If you are building or undertaking major renovations to your home, you may be looking for a construction loan. Unlike a standard loan, a construction loan allows you to pay for each stage of the build without having to come up with all the funds upfront.

How construction loans work

Also referred to as building loans, this type of loan is aimed at people either building a new home or making significant structural changes, such as adding a room or changing the roof, to their pre-existing home.

Construction loans allow for flexibility throughout the build or renovation, through the process of drawing down progress payments.

Draw down progress payments

A key feature of a construction loan is the flexibility to draw down your loan in instalments throughout the building process, which is referred to as a draw down or progress payments, rather receiving the full loan at the start of your major project.

There are usually five to six stages in which you’ll receive the instalments, including the deposit, foundation works, the framework, lock-up, fixing (plumbing and electrical) and completion.

While this payment arrangement, rather than receiving a lump sum at the beginning, can seem cumbersome, it means that you’ll only be drawing down on your loan to pay your builder and other contractors as they complete stages of work.

This can be beneficial as you will only be charged interest on the amount drawn down, not the total. You also don’t have to pay back the principal loan amount until after construction has been completed. helping you manage your cashflow throughout the project.

Fixed price contract

Construction loans are usually based on a fixed price contract, whether that be the land you are building on or the property you are renovating. This means that there is little room for change while the building or renovations are going ahead.

This loan tends to be interest only for the period of building/renovations, then become principal and interest once completed. You may be able to negotiate that the interest only term can be continued, so discuss this with us if it is something that appeals to you.

Should changes need be made to your build along the way, you must discuss this with your lender as this can be likely to vary the forecast costs. As variations are very common in building and renovating, it’s wise to make sure you have accounted for possible changes when applying for the loan.

How to apply

To apply for a construction loan, you will need to show the lender your council approved building plans and fixed price building contract from a registered builder. Usually, you will also be asked to make a deposit of 10% – 20% of the total cost, it’s worth noting that you might have to pay Lenders Mortgage Insurance if your deposit is less than 20%.

Having a licensed builder greatly increases your chances of getting the loan, though in some instances you can still apply for the loan as an owner builder. Applying as an owner builder involves more paperwork and can be more arduous, so be prepared that this process may take longer.

You may be visited by a valuer during the construction/renovation process, to ensure that everything is running to plan. Based on the valuer’s report, the lender will either continue the payments or alert you of a problem.

Be aware of the dates of your loan, such as when the build must be completed by (for example, within 24 months from the date of your first draw down). If the build has been delayed, keep us informed, as we will need to discuss your moving timelines with the lender.

Once the building or renovations are completed, you will need to provide the final paperwork, such as the builder’s final invoice or receipt, building insurance policy and certificate of occupancy.

The building and renovating process can be stressful as it is, so chat to us today to see how we can help you navigate construction loans. We can step you through the process to get you on your way to securing the money to fix up or create your home.

If you have any questions or need any information please give us a call on 039723 0522.

Loud budgeting is a trend that may have started as a joke but is being embraced by those who want to share their financial goals and priorities and in doing so, also improve their chances of achieving them.

It was comedian and writer Lukas Battle who brought the term “loud budgeting” to the world in a TikTok post, presenting it as an alternative to “quiet luxury” as loud budgeting represents a move away from spending to impress or conform.

As is the way with trends, the idea resonated with people, was picked up and run with by a growing group of budgeters. The spirit of the trend is about saying a loud “no” to what doesn’t align with your values. But there’s more to it than that, and there is also a right way to go about loud budgeting that will enable you to keep your finances on target – and your friendships intact.

The benefits of loud budgeting

But before we look at how to get it right, let’s explore why loud budgeting can be such a powerful tool to put you in control of your financial journey.

The fundamental reason it works is because talking transparently about your finances and sharing your reasoning behind how you want to spend your money gives you power and lets you decline invites in a way that is less likely to offend others.

Being open about your challenges can create a sense of community and inclusion. By sharing and acknowledging that it is normal to have limited spending capacity and that it can be a juggle to manage our short-term spending with our long-term savings goals, helps everyone understand each other’s pressures.

Once things are out in the open you are also more accountable. When you have shared your financial hopes and dreams with others, you are more likely to do what is required to stay on track and get support from those who care about you.

Making it loud – and successful!

Think of your goals

Before you start sharing your financial goals with others you must be clear on what they are. Think about what is important to you and what you are working towards. Don’t just have figures in your head – do a proper budget of what you have coming in, what you need to save to meet your targets and what you have left over to spend, so you can make educated decisions.

