Episode 4 of The First Home Buyers Show - Getting the Deposit

Owe me the money. Welcome to the first Home Buyers Show. Now tell me this, does it worry you about where you are going to get the money to buy your first home? Do you think that it's impossible? Do you lay awake thinking this is never something I can achieve? Well, I can tell you right now there is government and lender advantages to you and there's up to $60,000 thousand dollars that I've uncovered that I believe that you don't have to pay if you get it right. So without any further ado, let's roll those credits because I want to show you how it's going to cost you less to get into your first home than you ever believe. It's the first Home Buyers show where first home buyers go to watch their wealth grow. And here's your host, Jane Slack Smith. Hello. Hello, it is Jane here and yes, I want to take you through so many things today because it's all about the money. And today we're going to discuss the money from top to bottom. Now some pretty exciting developments have happened in the first, in the last week or so the government has come out and they have told us about what capsules they're going to be putting on different city and regional areas throughout Australia to allow people to purchase into the first home loan deposit scheme and take advantage of that when it comes about on the 1st, the 1st 2020. Now, a lot of interesting data has come out now just to remind you, there is some eligibility as well. So if you're a single person you have to earn less than $125,000 and if you're in a couple, you have to earn over or below $200,000. So I think that's quite probable and possible that a lot of people are going to fit in that space. Now obviously you can't have owned a home before to access this, so why is this so important? Well, what normally happens is the bank wants you to be able to put in a bit of hurt money. They want you to put up a deposit. They're going to give you a large amount of money that they're going to trust that you'll pay off over the next 30 years. Typically. Now what, what this means is they want you to put in a deposit. So they want you typically to put in 20% of the value of the property. Now if you don't, they say, well, there's a bit of a risk to us so we're going to get insurance to cover us in case you default. And just to be extra nice, we're going to make you pay for the insurance. Now it is a once off fee, however, it can be quite hefty. So what the lenders do is they actually then say, well, you could put in a 5% deposit or you could put in a 10% deposit or a 15% deposit, but anything less than 20% we're going to charge you that fee. Now the government has stepped in and said, how can we make this easier for people? What if we guarantee the difference between their 5% deposit and the 20% that the government wants so that 15%. So if they want that difference, then they are going to guarantee that for you, but you have to commit their eligibility. Now the government's put about $500 million up. They reckon that's going to be about 10,000 first home buyers that they're going to be guaranteeing in this scheme. And it is expected at this stage that it could run out very, very quickly. I've seen numbers that have said that there's going to be so many people ready for this that it will be exhausted within the first six weeks. So we're talking mid February. Now here we are, first Home Buyer Show Episode four, and we are looking at November, December and then January. So we've really got less than eight weeks to get you sorted. Now, is it such a big deal if you don't have access to this first home loan deposit schem? And the answer is, well, not really because you can still get loans with a 5% deposit. You just have to pay the mortgage insurance. Now the mortgage insurance can be huge with a 5% deposit, especially if we go to some of the caps and I'll show you some of the caps in a moment. But if it is that large, that amount of money, the banks do make you pay that to cover them. But the one nice thing that they do is they say you can put this on top of your loan so you don't have to come up with a cash. Now I've done some numbers and I'm just going to share my screen here with you. I've done some numbers based on what the lenders. So let me just show you what the caps are in different areas and you can see here, just check it out for the moment. What can you see? It's kind of working, isn't it? Right, so we've got $700,000 in Sydney, so that's not going to get you a very big property in Sydney. And what we've also got is $700,000 for major regional centres. Now for the rest of New South Wales, the limit is a purchase price of $450,000. Now we jump over Victoria and we're at $600,000. And you can see there that in Victoria and in Melbourne, $600,000 is actually going to get you a house within 20ks of the CBD. Whereas if you're looking at $700,000 cap for Sydney and major regionals, you're looking at Newcastle and Wollongong on Central Coast, $600,000 is definitely going to get you into Geelong as well. Now the other areas in Victoria is the 375 and then we go to Queensland. Now you, this is going to get you a property in Brisbane, a house in Brisbane, but once again in those outer suburbs. So $475,000. Other areas a little bit more generous. $400,000. Western Australia, 400. We've got other areas, 300,000. South Australia, 400. Other areas, 250. Tasmania, Hobart, 400. And other areas 300,000 ACT 500,000. And the Northern Territory, we're looking at difference of $375,000. So as you can see, there's actually like quite a lot of scope for you. Now if you're in Sydney, unfortunately, this is probably not going to help you that much because we know in Sydney even the median house price for units within, you know, 5Ks is like over a million dollars. So what I need you to be aware of is there is money up for grabs. Now I did the numbers on this and I took the figures for Victoria and I'm just going to show you with my secret software here. Don't tell anyone I have shared this with you, but this is kind of the secret mortgage broking software. So I've done these numbers for Victoria and here I'm just looking at the state charges. Now if you can see that, I'm going to zoom in a little bit further so you can. If we click off first home buyers concession, if we go up to the $600,000 that is possible under the cap in Melbourne, there's normally state charges of stamp duty of 32,692. We put on the first home buyers concession, 31,000 of that comes back to you. Now if I jump over here and look at the mortgage insurance and I do the same thing for Victoria and let's try, I don't know any bank. Commonwealth Bank's the biggest bank. We look at that $600,000 and we put in a 5% deposit, 570,000 is going to be our loan amount. If we click on this you can see that mortgage insurance is going to be about $25,000. So this gives us a