pay off your bills and daily expenses.

With either option, adding the extra cash to your home loan allows, where possible, you to earn interest tax-free - as your savings reduce the interest payable on your loan.

Cash savings

If you want to build up cash savings, the simplest option is a high-yield savings account or term deposit. Locking your money away in a term-deposit will earn a higher interest rate than is offered with most saving accounts.

Share investments

With as little as $1,000 in your pocket you could get involved in a managed fund - allowing you to access certain investments at a fraction of the usual cost. While investing in a range of shares often involves large sums of money, managed funds allow you to share these costs with other members of the fund rather than having to pay the minimum investment fee on your own.

Since mortgage rates have dropped, nearly one in three suburban families continue to make more than the minimum required monthly home loan repayment*, a choice that will save years off their mortgage and thousands of dollars in interest.

Borrowers who are tempted to lower their repayments and put the money into a savings account should keep in mind that savings are taxable and paying off the mortgage is not.

If you are able to do without the additional funds, redraw and offset accounts offer a convenient place to store money that you can still access for a rainy day. For as long as you have extra funds in your mortgage you have the security of knowing you have a buffer to cope with hard times as well as the financial stability to weather any future interest rate rises.

What is a redraw facility?

It is a way of making additional repayments on your mortgage and then having access to this money again when you need it, such as for a new car or holiday.

Redraw is offered as a feature of most home loan products, with fees and conditions varying from one lender to the next.

What is an offset account?

It is a savings account that is connected to your home loan, where you deposit money into it and use it to pay off your bills and daily expenses. You don't earn interest on the money sitting in your offset account; instead the balance is offset against your mortgage amount.

Like redraw, offset accounts differ in their fees, terms and conditions. Some are fully offset (100%) while others are only partially offset and may be conditional on a minimum account balance or withdrawal amount.

As your mortgage broker we can advise you of the suitability of different lenders' redraw and offset accounts. Contact us to discuss the best option for your needs.

* May 2009 Mortgage Stress-O-Meter, Fujitsu Consulting.

It's a reversal of fortune that has put the smile back on the face of home owners across Australia. For those on variable home loan rates or fixed interest rates due to expire, the smiles are even wider as they are looking at savings over the long term that could run into the many thousands.

With home loan mortgage rates at their lowest in nearly 50 years, it makes sense to check on the health of your existing loan. Also keep in mind that as the property market continues to show signs of improvement, many lenders are discounting interest rates and offering more attractive products.

There are many reasons to consider refinancing, such as wanting a better deal, consolidating debt, freeing up equity or renovating your home. The decision to switch between fixed and variable rate home loans is a common reason for refinancing. It is always useful to seek advice in this area from our office. As there are some great deals to be had in the current climate of record low interest rates, we can work with you on finding the right loan options for your situation. With advertised fixed rates in the 5 per cent range there are offers available that we could only have dreamt about a year ago.

If you want a good indicator of what is happening with fixed rates, keep an eye on the movement of the 90-day bank bill swap rates. Unlike the variable rate, which is influenced predominately by Reserve Bank policy, fixed rates are influenced by speculations of investors in the wholesale money market. Lenders base their decisions on fixed rate pricing on bank bill swap rates, so when they drop, lenders start to follow suit.

As your mortgage broker we are both a reliable and up-to-date source for what is going on in the money markets. Talk to us and we can help you make an informed decision that will bring long term benefits. With the right loan you can make significant savings over the course of your loan. Keep an eye to the future, and what you save now can help with short term cash flow or give you the leverage you need for additional investments.

It is the wealth belt suburbs, where prices have risen strongly for the past four years, which are now the most affected by the economic downturn. Home prices in these suburbs have fallen steeply and experts predict they will continue to fall.

In a turnaround for the property market, it is the homes priced on the lower end of the scale that offer the best value for money and potential for strong capital growth.

RP Data's 2009 Property Pulse Report has highlighted that property hot spots are those with a reasonable price tag that are well serviced by public transport, arterial roads and amenities such as shopping, school and health care facilities.

With the economy on track for a serious slowdown, those of us who are reluctant to either buy or sell can take heart from the news that property prices and rents are expected to rise by the second half of this year.

The combination of low interest rates, softer property prices and government incentives are working to drive growth, especially among those buying for the first time. In fact, first home buyers now represent 22% of all residential property transactions, according to the ABS, and this figure is expected to increase as affordability improves.

Investors too are expected to be increasingly drawn into the market as mortgage holders begin to benefit from the lowest variable interest rates ever offered in Australia.

