Jacqueline Barton

With today’s cost of living pressures and the median dwelling value in Australia now at $794,000, many young Australians feel like they’ll never be able to enter the property market.

However, it’s important to remember there’s no one-size-fits-all approach to buying your first property. For some, it could be a home to live in. For others, rentvesting makes more sense as it can offer a great alternative to get a foot up on the property ladder.

What is rentvesting?

Rentvesting is when you rent where you want to live and buy where you can afford.

By rentvesting, you can earn an income from your rental property, pay off the mortgage, and potentially cover the costs of owning the property, all while continuing to live in a suburb you enjoy.

Why do people choose to rentvest?

One of the biggest motivators of buying an investment property is the potential to make a return via capital growth. This is when your property increases in value over time.

If you’re positively geared (that is, the rental return is higher than your home loan repayments and other property expenses), a rental property can also offer you an additional income stream.

Another reason people choose to rentvest is that it’s another way to enter the property market, without having to purchase a home to live in. Maybe you’ve grown fond of your inner-city apartment (that’s unfortunately out of your price range) and don’t want to move out to the “burbs”? With rentvesting, you can own your own slice of real estate where you can afford and still have the flexibility to live where you want to live.

What to know before going ahead with rentvesting

1. Potentially smaller deposit, but fewer government perks

If you choose an investment property that’s more affordable than the home you intend to live in one day, your deposit will be smaller. It might be easier to save a deposit if you go down the rentvesting route.

However, because you’re an investor and not a first-home buyer, you won’t benefit from government schemes such as the First Home Owner Grant and First Home Super Saver Scheme, which would only apply if you were living in the property.

2. There are ongoing costs to factor in

If you’re rentvesting, you’ll need to budget for all of the costs associated with owning the property (e.g. the mortgage repayments, management fees, rates, water bills, maintenance, insurance, and strata levies if it’s under a body corporate scheme).

Keep in mind, the rental income may cover some, if not all, of these costs. You’ll also need to cover your own rent too.

3. Investor loans could come with higher interest rates

As a rentvestor, you will have an investor loan. These typically come with higher interest rates than owner-occupier home loans.

This means your mortgage repayments may be larger than if you were living in your own home.

4. There will be tax implications

At tax time, your accountant will ask for information about your investment property, including the rental income and expenses (most of which can be claimed as tax deductions).

Your accountant can guide you about the tax implications of owning a rental property, such as the potential for capital gains tax (if your property goes up in value) when it comes time to sell.

Like to know more?

If you want to get started in the property market sooner rather than later, rentvesting could be the way to go.

To explore your finance options, get in touch. We’ll help you work out whether rentvesting is right for you.

To pay more off your home loan or invest in another property? It’s a question many homeowners face.

Ultimately, it depends on your financial situation and long-term goals as to whether you funnel your funds into your home or an investment property.

Here are some of the key considerations to think about before deciding what’s suitable for you.

How much do you owe on your home?

If you still owe a fair amount on your home loan, you may need to put plans for an investment property purchase on ice, at least for the time being.

If your mortgage is more than 80 per cent of the current value of your home, it may be worthwhile working towards paying down your home loan and increasing your equity. Equity is the difference between the value of your property and the loan balance.

The case for paying down your home loan

There are all sorts of benefits to making extra repayments and paying off your home loan sooner. For one, you’ll pay less interest over the course of the loan, while at the same time increasing your available equity. You may even use your available equity to do renovations on the property and increase its value.

You may consider paying down your home loan if you:

• Tend to spend money on things you don’t need and want to ensure you put any extra funds towards something useful, like paying off your home,
• Are close to retiring and still have a way to go to pay off your mortgage,
• Hope to release guarantors on your mortgage, or
• Want the peace of mind of being debt-free sooner rather than later.

Remember, if you do focus on paying off your home loan before investing, you can always revisit property investment down the track. It also pays to keep in mind that there may be limits on how much extra you can repay on your home loan in a given period, so ask your lender for clarification.

The case for investing in property

Some people decide that investing in property is more important to them than paying off their mortgage faster.

There are many perks of buying an investment property. Some people go into it for the capital growth – the potential for the property’s value to increase over time. Others invest for the rental returns or for the tax benefits.

If you owe your lender less than 80 per cent of your property’s value, you may even be able to use your equity as a deposit to buy an investment property.

Consider your Superannuation as an investment strategy

Another option is contributing to your superannuation. With concessional tax rates on contributions, this can be an effective way to build wealth for retirement, particularly for those concerned about their long-term financial security.

Determining what’s right for you

It’s important to consider what your long-term goals are before deciding what’s right for you.

If your priority is to be mortgage-free rather than taking on more debt, you might decide not to invest and to pay off your home instead. But if you’re looking to channel your extra money into a prospective wealth-building asset, you may consider buying an investment property.

It’s a good idea to speak to a financial adviser or accountant about the best big-picture financial strategy for you.

And when it comes to the finance side of things, we’re here to help. We can suggest ways to pay off your home loan sooner or line you up with the right investment loan for your needs, depending on what you decide.

Please contact us today to learn about how we can help you.

Buying your first home is an unforgettable experience. There’s nothing like the thrill of hearing that settlement has gone smoothly and that you own your very own home.