real idea around. You know, the different lenders as well have different premiums based on all of their different amounts that they put through to the bank. So you can see here Adelaide bank, if you had to pay mortgage insurance, there'd be an extra $29,000 that would actually go on top of your loan. Now $29,000 of the lenders mortgage insurance, we've got the state taxes of $31,000. So there's $60,000 that you don't have to pay if you qualify for the first home loan deposit scheme. And breaking news. So the question is, and if you've been over to the first house buyer group, Facebook group, you'll see a lot of people in there saying what is the biggest concern? And getting the money together seems to be one of the biggest issues that people are facing. So what I thought I'd do today is I'm going to show you the money and where to get the money. So first up for grabs, $60,000 is available for you, but how do you get that 5% that you're going to need? Now $700,000 in New South Wales and major regionals in New South Wales, that's obviously $35,000 in Victoria. In Melbourne it is obviously $30,000 if the cap is $600,000. So it gives you an idea. If you're buying around $500,000, 5% is around $25,000 obviously. So you know, this is the amount of money that you need to save. So I want to assist you in understanding how to get that money together and how the lenders are going to assess you. Now first and foremost you need to know how much you actually need to live off and how much you are actually earning because the difference could actually form your savings. So first I want to talk about understanding what your actual expenses are. Now I'm just going to share this with you. I've developed a calculator here and you can Access this through investorschoice.com it's called the portfolio calculator because a lot of people always ask me, you know, how do you actually work out how much you need to have in property to retire? And you know, it's an age old question, so I've got this how many properties calculator. But the first few tabs of this calculator are really handy as well because it allows you to work out how much you actually need. And with the buffer to Live. So for instance, here, you know, I've got here accommodation per month, rent, $2,500, food, utilities, transport, insurance, that's what it equates to per year. Now you're going to cover your basic living costs. This is how much you need to earn after tax to be able to do that. But I really suggest you also go in and just base yourself, give yourself a bit of a buffer. So maybe you want three months of buffer on your whole basic costs. So therefore, after tax, you're going to need about $56,000. Now, we do know that life's kind of, you know, worth living. So there's extra things you want to maybe some entertainment or education, holiday money to put aside, gifts, little luxuries, others, and clothing. So all of a sudden, you know, your basic living costs, they start increasing a bit. And I would still suggest that you consider having, you know, at least a buffer in place for you to cover at least one month of your accommodation and preferably three. So this is a before tax, sorry, after tax income of $88,000. So I encourage you to go over the calculator and just work out exactly how much you need to live off. Now here's the thing. When we actually look at how lenders assess you, they assess you in a couple of ways. They firstly assess your income and expenses and they can work out how much that you can borrow. But there's another thing. They then look at the money you have as a deposit. So often I work with people where they have a great income and they have low cred cards and they don't have any debt, but they don't have a deposit. So they might be able to borrow $700,000, but their deposit is only $10,000. So they're restricted in what they can actually purchase. Now that might be you. So you need to understand that there's three things at play here. The first is your income and let's talk about how you can increase that. The second is your expenses and we're going to talk about how you can reduce that. And the third is your savings. So how much do you actually need? Now, we've just looked at the calculator to work out, well, how much your living expenses might mean. So basically you can go and use this calculator and just work out, you know, what is available to you, what is the capacity for you to save some money. Now, if you don't have any capacity to save some money at the moment based on your current income and your current expenses, that's when we have to increase the income, reduce the expenses so we can increase your savings and that's going to get you ready for the first of the first 2020. Okay, so let's talk about the ways that the lenders are going to assess you and what you do. Now I'm going to share with you once again. This is one of the documents that we send as a fact founder that goes out to all of our mortgage clients. And we're just trying to get a feeling for what are your goals, what are you trying to achieve? The basic information about what your credit history is if there is any issues. However, we always do purchase the credit file on your behalf and we purchase it without making an inquiry on your credit file because we want to make sure that you're set up with the best opportunity as possible to go through this. Now obviously there's all the information that you need to know about your personal details, your employment details and if you're self employed, we need extra information and we jump down here and we're always looking at what are the assets that you have, some liabilities that you have, and if you're thinking of purchasing a property, what are your kind of estimates of what you can afford and where you can be. Now this is what I really want to concentrate on. The lenders have got really, really, really determined in going through everyone's monthly budget and basic budget and what they spend their money on. So you know, in some lenders applications there's up to 23 different lines of where we have to fill in what you spend on water or contents or groceries or medical insurance. And you can see here child support, childcare, tyres, fuel. So they expect us as a minimum to fill all of this in. Now this is the level of detail that they're going to now. So it's really important that you're just familiar with the process. So you speak to a mortgage broker or you go to a bank, this is what the kind of data they're going to get from you. And the important reason that you get and start talking to a mortgage broker or lender up front and first is because they'll be able to assess you based on your borrowing capacity. So you know what you can borrow based on your income and your expenses, but they can also say, well based on your deposit, this is actually what you can purchase. So there might be a gap and if there's a