At KeyInvest we know that every year for the last 10 years, education costs have increased by around 7%.

As a parent, no matter what type of education you choose for your children, the costs are likely to add pressure to your family budget.

Our calculations indicate that it can cost up to $260,000 to send one child to a private school for 13 years, taking into consideration additional costs such as textbooks, uniforms, excursions and extra-curricular activities.

 And when it comes to paying for school fees, many Australians are paying up to $5,000 on a term-by-term basis.

The costs are so significant that in dual income families, it is not unusual to have one income entirely dedicated to school costs.

It is also important to remember that education costs don’t stop when school finishes. University students will be faced with their own HECS-related expenses.

 As a result, we have found that parents are looking for greater assistance when solving the education equation. And there’s no better way to start than with a $1,000 from KeyInvest.

 To enter, visit http://www.savingsfortheireducation.com.au.

From the desk of the Chairman of KeyInvest, Dr Roger Sexton.

“Current media commentary about direction of the global economy can be very confusing and even disconcerting at times. In simplified terms, this commentary tends to fall into two distinct categories i.e., that is:

The “pessimists” (those who paint a worse case scenario); and

The “optimists” (those who argue a best case scenario).

Worse Case Scenario

The reasons why some pundits have a pessimistic view on the current global economic situation can be summarised as follows:

 • The world is in a “balance sheet depression” with excessive debt which could make a second GFC type credit crisis inevitable.

 • The three pillars of the global economy – the USA, Europe and China – each have their own particular problems but their impact is global because of the feedback which occurs from the financial sector to the production sector.

 • The ageing demographics in these major economies will depress spending and slow household wealth creation.

• Global industrial production will fall by an average of 0.250/0 a year for the next three years because of these demographic and wealth effects.

• European banks are under stress and European Government debt makes up a large proportion of their asset base.

The conclusions drawn by the proponents of this worse case scenario is that:

• The world will suffer from rolling recessions, starting in 2012 or 2013 and lasting until about 2018.

• Deleveraging (debt reduction) will run its course during this period.

 • CPI inflation will be contained at around 3 °/o a year as a world average over this period.

Best Case Scenario

 The Best Case Scenario is based on the following observations:

• Global credit markets have recovered from their GFC woes and are proving resilient (excluding the European Banks) even in the face of the sovereign debt fears in Europe.

• The key economic indicators in the US all point to a slow but steady recovery of the world’s largest economy over the next three years.

• The Dow Jones index (the “leading” indicator on the economy) is in fact only 10% below its all time high and is 93% above its GFC low.

• The outlook for about 70% of the world’s economy looks reasonably solid.

• The Chinese economy is proving to be resilient and inflation risks are fading.

• Industrial valuations across the world, both in absolute terms and relative to prevailing interest rates, are very cheap. Dividends are growing in real terms. This will lead to a step up in corporate merger and acquisition activity over the next 12-18 months.

• The growth of “new age” businesses is continuing at pace (e.g. Facebook and Web based “flash sales” businesses such as Gilt, leading to increases in productivity).

• Some positive policy settings emerging, finally, from the European Central Bank and the German Chancellor.

• There are a number of key reasons why the German Government will not allow the Euro to fail, including:

• The Community Banks in Germany are big holders of Euro denominated bonds. The German Government cannot (and will not) allow these banks to fail. Amongst other things, it would be political suicide.

• The German economy relies on exporting to the rest of Europe. • Following strong encouragement from Germany, the European Central Bank has loosened monetary policy and launched a new three year lending program to support European banks.

• The Federal Reserve in the US has also recently taken similar steps to loosen monetary policy in order to stimulate a resurgence in economic growth.

 • The Federal Reserve Bank has announced that they will keep interest rates at zero for another three years in the US.

• M2 Money supply growth in the US is at a record high. •

 The US economy is showing new signs of life:

• All key US data is exceeding the most recent forecasts.

• US car sales are booming.