What matters to you

When you have decisions to make about how to spend your money it can help to think about what is important to you and make intentional choices. That ensures you are not living unnecessarily frugally, but being selective about what you choose to spend your money on, taking into consideration what matters most to you.

Eye on the prize

It’s important to keep your eye on the prize (or prizes) whatever form they may take. Looking to the longer term, this can be smaller goals, like saving up for a special occasion or bigger ones, such as a home deposit. It could also be prioritising payments such as mortgages, student loans and other kinds of debt. Check in from time to time to track your spending and savings against your goals.

Careful communication

Being careful in your phrasing will help make sure feelings aren’t hurt when you decline an invitation. Part of loud budgeting is not saying ‘no’ outright – it’s about explaining what’s going on for you and offering an alternative that works for you. For example, if you’re invited out for a dinner that you know will blow the budget, you could say “I’m trying to get enough together for a deposit to buy a place so I’m on a tight budget at the moment, can we catch up for a BYO barbeque at my place instead?

Making financial choices that are in line with how you want to live your life and prioritising long-term goals over temporary indulgences is a great way to set yourself up for a fantastic future. So why not speak up and try making your budgeting loud?

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

We all love a holiday. Having a break from the daily grind is the best way to refresh, re-energise and refocus but it’s not always possible to take off for a long holiday, which is where the newest vacation trend – microcations – comes in handy.

The microcation squeezes all the benefits of a vacation into a short break and addresses all the reasons you might not have managed to have time away for a while. Personal commitments, pressures at work and financial constraints all can get in the way of taking a vacation so taking off for a short, mini break is easy to organise and can be easier on the bank balance.

The benefits of a microcation

Whether you’d like to tear yourselves away from the routine of daily life and have some excitement, or just leave the stress of life behind for some much-needed R&R, the microcation offers all the benefit of a longer holiday in a small package.

Short breaks of under four days achieve restorative benefits on par with longer vacations and are even better for your thinking patterns and mental health than a longer break. The benefits of a tiny vacation also extend way past your return home, as a study conducted by the University of South Australia demonstrated. Participants wore fitness trackers that showed improved health and sleep patterns for as long as two weeks after taking a long weekend consisting of three days on holiday.

Microcation – macro easy!

If the thought of planning a lengthy vacation makes your stress levels rise, think of how comparatively easy it is to plan a micro vacation. It’s much easier to be spontaneous when you are only heading off for a few days. You can make the most of last-minute special offers for accommodation or airfares, or even just hop in the car and see where you end up. And you don’t have to worry about luggage allowances or excess baggage!

Does not need to break the bank (or the budget)

A tiny break is a LOT cheaper than a lengthy holiday just because of the short duration but there are also a lot of ways to keep a lid on expenses when you are away for a small amount of time.

Check out special midweek offers or look at house sitting or pet sitting opportunities in the area you are thinking of visiting. You might get to stay somewhere stunning for a few days – with some fur babies to spend time with.

Making it a social trip can also make for a lovely time away – and cost savings. You could think about visiting friends who live somewhere nice or getting together with a group to rent a lovely house in a great spot.

Planning a road trip can be simpler if it’s just for a brief time. You could even try camping to get off the beaten track and go exploring.

Just think about how many of your holiday highlights have been those unplanned magic moments that only happen when you let go and be open to new experiences. So just clear your schedule for a few days and let the fun begin! You don’t even have to have a trip away to enjoy a short break. Just taking a break from routine and exploring what your local neighbourhood has to offer can lead to amazing experiences.

Making the best of a short break

It’s important to make the best of a microcation from the get-go as you don’t have the luxury of a week or so getting into “holiday mode.” Try to choose an environment that allows you to feel removed from your regular routine and responsibilities and detach from work as fully as possible.

There are no limits to how short a microcation has to be, so you could even do something nice on a weekend, in your lunchbreak or after work – anything that makes you happy, relaxed and gets you out of your regular routine will give you all the benefits of a microcation and leave you refreshed and ready to live your best life when you’re not on holiday!

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

The recovery continues with a second place shake up

It’s been a positive quarter in the three months to May 31, albeit a period of slight to modest growth for most capital cities and the combined regions.

CoreLogic’s Home Value Index (HVI) rose 1.9 per cent nationally over the quarter, with Perth taking the top spot for growth after a 6.1 per cent increase in the median dwelling value. The West Australian capital also earns the gong for the best-performing city annually with a 22 per cent jump since May last year to a median of $736,649.

Melbourne, however, was the only capital to record negative dwelling growth with a -0.2 per cent move over the quarter taking the 12-month change to 1.8 per cent and a median of $780,437.

