October 23, 2017

Author Archives: savings dotcomdotau

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Home and Contents Insurance

A home and its contents are the most valuable things that most people will ever own.

To protect them, you can take out Home and Contents insurance.

This allows you to pay an affordable premium each year so that, if your home is damaged or destroyed, the insurance company will give you the money to replace what you lost.

Home and contents insurance often come bundled as a package but they are actually two separate polices.

Home insurance covers the cost of damage to your home, while Contents insurance covers damage to your possessions.

It is important to know exactly what an insurance policy covers as it varies between companies.

For instance some policies insure your home against flood but some do not.

You can find this out on the key factsheet for the product which will be on your insurer’s website, or you can ask them to send you a copy.

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What is a High Interest Savings Account

A high interest savings account is a bank account that offers a competitive interest rate.

It is similar to a regular bank account, but it is designed to help you save money, rather than spend money.

It does this by offering a higher interest rate than a transaction account.

Interest on a high interest savings account is usually calculated daily and paid monthly.

A high interest savings account gives you at-call access to your funds, which means you can get it quickly if you need it.

It is one of the safest investments in the financial system because it is guaranteed by the Australian Government.

Under its Financial Claims Scheme, the government guarantees deposits of up to $250,000 per customer per Authorised Deposit-Taking Institution.

If an Authorised Deposit-Taking Institution cannot pay you back your term deposit, the Government will aim to pay you the money in seven calendar days.

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Term Deposit Basics

Term deposits are savings products offered by banks, credit unions and building societies.

You give them a chunk of money for an agreed term and they give you a fixed rate of interest over that term.

The term can range from as little as one month up to five years.

Depending on the deposit, interest can be paid to you regularly or in one big payment at the end.

When the deposit matures, you can get your money back or roll it over into another term deposit.

The main benefit of a term deposit is that all deposits up to $250,000 are guaranteed by the Government.

The disadvantage is that if you want your money back before the agreed date, you will probably have to pay a financial penalty.

Applying for a term deposit is essentially the same as applying for a bank savings account, and most applications can be made online.

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What is Superannuation in Australia

Superannuation is a way to accumulate funds through your working life for your retirement.

It is compulsory for employers to contribute to superannuation on behalf of their employees.

Your employer must pay 9.5% of your salary into a superfund. This is called the Super Guarantee. You can also top it up with your own money.

If your money is being paid to a super fund, it is invested by your super fund manager into assets such as shares, property and term deposits so it can grow.

To encourage people to invest in super, the government taxes it at a much lower rate than investments outside super.

Generally, you are not allowed to withdraw money from your super until you reach your preservation age, which currently ranges between 55 and 60, depending on when you were born.

At retirement, you can retire and start withdrawing your super to live off.

The earlier you start putting money into super, the longer it has to grow. Retirement calculator will help you on this purpose

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What is Conveyancing in Australia

Conveyancing basics

When you buy or sell a property you will need to hire someone to handle the legal process, referred to as conveyancing.

It can be done by lawyers or by non-lawyers who are licensed conveyancers.

The work a conveyancer does for the buyer includes the preparation of the legal documents, conducting local government searches on the property, and checking the legitimacy of its current title.

The conveyancer will also:

  • Manage your deposit in the trust account
  • Calculate the adjustment of rates and taxes
  • Settle the property
  • Coordinate information between the banks and the buyer and seller
  • Generally represent your interests

For the seller, the conveyancer will ensure that all the legal documents are prepared, signed, and properly in order.

A licensed, professional conveyancer will protect you from being taken advantage of through fraud or misrepresentation.

Fees will vary so it is a good idea to shop around when you start looking for a property.

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How Borrowing Capacity is Calculated

Before you start searching for a home it is a good idea find out your borrowing capacity.

This will tell you what you can afford to buy.

To work out what they can lend you, a mortgage lender will determine what you could afford to repay each month.

They do this by comparing your spending with your income.

Your income includes your salary, any income you receive from a rental property, and other income such as overtime, bonuses, and government transfers.

Your expenses include your living expenses and your repayments on any other loans.

Lenders will ask you detailed questions about how many dependents you have and costs for childcare, school fees, and private health cover.

If you have a credit card, they will also factor in your whole credit limit to figure out how big your repayments could get in the future.

Many lenders offer a borrowing mortgage repayment calculator on their website to give you a rough idea of what they would lend you.

 

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What is a Comparison Rate

When they advertise a loan, banks and other lenders are legally required to display a comparison rate.

The comparison rate is important because it lets you know the true cost of the loan and to easily compare home loans between different lenders.

As well as charging interest, lenders levy fees which can be substantial including establishment fees, approval fees, and other upfront and ongoing fees.

The comparison rate combines these fees and charges along with the interest rate into a single, easy to understand percentage figure.

The lower the comparison rate, the cheaper the loan.

For this reason, it is wise to pay close attention to the comparison rate when you shop around for a loan and not be dazzled by a cheap interest rate.

But remember that cost isn’t the only thing to consider when you are trying to work out which loan is right for you.

 

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5 Tips to Save Money on Furniture

Homeowners want furniture that’s functional and visually appealing. It’s nice to go home to something that gives you comfort and can help make things easier around the house. However, new furniture can be expensive, especially if you want the latest design from a well-known brand.