• Natural gas prices in the US have fallen dramatically due to the shale oil revolution (this will also lower oil prices globally).

What does this all mean?

Putting aside all the hyperbole, the reality is that the resolution of the financial problems in Europe are very much a matter of politics. A series of policy mis-steps by EC Governments over the past 20 years have created a situation where most of Europe ran up an unacceptable debt burden and where the financial markets mis-priced the risks of lending to these Governments.

The solutions in Europe require the following policy actions to be taken by the Governments of the G20 countries, at minimum:

• Governments must accept that austerity measures – which are necessary to avoid country bankruptcy – have recessionary effects on GDP. So, while some countries in Europe are being forced to undertake fiscal austerity measures, (e.g. Greece) others in Europe (e.g. Germany) and elsewhere (e.g. the US, Japan, China) need to be able to provide short term stimulus.

• More monetary and credit easing is required (by the European Central Bank, the US Federal Reserve, Bank of Japan, Bank of England and the Swiss National Bank) to assist the short term fiscal stimuli.

• Supply side measures are also required to run in tandem so that the inflationary impacts of the fiscal and monetary stimulus is mitigated (e.g. through the development of corporate bond markets and infrastructure investments).

• Structural programs are required to help restore the long-term competitiveness of many of the European countries (e.g. via high quality education, job training, human capital improvements, new infrastructure and alternative energy).

The likely outcome from the interplay of the various economic forces at work is that the global economy in 2012 will be divided between:

• The high debt de-leveraging economies of Europe and the US and the no or low debt economies of the Emerging world.

 That said, the weight of probabilities is that we will see a positive outcome start to emerge for the worlds current economic problems during the second half of 2012.

Construction is now underway at the environmentally sustainable Chiton Retirement Living community in Hayborough at Victor Harbor, and over the next five years developers Beyond Today and KeyInvest will have completed 86 homes built to the highest energy efficient standards.

The frames are up on the first ten homes in the groundbreaking development and Beyond Today partner Adam Wright said an overwhelming response from retirees had seen seven of the homes already reserved.

“It is unprecedented to have this level of interest in the early stages of a retirement development and it is promising to see so many people interested in living with the benefits of a sustainable home and environment,” Mr Wright said.

“One of the major concerns in retirement is managing the ongoing cost of living, and the homes at Chiton Retirement Living are designed in a way that will make it possible to live with minimal and possibly no charges for power and water.”

Each home in the village will achieve a minimum 7-star energy rating and features solar energy and solar hot water supply, rainwater harvesting via 10,000 litre underground tanks and a guarantee there will be no overshadowing from neighbours.

“With additional design features such as north south orientation, effectively placed eaves, exterior blinds and double glazing inside temperatures can be kept down by up to 10 degrees,” Mr Wright said.

“This makes it possible to avoid turning on the air conditioning as often as you would in a conventional home and helps to prevent excessive electricity usage.”

Chiton Retirement Living is set in the award winning environmentally sustainable housing development Beyond Today and offers an unrivalled eco-friendly living experience.

“We have used only a quarter of our land holding for housing which has left 64 hectares of green space, reserves and a wetland all nurtured from what was denuded farmland,” Mr Wright said.

“Our wetland is attracting bird life never seen on this part of the coast in the past so bird watching will be a feature of Chiton Retirement Living and the community is also an easy walk to the nearby beach. Chiton Retirement Living is also just a few minutes from other local attractions such as Goolwa and Port Elliot.”

Mr Wright said the resort standard Community Centre planned for the village had also proved a popular drawcard for retirees.

 “The Community Centre will have stunning views of the wetland and surrounding reserves and we expect it to come alive with the activities that seem to be keeping the over 65s forever young,” Mr Wright said.

 “It is a sustainable way of life that many people have not had time to think about during their working lives, and when they discover how they will be able to live at Chiton Retirement Living it just makes sense.”

Homes at Chiton Retirement Living are available from $359,000 and offer two or three bedrooms, single or double garage, spacious and light living areas and private rear gardens.