If you’re an aspiring homeowner who is struggling to save a deposit, there may be other options to get you over the line and into your first home sooner. A guarantor loan is one of them.

A guarantor loan is where a relative, usually a parent, uses the equity in their property as additional security for your property purchase. And it’s not uncommon.

According to research by Digital Finance Analytics, the percentage of first homebuyers seeking help from parents jumped from 3 per cent in 2010 to 59 per cent, with the average loan for a deposit increasing from $23,000 to $107,000.

Here’s what you need to know about guarantor loans before diving in.

Why consider a guarantor loan?

To buy a property, you usually need a 20 per cent deposit. For many people, saving a deposit of that size can be difficult and take years, particularly with today’s cost-of-living pressures.

A guarantor loan offers an alternative way to get into the property market. Sometimes, a guarantor can mean being able to purchase a home with no deposit at all.

Having a guarantor can also help you avoid paying Lenders’ Mortgage Insurance (LMI). LMI usually applies if you borrow more than 80 per cent of your home’s value. It’s to cover the lender against the risk of you defaulting on the loan.

Who can be a guarantor?

Typically, a guarantor is a close relative like a parent, grandparent, or sibling who is willing to offer up their own home equity in addition to your cash deposit.

If you’re unsure what equity is, it’s the difference between their property’s value and how much they (still) owe on it.

How does a guarantor loan work?

The guarantor doesn’t actually have to hand over any money at settlement. They simply agree to offer part of their property’s equity as security.

Here’s how a guarantor loan may work. Say you wish to buy a $600,000 property and you have a 10 per cent deposit saved of $60,000. To buy the property, you need a deposit of 20 per cent, so $120,000, otherwise, you’ll have to pay LMI.

Your parents offer $60,000 of their home equity as extra security for your home loan. They don’t have to make any payments at settlement, but if you default on your mortgage repayments down the track, the guarantor may be liable.

Once you’ve built up equity in your home – either by paying down the mortgage or if the value of the property increases – your guarantor can be released from the loan (fees may apply).

Risks to consider

Before diving into a guarantor loan, it’s important to consider the risks involved.

As mentioned, if you’re unable to make the repayments, your guarantor will be financially liable. Some of the guarantor’s equity will also be tied up in your property, which may affect their ability to sell or refinance.

There’s also the impact of mixing family and finances to consider.

It’s a good idea to seek legal and financial advice before entering into a guarantor home loan.

Like to explore your finance options?

If you’re hoping to buy a property and you don’t have a 20 per cent deposit saved, a guarantor home loan may be worth investigating.

Please reach out to us today and we’ll run through the pros and cons of a guarantor loan and the different lender requirements.

We’ve all received them. A dodgy message about a missed delivery. A robotic-sounding phone call with some random request for information.

Some scams are easier to spot than others. But scammers can be very clever at tricking people into giving out personal information. With generative AI technologies now thrown into the mix, it’s more important than ever to be vigilant about your cyber security.

Scamwatch has already received more than 95,500 reports of scams in 2024. The Australian Competition and Consumer Commission (ACCC) said scam losses declined last year, but there was still more work to be done as Australians lost $2.7 billion.

In this article, we’ll cover what four of the most common scams are at the moment, along with what you can do to protect yourself and your family from them.

Scams doing the rounds

Impersonation scams

The ACCC issued a warning earlier this year urging Australians to check payment details directly with businesses before paying an invoice, following a rise in losses due to payment redirection scams.

With this type of scam, you receive an email from a business you are dealing with and are expecting an invoice from. You pay the invoice but end up paying the scammer because they have gained access to the business email account or changed the email address and modified the payment details.

Product and service scams

Scammers have been known to set up fake websites on retailer sites, and then offer products or services at ridiculously low prices. There may be fake ads, fake reviews, and a stolen Australian Business Number (ABN), making these types of scams hard to recognise. If something seems too cheap compared to competitors or too good to be true in other ways, it may be a scam. Likewise, if there are no terms and conditions, ABN, or privacy policy on the website, it may not be legitimate.

Remote access scams

With this type of scam, scammers try to convince you that you have a computer or internet problem. Sometimes the scammer will call and pretend to be from a large telecommunications company like Telstra, or they may say they’re from a technical support service provider. They may say your computer has been sending error messages or that it has a virus, or mention internet connection issues. The caller will request remote access to your computer to find out what’s happened, or they may ask you to buy software to fix the problem.

Tips to protect yourself (source: ACCC)

• STOP – Don’t act quickly. It’s better to take the time to call the business you are dealing with – using independently sourced contact details – to check the payment details are correct.
• THINK – Ask yourself if you really know who you are communicating with. There may be legitimate-looking logos and ABNs, but scams can be sophisticated.
• PROTECT – If something feels wrong and you have shared financial information or transferred money, contact your bank immediately. Report any suspected scams to Scamwatch.

You can find other tips to protect yourself and your family from scams here. Protecting your personal data is important, so be proactive and stay informed.

How we protect our client’s data

We understand the importance of data protection, which is why we use a cloud-based technology platform that runs on servers that are 100% Australian-owned and operated. It features security protections like multi-factor authentication, state-of-the-art encryption, and security monitoring tools to protect data.

We hope that with these tips you have a cyber-safe new financial year and we look forward to helping you with all your upcoming financial needs.