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If you’re planning to buy a new home this year, the first thing you’ll need to do is work out what kind of property you want. And when you’re weighing up your options, think about where you’re at in life – it might be an important factor in your decision.
Starting out If you’re a first home buyer looking to enter the property market, price will likely be the main consideration in your choice of home. So you may need to steer clear of expensive inner-city locations in favour of suburbs or regional centres.
But as your first property is likely to be a long-term investment, you’ll want to make sure it has the potential to increase in value – so it’s worth doing some research around up-and-coming neighbourhoods in your area.
To avoid straining your budget, be wary of ‘fixer-uppers’ that may require hefty spending on repairs and maintenance down the track. But at the same time, think about how you can add value to the property when you eventually sell. Even a small renovation could give a big boost to your sale price.
The good news for first home buyers is that the government has introduced the First Home Super Saver (FHSS) Scheme. From 1 July 2017, you can save up to $15,000 per year and up to $30,000 in total in voluntary super contributions (for example pre-tax contributions) under the scheme. From 1 July 2018, you can then access eligible contributions (plus a calculated earnings amount) and put this amount towards a deposit, assuming certain conditions are met. The amounts released under the FHSS, plus associated earnings, are included in your assessable income and taxed at your marginal tax rate, less a 30% tax offset.
Speak with your financial adviser about the important scheme rules to ensure that you can qualify.
Upgrading As you move through life, your housing needs may change as well. For instance, if you have a growing family or pets, you might be in the market for a larger property with plenty of living areas and outdoor space. You might even consider a cheaper neighbourhood if it means you can afford a more sizeable home. If you don’t have a family and you’re not planning to start one, a change of address could allow you to enjoy the type of lifestyle you love. For example, you might take the opportunity to move to a vibrant neighbourhood with plenty of restaurants, cafes and recreational facilities nearby.
Working from home? You’ll probably want a peaceful location with enough space for your home office.
Downsizing Once the kids have flown the coop, you might think about selling the family home and moving somewhere cosier. And as you settle into retirement, you may prefer to be surrounded by a community of people your own age who enjoy similar hobbies and activities.
Chances are you won’t want to move again any time soon, so you’ll need to consider how your needs may change in the future. As you become less active, you’ll want a home and neighbourhood that are both easy to get around. It’s also worth ensuring you’ll have easy access to medical facilities and government services.
If you’re looking to downsize, you may be able to use it as an opportunity to boost your nest egg. As of 1 July 2018, Australians aged 65 and over may be able to make an extra ‘downsizer contribution’ of up to $300,000 from the sale proceeds of their home, if they’ve owned it for 10 years or more.
Speak with your financial adviser about the other requirements to be eligible to make a downsizer contribution.
Speak to your financial adviser
There are a number of professionals you may need to consult when looking for a new home such as your accountant, lender, solicitor, real estate agent and financial planner/adviser. Verve Group's Senior Wealth Adviser, Matthew Carberry, can help you work out your budget and create a financial plan to suit your needs and lifestyle at any stage of life.
Call Verve Group on (08) 8120 4877 or email matthew@vervegroup.com.au to get in touch today.