gap, that's what we have to fill. So this knowledge is power. So when we think about the process of going through and buying your first Home, you don't leave the lending to the last moment, especially not if you've just been successful at auction. It's about being part of the conversation up front. So I really encourage you to speak to your broker, speak to us if you'd like. Investors choice mortgages, but speak to the, to a broker and get this assessment done. It is so important. Okay, so let me move on to the next thing about lenders. And I think it's, you know, once again, it's really important to understand that the lenders at the moment are being, you know, super, super, super vigilant on looking at your numbers. Now we had a mortgage client and an application that we put in a month or so ago now and we put down all of those expenses, you know, everything that the person had been spe. And with the forensic intensity that these assessors are using at the moment, they went through individual items on the savings statement. Now with technology, this is getting easier and easier, but individual items on the savings statements and what they found was there was a regular payment every Friday of $25. Now they came back to us and said, you've got an undeclared debt here. There's a repayment of $25 every single month that's going, every single week that's going ahead. Please explain because you know, you haven't declared this. So we went back to the client and said, what's going on? And they said, that's my Palmer and Pint I have at lunch on Friday with my partner. That is the level of integrity or searches that they're doing on your application. So just be aware of that and just be aware of those extra little expenses that are popping up. Those extra little expenses are expenses that are possibly getting you away from your home. So if you could possibly look at those expenses, which we'll come to in a moment, it's an opportunity for you to get into your home sooner. Okay. So, you know, the thing is, you may not have the capacity to create that deposit for yourself. It might be something that isn't possible. And you could potentially use your parental guarantee to assist you. Now, if you jump over to the first house buyer Facebook page, I've just done an entire lesson on how to use parental guarantees and the risks and rewards of doing that and how you can get your parents property released as soon as possible. Good news is they don't take the control over the entire property, just the amount that you need. But it is an alternative to getting a deposit. But we all like doing things by ourselves, right? So let's look at how we could do that next. So I think that the next thing that you need to understand is just understanding your expenses. Now one of the things, and if you would like to have your borrowing capacity and future spending planning assessed by my team at Investors Choice Mortgages, I'll put in the details where you can make a time for that. But I believe in so much in actually assisting you in getting to the point where you can actually do this yourself, that I have this course that I've created. So anyone who does make an appointment to work with the Investors Choice team and book an appointment and complete the compartment, you get access to this course. Now, this course is worth $495. The reason I'm telling you that is that a lot of people in the Facebook page, the first house buyer page, said that they were having trouble and confused about the process of buying a property. And I've set it out here really easily now. Simone. Thank you. Simone, who made an appointment and had a chat to our team last week, she's been through this course and she was just absolutely overwhelmed by how much content is there. As I said, I used to sell this course for $495. If you make an appointment and turn up to the appointment and we can assist you, we're going to give you access straight away. So as you can see, we talk about goals and budgeting and I'm going to come back to this at a future stage. But today what we're also talking about is understanding all the things that you need to go to through this set IT component of our framework. And the set IT component is this. Getting your credit in check, getting your budget set up, understanding how much you can afford to buy. And there's a number of different models that you can get money from that is going to allow you to be able to make this contribution. Obviously we've got the government grants and stamp duty concessions. Someone could give your money as gift or your parental guarantee or you have savings and you know, give you exercises, etc all through this. But it's really important that you understand exactly the process of where you can get the money and how you can do it. And obviously we go into quite a lot of details afterwards as well. So that's my gift to you if you would like to make an appointment with us and just have an understanding of exactly what your costs are and what you can do. So let's move on now because what I want to talk to you about is how you can increase your income because you know, we can look at all of the things that affect you. And the reason, sorry, the reason I showed you that course material is there's a whole section in there about knowing your expenses. Now one of the things that I did, and I still carry around a little notebook with me, but one of the things that I did was have a little notebook in my bag and I wrote down everything that I spent for two weeks and I was absolutely shocked. You know, is this a magazine here or Flowers for home or a book here, you know, maybe a coffee, I forgot to make my lunch. That all added up. And just getting a perspective on the costs that come and go out of your life is really important. So part of that course, you know, I really encourage you to go and get a notebook, start filling in your expenses, just track them for two weeks. I think you'll be absolutely astounded. Now let's go in and talk about how to increase your income. So increasing your income, reducing your expenses and increasing your deposit, that's what our goal is. Now obviously the government's going to throw money at you and we do have the first home loan deposit scheme coming up. We do have grants and we also have the stamp duty concessions that I showed you a little earlier. So if I just have a quick little look at this, if you put remind below, I'm going to obviously send you remind you when we go live next time. But I'm also going to send you the first home buyer's guide to all the concessions and grants throughout the country. Now there's some really weird stuff here in the Act. It's based on how many kids you have in Queensland, they do things their own way up in Northern Territory you can actually have a first time buyer's grant every two years. If you go out of the state and come back. It's kind of strange