Read This Before You Buy Your Next Property

Establishing the right investment and finance structure is critical to the long-term success of any property acquisition.

Some people decide to convert their home into an investment property in the future. Seeking advice at the outset when you’re contemplating such a move is crucial, so that you don’t miss out on future tax deductions.

So let’s explore how you can establish the right ownership and debt structures from the outset, in order to reduce your risk exposure while to maximise your all necessary investment dollar and allowable tax deductions.

SEEK ADVICE

It doesn’t matter how much research you do into loan packages or lenders unless you are a professional working in the cutthroat world of finance, never assume you can go it alone.

It is extraordinarily important that you speak to an Awesome Lending Solutions mortgage broker, before you place the deposit down on a property, so that you have your debt structured correctly from the outset to make sure that you’re maximising your tax deductions on that borrowing.

An expert will guide you throughout the process, ensuring that each step is taken only after careful consideration of your personal circumstances and long-term goals when it comes to property ownership.

If you used cash for the initial deposit of say 10%, then you’re potentially not going to get the full tax deduction that you might otherwise have received. Get that right at the outset by speaking to somebody before you sign on the dotted line.

Once you are ready to settle or you’re moving towards settlement, make sure you have the loan structured correctly from a principal and interest perspective. Also consider the options of fixing or variable (interest rates) in light of your overall position, so that you’re not overcommitting and missing out on opportunities in the future.

It is critical for investors who need to be mindful of their cash flow.

As a professional property investor, you want to structure your finance arrangement(s) to maximise your borrowing power now and into the future and minimise any out of pocket contribution.

Ideally, you will pay nothing at all to service the loan once structured.

This is particularly important when you’re still in the accumulation phase of your investment endeavours and are likely to have what we refer to as “bad debt” – the mortgage over your own home – which you should aim to pay down as quickly as possible, whilst capitalising on your “good” investment debt, where the government provides you with that extra negative gearing incentive.

MAKE YOUR DEBT WORK FOR YOU

A primary consideration in this optimal debt-constructing scenario is whether you have any intention of converting your home into an investment property in the future.

We have seen a lot of clients who have almost paid their initial (home) loan off.

Then moved into a new home over which they have a substantial borrowing and effectively no tax deduction on that debt.

Whereas if they structure it correctly from the outset. Incorporate an offset facility, they can take their money into the new home and only have good debt, being the tax deductible loan on what is now an investment property that used to be their home.

LAND TAX SAVINGS FOR THE SAVVY INVESTOR

Interestingly, many people neglect to consider the ongoing cost associated with holding property when establishing an investment loan. And the price that takes the unsuspecting investor by surprise most often is land tax.

When you are looking at ownership – be it an individual, super fund or trust – consider the stamp duty and property tax costs that are potentially attached to that particular structure.

As an individual, you have a substantial threshold before land tax is payable, whereas other entities don’t necessarily have those thresholds.

Likewise, if an individual already has an investment property in their name, your land tax bill could become expensive.

If you put another property in your name, as opposed to having it in your spouse’s name, who is not attached to another investment property title.

Given that electing to adopt this type of strategy for your ownership structures could save you a few thousand dollars each year in property tax obligations, this is something you should consider from the get go.

DO YOU APPRECIATE THE BENEFITS OF DEPRECIATION?

One of the things we find here at Awesome Lending Solutions, when investors approach us to assist with refinancing or implementing a new arrangement, is that they are underutilizing the taxation incentives available to them, particularly concerning depreciation schedules.

Depreciation schedules written by quantity surveyors, who assess the value of your property’s assets and the potential cost to replace them should the need arise.Provided the property fits within certain construction dates, depreciation can be a substantial benefit,” agrees Ty.

Provided the property fits within certain construction times, depreciation, can be a substantial benefit.

Not only a property that may have been wholly constructed after, say 1987 that should have a depreciation schedule drawn up. It can also be a property that has had renovations done since that time.

This means receiving deductions on two fronts, being the “building write off” – the cost of wear and tear on the property’s structure – and depreciation on fittings and fixtures such as wiring, lights, furniture and the like.

A quantity surveyor will come out to your investment property, do an assessment and prepare a report for you, which will provide a detailed report on those depreciation items that you can claim each year.

