Friday, June 22, 2018

Women

"All the Single Ladies (All the Single Ladies)." I know you're all "Independent Women" and not "Just a Girl" and you know how important it is to have your finances in order - especially after a break-up.

In fact, new research commissioned by State Custodian Home Loans, shows that financial worries are a major concern for many women. So, if you feel like there "Nothin' Goin' on But The Rent", read on and "Run the World."

Ok, enough with the song title theme and down to some serious money talk...

First, back to the aforementionedsurvey for a moment, which studied over 1,000 Australian women. Results discovered that almost 50% of single women and 60% of single mums were concerned about their lack of financial understanding. Single mums were also more intimidated by the big banks and other financial institutions, with many preferring to simply take advice from family and friends, rather than seek out professional guidance. 

"I can understand if you're a single woman, or a woman on you own with kids, how intimidating some institutions can feel," says Joanna Pretty, State Custodians general manager. "But I'd advise women to talk to different institutions and experts, such as financial advisors or accountants, to see who they're comfortable with and how they can help. 

"Finding people who can give you the right information and products, and reassure you they'll look after you is key. Trust is very important in dire situations and it is vital single women financially educate themselves."

If you find yourself newly single, one of the key factors you may be facing in a break up or divorce situation is the family home - not only is this your greatest asset, but emotionally it has been the heart of your family unit. However, putting concerns of the heart in front of the realities of your financial situation, can put additional stress on your finances and your emotions. Yet, despite this fact, a third of all women interviewed said they would be reluctant to move and downsize. 

"The home can hold great emotional attachment and is familiar for kids," said Pretty. "When women lose their jobs or get divorced, often they want to hold onto a home so they'll feel secure. However, you need to think about it in practical terms. If you can't handle the mortgage and it's going to financially wipe you out in two years' time, get advice and consider your options."

So, what should you be doing to ensure a brighter financial future? 

Be Prepared
Educate yourself about your finances - and consider seeking some professional advice - there are some really good advisers out there who will help and guide you. Get ahead of the game with some up-front budget planning - draw up a budget so you know exactly what's coming in and going out each month and make sure you have a contingency plan. Having a clear roadmap to follow should anything happen to the family breadwinners will reduce your stress and help avoid panic. 

Start Saving
If you don't have any savings, make a start, no matter how small. Don't be tempted to avoid the issue because you don't have much spare cash - once you start saving you'll be amazed how quickly it can build up - and you will find saving becomes addictive. You'll want to skip a coffee, cancel your cable TV or cut down on the takeaways and put the money into your savings account. Every little helps and it's a great comfort to see your funds building into a safety net you can fall back on in an emergency. 

Be Realistic
It's easy to say keep your head and keep your emotions out of your decisions, but it really is the best advice. If you simply can't afford to remain in the family home after a divorce, you will have to move. It's all about attitude - think of all the positive aspects of moving and downsizing and make a fresh start. The capital you release will provide you with a financial buffer that will ease your move into a new home and avoid you falling into a pit of debt that will have a damaging impact on your family and your emotional state. 

Talk to the Pros
Don't just rely on advice of family and friends. Make an appointment with your mortgage broker and talk to a financial adviser. They are the experts in taking some of the stress out of your difficult situation and will help you save money. Professional advisers are there to help you - you won't find them at all intimidating, like the big financial institutions and they will deal with the banks on your behalf, so you always have a buffer. And you'll generally find brokers and advisers to be empathetic and supportive - offering you the clear thinking you need to navigate your financial future. 

"Man, I feel like a Woman"...

Lending 

Ten years on from the Global Financial Crisis and Australia, despite the end of the mining boom, it is not doing too badly. But while we escaped the worst ravages of the worldwide recession, we have not escaped the economic flow-on effects. 

Thanks to the low-interest-rate cure for the Global Financial Crisis, investors worldwide have piled into property and shares, and in the process the affordability of housing has plummeted - from Canada to London, Hong Kong to Down Under - and become a serious political issue. 

As a result, there has been a lot of finger pointing. Foreign buyers, especially those from China, have borne the brunt of the blame, but they are only a tiny part of a far more complex landscape that also includes population growth, lack of supply and low interest rates. 

In Australia, most recently, it has been investors who have been under the spotlight: over the past eight years the total value of all mortgages has almost doubled to $1.54 trillion, and nearly a third of that total is made of loans to investors. 

Indeed, as house prices continued to experience double-digit year-on-year growth (Sydney up 20%, Melbourne up 17% and Canberra up 14%) - earlier this year the total of investor loans rose to above 50% of all loans issued. 

Despite the robust nature of Australia's banking system, high investor debt is a worry, especially given the uncertain geopolitical landscape and the spectre of rising borrowing costs. Interest-only loans are a particular worry for regulators, since they are particularly susceptible to any slump in the housing market. 

As a result, banks and lenders have been facing tighter lending criteria. Treasurer Scott Morrison has called for a "reduced reliance on interest-only loans" and the Australian Prudential Regulation Authority - which oversees the banking sector - is about to release further rules regarding banks' investor lending. 

Anybody who has applied for a home loan over the past few months will be aware of these new measures, and investors have faced even more scrutiny.

So, what does this mean for people who want to invest in property? Well, it is not all bad news. While many unprepared speculators will be turned down for loans, for those with solid finances, property investment is still a valid and rewarding option.

Proper market research is vital, so is the help of industry professionals. A mortgage advisor can offer a range of financial products and tailor fit solutions to your requirements. And once the loan has been approved, with fewer speculators in the market, auction activity and prices should cool - leaving you with more opportunity to make a healthy return on your investment. 

 

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Contact Details

Zippy Finance 

PO Box 3078
North Turramurra
NSW 2074

T 1300 855 022 

Louisa Sanghera is a credit representative (437236) of BLSSA Pty Ltd ACN 117 651 760.  Australian Credit Licence 391237. ABN 85 168 278 975.

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