in Western Australia, depending on what parallel of latitude you're on, you get different grants. So I understand how confusing this can be. But there are grants available to you. So go ahead, put reminder below. I'll give you a copy of that Australian guide to first home buyers. Grants and concessions now know as part of our community and what I have seen in teaching investors over the last 15 years, established houses, not units and not new, is what gets the biggest growth. And my goal for you is to use all of these grants with as little of your own money as possible. Get into the property, have the property in the right area so it is right for renters who want to live there and the capital growth that you can experience in the next 20 or 30 years. So I'm not talking about units at all, ever. And I'm definitely not talking about new properties or house and land packages or buying off the plan. Not on. So let's go to how to increase your income. There's a couple of ways ask. A very good friend of mine wrote a book on how to increase your income and it was how to get a pay rise. Now, there may not be the capacity in the current environment to get a pay rise, but start the conversation and go to your boss and say, is there a number of KPIs or stretch targets or something that I could achieve that over the next three, six or 12 months? Because I'm planning on buying a home that could allow me to get a pay rise. Just starting that conversation is really, really important. And the other thing is my boss used to say to me, I can't wait for you to get a mortgage because I think you'll be tied to me for life. Which terrified me. But the reality was, you know, a lot of lend a lot of employers like their employees to kind of be a bit tired to them as well. So the fact that you're actually actively taking them on the journey with you and, you know, buying your first property is great. Now one of the things that my boss used to say to me every month was, how do I get paid a lot more than you? And you get more in the pay packet. And that was a little tricky that I'll teach you in the course. Good tax variation when the property becomes an investment property. So the thing is, if you have the opportunity, go to work, ask for the pay rise or ask the KPIs that can assist you in getting a pay rise in the future. The other thing is check out what your value is worth on the market. Now, if you are working in corporate. And I had a friend recently who did this, she went out to one of the major groups, consulting groups, to find out what she was worth in the market. And she was being paid about 50%. Now, she'd started with them, had been with them for many, many years, and she'd got some really good pay rises. She was on what she felt was a very healthy income. When she checked her value in the market, it was a lot more. Now, I know a lot of people who potentially aren't in corporate roles can't just jump along and find out what their income is worth elsewhere. And they may not be possible, but it's something you check out, especially if you're under regulations on your hourly rate, etc. Okay, so the next thing is potentially you can get a second job. Now, I know this sounds a bit scary and it could be possible, or it may not be possible, but we're talking about getting your savings up in the next three to six months. So if getting a second job and maybe working a couple of nights or doing an extra few shifts on the weekend or means that you can get to your savings a whole lot sooner and then get into your first house a whole lot sooner, then well worth it. And I had one of my mortgage clients a few years ago, you know, we did the assessment for them. They had a great borrowing capacity, they didn't have the savings and the husband, who was a nurse went and pulled all these extra shifts and within eight weeks they had that deposit already. So, you know, it might be a little bit of a switch and it might, you know, take you away from your social life a bit, but this is a long term commitment. We're talking about getting you a million bucks in equity by the time you retire or in the next 15 to 20 years. But by the time you retire, well and truly done. So this is really worth it. Now the next thing is you could actually start your own business as a bit of a side hustle. Now know that the lenders are not going to allow you to take that income into account when assessing your borrowing capacity for two years. It has to be consistent. If there's more of a difference of 20% over the two years, they take the lower year. There's all these different policies, but it will help you build a deposit. Now I have a lot of friends that are selling, you know, have little shops on Amazon and you know, there's a number of courses and experts who teach how to do it. There's a lot of people who've spent a lot of money on doing courses and buying a lot of products and importing them and it's going nowhere. And there's other people who have done it and followed the bouncing ball of really great educators have shown how to do it and they've done it themselves and they're making money. So just be aware that, you know, if they require you to put in a whole amount of money and you can't, through your research, show the upside, then it might be actually using up your deposit. But you could be selling things on ebay or on Gumtree or your local Facebook group for your local community is a great way to do it as well. Now, last week my son sold his bb8 robot for $30 hurt my heart because we bought it for $80 two years ago and he's hardly ever used it, but it was valuable to someone else and wasn't to him. So he's in a process of selling down his Lego so that he can actually make some money and save some money. Does he have a saving plan? We're still talking about that. But the thing is that have a look around your house and have a look at what's available. What's not of value to you now could be value someone else. Now, as a kid, my son had the Duplo Farm Animal Lego and I bought that for $150 secondhand on eBay. He sold it on eBay five years later for $180. So there you go, appreciation Lego goes up. So just be aware that there might be money that you can actually get that could assist you as well. As I said, if you're going to do this long term and create a business, the lenders won't look at this as income for two years, but it will help your deposit. Okay, what else do I have? Oh, maybe you could turn your hobby into some income. Now, I don't know if you guys have ever used Airtasker, but I use Airtasker all the time. So, for instance, I put a job on Airtasker and said, look, I really want to learn portrait photography. You know, I know I'm going to spend like $300 for a day course with a group of 15 people and maybe not get all my questions answered. I'm prepared to pay, I think it was like $70 an hour for two hours, $150 for two hours to get just