Of course, as with many property investment related expenses, the fee to engage a quantity surveyor is also tax deductible. So there’s really no reason to not have this done and potentially save thousands on your annual tax bill!

FIND THE RIGHT HELP

Ultimately, if you establish yourself as a professional property investor, the best way to optimise your portfolio is to ensure you surround yourself with the good consultants and maintain strong, working relationships with them.

Your rapport should be based on trust, and you must feel comfortable enough to ask any questions upfront when contemplating the establishment or alteration of any type of investment or debt structure.

After all, a dollar saved is a dollar earned!

Like to read some other articles related to this topic? Have a look at the following links:

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http://awesomelendingsolutions-com.hs-sites.com/blog/how-to-decode-a-property-advertisement

http://awesomelendingsolutions-com.hs-sites.com/blog/how-can-i-develop-a-property-investment-strategy

Should You Refinance For a Better Deal

Refinancing a loan can take advantage of lower interest rates to bring down the overall cost of servicing a loan. But it’s not always the best, or the only, option.

There are many different factors borrowers need to consider when thinking about refinancing a loan.

The first step is to speak to an expert about your needs and whether you can afford to service a different loan structure.

At this point, an Awesome Lending Solutions Credit Adviser will also need to find out about your existing loan, repayments and the structure of the facility.

The current value of the property is also taken into consideration, so the credit adviser will have access to current data that will indicate what the asset is worth.

Then credit consultants will have a look at the various loan options and figure out whether it’s worth it for the borrower to refinance. It’s not usually worth it if it’s only going to save a couple of hundred dollars a year, taking into consideration exit and application fees. But if it’s going to save upward of $1000 a year, refinancing might be a sensible approach.

Another critical consideration is lenders’ mortgage insurance (LMI). If switching loans means you will need to pay LMI again, sometimes it’s not worth refinancing.

If you want to refinance just to lower lending costs, ask Awesome Lending Solutions to negotiate with the bank for a lower rate.

If you do decide to go down the refinancing path, working with a credit consultant rather than going straight to a bank has advantages because the adviser has access to loan options from scores of different lenders.

Awesome Lending Solutions can compare lots of different lenders and, if there is a better opportunity, they’re able to access it. Credit advisers are always working to give you great advice that’s in your best interests.

Want to know more? Have a look at the following related article

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Why You Don't Need to Declutter to Revamp Your Home

Change can be exciting and enjoyable, sticky and tight, fast and furious or gentle and subtle. But one thing's inevitable: change happens. So how can you navigate all the changes in your life with a little less resistance and a lot more ease? With one powerful question:

Has your area changed to fit your new life?

Your area is like a mirror, reflecting who you are back to you.

If you want to love your life, your area needs to reflect and support where you are right now, and where you're headed. An outdated home can keep you stuck in the past. For example:

• Your sweetie moved in — but is he cramming all of his stuff into one corner of your home?
• Still have sharp edges and expensive breakables on low bookshelves, even though you have a toddler?
• Is your closet still filled with power suits, even though you ditched the corporate track for a self-employed, working-from-home gig years ago?

You and your life are constantly changing, and that's why regularly updating your location is so important. You don't have to wait to move or do a big spring cleaning to sift through your belongings. Take time regularly to update your home so that it reflects who you are and who you're growing into.

Stop Decluttering & Start "Editing."

Decluttering sounds like a chore, right? That's why I prefer "editing" to describe the multidimensional process of aligning you and your area.

Whatever you call it, the heart of this practice is to clear out what no longer serves you. Add in things that do, and update your area, so it helps you get to where you want to go.

Here's a simple practice to get started: hold one of your possessions. Notice how you feel when you interact with it. Does it feel alive or dead? Current or outdated? Is it serving you or holding you back? You can do this with clothes, knickknacks, kitchen gadgets, or entire rooms.

The next time you're feeling drained or stuck, look at the location you're in. Are you swimming in a sea of objects you don't love? Constant reminders of a person, you simply aren't anymore? This can leave you feeling depleted, resistant, and murky.

Editing your area creates flow. It keeps your area (and you!) alive. It dissolves stagnation. It eases us from one chapter to the next. It makes those inevitable changes easier and supports us on physical, mental, and emotional levels.