A second place shake up

Perhaps one of the most intriguing revelations of this month’s HVI was that there has been yet another changing of the guard on the totem pole of Australia’s priciest cities. As usual, Sydney still sits far out front with a median of $1.156 million. Canberra had been in the runner up position, but after a bumper quarter of 3.9 per cent growth (an annual movement of 16.3 per cent) Brisbane has taken the silver with a median value of $843,231. According to CoreLogic figures, the Queensland capital hasn’t held this second position since 1997. Coming into the pandemic Melbourne’s median dwelling value held around a 37 per cent premium over Brisbane’s, and the ACT’s median was approximately 24 per cent higher.

In the three months to May, the nation’s capital moved into bronze place on the price podium with a 0.7 per cent rise over the quarter to a median of $840,100.

Tim Lawless, CoreLogic research director, said extremely low levels of supply across the strongest markets provide the best explanation for the difference in growth rates. “The number of properties available for sale in Perth and Adelaide remain more than -40 per cent below the five-year average for this time of the year while Brisbane listings are -34 per cent below average,” Mr Lawless said.

“Inventory levels in these markets remain well below average despite vendor activity lifting relative to this time last year. Fresh listings are being absorbed rapidly by market demand, keeping stock levels low and upwards pressure on prices.”

Travelling the peaks and troughs

Sydney spent the last quarter in recovery mode as values increased by 1.2 per cent. In May, the HVI revealed the improvement was nominal, equalling the earlier record high set in January 2022. After that price peak, the Harbour City’s dwelling values dropped by a dramatic -12.4 per cent, hitting a trough approximately a year later. The local market has since picked up by 14.1 per cent through the cycle to-date.

Since the onset of Covid to May this year, Sydney has seen a 27.2 per cent rise in its median dwelling value.

Hobart, however, is the capital sitting the furthest off its pandemic-induced peak. Between its high in May 2022, the Tasmanian city is still -11.5 per cent down recording a $655,170 dwelling median. Despite the significant decrease, Hobart is still up 28.4 per cent on its pre-Covid median. Although CoreLogic places Melbourne, Brisbane, Adelaide, and Perth back at their peak positions for the current cycle, no capital has surpassed its peak as of yet.

High end home growth in hiatus

Despite a handful of multimillion dollar trophy homes selling over the past three months, CoreLogic data has shown that upper quartile home values (those sold in the top 25 per cent of prices) are at their lowest rate of growth in 12 months. This phenomenon is occurring in all capital cities, except Darwin, demonstrating stronger conditions in the more affordable price points.

“After recording a higher rate of gain through the early months of the growth cycle, conditions have faded across the upper quartile as borrowing capacity reduced and affordability constraints deflected demand towards middle-and-lower-priced properties,” Mr Lawless said.

Across the combined capitals index, upper quartile dwelling values were up 6.7 per cent annually compared with a 13.4 per cent gain across the lower quartile of the market.

Prices moving forward

Unsurprisingly, the interest rate status and the imbalance in the supply and demand equation, are being tipped as the catalysts for future home price growth.

Eleanor Creagh, senior economist with PropTrack from REA Group, said in the May Home Price Index that with housing supply not keeping up with demand, national home values have now cycled through 17 consecutive months of growth according to their data.ⁱ

“Despite a rise in the number of homes for sale this year, strong population growth, tight rental markets, and home equity gains continue to bolster strong demand. Meanwhile, building activity remains challenged by capacity constraints and higher costs, with consequent tight housing supply pushing prices and rents higher,” she explained.

“This mismatch between supply and demand is continuing to offset the higher interest rate environment. Further, current interest rate stability has sustained buyer and seller confidence, while ongoing home price rises are likely incentivising many to overcome affordability challenges and transact with the expectation of further growth.

Although, it is likely the pace of growth will continue slowing through the seasonally quieter winter period, particularly with interest rate cut expectations pushed out to late 2025.”

Dwelling values over the quarter

Melbourne

The Victorian capital posted a -0.2 per cent quarterly move according to CoreLogic figures taking the city’s median dwelling price to $780,000. Investors should take note that the gross rental yield figure for Melbourne now sits at 3.6 per cent.

Sydney

In the three months to May’s end, Sydney experienced a subtle dwelling value change of 1.2 per cent resulting in a median of $1.156 million. The gross rental yield for the Harbour City is currently the lowest in of the capitals at 3.1 per cent.

Brisbane

Gaining momentum, the Queensland capital has taken the second most expensive spot for dwelling values at $843,231 after a quarterly rise of 3.9 per cent. Brisbane has recorded a gross rental yield of 3.8 per cent.