the fundamentals that I needed. And I had, I think 30 people actually reply within the first hour and had to turn it off. And I ended up having one of the professors who teaches photography at one of the universities teach me. Now, I have also used Airtasker to get someone to come and mount a TV into a wall. The guy was doing it as a job during the day and he was moonlining at night. I've had someone as a driver driving around the vineyards with my friends at 50 bucks an hour. And, you know, so he was really happy. I was happy I wasn't paying $250 for four people each, for four people to be picked up in a bus and driven around. More money to spend on the wine. So, you know, there may be some things that you have as hobbies that you can use or maybe you have some real, really important technical Skills. Now there's a website called Clarity FM and it's where entrepreneurs and business builders can go to get advice from really clever, done it already people. So for instance, I was looking at the other day about getting some advice on, oh, I was on program that I was developing and I looked on there and the person who had developed a real estate based program for the equivalent of realestate.com au in the States, he was their chief program designer. He was on there. Now he charges $8aminute to answer your question, but he was answering questions. And I have a girlfriend on there who spent so many years teaching people in the States how to buy blocks of units and rehab them, which is renovate them and then sell them based on a higher yield. Now she's now into shares, but she still has that capability and she has her details up there. And it's not uncommon for her to make $200 a week for someone saying, look, I want, you know, 30 minutes of your time to answer these questions on how to do it. So if you've got some skills, Clarity FM is somewhere you can look as well or airtasker. Okay, so this is different ways you can increase your income. Let's talk about reducing your expenses. All right, you're going to get that book, you're going to write down everything over the next two weeks or so and you're going to find out where all your expenses are. So I really want you to have the understanding that this is a short term savings plan. But if it becomes a habit, really, you're going to do this forever. Because I did this and you know, and every now and then I still do it when I feel that I'm probably spending a little bit much. But you know, just writing things down and getting clarity of where your dollars are going can, can be so illuminating. So first and foremost, I suggest you do that. Some of the things that you might look at now, I remember doing a lending assessment when I had my mortgage brokering hat on years ago and it was about three years ago and this couple so keen on buying their first investment property and I went through all their borrowing capacity and said, look, you're about 30 bucks a month short. You're paying $40 a month for Foxtel. If you got rid of that, you'd be fine. And they went and had a really deep conversation about it and they came back and went, in actual fact, no, we're not prepared to give up Foxtel, no investment property. And the property in the price range we were looking at would have Been up now about a $200,000 gain for them. So know, there can be some sacrifices. So, yes, you're going to hear things about, you know, take your coffee, you know, take your coffee to work or don't buy a coffee. Honestly, I just went to Officeworks and bought some of the disposable and Woolies has the disposable mugs. And when I go to work, I often just make my own coffee and walk to work with the coffee. So, you know, saving a bit of money there. Look, it's four bucks a day, potentially taking your lunch. No, blah, blah, boring. There's other things you can do, such as maybe not go out for dinner, but go back to the 70s when my folks used to do progressive dinner parties or bring a pot and everyone would share. And, you know, it's a major way to cut down expenses. Often you get a better meal and, you know, you're not kicked out of the restaurant at the end of the night. So think about, you know, rather than going out and seeing people, what can you do in house? And then there's that gym membership now, I know, you know, in the beginning of the year, everyone joins up to the gym and then potentially don't continue. You know, if it is at all possible for you to go out and enjoy nature and potentially even do workouts at home, home, consider that Nike has an incredible app that has essentially a free workout on every single part of your body could ever want. So maybe there's not the necessity to go to the gym. And often a lot of the community councils in a lot of areas actually have like a free exercise, getting to life kind of activity as well. So check that out. What else do I have on here? Oh, okay. Don't pay full price. Now. I very, very rarely pay full price for anything. And this is as easy as it is. Jb hi Fi. They want you to purchase a laptop, A laptop monitor or screen or keyboard. So I will always say, what's the best price? And they never, ever hesitate. They pull out their thing and they go, oh, I think could possibly do this. And once they've given me their best price, I'm like, oh, how much more? How much less for cash? And I'm often getting 5 to 10% off those prices. I was in a shop the other day and we were looking at some shoes for my son. There was the normal prices up there. And the lady said, I'm going to go get these shoes for you. And I said, oh, tell me how much those ones are first. And she Went well today there's a secret discount of 10%. I was like oh okay. And she went and got the shoes. Now if I hadn't asked what the price was, I bet you I didn't get the secret discount of 10%. So please just ask because it is extraordinary. Now one of the things that I always recommend to my mortgage clients is that they get death and trauma insurance. It's a horrible thing. We don't talk about it, let's face it. But one of the groups that I recommend do this give you an extra benefits awards card. So they've gone through and they've worked out that if you use the extra benefits awards card for the groceries and tyres and petrol and all the things that you can 5, 10, 8% off then you can actually save the same amount as the premium per year that you would be paying for them. So it's a bit of a no brainer, right? You get all of that coverage. Now I know when you're young and or you're caught up in expenses of kids and everything then it's hard to think about insurance. But just recently one of my clients rang up to thank me. He was riding on his way to a spin class and his bike slip, he broke his hand in a number of places and we'd be put in place that insurance and he got like $5,000 to help him out whilst he was homesick. So you know, it really can count. But I use the extra