How To Know It's Time To Edit Your Space

People modify and update their areas in different ways and at different times — some edit all the time, others do it in spring or fall. There's no right answer or magic formula, here, as long as you're paying attention to what your space (and your life) are asking you for.

Moments that almost always call for a significant edit include times when:

• You feel stuck. You want a shift or change — internal or external
• You're navigating a major life transition or milestone: marriage, new baby, divorce, new job, new relationship, breakup, or move
• You feel dull, bored, or overwhelmed
• You're struggling with a question and need a booster shot of clarity
• Before, during, or after major life decisions.

No matter what change you're facing, editing your location can make it a little easier — and even fun!

Remember: this process can uncover intense emotions. Go at your pace. Be gentle with yourself. Journal or talk to a friend about any thoughts and feelings that arise.

Whether your editing is spontaneous or scheduled, set the intention for it to be an act of self-love. Allow this physical, external change to support the inner shifts you seek.

For articles similar to this why don't you check out the following link:

http://awesomelendingsolutions-com.hs-sites.com/blog/case-study-buying-my-first-home

What tax benefits can I get from investing in property?

Investing in bricks & mortar may offer a variety of tax benefits, both immediate and longer term. As this table shows, many different types of expenses can be tax deductible while you hold the property as an investment.

Type of expense	Example	When can you claim a tax deduction?
Interest on a loan	Buying a rental house or unit Buying land to build a rental Buying a depreciating asset for the investment, like an air conditioner Financing renovations or improvements	Same tax year
Repairs and maintenance	Replacing part of the guttering or windows damaged in a storm Replacing part of a damaged fence Repairing an electrical appliance	Same tax year
Tenancy costs	Preparing a lease agreement Evicting a tenant	Same tax year
Structural improvements	Adding a room Building a retaining wall or fence	Over a number of years
Assets that are part of the investment	Stoves Air conditioners Hot water systems	Over a number of years
Borrowing costs	Stamp duty charged on a mortgage Loan establishment fees Title search fees charged by the lender	Depends on the amount: less than $100 can be deducted immediately larger amounts are deductible over five years or over the term of the loan, whichever is less

This table is for illustrative purposes only. It’s not exhaustive and is subject to change. To make sure, you don’t miss anything, talk to your tax adviser about how to claim the correct tax deductions.

What happens when you sell your investment property?

Many investors focus on the positive impact of tax deductions when deciding whether to invest in bricks & mortar. However, it’s important to remember the potential impact of the capital gains tax.

If you bought an investment on or after 20 September 1985 and you then sell it at a later date. Then you may be liable for capital gains tax if you sell it for more than you paid to buy it.

You can also make a capital gain or loss from some capital improvements made since 20 September 1985 to a home or unit you acquired before that date.

To work out whether you have made a capital gain on your investment, visit the ATO website or speak to your tax adviser.

For other articles relating to this topic why don't you have a look at the following:

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http://awesomelendingsolutions-com.hs-sites.com/blog/what-are-the-benefits-of-buying-an-investment-property

http://awesomelendingsolutions-com.hs-sites.com/blog/steps-to-buying-an-investment-property

http://awesomelendingsolutions-com.hs-sites.com/blog/steps-to-buying-an-investment-property

The Shocking Truth About Landholder Duty

Acquisition of interests in landholders apply to relevant assets in private landowners made on or after 1 July 2009 and in public landholders on or after 1 October 2009. Landholder duty is duty paid on the acquisition, by a person, of a significant interest in a landholder.

A landholder is a unit trust scheme, a private company or a listed company that has land holdings in New South Wales (NSW) with a threshold value of $2,000,000 or more.

A property holder can be either private (private unit trust scheme or private company) or public (public unit trust scheme or listed company).

Threshold values

What is the threshold value?

The threshold value is the total value of all landholdings in NSW of the unit trust scheme, or private or listed company.

The value of land holding is the registered land value of the property as at 1 July in the previous year.

Registered land value (including a parcel) is the land value of the land as entered in the Register of Land Values kept by the Valuer-General under Section 14CC of the Valuation of Land Act 1916.

For any land holding, such as leasehold interest, where the value cannot be determined, the value of the land holding is the unencumbered value of the land holding.