Canberra

Knocked off its second spot, the national capital had a modest 0.7 per cent increase during the quarter with the median now sitting at $840,100. For Canberra, the gross rental yield is 4.1 per cent.

Perth

By far the best-performing capital over the quarter, Perth jumped 6.1 per cent in three months taking its medium to $736,649. At 4.5 per cent, Perth has the second most impressive gross rental yield in the country, only behind Darwin at 6.5 per cent.

For more information about how you might be able to purchase a property in the current market, get in touch with us today.  

Note: all figures in the city snapshots are sourced from: CoreLogic’s national Home Value Index (June 2024)

If you have any questions or need any information please give us a call on 039723 0522.

Stay up to date with what’s happened in markets and the Australian economy over the past month.

The run of stronger-than-expected domestic inflation figures continued in May.

The higher-than-expected inflation figures saw Australian shares tumble after reaching a welcome high mid-month.

The ASX200 finished the month on a positive note, slightly higher for the month of May.

Click the video below to view our update.

Please get in touch if you’d like assistance with your personal financial situation.

Click here for our June update video.

Please get in touch on 03 9723 0522 if you’d like assistance with your personal financial situation.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.

As the financial year draws to a close, it’s the perfect time to review your financial affairs and set the stage for a successful new financial year. By taking care of essential tasks and implementing strategic planning, you can position yourself for a smooth transition and a strong start for the year to come.

Topping up super

One important item for the To Do list is to top up your super with either concessional (pre-tax) or non-concessional (post-tax) contributions. For example, you could make a voluntary concessional contribution up to the limit allowed and then claim a tax deduction on your personal assessable income for it.

Consider making additional contributions to your own super account or your spouse’s account, to take advantage of tax concessions.

If you have unused concessional cap amounts from the previous five years and a super balance less than $500,000 on June 30 the previous year, you may be eligible to make a catch-up (or carry-forward) contribution greater than the annual limit.

Maximising contributions not only helps you build your retirement savings but can also provide valuable tax benefits. But it’s critical to be mindful of your caps and to ensure that you make any super contributions before the end of the financial year to meet the deadline.

Reviewing investments

Reviewing your investment portfolio is a valuable task at any time but particularly now.

For example, you could take a look for any capital gains or losses that could be used strategically to manage your tax liability.

Also, it is worth considering how your portfolio performed over the past 12 months against your goal of capital growth, income, or balance.

You may decide to readjust your goals or your investments to help steer performance in the right direction for the next 12 months.

Of course, if you’re planning any changes, it’s important to check in with us to ensure you’re making informed decisions about your investments.

Paying expenses early

Another useful strategy at tax time can be to bring forward any deductible expenses or interest payments before 30 June to reduce your taxable income.

That could include incurring expenses on an investment property, prepaying interest on investment loans, making charitable donations, or claiming eligible work-related expenses.

Make sure you keep detailed records and receipts to support your deductions.

The ATO’s myDeductions app is a great place to start for free record keeping and to assist you to be ready for tax time.

Setting up salary sacrifice

As you look ahead to the new financial year, consider whether a salary sacrifice arrangement might be right for you.

Salary sacrifice allows you to divert a portion of your pre-tax salary directly into your superannuation, effectively reducing your taxable income and boosting your retirement savings.

You will need to think carefully about your living expenses to work out the amount you can afford to contribute to your super, ensuring you do not exceed your concessional (before-tax) contributions cap of $27,500 (which will increase to $30,000 from July 1 2024) to avoid paying any extra tax.

Your employer or payroll department can help you set up a salary sacrifice arrangement.

Checking your budget

This is a good time to revisit your financial goals and how you’re tracking and then put together a strong budget for the new financial year that will help get you further along the track.

Take the time to review your income and expenses and identify any areas where you can cut back spending or improve your income.

This exercise not only helps you understand your financial habits but also allows you to reallocate funds towards your goals, such as paying down debt, building an emergency fund, or increasing your investment contributions.

Consult with professionals

Don’t forget to check in with your trusted advisers – financial advisers, accountants, or tax professionals – to make sure you are making the most of any opportunities for financial growth and maximising tax savings.

Taking advantage of our expert advice to review your current financial situation and goals, and check that you are making the best decisions for you can make a difference. It provides peace of mind, ensures that you are complying with any obligations and, importantly, puts you in the best position to achieve your financial goals.

Suite 2, 1 Railway Crescent
Croydon, Victoria 3136

Email: integrityone@iplan.com.au

Telephone : 03 9723 0522

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This information is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Financial Planning activities only are provided by Integrity One Planning Services Pty Ltd as a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 AFSL 225051. Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. Please consult your adviser, finance specialist, broker, and/or accountant before making decisions using this information.