 Transitioning to retirement is proving a difficult issue for mortgage brokers as the industry ages. KeyInvest national aggregation manager John Trubicyn has told Adam Smith of Broker News (www.brokernews.com.au) that, despite an aging industry, many brokers are unprepared for transitioning to retirement.

“Brokers often do not know what to do, where to go and more importantly, how to let go. Far too many work in their business rather than on their business, and as a result, are often ill-prepared when they want to retire,” Trubicyn said.

In light of the problem, Trubicyn said KeyInvest has worked to build a clear path to retirement for its brokers. He said the aggregator had put in place a 1-3 year succession plan for brokers looking to exit the industry and sell their business. The plan includes partnering outgoing brokers with brokers seeking to buy trail books, with KeyInvest often offering to purchase the books themselves.

“As part of our business coaching and support, we determine what the long-term goals are for their business, and then help them formulate plans that will enable them to reach their ultimate goal. Good brokers ask their clients the same sort of questions, but rarely apply the same principles to their own business and lifestyle needs,” he said.

For other brokers moving toward retirement, Trubicyn advised that they examine the assets their business has to offer.

“There are only three real assets in most broking businesses: the loan book, the database and the broker. The loan book may be devalued if it is old, is mainly with one lender, overly represented by sub-prime loans, too many jumbo loans or has problem loans. The value of a database improves if there is evidence it has a robust CRM capability that facilitates personalised marketing and customer care programs. The broker should be compliant, have a sound reputation, be willing to assist with the transition of the business and provide a clear undertaking regarding future activity,” Trubicyn said.

Another difficulty facing the industry as brokers head toward retirement will be reinvigorating mortgage broking with new blood, Trubicyn indicated. While he said KeyInvest offers programs to ease the transition for brokers both entering and exiting businesses, he commented that succession plans have often been lacking in the industry.

“We have in the past offered ‘broking apprenticeships’, but this is an industry initiative that is currently lacking, and should have greater buy-in from our industry associations and government. On our part, we provide guidance to our brokers of the optimum time to recruit the right personnel for their business. The challenge for both parties is that the businesses vary greatly in size, diversity of service and product offering, so it’s not one size fits all advice, and needs to be tailored to each situation,” he said.

 Financial planners and their clients require products and services that are easy to use, flexible and competitive. IT systems that support these goals are critical and are the reason why KEYINVEST determined that the previous IT platform would not adequately meet future requirements, especially with FOFA reforms on the horizon.

 So it became necessary to invest in a new Funds Management system.

“As a financial services institution, KEYINVEST’s core activity is the provision of financial services and products such as education savings plans, funeral bonds and products to assist with aged care financial planning and retirement planning. So we knew we had to engage external assistance to deliver a system that was custom-built for our products and the market-leading products and services that we have planned.” explained James McGill, General Manager Business Services.

 KEYINVEST’s ultimate priority was to implement a solution that would meet current requirements and could be expanded in the future. The chosen solution would need to be ‘future proof’; the product would have to secure the future direction for the customer base for at least the next five years.

 The desired outcome was to develop a cost effective platform that would meet scoped business areas and core business functions. The ability to deliver improved and modern functionality to internal and external stakeholders was a priority.

 After conducting a competitive evaluation, the IT Steering Committee at KEYINVEST, backed by the Board, recommended CIM (Corporate Information Management) for selection.

 CIM were commissioned to design, build and deliver a Funds Management System that supports the full Investor life cycle from applications and transacting, through to customer servicing and reporting. Designed to minimise the investment administrative workload for KEYINVEST, CIM provided a robust and scalable solution that fulfilled the requirements set out by KEYINVEST.

 Implementing the unit registry application

In January 2011, implementation of CIM began, with a ‘go live’ date scheduled for 1 July 2011. In conjunction with project managers, service delivery managers, programmers, analysts, testers and a group of KEYINVEST employees assigned to the task, a project plan was developed to include; scoping and gap analysis, custom KEYINVEST build, server installation, installation, configuration and testing, and user acceptance testing.