If you are in the market for a bargain, some property experts advise to strike now before property prices start to recover by mid to late 2009. Keep in mind that some areas - such as those close to transport, shops and entertainment - offer better opportunities than others. You want to be in a situation where no matter what, you don't suffer losses, which means you want investments that will provide growth. A bargain in an area that fails to produce any growth and has a low rental yield may be too costly to hold.

The survey, conducted by CPA Australia, has found that 94 percent of respondents agree getting good advice is the key to securing a successful home loan arrangement.

Choosing a home loan can be a daunting task and the survey showed that people turn to brokers when they are having difficulty sourcing a mortgage.

As your broker, we are here to help demystify the process of selecting a loan, as well as save you the time and effort of wading through the fine print of so many lenders. A recent survey by the Mortgage and Finance Association of Australia actually shows that the main reason people choose a broker (75.1% of respondents) is that they do all the leg work for you.

Survey respondents also chose brokers because they have a wide loan range (72%) and will help you get the right loan for your circumstance (63.7%). Brokers are cited as experts in their field (71.1%), and as such know the mortgage market inside and out.

It's true that we are able to provide you with expert advice regarding the options available to you. Our access to different loan products gives us the ability to source loans that most closely match your personal financial situation.

We can also provide the added advantage of a speedy application. Our close relationship with lenders enables us to get an answer faster, in most cases, than if you submitted the application yourself.

The personalised relationship that is built between broker and home buyer is another benefit of using our services. We are your single point of contact, so there's no waiting around at the bank or dealing with different staff every time you have an inquiry.

We are passionate about helping you through the complex lending maze to make the right financial choices. As your mortgage broker, we are here to meet your needs, both now and in the future.

As its name suggests, an interest-only loan is a type of loan in which you pay only the interest on the principle balance. This doesn't mean you will never pay the principle, it simply means that for a set term - usually 5, 10 or 15 years - you can make interest-only payments.

As you are only repaying the interest component, these loans have lower repayments than principle and interest loans. They offer most of the same features as standard loans and their interest rate is dependant on whether your loan is fixed or variable.

Interest-only loans are suitable for any number of applications - from buying a new home or refinancing an existing loan to paying for home renovations or obtaining bridging finance.

Reducing your loan commitments has the advantage of generating cash flow and freeing up your disposable income for other family commitments or alternative investment opportunities.

If you are looking at maximising the tax benefits of property investment you may want to consider taking an interest-only loan, as only the interest portion of your payment is tax deductible.

This type of loan also allows you to buy investment properties with a lower loan commitment. However, you need to consider the risk that the property could decrease in value over the interest only term.

During the interest-only years of the loan, the loan balance will not decrease unless you make additional payments towards the principle. This means at the end of the interest-only period you must repay the principle in full or refinance to another loan.

Keep in mind that interest-only loans require careful management, so are best suited to investors and borrowers with a good head for money. They should only ever be considered a short term option that can be used to your financial advantage.

Contact us if you wish to talk through the pros and cons to work out whether it's the right loan type for your situation.

A little common sense and restraint can go a long way towards creating a healthy financial situation. The solution lies in gaining control of your spending and finding an enjoyable lifestyle suited to your income rather than your dreams!

Make a budgetBudgeting is one of the most effective tools for keeping your finances under control.

Take advantage of the free budget planners on the internet and you'll soon see where you're spending your money, where you can cut back and how you can pay your debt off quicker.

Budgeting allows you to set yourself goals for how much you want to save and by when. The more realistic and measurable your goals, the more chance you'll stick to them!

Spend lessTo improve your net worth, you need money left over from your pay packet to save, invest or reduce debt. Find ways to keep money in your wallet by going back to the budget and trimming your spending (see 'Did You Know' below).

Pay off debtsThere is no point saving money in the bank while you have credit cards accruing interest. If you have money to spare, make more than your minimum credit card payment, prioritising the ones with the highest interest rates first.

Also consider rolling your credit card and personal debts into your home loan. By consolidating debt you reduce your short term interest payments, instead paying the debt off over a much longer term.

Go interest-only Switch all or part of your loan to interest-only. If you're struggling to meet repayments it is an effective strategy for cutting outgoings in the short term.

Extend term of loanExtending your loan term by reducing your repayments will also help with immediate cash flow problems. Again, it's an emergency measure because it equates to extra interest down the track.

Talk to your brokerIf you are taking on a new loan, we can help you shop around for the best deal with features that are going to suit your needs.

It also helps to talk to us when times are tough, as we can work together to find a way through your financial difficulty.

Did You Know?

