3 CONVERSATIONS COUPLES SHOULD HAVE BEFORE GETTING A HOME LOAN

Purchasing a home as a couple is a major financial and emotional milestone. Beyond simply owning property together, it signifies a long-term commitment to shared financial and lifestyle goals. It’s vital that couples have open communication and clear expectations before applying for a mortgage to avoid future challenges. Here are three important questions to ask.

1. What are our non-negotiables in a home?

Before house hunting, it’s vital to clarify what each partner wants in a home. Discussing location preferences is important, as proximity to work, schools, family, or public transport may be a priority. It’s also important to determine which neighbourhoods are appealing and which should be avoided. Home features that each 

person wants should be clearly outlined, including the number of bedrooms and bathrooms needed, as well as whether an open-plan living space or separate rooms would be preferable. Additional considerations such as a backyard, garage, or home office can also play an important role in decision-making. 

2. What are our financial limits and strategies?

Disagreements around money can be a significant source of stress in relationships, making it important to have a clear discussion about financial boundaries before committing to a mortgage. Setting a maximum budget that accounts for mortgage repayments, property taxes, and ongoing maintenance costs can help avoid financial strain. Securing pre-approval can give couples a realistic picture of what they can afford and help determine a comfortable repayment level. To avoid overspending in competitive markets, establishing clear spending limits before engaging in bidding on a property is crucial. 

On top of that, planning for unexpected costs, such as emergency repairs or income changes, by maintaining a contingency fund can provide long-term financial security. By defining financial parameters early in the process, couples can make informed decisions without unnecessary pressure.

3. How Does This Home Fit Into Our Long-Term Vision?

Looking ahead to the future is essential when choosing a home. Evaluating whether the home provides enough space for potential growth, such as children, pets, or extended family members, ensures it will be suitable over a long period of time. 

Considering whether certain spaces can be adapted, such as converting a guest room into a nursery or a home office, adds flexibility and gives you more options down the track.

Schools, childcare facilities, and the different amenities on offer should also be factored into the decision-making process for couples planning to start a family. Even if children are not in the immediate plan, choosing a home with future needs in mind helps prevent needing to move sooner than expected.

6 THINGS TO KNOW ABOUT SMSFS AND PROPERTY 

1. You can borrow, but there are restrictions

SMSFs can use loans to purchase property through a Limited Recourse Borrowing Arrangement (LRBA). However, lending criteria are stricter than standard home loans, and not all banks offer SMSF loans. Borrowing capacity is assessed based on the SMSF’s income, not personal income, which may limit loan options.

2. Rental income and tax benefits can help

Rental income from SMSF-owned properties is taxed at a concessional rate of 15%, which is lower than most individual income tax rates. If the SMSF is in the pension phase, rental income may even be tax-free. Capital gains tax (CGT) is also reduced if the property is held for more than 12 months.

3. Your super fund must meet compliance rules

SMSF trustees must follow strict rules, including ensuring the investment aligns with the fund’s documented investment strategy. The Australian Taxation Office (ATO) also requires annual audits and compliance with superannuation laws. Failing to meet these obligations can result in financial penalties.

4. You can’t live in the property

One of the main rules for SMSF property investment is that the property must be for investment purposes only. It cannot be lived in by the SMSF members or their relatives. This applies to both residential and commercial properties, making sure the asset is used solely as an investment.

5. Commercial property can be used for business

SMSFs can purchase commercial properties and lease them to a related business, provided it is done at market rates. This strategy can be particularly beneficial for business owners, allowing them to pay rent directly to their SMSF rather than a third-party landlord.

6. Liquidity and diversification are important

Property is an illiquid asset, meaning it can be difficult to sell quickly if the SMSF needs cash. It’s important to make sure you balance property investments with other assets like shares, cash, or managed funds to ensure the fund has enough liquidity to meet expenses, such as pension payments for retired members.

