Is your property costing you more than it should? See our tips on how you can lower your expenses.
Owning a property can be an expensive responsibility to have. There are lots of costs that begin to add up and can cause some very nervous moments. From the utility bills to mortgage payments, there are plenty of ways that you can reduce the amount that your property is costing you.
Sell your unwanted items
Having unwanted items around your property is a waste that you can do without. There are many items that can take up space around the house and really serve no purpose. They can also, in fact, be something of an eyesore.
If you have furniture, a bicycle or even electronics that you seldom use, then it may be time to consider selling them. By selling these you can make extra cash that you can put towards paying off bills or buying yourself something nice.
Refinance your mortgage
As time goes on, your specific needs and situation will change. This can be particularly true for your financial situation, but often home loans will not offer the flexibility to allow for you to adapt as things change. For this reason, it is a good idea to review your home loan every now and then.
Refinancing is an option you might want to consider. As your loan becomes an important part of your life for a long period of time, it is vital that it suits your current situation.
There are some real positives that can come with refinancing your home loan.
A great benefit of refinancing is that it can allow for you to get a lower interest rate that can save you a lot of money in the long run. If your rate is lower, the repayments being made will be too.
By choosing to refinance, you may be able to unlock new features that previously would not have been available to you with your old loan. For example:
When you are allowed to have additional repayments on your home loan, you can pay off extra amounts towards your loan and save on interest too. Home loans with this as a feature give you a chance to save money in the long term. When your principal balance is reduced, you are decreasing the loan amount and therefore the interest charged.
This feature is generally only available with a variable rate loan.
Another potentially cost-reducing feature comes through an offset account. When you attach an offset account to your home loan, the amount of interest you pay will be reduced while still giving you the ability to save money. You can also maintain access to money in the account.
An offset account works by having the balance of the account taken away from the principal remaining on the loan for interest calculation.
Like with any type of home loan though, be sure to do thorough research on fees that are applied to this feature.
Having a redraw facility means you can access any extra repayments that you’ve already put into your home loan. With this you can take out additional repayments or lump-sum payments.
One positive of having a redraw facility is that you can access funds if you need them. Using redraw also doesn’t affect your repayment schedule.
Loan portability is a common feature applied to home loans which allows you to keep your loan if you are moving properties.
Another benefit to refinancing your home loan is that you may be able to take advantage of equity that you have accumulated through your repayments.
Equity is the difference between the value of an asset less the amount of all liabilities on that asset. In relation to property, the debt that is owed to the loan provider is the liability. By paying down debt, you are acquiring equity.
Property investors can use refinancing to access the equity they have accumulated and take out a loan that can allow them to purchase another investment property. For owner-occupiers, doing this may provide the finances for renovating their home.
It is important to note though that, by doing this, it will take longer to pay off your debts.
Debt consolidation is another method that allows you easily keep track of what you owe and the repayments. By doing this you can potentially save on fees and lower the amount of interest that is being paid. In this example, it is vital for you have a competitive rate.
A common sense approach
Taking a common sense approach to your utility use is by far the easiest way to reduce the cost of your bills and your property.
Electricity, in this regard, is one of the worst offenders. There are a number of steps you can take in your everyday activities to reduce your electricity use.
Ensuring that all unnecessary lights are turned off when you leave the property is a great habit to get into that has potential to save you money over time. Even something as simple as turning them off when you leave a room that you won’t return to immediately is a habit you can get into.
During the chillier months of the year, it can be very tempting to turn up your heater and simulate a warm summer evening. This is, however, not a cost-effective method. While using the heating system is fine, by wearing warmer clothing to complement it, you can set your heating to a lower temperature and save yourself money on your bill.
Nothing is more fashionable than a warm beanie and thick set of socks during winter anyway.
Taking a similar, common sense approach to water usage will also help towards reducing your bills.
A habit that can cost you money is leaving the tap running while you are brushing your teeth or shaving.
A further means of potential saving is limiting your shower times to a shorter period. If you can combine this effort with the installation of a water efficient showerhead, then you are sure to save on water and your bills.
Perhaps as a last resort, moving to a less expensive area or downsizing may be the strategy that you can use to reduce the expenses of owning your property.
If you can find an area that you are happy with that has good amenities, then you can begin to give the idea of moving serious consideration.
Disclaimer: The information in this publication and the links to further information within it are provided for general information only and should not be taken as constituting professional advice from Little Real Estate. You should not rely on the accuracy of this information and should seek independent legal, financial, taxation or other advice to check how any of this information relates to your unique circumstances. Little Real Estate is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, or from our website.