A pilot method was employed, allowing KEYINVEST to perform real validation of the product. The use of a migration path solution from its outdated platform to CIM prior to going live, enabled KEYINVEST to perform in-depth validation, as well as ensuring a smooth go live process.

 Generating immediate results

The implementation generated immediate results after ‘go live’ and (costly) satellite applications that were in use to support their previous platform were decommissioned. The new system now offers:

• Reduced costs by maximising automation and process

efficiency;

• Simplified compliance requirements and reporting;

• A highly flexible solution that supports business change; and

• Improved quality of service to the customer through advanced reporting and servicing functions.

 KEYINVEST are now planning further benefits to be available before the middle of 2012 in preparation for the changes required under the Future of Financial Advice (FOFA) reforms, such as improved management reporting and customer tracking, as well as online access to information for third party groups such as financial planners.

This is our Lending Services first year as an MFAA finalist, nominated in the highly competitive 2012 MFAA Excellence Award Mortgage Broking Business (6+ loan writers) category.

 “We are honoured to have been recognised by our industry peers and to have been selected from all the nominees across the country and named as a finalist for this Award,” said Chris Burns, Chief Executive Officer at KeyInvest Lending Services.

 “The last year has been full of changes and challenges for the home lending market, but our Lending Services’ team has been able to stay ahead of the pack due to our commitment to expertise in the lending market.

 At KeyInvest, we are committed to looking after the interests of our customers and have developed a range of network affiliations to help them achieve their long term financial goals, which we believe has enabled us to grow and prosper during challenging economic times.

 The dynamics of the mortgage broking industry has completely changed over the last few years and I’m proud to say our team have not only embraced these changes, but they have used the National Consumer Credit Protection changes to take their business to the next level and to diversify their product offerings,” Chris Burns, CEO of KeyInvest Lending Services said.

About the MFAA Excellence 2012 Awards

The MFAA Excellence Awards are the most rigorous in the Australian mortgage and finance industry and are judged by an independent panel of business professionals and experts. “The MFAA has acknowledged forty-two 2012 MFAA Excellence Awards finalists who have been judged on and rewarded for consistently demonstrating their professionalism, integrity, ethical conduct, innovation and role-model value,” said Phil Naylor, MFAA CEO.

 KeyInvest Lending Services’ continued innovation, growth and success in the industry is to be commended. To be recognised as a finalist speaks volumes of their exceptional practice and professionalism in mortgage and finance industry,” said Phil Naylor, CEO, MFAA.

 The winners will be announced at the MFAA Excellence Awards presentation dinner on 9 March 2012 at The Westin, Sydney. This is a very special occasion where industry professionals have the opportunity to celebrate excellence.

 For more information

Kriti Colless, MFAA, on 0434 692 402,

or Tim Carabott, KeyInvest Lending Services, on 08 8210 0000.

Wrinkles don’t hurt . . . but what can be extremely painful are the wrong decisions when you or a loved one need aged care.

KeyInvest has been a leading provider of Personal Financial Solutions for older Australians for several generations. Making knowledge accessible and easy to understand is a key component of our offering and we’re delighted to bring two of the leading experts in the field of Aged Care Financial Services to Adelaide for our customers.

In this Seminar, Noel and Rachel will deal with a number of issues that people need to consider when relocation to an Aged Care facility, including;

•  What to do when you want to stay in your own home but need some extra care?
• What does it really mean to live in a retirement village? Or an aged care facility?
• What are all those fees and charges and which ones will apply to you?
• Should you sell the family home or not?

 The answers to these questions and many more will be explained by our panel of experts, including Noel Whittaker and and Rachel Lane.

 If you’re interested in understanding the complex world of aged care these events are for you.

 Seminar details – Wednesday 29 February 2012, 2.30pm — 4.00pm

North Adelaide

 Register via enquiry@acaasa.com.au or by phoning 08 8338 6500

 About the Panel

Noel Whittaker Co-founding Director, Whittaker Macnaught.