Investing in property through a SMSF can be a great wealth-building strategy, but it’s not for everyone. It requires planning, and compliance with regulations. Speaking to an experienced mortgage broker and financial adviser can help determine whether it will be a fit with your personal and retirement goals.

RENTAL MARKET BEGINS TO EASE AS LISTINGS IMPROVE

The Australian rental market is showing signs of cooling, with national median rents growing at a significantly slower pace compared to the previous year’s surge.

According to REA Group’s latest Rental Report, national median rents increased by 6.9 per cent to $620 per week in December 2024, marking a substantial decline from the nearly 20 per cent growth recorded in 2023.

New rental listings have shown promising signs of improvement, with a 4.6 per cent increase in the second half of 2024 compared to the same period in 2023, representing the most active second half since 2020.

The country’s largest rental markets have started to stabilise, with both Sydney and Melbourne recording no changes in the December quarter, maintaining median rents of $730 and $570, respectively.

REA Group Executive Manager of Economics Angus Moore, said there has been a significant shift in market dynamics.

“Over 2024, we saw rental price growth slow and the availability of properties improve, indicating that conditions are gradually beginning to ease for renters,” Mr Moore said.

Perth and Adelaide have emerged as the strongest performing markets, with Perth leading rental price growth at 8.3 per cent and Adelaide following at 7.4 per cent. Adelaide’s median weekly rent of $580 has now surpassed Melbourne’s $570, while Perth at $650 has moved ahead of Brisbane’s $630.

Regional areas continue to outperform capital cities, with regional rents climbing 10 per cent to reach $550 per week, compared to capital cities’ more modest 6.7 per cent growth to $640.

The market has shown signs of moderating demand, with the median days on market increasing slightly from 19 to 20 days, while average enquiries per listing have decreased from 24.1 to 19.5 nationally.

“Despite some easing of rental pressures, the market remains far tighter than pre-pandemic levels, and availability is still strained,” Mr Moore said.

“Rents are expected to keep rising in 2025, though at a more moderate pace.”

PROPERTY MARKET SET FOR GROWTH IN 2025, STRONGER GAINS IN 2026

Australian property prices are expected to continue their upward trajectory, with units outpacing houses for the first time, according to KPMG’s Residential Property Market Outlook.

The national housing market is forecast to see house prices rise by 3.3% in 2025, followed by a more substantial 6% increase in 2026, while unit prices are predicted to grow by 4.6% and 5.5%, respectively.

Perth leads the house price growth forecast for 2025 at 4%, while Sydney is expected to dominate in 2026 with a 7.8% increase. The shift towards units reflects growing affordability constraints in capital cities.

KPMG Chief Economist Dr Brendan Rynne, said the market has shown remarkable resilience despite challenging conditions.

“While 2024 was a year of high interest rates and inflation and subdued consumer sentiment, the housing market withstood all those factors and still provided strong price growth, due to demand outstripping supply,” Dr Rynne said.

The report indicates that building approvals are improving, though the translation into actual housing completions will be limited in 2025 and 2026 due to inherent time lags in the construction process.

For renters, some relief may be on the horizon. Rental growth is expected to moderate to between 3.5% and 4.5% over the next two years, down from the peak of 7.8% observed in March 2024.

The market’s performance has aligned closely with previous forecasts, with 2024 seeing house prices rise by 5.1% and units by 4.5%, nearly matching KPMG’s earlier predictions of 5.3% and 4.5% respectively.

“Despite affordability and availability issues and a delayed interest rate cut, increased investor sentiment, and anticipated relaxed lending conditions will help support modest price growth in 2025, and then stronger growth next year,” Dr Rynne said.

He said that the anticipated interest rate cuts starting in the second quarter of 2025 would likely accelerate price growth in the latter half of the year.

“A downward shift in rental prices will help restrain property growth. The high rents in recent years have pushed more renters to look to buy instead which has added to demand and hence prices,” Dr Rynne said.

“This is one of the factors we see contributing to a more balanced and sustainable rate of price growth over the next one to two years, and more aligned with long-term averages.”