benefits to card that these guys give me so I get 5% off all my Woolworths shops and you know, things like Suzanne's I get 8% off and I get 10% off cotton on and money off different things. So just be aware that there's so many ways to get discounts on what the normal things that you'd be paying for. So I'm not saying go out and buy new things, I'm saying we'll go to Woolies. Why don't I get an extra 5% off now on $200 shop, that's 10 bucks. But here's the thing that's a saving that money needs to go into your savings, it doesn't go back into your wallet. Be aware of what you're saving. So I'm always saving funds. So you might for instance, I'm a member of my now I like their vitamins, I don't sell their vitamins, I don't go and sell their cleaning products or anything. And I know people have made amazing businesses of doing that. But as a group nway is probably one of the biggest single groups in Australia and they have incredible bargaining power and they have the most insane Hertz deals. So when I ring up and I use my Hertz Amway membership number, the people on the other end of the phone go, oh, my God, I work for Hertz and you get a better discount than me. Now, you may not use Hertz that often and you may not need vitamins, but, you know, for 60 bucks a year or whatever it is to join Amway, I get a Hertz at a lot price discount. But I also have no waivers of excess. I have no excess, I have to pay. So there's all these extra benefits. So just look around the normal things that you're going to spend your money on where you can save those expenses. So other things that I've got in place is just be aware of things that you're spending money on. Now, I was listening to a marketing video the other day and this guy has like a BP and he has, at the front of the shop, he's got these chocolates sitting there and it says, you know, do you want to for the price one or do you want a discount of this? And the person who was a marketing person said, oh, that's really interesting. You've got this just here, you know, is it worth your while? And he's like, yes. And he's making 20,000amonth from selling a chocolate that's sitting there in front of people whilst they're buying their petrol. That is insane. So just think about, you know, who's marketing to you and where are you picking up those little discretionary things that you possibly don't need. And writing that down in that document is going to be so worth your while because you're going to know what to do. So other things I have listed down, buying movie tickets in bulk, potentially making birthday and Christmas presents, or actually putting some thought in and making an experience for someone I know. Often I speak to family and friends and say, what would you like for your birthday? And like, just like an hour of your time so we can just sit down and chat. Like, really, maybe Amrosh should be reading them more often. But, you know, sometimes this is something more personal that people would really enjoy. So just think about the gifts and Christmases coming up. Maybe there's something that you can start doing now. Making coconut ice, for instance, or beautiful cordials or something that can go under the tree that tells people that you thought of them and what they've really liked. Now what else have I got? Maybe you don't need your card. So maybe you could take public transport or have a go get car and just pay for when you need it. Now I live near the inner city and on four corners around me are go get cars and I have a car that I use twice a week. So it could make sense for me that in actual fact it would be a lot cheaper than rego and fuel and insurance and everything to just have a go get car. So just think about these different things and the expenses that you have. Okay, I've got some other things. Use your library. I have. When I found out how much I was spending on books and magazines, I went and joined the library. Now this is 20 years ago and I think I've converted all of my friends and family to it. On the library now is insane. There is. So LinkedIn recently bought Lynda.com which gives you courses. So I've done courses on Excel, I've done courses on photography, I've done courses on marketing and video. Obviously not always so good, but this can cost you $200 a year for membership. I know Melbourne Library. If you're a member of Melbourne Library, you get it for free. I know that they have all the latest books now that are available online. So you can read it on your Kindle or your iPad or whatever. The magazines as well. I go, I like the tech magazines. I go and borrow the tech magazines or go and sit in there. The libraries these days, 3D printing, they have amazing resources. So go in there and if there's a new book that's coming out and they haven't got it in, ask for it, they'll buy it and your name's first on the list. If you have a dirt phobia that I know some people do about libraries, but make your library your friend. And the other thing is sign up for things like Weekend Notes where there's free activities every weekend going on in the city or regional areas. You know, I know growing up in Dubbo and we didn't obviously have a lot of money at all, but you know, we were always doing things. At one stage, I think my mother knocked on the door of the ambos and asked if they would teach, teach my sister and I first aid. And we were there every Saturday for an hour, for a month learning how to do first aid. So you know, there's so many things you can do and expenses and activities that you don't have to spend money on. So we're talking about expenses down, income up. How about savings? So let me tell you about some savings tips. All right, first of all, if you actually are saving, know what you're saving for. So I told you before, feel free to give us a call at Investors Choice. I'll put the link in the notes above so that you can click on it. Make a time that's convenient for you and if you shop for the call, I'll give you that a $495 course. But the more important thing is understand what amount you have to have. Understand what your borrowing capacity allows you to be able to buy at. Because if you only need $20,000 and you've already got it or you're $1,000 off, maybe you can start moving on to the source. It part of our five step framework that is actually going to get you in to start looking for a property. Because I want you to be one of those people that if you have the eligibility, you can buy the first, the first 2020 and take absolute maximum use of that because it's going to run out really quickly and it won't come back in until the next financial year. So my goal is to get as many of you ready to be able to be active for that. And you won't know until you know how much savings you have. And maybe you only have eight weeks of having to pull in the belt and spend a little less to get your savings up to where it needs to be. Because