Noel is the author of 20 bestselling books, appears frequently in the major Australian newspapers, and broadcasts on over 50 radio stations each week. He has been named Australian Investment Planner of the Year (1988), been awarded the Australian Centenary Medal (2003), and in 2011 was made a Member of the Order of Australia for “outstanding service and commitment to the financial industry”.

 Rachel Lane Executive Manager — Aged Care Solutions, Colonial First State

Rachel is well known and respected within the aged care and financial planning industries for providing advice in relation to the structuring of assets and income for Aged Care, and regularly facilitates workshops for the Aged Care Association of Australia (ACAA) and is highly sought after as a presenter at aged care conferences and seminars.

 Noel and Rachel have co-authored the book “Aged Care. Who Cares“.

Being a parent has many highs (and perhaps some irritations too), but one common issue is the amount of money Australian parents spend on their children. There are many costs associated with raising children including housing, food, clothing, recreation and education. For those planning on private school, this expense is often second only to mortgage costs. Planning ahead is the key and budgeted savings can be the answer.

The cost of education alone has been increasing by around 7% per annum for the last 10 years which is well ahead of the national inflation rate. Costs can vary between $1,000 per annum for a government secondary school education to $40,000 plus for a child in a private school boarding house. Importantly, these figures include not only fees but also allowances for uniforms, transport, computers and extra curricular activities. The resulting financial pressures can add stress to families and their budgets

A simple solution – savings accounts

Investment options range from a simple savings account with a bank or credit union – be sure to seek advice about the best account to avoid tax head-aches. A regular automated savings plan that adds to the account will be required. Look for an account with high interest that’s designed for long terms savings as you shouldn’t be using this account on a daily or weekly basis.

Tax effective and flexible – investment bonds

Another alternative is an Investment Bond that offers a number of tax advantages over ordinary savings accounts. It is estimated that in excess of $100 million each year is invested in bonds by Australian parents for future education expenses.

KeyInvest has offered these Bonds for a number of years as they’ve maintained their popularity because KeyInvest pays tax out of the earnings of the bond, so there is usually no need to pay any personal tax. Lower taxable income can also help maximise any family tax benefits you might be eligible to receive.

By investing $2,000 up front and 200 per month for 10 years, you would save enough to fund 6 years of secondary school at $6,000 p.a. Like all good long term savings plans, time and regular investments are the key.

Using home equity

An increasing trend is to draw-down on available equity in the family home. Whilst this does free up cash for education expenses the home-owner is left with an increased mortgage which of course attracts interest repayments. Again, ensuring any draw-down is structured in the best way possible you should consult your financial institution of financial planner.

The most important decision you make, however, could be just to start saving as time and regular investments are the key to getting ahead for an expense such as education.

For more information speak to your financial adviser or contact KeyInvest on (8213 1100) or click here 

By Russell Investments

There are two perspectives on the outlook for Australia. The first is that the economy will be under pressure from weaker commodity prices and export demand, and from a very large fiscal tightening – the government’s plan to deliver a modest fiscal surplus by 2012/2013 implies a fiscal tightening equal to 2.6% of GDP.

Furthermore, the two-speed economy divide will grow larger if the Australian dollar remains above parity.

The other perspective is that Australia is still likely to be the strongest of the developed economies. The surge in mining investment shows no sign of slowing down – the latest survey shows that mining companies intend to increase investment spending by 70% in the year ending June 2012, taking the total spend to 5.5% of GDP. The latest survey by Consensus Economics shows most forecasters expect GDP growth of 3.5% in 2012 following 1.6% growth this year.

We suspect that there is some downside risk to the 3.5% consensus 2012 GDP growth forecast even under our central scenario that the euro-zone holds together, the US posts modest growth and China slows moderately. The two-speed economy theme has hit harder than most analysts expected and we suspect that will be the case next year also – Australian GDP growth of 2.5-3.0% seems more likely under our base case.

