The current 1.5% low-interest environment we have in Australia is an opportunity for first home buyers and property owners. The Victorian government last July 2017 announced a package of measures that will help first home buyers get into the market. The package aims to address the difficulty that first home buyers face in entering the property market. Lenders have also joined the bandwagon and have been offering low-interest rate loans geared towards the first home buyer. Property owners can also access interest rates below 4% which is an opportunity for homeowners to put more money into their home loan and pay it out as soon as possible.

I’ve come up with a list of financial goals that you can follow to put yourself in a great and healthy financial position in 2018.

  1. Save, save, save. Be disciplined, set-up a savings account and place extra money there.
  2. Pay down your debts. Begin with the credit cards and the personal loans as these credit facilities attract a high-interest rate. Increasing your payments to reduce these debts can result in paying less interest in the long term.
  3. Pay cash. Once you’ve paid out your high interest bearing credit facilities, start paying cash for all your future purchases. Don’t fall into the debt trap again.
  4. Start an emergency fund. This can help you to cover unexpected costs and give peace of mind. This will avoid you from resorting to payday lenders or using your credit card to cover the emergency expense.
  5. If you are a first home buyer, put yourself in a strong position to buy. Start saving for the deposit for your first home. Consider taking a 2nd job to build those savings more quickly. If saving for the 5% is difficult, speak to your parents. Perhaps they can provide you with a leg-up by using the equity in their home as a deposit for your first home.
  6. The low-interest rate is a good time to increase your repayments on your mortgage. Paying off more of that mortgage will increase the equity you have in your home. You can use this equity to further invest in properties in the future.
  7. Consider investing. Perhaps you’d like to take the opportunity to branch out into property investment? For instance, you could look into using the equity stored in your current home loan to purchase an investment property. This can provide you with a secondary source of income through rent.
  8. If you have a mortgage, have a broker review your current home loan interest rate. A 0.5% reduction in interest rate can provide savings of up to $2,500 for a $500,000 loan.

Prices of properties in Sydney and Melbourne have become expensive but this should not dishearten the first home buyers. There are still suburbs in the southwest (Leppington) and northwest (Marsden Park) where single level homes within the $750,000 mark are still available. In Box Hill where several estates are being developed, expect to find a home above $750,000. Remember that the $10,000 grant is only available to first home buyers purchasing new homes up to $750,000. In Melbourne, suburbs such as Truganina and Tarneit still have homes within the $600,000. Expect to pay above $600,000 for house and land packages in the suburb of Point Cook but townhouse developments are still below the $600,000 mark. The $10,000 first home owners grant in Victoria is still available for homes up to $600,000. A first home buyer purchasing a new home in regional Victoria gets a $20,000 grant.

This article is for general information only and should not be considered personal financial advice. Before making a financial decision, you should seek independent advice from a mortgage broker, financial planner or an accountant.

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