a 5% deposit is quite possible. And even if you have a 5% deposit now and you don't want to wait because the market is moving so much, then getting in and putting mortgage insurance on top of your loan is not the end of the world. It's where I started with a 5% deposit. I bought my first property for $425,000. I used all of the money that I had, $45,000, 25,000 of that went to stamp duty. I then borrowed 50 grand. I did a renovation and nine months later that property was worth $700,000. Four hundred and twenty five thousand dollars to $700,000. I started with a 5% deposit. If I had waited till I had a 10 or 20% deposit, it would have been three or four or five years later and I wouldn't be buying the equivalent property that was worth 475, 425, then it would have been more like 350. So no, it's an opportunity cost. So don't be scared about paying mortgage insurance. It allows you to get into the market. And especially in this growth market at the moment, if you have the Ability to get in now and not wait and take your chances of being one of the 10,000 that does get that first home loan deposit scheme then I really encourage you to find out what you can do to start it now. But remember, where you buy is critical. No units and nothing new. Now freeze your credit card. This is a little trick that I know numerous people have done and that's just put the credit card in some plastic and then put it in another bag and put water in the other bag so you're not actually freezing your actual credit card. And if you find something you want to buy, you have to defrost it first. You have to think about what you're doing. This is really important when it comes to making purchases and looking at what your expenses are, is what are you actually spending your money on and take a step back and put the money that you save in savings. I remember a workmate that I used to have and we used to drive all over town for him to get the cheapest petrol and at the end of the day he'd get the cheapest petrol and he'd go, yay, I got the cheapest petrol and he'd be 2 cents off or something. That money never went into his savings, that money just went back into his wallet. So if you are saving money, write down in that workbook after you've done your expenditure analysis is what, what you could have spent and what you've saved and put that money into a savings account. And if you have to separate your savings account from your everyday account. Now a lot of lenders these days allow you to do that and potentially can be fees associated. So I really encourage you to check that out and also look at the discounts that are available on things. So, you know, I always think that education is an investment and I know when I started off, you know, I used to buy all the books, should have gone to the library on property. And I have many, many books in my library and property, over 130 of them. And you know, it got to the stage where I was like, I didn't know who to trust but it was an education process and I really appreciated that. And then I tried to start doing, you know, some of the free courses and I, you know, worried about the free courses where they really trustworthy and then I started paying, go to the point where I could pay for courses and pay for education and you know, I never would think that that is something that's a waste of money, especially if it gets you to your goals. Now obviously I've just offered you a course that's usually worth $4.95 for free. So there is an opportunity to have good quality education for free. But what I would really encourage you to think about, and it happened when I was recovering from surgery recently and I spent some time in hospital to work, talking to nurses. And I spoke to this one nurse about investing and she said, oh my gosh, you know, we were so lucky. You know, we found this group in town and they found us the property, they got us the loan, they found us the property manager as well. You know, we got completely set up. And they did get set up because that person got money off the developer for the property. The person who possibly got paid a referral fee from the mortgage broker and they probably got a referral fee from the property manager. They might even have that all in house. Now, not everyone's bad, but if it seems too good to be true, it possibly is. And as we know what's happened with a lot of units, I know speaking to valuers in Sydney and Melbourne, more than 60% of the value of the exchange price and what they've actually had to pay at settlement of the value of the property has come down. So they might have paid 375 for the property. And when they've come to actually settle on the property, the off the plan property a year later, it's only worth 325. And we don't want this to happen to you. We want to shortcut all of the bad experiences that we've seen so many people make. Why am I saying me? I've seen people make and it's often to do with buying off the plan properties, house and land or in big estates where you can't add any value and you're really sanctioned by what you can do and going to one stop shop that is actually not giving you everything that you need. So I think that I've probably been talking for a long time here, but I want to make sure that you understand the value of this information. First and foremost, there is money that is being thrown out at the moment from the government through concessions and through stamp duty. And in the future through the first home loan deposit scheme, there's three ways that you can get the money and as I showed you a bit earlier, up to $60,000 in savings if you are eligible and you're buying under the cap and all of those things for the first time, loan deposit scheme. So there's incredible dollars on the table at the moment. The other thing is, even if you don't qualify for that if you have a 5% deposit. You know, we're working with lenders right now who are taking 5% deposit and booking the mortgage insurance on top of that for people. Maybe you have a parent who has property that you can get a parental guarantee. If you do, head over and have a look at my education segment in the first house buyer Facebook page where I talk about that and understanding how that works. So there's ways that you can get into the market now or use the first home loan deposit scheme when it comes out in the first of first. Now we have less than eight weeks until that date. So I really want you to be set up right now. Some of the things that you may not know that lenders do, you don't necessarily need to have that deposit in cash if you've been renting. Some lenders actually look at the money that you've spent in renting over the last three to six months and they consider that your genuine savings. So there's all of these little shortcuts and little things and nuances that can come into play for you. There's other lenders that are actually