For a land holding that consists of a proportionate interest in an estate in fee simple in the land (other than strata lots).

The value of the land holding is the proportionate interest of the registered land value as at 1 July in the previous year.

For a land holding that consists an estate in fee simple in a strata lot (or consists of a proportionate interest).

The value of the land holding is an amount that relates to the registered property value of the relevant parcel (as at 1 July in the previous year).

The same proportion being the unit entitlement of the lot bears to the aggregate unit entitlement.

The proportionate interests of joint tenants in an estate in fee simple are to be determined as if they were tenants in common in equal shares.

What are the land holdings of a landholder?

A land holding is an interest in land other than the estate or interest of a mortgagee, chargee or another secured creditor.

An interest in land is a land holding of a unit trust scheme only to the extent that the interest is held:

• by the trustee of the unit trust scheme in their capacity as trustee of the scheme
• by a custodian of the trustee of the unit trust scheme in their role as a custodian
• by a sub-custodian of the custodian of the trustee of the unit trust scheme in their capacity as sub-custodian.

An interest in land is not a land holding of a company if the company holds property on trust, but only if the company is not a beneficiary of the trust.

Acquisitions in a landholder

What is a relevant acquisition?

You make an appropriate acquisition if you:

• acquire an interest in a landholder:
  • that is a significant interest
  • that when aggregated with other interests you or an associated person holds in the landholder leads to a great interest in the landholder
  • that when aggregated with other interests you or another person acquire under transactions that evidence give effect to arise from what is substantially one arrangement between both parties, results in a significant interest in the landholder.
• have a great interest in the landholder and acquire a further interest in the landholder.

Interests are to be treated as if they were acquired or held independently by separate persons:

• if a person who acquires or holds an interest in a landholder is a trustee for two or more trusts and receives an interest in the different trusts
• if a person who acquires or holds an interest in a landholder is a life company and receives or holds the interest for different statutory funds
• if a life company acquires or holds an interest in a landholder other than for a statutory fund.

Interests in a landholder

What is an interest?

You have an interest in a landholder if in the event of a distribution of all property in the landholder you would be entitled to any of the property distributed.

A debt interest in a landholder is not an interest in a landholder.

What is a significant interest in a landowner?

You have a significant interest in a landholder if you are entitled to the following in case there is a distribution of all property in the landholder:

• Private landholder – 50% or more of the property distributed
• Public landholder – 90% or more of the property distributed.

How is an interest acquired?

You may receive an interest in a landholder in the following ways:

• the purchase, gift or issue of a unit or share
• the cancellation, redemption or surrender of a unit or share
• the removal, cancellation or alteration of a right for a unit or share
• the payment of an amount owing to a unit or share
• If you hold an interest in the landholder and the capacity in which the person holds the interest changes.

What is a linked entity?

In addition to any interest in land or other property a company or unit trust holds in its right, it is taken to hold an interest in land or other property owned by a linked entity.

related entity of a private unit trust or a private company (the principal body) means a person:

• who is part of a chain of people:
  • which includes the principal entity
  • which comprised of one or more links
  • in which a relationship exists if a person would be entitled to receive not less than 50% of the unencumbered value of the property of another person in the event of a distribution of all property of the person
  • which does not include, in any of the links between the person and the principal entity, a public unit trust or a listed company.
• who is not a public unit trust scheme or a listed company.

A linked entity of a public unit trust scheme or list company, means a person who is part of a chain or people:

• which includes the principal entity
• which is comprised of one or more links
• in which a link exists if a person would be entitled to receive not less than 50% of the unencumbered value of the property of another person in the event of a distribution of all the property of the person.

The value, for duty purposes, of the interest in land or other property that a unit trust scheme, private company or listed company (being a principal entity) is taken to hold because of a holding by a linked entity, is that portion of the interest’s unencumbered value to which the unit trust scheme or company would be entitled (without regard to any liabilities of the linked entity or any other person in the ownership chain) in the event of a distribution of all the property of each entitiy in the chain of entities.

A linked entity also include Discretionary Trusts.