The alternative scenario of a euro-zone collapse and ensuing financial crisis would obviously imply a weaker Australian economy and potentially a recession. But Australia should be much better placed to weather a global storm than other economies. A global crisis would again see the AUD drop sharply, potentially below 70 cents. The Reserve Bank, with the official rate at 4.25%, has the ability ease monetary policy much more aggressively than any other central bank and the government could quickly reverse its plan to bring the budget back to surplus. The mining investment boom would continue given the long-term nature of most of the projects.

Australian share market returns are likely to be in the high single digit range and we expect the S&P/ ASX 300 to finish 2012 at around 4,500. Valuations are attractive with the P/E ratio at 11 times, price to book value at 1.7 times and the dividend yield at 4.75%. Our composite value index has the Australian market at near one standard deviation undervalued. The market has the potential to move higher if global concerns ease. Our central scenario for subdued US economic growth and ongoing concerns about euro‑zone stability will keep the local market in undervalued territory.

Australian government bond yields at under 4% are expensive relative to history. A subdued global growth outlook, RBA interest rate cuts and declining local inflation pressures make a sell-off unlikely in 2012. We expect 10-year yields to end 2012 at around 4.0%.

The RBA’s two interest rate cuts so far have taken monetary policy from mildly restrictive to broadly neutral. Interest rate markets are pricing in a further 125 basis points of cuts that would take the cash rate to 3.0% by the end of 2012. This amount of easing seems unlikely barring the euro-zone collapse scenario, but another couple of 25 basis point rate cuts seem likely.

The Australian dollar has downside potential amid weaker commodity prices, slower export demand and RBA interest rate cuts. We look for the AUD to end 2012 between 80 to 90 cents.

Assumptions:

Investment return is 7% p.a.

$6,000 School costs is in today’s dollars and inflated at a rate is 3.5% p.a.

Total investment period is 16 years i.e. 10 years accumulation with 6 years of annual draw downs for school fees

If you’re thinking about buying a property, our experts have some tips to help work out exactly what you can afford before you sign.

The most important objective for any mortgage holder is to ensure repayments are made on time. Defaulting on a mortgage is not only costly in the short term but can have major long term implications for your  credit rating too.

Defaulting can happen if a loan is taken out that you end up not being able to service. The best way to avoid such a situation is to be as prepared as you can for what is for one of life’s biggest financial commitments.

There are dozens of online tools that help you work out how much you can borrow. What you really need to understand is how much you should borrow, rather than how much you can borrow. Under-estimating daily costs such as entertainment, petrol and even new costs such as council and water rates is quite easy -  and this can be costly once you’ve locked yourself into a repayment schedule. For information on Loan repayments or for Loan comparisons try our online calculator at http://www.keyinvest.com.au/lendingservices/toolandcalculators .

We’ve also asked some of our mortgage brokers from across Australia for their top tips to ensure you get the right mortgage.

Tip 1 – Get your financial records in order

Victorian based KeyInvest mortgage broker, Lorna Stott-West , of Sandhurst, says in recent times lenders have a tighter rein on assessment and serviceability issues when it comes to loans.

”Their main objective is to provide funding to clients who they believe can service the housing loan without undue hardship given normal circumstances,” she says. ”The last issue any lender wants is to follow up late repayments on a regular basis and they certainly don’t want to spend time, expense and ultimately get the bad publicity of ejecting the home owner.’

“Whilst lenders will assess risk differently, a history of solid financial management is a big advantage when looking to negotiate a loan. Make sure your credit card is paid on time and where possible consolidate debt to reduce account costs and interest payments.”

“It’s also worthwhile talking to your existing bank or financial institution before you seek a loan to see if your existing accounts are working for you as best they can. Is there a savings account paying a higher interest if you only access it online? Should you be paying existing debt weekly rather than fortnightly?”

“Getting your house in order is important before taking on more debt and shows you have financial awareness which can make you a lower risk.”