throwing money at the moment to get their clients, get more clients in the door. Now first home buyers have become really active. It's no secret that investors have really taken a bit of a backseat in the last couple of years. Well, let me just tell you they are full on back and the market is moving and we're going to see the banks are going to start seeing the investor number of loans increasing. But the first home buyers are still really attractive, I suppose to one of our representatives from one of the major lenders last week who said that they are doing so many pre approval applications or home seeker applications that don't actually convert into a loan that they're actually looking at introducing a program that they're going to pay you, I think $750 if you actually go forward with the loan. So there's all of these different things out there. There's a lot of money that is on the table at the moment that you may not be aware that that you have access to and there's ways that you can increase your income. So when you do do that servicing capacity and please, as I said when I showed you the steps to go through with our five step financial freedom framework, we're talking about set it here. We're trying to understand how much you can afford to buy and so that we can move on to source it next and have a look where you can actually spend that money. But the really important thing is understanding the process and we're more than happy to do that assessment for you and work out what your buying capacity is. As I said, I put together the first home buyer course just to give people an extra hand to assist you. That course did retail for $4.95 when it's available. It's been completely redone now. And you make an appointment with us at Investors Choice. As I said, the link will be above soon then and you come and have an interview with one of my team and we can work out some numbers for you. We'll give you access to that course straight away, but please work through it because there is a process and knowing how much money you need, it might be less than you think. So just be aware what's available. And the other thing is if you can increase your income and it might just be so that you can increase your deposit. So it could just be getting on Airtasker or getting on Clarity FM or selling things on Gumtree or the Facebook, Facebook community page, whatever. Getting that extra money is going to boost up your deposit. So there's other ways than savings. Go and use the Investor's Choice portfolio calculator, work out how much you actually need to live off, and then work out how much you actually earn and the difference there could be your savings that you're actually spending without even knowing it. So that's why I really encourage you to go and get that book. So, so many things that we've covered today. Let's do an absolute speedy recap. First and foremost, there is money on the table. There's over $60,000 if you're eligible, that the banks and government are going to give you access to. And it means that you can actually get into your first property sooner at a lower price than you ever thought. And you may only can you may be able to do that with just a 5% deposit. So know what you can afford and what can you afford? Well, get a mortgage broker to go and find out what your your income and expenses look like so that you can understand what lenders will lend you. Once you understand that, then we take into account your deposit because you could be limited by what you can afford to buy or you could be limited by your deposit. Usually people are limited by one of those things. So understand where your limitation is so that you can work on it if your limitations are servicing. Now let's talk about how to increase your income. How do you increase your income? Well, maybe ask for a pay rise, maybe do some extra shifts, maybe find some extra work. Maybe get paid for things that you're really, really good at and you're just giving away. Find out maybe on Clarity fm, Maybe on Airtasker, where you can actually make some extra bucks that can go into your deposit as well. So get your income up and reduce your expenses. So how can you reduce your expenses? Work out what you're actually spending your money on. So get a book and write it down for the next two weeks. I'm sure you'll be surprised. And look at where you're spending your money. Look at the marketing that is going on every single day. Maybe you're picking up that extra chocolate when you're at the petrol station. Maybe you're going out for dinner with your friends and family. Let's bring back the progressive dinner or the Potluck dinner. Let's bring it back and save some money. Maybe get rid of that Netflix subscription. Maybe get rid of the gym subscription. There's so many great gym and even on YouTube, really great workouts you can do. But check out the Nike one. It's a great free app with great workouts on it. So there's ways you can reduce your expenses as well. That's going to affect your borrowing capacity. And if you would like us to do that for you at Investors Choice, more than happy to, we'll do that assessment for you. And if you make an appointment with the link that I have, which is investorschoice.com I will get you that course worth $495 for our first home buyers. There's over 30 modules in it, lots of exercises. As I said, I've had that on the market for $495. I'm only giving it to my first home buyers that I'm working with here at the moment. So you know, you don't have to pay for education too. You could actually come up with a really good way of actually getting it for free. So look at what you can get for free. There's free activities happening all the time in the city. Understand where you're spending your money and see what the alternative is. Rather than buying a book, go to the library. You can actually download with their apps all of electronic books. You don't even have to go to the library these days except to join and then look at your savings. If you are saving money, put it in a savings account. Don't just leave it in your wallet because you're going to spend it. Increasing your savings is actually really easy when you put your mind to it. But first and foremost, you have to know how much you need to save. So that's the speedy recap. There is money on the table. Increase your income, reduce your expenses, increase your deposit, and you can be one of the people can get into your first home even sooner than you thought, for even less than you even thought possible. That's it for me. That's it for this week. I hope you guys have had a really good time. And without further ado, I'm going to throw you over to the exit credits. Have a great week. Speak to you next week, 12:30 on Wednesday. And that's it for this week's first Home Buyer Show. And Jane will be back next time with more tips, tricks, resources and interviews. See you then.