A person or a member of a class of persons in whose favour, by the terms of a discretionary trust, capital the subject of the trust may be applied:

• in the event of the exercise of a power or discretion in favour of the person or class, or
• in the event that a discretion conferred under the trust is not exercised,

is, for the purposes of this section, a beneficiary of the trust.

A beneficiary of a discretionary trust is taken to own or to be otherwise entitled to the property the subject of the trust.

Also any property that is the subject of a discretionary trust is taken to be the subject of any other discretionary trust:

• that is, or
• any trustee of which (in the capacity of trustee) is, a beneficiary of it.

Note: Person includes a landholder.

Discretionary trust is defined in the Dictionary of the Duties Act 1997.

Paying the duty

When must duty be paid?

The duty must be paid within three months after the liability arises.

Landholder duty is a self assessment duty and a person who lodged an acquisition statement is required to calculate and pay the duty.

Who must lodge an acquisition statement?

A person who has made a relevant acquisition must prepare an acquisition statement and lodge it with the Chief Commissioner.

When does liability for duty arise?

A liability arises when a relevant acquisition is made in a landholder.

Who is liable to pay the duty?

Duty is paid by the person who makes the relevant acquisition.

If the acquisition is the result of the combining the interests of associated persons, those involved in the acquisition are jointly and severally liable for the payment of duty.

Applying duty to relevant acquisitions

How is duty charged on relevant acquistions?

Public landholder

If a relevant acquisition is in a public landholder, the duty charged is 10%, at the general rate, of the duty that would be charged on a transfer of all the land holdings and goods of the landholder in NSW.

If the acquisition statement also includes an exempt acquisition, the duty charged is calculated after deducting the proportion of the value of the interest acquired in the exempt acquisition from the duitable value of the land holdings.

If the public landholder is a widely held trust, the duty payable is reduced by the following amounts (if applicable):

• the amount of duty paid or payable in respect of a dutiable transaction in relation to the units concerned
• any duty of a similar nature paid or payable in another Australian jurisdiction.

If duty is charged on a relevant acquisition by a person in a public landholder, further acquisitions made by that person in that public landholder will not attract duty.

Private landholder

If an acquisition statement states only one relevant acquisition in a private landholder for the statement period, duty is charged at the general rate on the the amount calculated by multiplying the unencumbered value of all land holding of the landholder in NSW by the the proportion of the value represented by the interest acquired.

If an acquisition statement states more than one relevant acquisition in a public landholder for the statement period, duty is charged at the general rate on the amount calculated by multiplying the unencumbered value of all land holdings of landholder in NSW by the proportion of the value represented by the combined interest acquired.

Duty payable is to be reduced by the sum of the duty paid or payable for an acquisition by a person or associated person of an interest in the same landholder, by the proportion attributed to the amount of the duty payable.

Duty is to be reduced by the sum of the amounts calculated individually in respect of each acquisition of an interest in a landholder by a person or associated person, in accordance with the following formula:

A/B x C

A is the unencumbered value of the land holdings in NSW of the landholder at the time of acquisition.

B is the unencumbered value of all property of the landholder at the time of acquisition.

C is the sum of:

• the duty paid or payable in respect of:
  • a duitable transaction in relation to the units or shares acquired
  • a capital reduction or a rights alertation by which an interest in the landholder was acquired
  • an allotment of shares by which an interest in the landholder was acquired.
• Any duty of a similar nature paid or payable in another Australian jurisdiction.

Example

ABC Pty Ltd is a private company whose total assests are valued at $6,000,000. This includes NSW land tax value of $2,000,000.

The unencumbered value of the land is $2,800,000. It also has dutiable goods in NSW valued at $200,000.

X acquires 60% of the shares in ABC Pty Ltd.

1. Duty is payable on the transfer of shares
   Dutiable value = $3,500,000.
   Duty payable = $21,000 [Share duty is charged at the rate of 60 cents per $100 (or part), of the dutiable value of the shares].
2. Calculation of landholder duty
   Unencumbered value of land = $2,800,000
   Other dutiable goods = $200,000
   60% of $3,000,000 = $1,800,000 is the dutiable value.
   Landholder duty payable on $1,800,000 = $84,490.
3. Credit for the duty paid on the share transfer
   Using the formula A/B x C outlined before the example.
   A = $3,000,000
   B = $6,000,000
   C = $21,000
   Therefore the amount of credit is $3,000,000/$6,000,000 x $21,000 = $10,500
   Landholder duty payable = $73,990 ($84,490 – $10,500)

If an relevant acquisition is made by aggregating the interests of an associated person, the Chief Commissioner may assess and charge duty on the interest separately if they are satisfied that the associated person acquired their interest(s) independently.