Tip 2 – Be honest with yourself about current and future spending.

Victor Moo, a KeyInvest broker based at Norwood, South Australia, says every financial institution assesses people’s serviceability differently, so how much you can borrow may change from lender to lender.

While calculators will go some way to determining what someone can borrow, these should be used as a guide only – and only you know what is a safe amount based on your living costs, required standard of living and likely future expenses.

”It is important to have a close and honest look at your personal situation so you can  determine what you can realistically and honestly manage,” Victor says.

”Even though you may be able to borrow a certain amount, only you will understand what really goes on with your spending. A lending institution can question the information you’ve provided however they won’t come and live with you for a month to see how truly accurate it is.”

When someone goes into long-term debt, particularly first-time borrowers, they need to know they can make the commitment week in, week out, for years.

Personal circumstances and priorities change, but loan repayments still have to be made. If you find yourself struggling with repayments it’s often better to make contact with the bank or mortgage broker as soon as possible to work out solutions. For first-time borrowers especially all the planning in the world can’t always help avoid real-world issues – so keep the lines of communication open.

Think about what might happen if you lost your job or wanted to go travelling for a couple of months. Factor in how you might cope if interest rates rise by, say, 2 or more per cent.

”It is critical for every borrower to understand that interest rates, like property prices, are cyclical, so you need to be comfortable with your financial situation, not only now but in the future,” Victor says.

Tip 3 – Information is not as powerful as knowledge

Online calculators such as those available on the KeyInvest website assessing how much a person can borrow generally consider your income, household size (single or couple, number of dependants) and existing loan commitments.

They may or may not ask for your living expenses. This is because some calculators use built-in estimates of average living expenses for different household types.

Loan calculators also generally regard the bulk of income after tax and living expenses as being available for debt servicing. Whilst they are a useful tool for understanding the size of mortgage repayments or how much you may be able to borrow, they shouldn’t be used to apply for a loan without getting personalised advice first.

In real life, the assessment needs to take into consideration not just your income and regular expenses, including any credit arrangements, but also where you are in your life cycle, says Adelaide based KeyInvest mortgage broker Grant Winchester.

”This can take into account … how many children you have or when you plan to have children and how long you are likely to continue working,” he says.

Lenders also consider estimated future income and overall spending patterns.

”You need to take the time to really understand your spending habits and commitments and the sort of lifestyle you want after purchasing” Grant says. “Do you need to pay higher school fees in the next few years. Are you planning a holiday or changing cars? Have you factored in higher council, energy and water costs?”

“Having your financial affairs close at hand does help, as do calculators and other online tools. An experienced professional will ask the questions a website can’t.”

Tip 4 – Understand what the banks want

Grant says there are four main criteria a potential borrower will generally be assessed on: the amount and stability of income; the capacity to repay the loan (income versus expenses); future plans, such as starting a family; and credit history.

”As a mortgage broker when we’re helping a customer work out their borrowing capacity, it’s important to make sure they can cope with their repayments, without unrealistic changes to their lifestyle,”.

“ A big advantage is to have completed your most recent Tax return. This allows recent evidence of earnings and provides the bank with some confidence that your financial affairs are up to date. In addition, using a budgeting tool to work out what you’ve actually spent in the past 12 months – this is often more accurate than forecasting what you will spend. Start with your banking records (most of these can now be accessed on-line) and this will show your spending history very quickly. It’s a lot easier than searching for a vast collection of bills and receipts.”

Tip 5 – Make it easier for the banks to say “yes”

Victor adds “I often advise my customers to set up a bank account when they start looking for a home and make regular (weekly) deposits into it. This does three things – demonstrates to the bank that you have the capacity to meet mortgage repayments of this amount and also allows the customer to adjust their discretionary spending to suit what life will be life after a mortgage. Most importantly it also serves as an additional deposit amount or savings account for those items you always end up having to deal with after the settlement – such as the new hot water system or air conditioner”.

For more information visit http://www.keyinvest.com.au/lendingservices/