2015 is a great time to own a home in Australia, as major cities like Sydney and Melbourne are pushing property prices skyward – but are you harnessing your homeownership power?
In a recent survey, Mozo asked Australian homeowners what their property moves will be over the year. Here are the top 3 ways homeowners like you are planning to cash in on the property boom:
1. Renovation – 26% planning a home refresh
Who doesn’t love a good DIY reno? While it might be tempting to borrow glitzy renovation ideas from Australia’s favourite renovation shows The Block and House Rules, if you’re planning on selling your home in the next 2-5 years your best bet is to go back to basics and look at the most cost effective renovations that will add the most value to your property.
Using the kitchen as an example, according to Domain experts you don’t have to undertake a complete overhaul, as quick DIY renos like replacing benchtops, kitchen joinery and lighting can give your kitchen an immediate visual refresh and add value without breaking the bank.
Another important value adding reno is improving your home’s street appeal by giving your front door a fresh lick of paint and landscaping your front yard with low maintenance plants like Australian natives Lomandra and Bottlebrush. And if you have an unused space like an attic or basement, you can easily turn it into a parent’s retreat by adding insulation and installing windows to provide natural light and show buyers the potential of the space.
Top tip: Don’t cut corners on your renovation. Quality fixtures and a professional paint job will reward you in spades, when it comes time to sell.
2. Extra repayments – 24% getting ahead on their home loan
With interest rates tipped to stay on hold at next Tuesday’s RBA Board meeting, now’s the perfect time to take advantage of the record low rate environment by making extra repayments on your home loan.
Say you have a $300,000 home loan over 25 years with the average variable rate at the moment of 4.91%, by making an extra repayment of $200 a month you could save $45,187 in interest and slash the life of the loan by 4 years and 6 months.
But you could slash the interest you pay on your home loan even further by switching to a more competitive home loan.
Refinancing to Mozo’s Mystery Bank Deal with a 4.29% interest rate will reduce your monthly repayments by $106. So if you are smart about it and make an extra monthly repayment of $306 (The $106 saved by refinancing and the original $200 extra repayment amount) you would save $50,539 in interest and reduce the term by 6 years and 1 month.
Interested in seeing how much you could save? Give me a buzz on 13 6696 (13 MOZO) or use our online enquiry form here.
3. Investment – 5% buying another property
As property prices soar, it’s likely that the amount of equity you hold in your home has also grown. So it could be a smart move to use your equity to purchase another property as investment real estate can provide steady rental income and capital gains over the long term. Plus, it can be a great way to diversify your income or make it part of your retirement planning.
Unsure of how much equity you hold? Ask a local real estate agent to conduct a property valuation for you, this will cost around $200. Alternatively, ask your home loan provider if they offer free home valuations.
If you decide buying another property is your best bet for 2015, before you begin your hunt your first step should be to use Australian Property Monitors to search for suburbs with high potential for growth. However, property booms don’t happen every year, so weigh up current property prices and conservative forecasting rather than relying on a continuous boom, in order to determine whether it is a good investment.
For more investment tips, read my Invest like a property magnate article.