Duty is not charged on an exempt acquisition of an interest in a landholder.

Bare Trustees

The ultimate beneficial owner of an interest acquired by the legal owner is liable to pay any duty charged on a relevant acquisition made as a result of the acquisition by the legal owner. (Refer to Revenue ruling DUT 041.)

For example A acquires an interest in a land holder as a bare trustee for B. A is the legal owner and B is thebeneficial owner. B holds that interest as a bare trustee for C. As a result, C is also a beneficial owner of the interest in the land holder acquired by A. If C does not hold an interest as a bare trustee for anyone else, C is the ultimate benefical owner of the interest and is liable for the duty.

For the purposes of determining whether an acquisition is a relevant acquisition, the interests held by the ultimate beneficial owner or associated person will be combined.

For more information, view Revenue ruling DUT 041.

What is not included as goods of a landholder?

Goods of a land holder does not include:

• goods that are stock-in-trade,
• materials held for use in manufacture,
• goods under manufacture
• goods held or used in connection with land used for primary production
• livestock
• a registered motor vehicle
• a ship or vessel.

Goods are goods of a landholder if the landholder has any interest in the goods, other than an interest as mortgagee, chargee or other secured creditor.

Goods are goods of a unit trust scheme only to the extent that the interest in the goods is held by the trustee of the unit trust scheme in its capacity as trustee of the scheme or by a custodian of the trustee of the unit trust scheme in its capacity as custodian.

Goods are not goods of a company if the interest the company has in the goods is held on trust and the company is not a beneficiary of the trust.

Still confused then contact us at 

http://www.awesomelendingsolutions.com.au/contact-us/

How can I develop a property investment strategy?

When it comes to making any type of investment it pays to start with an investment strategy.

A property investment strategy is a financial plan built around your short- and long-term goals.

A financial adviser can help you work out what you want to achieve and how to make the most of opportunities.

It’s helpful to look ahead before buying a property, understand what your options are and how certain decisions can affect your long-term wealth.

Advice from a financial adviser like an Awesome Lending Solutions Financial Adviser can help you:

• decide what you want to achieve
• develop an overall investment strategy and work out how the property could fit your personal needs and goals
• find the right home loan, providing the financial adviser is an accredited mortgage consultant
• identify milestones for reaching your goals
• create a detailed financial plan for building wealth.

If you are interested in the steps to property investment check our articles http://awesomelendingsolutions-com.hs-sites.com/blog/steps-to-buying-an-investment-property

Or call your friendly Awesome Lending Solutions broker. 

What are the benefits of buying an investment property?

When you invest in property, you have the potential to benefit from:

• an increase in the value of your property over time (capital growth),
• an additional source of income once the property becomes positively geared.

You can invest in property directly as an individual or through self-managed super, but there are risks to consider first. For example, the home loan will need to be repaid, and your financial obligations may increase if the rental property is empty.

For example, the home loan will need to be repaid, and your financial obligations may increase if the rental property is empty.

Investors are not limited to residential properties such as apartments and houses―they can also invest in commercial properties such as shopping centres and office blocks through managed funds and property investment trusts.

Property investment can provide tax advantages because the expenses that come with owning a property are tax deductible. However, any income will be subject to tax and when the property is sold, capital gains tax will apply. One of the downsides of property investment is that the large upfront costs can make it challenging for many people.

However, any income will be subject to tax and when the property is sold, capital gains tax will apply. One of the downsides of property investment is that the large upfront costs can make it challenging for many people.

One of the downsides of property investment is that the large upfront costs can make it challenging for many people.

If you are interested in the steps to property investment check our articles http://awesomelendingsolutions-com.hs-sites.com/blog/steps-to-buying-an-investment-property

Or call your friendly Awesome Lending Solutions broker. 