There are many ways to stretch your daily dollar. Try these budget-saving ideas.

• Take your own lunch to work
• Buy a travel pass or join a car pool
• Buy your groceries in bulk and choose generic brand names or items on special
• Grow your own fruit and vegetables
• Do an energy audit of your home to identify areas you can save power
• Bundle your landline, mobile phone and internet plan with the one provider
• Cut back on eating out and buying takeaway
• Do your homework before filling up the car and find out what is the cheapest day and cheapest service station in your area

Unlike a standard loan where you start paying interest and payments at a fixed rate until repaid, a line of credit acts like a revolving credit card. In other words, you don't pay interest on the full loan; you only pay for what you have used and when the debt is repaid you still have access to the credit.

How does it work?

You have a predetermined credit limit that can be redrawn at any time. The funds can be accessed as and when you want through a variety of methods including credit card, cheque or EFTPOS.

Interest is much lower than that of credit cards and it is only charged on the amount drawn down. Some lines of credit have only the interest as the minimum payment, which can be helpful when finances are tight.

Repayments can be made in full or on a monthly basis and extra repayments can be made at any time.

How to use it well

Have your salary deposited into your line of credit account at the start of the month so it reduces the total balance of your mortgage for a short time. Put your monthly expenses on credit card and take advantage of the card's interest free period. Pay the credit card off in full at the end of the month or interest free period from the line of credit. Your salary is lowering your mortgage interest charged by sitting in the line of credit for the month.

How not to use it

Like any credit card account, line of credit loans require discipline to stay within your financial limits. Without careful financial management you could end up increasing your mortgage rather than reducing it, simply by drawing on more funds than you can afford.

To find out more about the pros and cons of this type of loan, give us a call and we would be happy to discuss it in more detail.

The changes provide an opportunity for a self managed super fund (SMSF) to borrow money to acquire a beneficial interest in an asset, i.e., property. Otherwise known as gearing, it is a wealth creation strategy that enables you to invest more money than you could if you had to rely solely on your own resources.

Prior to this reform, property could be purchased within a super fund but it usually had to be bought outright as the fund was not allowed to borrow a portion of the total cost. For this reason, many investors with self-managed super funds have up until now primarily focused on the share market or indirectly invested in property via property funds or trusts.

As its name suggests, a self-managed super fund gives you control of your super destiny, but its complex rules can be daunting to the uninitiated. Expert advice is necessary and will help facilitate a smooth set-up, as well as ensure any borrowing and investment falls within the rules of the fund.

If you are considering any type of borrowing for investment purposes, we are happy to provide information to help get you started and referrals to other professionals if required.

Unfortunately there's no simple answer, as your decision to choose a fixed or variable home loan largely depends on your financial situation and personal preference.

The good news is that as your broker we can assess your individual situation and help you make an informed decision that will bring long term benefits. For example, we can advise you whether the advantages of switching to a fixed loan outweigh the fees you will encounter along the way. We can also outline the pros and cons of switching loans based on your income stream, lifestyle needs and financial goals.

Fixed rate loan

Fixed rate loans best suit home owners who are on a tight budget and like the certainty of knowing exactly how much each repayment will be.

On the downside, many fixed loans charge for extra repayments and early payout. This means you will be financially penalised if you want to pay off more than you originally planned.

Also consider that fixed rates are generally higher than the cheapest variable rate, so by locking your loan into a fixed rate for three to five years you are gambling that you will come out ahead. Without a crystal ball no one can know whether interest rates will go up or down over this time!

Variable rate loan

Variable rate loans have more features and greater flexibility than fixed rates but can be risky if you've overcapitalised on your loan.

If you are sticking with a variable loan in this climate of rising interest rates, it's important to plan for the possibility of having to make increased repayments. Should rates rise, you need to feel confident that you will be able to adjust your budget accordingly.

Split rate loan

If you can't make a decision between fixed or variable, a split rate loan is a good option. It allows you to divide your loan between fixed and variable interest rates, which gives you a foot in both camps.

The fixed rate part of your loan is protected against interest rate rises, and the variable part of your loan allows for the flexibility of making additional payments without penalties.
Fixing the interest rates on your home loan is not the only way to protect against rate hikes. Here are a few more strategies worth trying:

• Review your budget. Work out where you can cut spending to free up funds for extra repayments.
• Ask for help. Talk to us as soon as you start having trouble making repayments and we'll work with you to help you keep paying off your loan.
• Review your mortgage. Consider whether you have the best product for your changing financial needs.
• Use redraw. Top up your loan when times are good, giving you readily-available funds to call on when finances are tight.