The good thing is, you can give your home a furniture upgrade even on a limited budget. Here are some tips on how to get cheap furniture in Australia and still get the makeover that you want:

Create a list

As with any shopping trip, it is very important to make a list of furniture that you need to buy. For some homeowners, a furniture store is like candy land for kids. Resist the temptation of going over budget by bringing a list with you and sticking with it. Not only will it save you money, it’s a great timesaver, too.

Know when to go furniture shopping

In general, you may want to buy furniture during December up to January. Many stores offer last season’s pieces at much lower prices to give room for new models. Save up to 50% on some items, even those from famous brands – this makes it worth the wait, right?

Make your own furniture

Being creative and resourceful can go a long way when it comes to saving money on furniture. You can create great pieces from wooden pallets and old wooden doors. You can also drop by garage sales and see if there are items that you can turn into a side table or any decorative and functional piece for your home. Going the DIY route can cut furniture expenses. Customized items have that charming, personal touch as well.

Consider secondhand furniture

Pre-loved items don’t necessarily mean they cannot be used anymore. Look at local shops or even online for secondhand furniture at low prices. In some cases, all they need is some cover-up for dents or new upholstery and you’re good to go.

Sell old furniture

Some homeowners want to buy new furniture to replace old ones and give their home a different look and appeal. If you’re in the same situation, you may want to sell your old pieces so you can have more money for your furniture budget. In this way, you can get the items that you want without paying too much.

Final Thought

Finding cheap furniture in Australia may entail a bit of work, but it’s out there, and with the significant savings that you can get, it’s definitely worth the time and effort of looking for great deals.

Do you know other tips on how to get cheap furniture in Australia? You can share your ideas in the comments section below.

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Why Balloon Payment on a Car Loan Makes a Difference

When choosing a car loan, one of the most important decisions borrowers are faced with is whether or not they should add a “Balloon Payment” to the loan? The size of the Balloon Payment will have an effect on the amount of your monthly repayments as well as the amount you will owe once the loan has expired. Keep reading to find out what difference the Balloon Payment makes on your car loan rates.

What is a Balloon Payment?

A Balloon Payment is a lump sum that the borrower owes to the financer at the end of the loan. This affords the borrower the opportunity to pay a portion of the principal of the loan during the term. This means that they pay a reduced monthly payment and then owe a larger sum at the end of the loan agreement.

The amount of the payment can be represented as a percentage of the amount borrowed or as an absolute dollar value. Other than a lease, this type of payment plan is optional.

Balloon Payment Benefits

The main benefit of a Balloon Payment is that you will have a low monthly payment. This can have the added benefits of qualifying for a larger car loan amount and helping to manage finances.

What is the process when the payment is due?

The payment must be made as a lump sum once the car loan has expired. There are typically a number of options available once the payment is due.

  • If the borrower wants a new vehicle, they can sell the car and use the money to make the payment and finalise the loan. The borrower is then entitled to buy a replacement car and if they wish, apply for a new car loan to pay for the replacement vehicle. If the car is being traded in as a part of the payment for the new vehicle then the Balloon Payment can be included in this process.
  • If the borrower wants to keep the vehicle, they can make the payment in cash, roll over or refinance the payment into another loan.

Final thought

There are so many different car loans that it can be difficult to decide which one is best for you. It is a good idea to speak to a financial advisor who will be able to explain loan terms and conditions, help to compare car loans and provide you with the best solution for your financial circumstances.

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Major Change in Your Life? Think About Life Insurance.

It is glum to think about, but the one thing that is promised to us in life is that everyone is going to die. You can’t predict when or how you are going to die but you can prepare for it. One way to prepare is to have life insurance in Australia so that you family is not left financially destitute when the inevitable happens.

Types of Life Insurance in Australia

In the event of terminal illness or death, life insurance pays a lump sum to the surviving family. Term life insurance is the most common type of life insurance available in Australia. It is generally available to individuals between the ages of 17 and 69.

The importance of life insurance

Financial burdens are the last thing you want to be concerned about when a family member has just died. This pressure is even more unbearable if the deceased was the main breadwinner. A life insurance payment can go towards the following:

  • Loan and mortgage payments
  • Education
  • To keep a business running
  • Meeting the general financial needs of the family

How much life cover does a person need?

Everyone is going to have different needs. An insurance company is going to take several factors into consideration. They are going to look at your current debt and this includes your mortgage payments. For those who already have life insurance, they should inform their company when their circumstances change. If the loan amount increases on your mortgage, you may have to make extra payments each month to ensure that you are covered in the event of a payout. Insurance companies will also look at things such as education costs for your children, and future income requirements.

Monthly payments

Until you have been evaluated by an insurance agency there is no way you can determine how much you will be paying each month. Your payments will depend on the following.

  • Age
  • Gender
  • Smoker or non smoker
  • The amount of insurance required
  • Current health status
  • Occupation

Final thought

There are several factors that can have an effect on your life insurance policy. This includes debt increase, changes to your children’s school fees and a change in your mortgage loan amount. To ensure that your family gets the finances that they are entitled to make sure that you inform your insurance company if there is a change in your financial circumstances.

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