How to find the right doors for your renovation

A grand front entrance can create a bold first impression, while an outdated door can diminish an opportunity to impress. So how do you decide which doors are best throughout your house, considering safety, functionality and aesthetics?

When you’re revamping your home or investment property, the right doors can make all the difference. The idea is to find a functional yet affordable door that adds interest and makes good use of light.

Every renovation decision, regardless of whether you’re looking for the right doors, the ideal benchtop or even smart landscaping solutions, boils down to one primary factor – cost versus value.

You need to ask yourself: does it add more perceived value than cost. Or is it a low or no return item that is going to add no value to your renovation, but could cost you money?

Replacing doors can blow your budget, as any cost differences between individual doors need to be multiplied by the number of doors to be replaced throughout the house.

You typically should allow up to $500 per door. That includes old doors that need to be stripped, repaired, painted, hung, and all the jewellery attached. Hanging doors is not easy in older properties, and a professional will charge about $100 to do this for you.

If you have five doors in your house, that can gobble up $2500 of your budget, and you have to wonder: have you added value

It is possible to install new doors for less than $500, of course, but you need to weigh up the quality of the materials.

There’s no doubt you can do doors cheaper but think about what overall look you want for your property; will $100 hollow, plastic or cardboard doors really create that look?

Often when I visit renovated properties, it’s the doors that let down the overall look, so you need to be mindful of the aesthetic and the cost when weighing up which way to go.

Safety considerations

Of course, doors are about more than aesthetics, particularly entrance doors, so there are a few things to think about:

• are security doors or screens important in your neighbourhood?
• is the property on the ground floor, therefore requiring secure deadbolts on external doors?
• Have you purchased the most suitable locks and deadbolts for the property? and
• Are you in an apartment building? If so, your entrance doors need to meet the requirements of Australian Standard AS1905.1, including any hardware, to ensure fire safety. Also, any screens installed should not compromise the functionality of the fire door.

Talk to your friendly Awesome Lending Solutions broker whose expertise can help you finance your dream renovations.

Debt Consolidation

Debt consolidation

 

Generally the home provides the opportunity to secure the most cost effective debt available in the form of a home loan. As the home is used as
recourse against the loan, it provides the lender with additional security allowing them to lend money to you with greater certainty and at a lower
interest rate. Credit cards and other store loans are provided without security and therefore charge much higher rates of interest as in the event of
default they are unable to immediately gain access to your assets to seek repayment of their loan.
In the majority of instances you will be financially better off utilising your home loan given the potential interest savings.
It is important to remember though that good budgeting, spending within your means and controlling your discretionary spending are the key
to getting ahead financially rather than continually spending borrowed money. A good savings and investment plan and debt reduction strategy
are important tools in securing your financial independence.

How it works

To ensure that you are minimising your interest payable on a soon to expire interest free loan or credit card that is unlikely to be paid off in the

foreseeable future you may like to consider debt consolidation as part of your debt reduction strategy. This involves taking multiple debts and
consolidating them into one loan with a much lower average interest rate. A home loan usually has the lowest interest rate.

Example

Debts before consolidation:

Debt	Balance	Interest Rate	Monthly Payment	Term (years)
Mortgage	250,000	5.5%	1,535.22	25
Car Loan	17,300	9.5%	363.33	5
Credit Card  1	3,000	17.5%	143.33	2
Credit Card 2	6,500	19.5%	329.24	2
Store Card	1,500	20.0%	76.34	2
Total	278,300		2447.46

 

Consolidating your debts into your existing home loan at an interest rate of 5.5% could achieve a number of objectives:

Reducing your interest paid - Ideally you should maintain your current monthly payments and aim to reduce your debt more quickly to   of a lower average interest rate enabling you to pay off your debt in 13.4 years and save $101,403 in interest.

Reducing your monthly repayments - In this example, in the event that you are unable to meet your monthly repayments, consolidating your debt will allow you to reduce your monthly repayments to $1,709.01 and allow you to regain control of your finances

This should only be undertaken for a short period of time as you will pay additional interest of $17,162.39 as a result of a number of the loans being repaid over a longer term.

Sometimes when you refinance it gives you a false sense of security with the additional cashflow available to spend each month.

Don’t be fooled or you may end up in a different financial position.

Debt consolidation

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