HOW TO TRADE IN YOUR CAR

Trading in your car can be a great way to help with the cost of a new vehicle, but the process can feel overwhelming, especially if it’s your first time.

Understanding how dealerships handle trade-ins and preparing accordingly can help you secure the best possible deal.

Know your car’s value

Before stepping into a dealership, be sure to research the market value of your car. Check online valuation tools, compare similar vehicles in your area, and factor in aspects like mileage, condition, and service history.

A well-informed seller has more leverage to negotiate a fair trade-in price. Without this knowledge, you risk accepting a lower offer. The condition of your car plays a major role in determining its trade-in value.

Dealerships inspect vehicles for cosmetic damage, mechanical issues, and maintenance history. A well-maintained car with a clean service record will likely get a better offer. Investing in minor repairs, getting a professional clean, and fixing cosmetic flaws like dents or scratches can increase your car’s appeal.

Compare offers

Don’t settle for the first offer you receive. Visit multiple dealerships or use online trade-in platforms to compare quotes. Some dealers, particularly those where you purchased the car, may offer a better deal due to an existing relationship.

However, always explore your options to make sure you are getting the highest trade-in value. If your car is still under finance, calculate its equity before trading it in. Equity is the difference between what you owe on the loan and the car’s trade-in value. If you have positive equity, the remaining balance can go towards your new purchase.

However, if you have negative equity, you may need to pay the difference or roll the balance into your next loan, which can increase your overall costs. Dealerships expect customers to negotiate, so don’t be afraid to push for a better deal.

If you’ve done your research and have competing offers, use them as leverage. Remember, you can negotiate both the trade-in value and the price of the new vehicle to maximise savings. The goal is to achieve the best possible terms for your transaction.

Finalise the trade-in and financing

To ensure a smooth trade-in process, have all necessary documents ready. This includes the car title, registration, service records, loan payoff details (if applicable), and any other relevant paperwork. Having these documents prepared can help speed up the transaction and prevent unnecessary delays.

If you need financing for your next car, don’t rely solely on dealership finance options. Work with a finance broker to compare your options so you know exactly what you have to work with.

IS IT POSSIBLE TO FINANCE YOUR WEDDING?

Weddings are one of life’s biggest celebrations, but they can also come with a hefty price tag. From securing the perfect venue to booking photographers, caterers, and entertainment, the costs can quickly add up. If you’re wondering whether it’s possible to finance your wedding, the answer is yes. A wedding loan could help cover your expenses while allowing you to spread the cost over time. Here are three key reasons why a personal loan might be a practical option for your big day.

1. Secure your dream suppliers early

Many couples have a vision for their wedding day, whether it’s a stunning venue, a sought-after photographer or a live band that brings the party to life. However, the best suppliers often book out months or even years, in advance, making it difficult to lock them in without upfront funds.

A wedding loan allows you to secure your must-have vendors early, ensuring you don’t miss out simply because you’re waiting to save up. By having the funds available when you need them, you can confidently plan the wedding you want without compromising on quality.

2. Spread the cost over time

Instead of using up all your savings in one go, a personal loan lets you break down wedding expenses into manageable repayments. Many lenders offer flexible terms ranging from three to seven years, giving you the option to choose a repayment schedule that works for your financial situation.

With fixed repayments, you can budget more effectively and avoid financial strain in the lead-up to your wedding. This approach is especially useful when covering big-ticket items like venue hire, catering, and travel arrangements, ensuring you don’t have to pay for everything at once.

3. Be prepared for unexpected costs

Even with careful planning, unexpected costs can arise, whether it’s a last-minute change of venue due to bad weather, extra seating for additional guests, or unforeseen decoration expenses. These unplanned costs can quickly put pressure on your budget. A wedding loan provides financial flexibility, giving you peace of mind that if an unexpected expense pops up, you’ll have the funds to handle it without dipping into emergency savings. This way, you can focus on enjoying your special day without added financial stress.

_{This is general information only and is subject to change at any given time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.}