For the 14th month running, the Reserve Bank of Australia has left the official cash rate at 2.5% for the month of October 2014, this being the most stable the cash rate has been in Australia for more than 10 years. Looking back in time to just over 6 years ago in August 2008, the official cash rate was sitting at 7.25%, and a massive 4.75% higher than the current level.
In looking forward, a survey was recently conducted by experts at Finder.com.au, drawing in 28 experts from accross the country, including Economists Michael Blythe from Commonwealth Bank, Savanth Sebastian from CommSec, Paul Bloxham from HSBC, Janu Chan from St. George and Michael Witts from ING Direct, to understand the anticipated direction of interest rates in the next year. The consensus was all of the experts are betting on a cash rate rise next year, with an average forecast of June 2015. Notable also, that all had correctly anticipated that the Reserve Bank would leave cash rates on hold for October, as they have.
Given that for most of us, our home and our home loan, are our biggest investment and biggest expense every month, it is important to understand how you are managing your home loan, what your priorities are (set and forget, or focus on paying it down, or a bit of both?), and what an increase in interest rates could mean for you and your family. Thinking about it, we all consciously have house and building insurance to protect our homes in case of emergency, yet If interest rates were to increase, what is the impact going to be to your cash flow and your lifestyle and the ability to protect your asset? How can you protect yourself and your home, or understand the likely implications, to have a plan and contingency in place?
Is it time to be proactive instead of reactive in understanding what the implications would be, and setting a plan in place to manage the anticipated changes? Absolutely!
At Get Smart, we have the expertise, skills and resources to analyse your cash flow for you, we want to understand what is important to you, and make sure that your home loan compliments your life, rather than controls or consumes it. It really is easy, and brings so much peace of mind, for so very little cost in comparison to the reactive scenario.
Want to understand more? Contact us, we want to see you succeed as much as you do, and we have the know how to make it happen!
Renovations are a great way to add value to your home or investment property. Plan your renovation carefully so you don’t waste time or money. It’s a good idea to keep a scrapbook of ideas, gathered from magazines, books and the internet, to firm up the look and feel you want in your home.
You might have heard of ‘overcapitalisation’ – when the money or time you’re spending is greater than the return you’re likely to receive. It’s important to find a balance between the work you’re doing and the increase in value to avoid overcapitalising.
But remember to always keep the market in mind – think about what a potential buyer might be looking for in your area and price bracket. The perceived value of the improvements you make, if done well, will exceed the actual cost of making them.
1. A fresh lick of paint
Nothing improves a home quicker than a fresh coat of paint. Choose your colour carefully, taking into account that neutrals can make life easier when it’s time to sell. If you can afford it, hire a professional painter to do the job. If you want to do it yourself to cut costs, speak to a reputable paint store for expert advice. They can even help you with colour choices – inside and out.
2. Update your kitchen
If the kitchen is the heart of the home, then it’s a smart move to make sure your kitchen looks and feels the best it can. A kitchen can make or break a sale, so it’s important to do this room justice and plan carefully. As a guide, for a property valued at $500,000, you should spend about $10,000. Any more than that and you may be overcapitalising. Look for fixtures and finishes that won’t date and will wear well over time. Aim to make your kitchen area look as large and spacious as possible using clever design and colour. Look at what is trending at the moment in kitchens, but don’t get swept away by the latest and greatest appliances and fittings if you’re nearing the top end of your budget.
3. Upgrade the bathroom
Similar to the kitchen, the bathroom is an important room for buyers, with a guideline of spending $7,500 for a property valued at $500,000. But you may not need to spend that much. Take a look at your existing bathroom and work out if smaller changes like updating the fixtures, vanity, shower screens or toilet might make a difference to the overall look and feel. Refreshing the tiles with paint and re-grouting can also give a completely new look for a smaller budget. If you need a complete overhaul, want to move the bathroom closer to the bedroom, or are changing the plumbing layout, you should expect to pay more. Do your research into what buyers want and choose timeless colours and fittings, installed by a reputable tradesperson.
4. Create more space
Knocking out a wall or two to create open plan living will add a feeling of space and light, especially if your property is older, when architectural styles featured smaller rooms and closed spaces. It’s important to check for structural issues before starting any work. A qualified tradesperson can advise whether your plans are feasible and if your walls are load-bearing or not. It’s important to get a full quote on the work upfront, in case there are any surprises or extra work required to make the new space structurally sound.
5. Create an outdoor entertaining space
Australians love to live life outside, so creating an outdoor haven for barbecues and get-togethers is a great investment. You might already have a space that just needs updating with a few new plants or paving. Simple ideas like painting an otherwise boring fence in a contemporary colour like charcoal, can give a new look for a small outlay. For others, you might need to create a space using clever landscaping, building a deck or even installing a pool. Sustainable plants and watering methods will also attract buyers as the world wises up to drought-proofing. Talk to a qualified landscaper or builder to get an idea of what you can do with your space.
Have more questions? We have the answers! Call us, we're here to help!
Rachael Bland – Founder & CEO