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HomeMoneySettled on your loan? Now what?

Settled on your loan? Now what?

Settled on your loan

By Tina Howes, Mortgage & Finance Advisor – SmartMove

So, you’ve spent the past decade, or what seems like forever, saving diligently to buy a property. And the loan has just settled! You’ve popped the champagne and moved in. Now what?

The sense of achievement, you pinch yourself, breathe a sigh of relief – you never thought you’d get there after two years of open homes and creeping property prices. Sound familiar?

It feels weird to go from such a big savings balance to so little… scary even.

You may have a sense to relax after sacrificing and saving for so long and then there’s the endless purchases for your new home.

Fine. Do it. Relax a little. Splurge. But then at some point it’s good to get back to utilising that same self-discipline you had to get here to achieve that next goal.

Here are my key pointers about how to get back on track post settlement:

  • Redo your budget. Instead of rent – it’s now a mortgage. Hopefully you had a good idea of the new costs but let’s face it, a budget is always going to be different to the actual expenditure.
  • You possibly have some initial purchases to make. New furniture, new carpet, maybe a new surfboard if you’ve just bought by the beach. A bike to pedal to work now that you are closer. Whatever it is, make a list.
  • Add in strata/rates/water/maintenance/electricity. You will have more outgoings on a house than as a renter. Or perhaps you have upgraded to a bigger house, with a pool, so the electricity is more expensive.
  • You may have moved – possibly out of the city into the suburbs. What does that new life look like? What’s the new commute going to cost? Your morning coffee, local Thai takeaways costs.
  • Give yourself three months after your first bills hit – to give a real sense of your new cost of living and then formalise that budget.
  • Make use of multiple bank accounts as offset accounts. I’m a big fan of this one and split your savings into multiple categories (refer my blog on budgeting).
  • Set a new goal. Your goal used to be buying a new home, so it was easy to make sacrifices. You may be exhausted from the sacrifices and want to let your hair down – that’s fine… to a degree – your loan repayments in itself are paying down debt and increasing your equity. So, there is the fact that simply by paying your mortgage off, you are getting ahead but it’s important to reassess your financial goals again.
  • These goals could be as simple as paying a little extra off your loan a week or putting aside money so you can invest in shares or an investment property. Chat to your bank or mortgage broker as to what’s needed to achieve that goal. It might not be now, or even in 12 months, but knowing what you need to work towards makes it easier to set those goals and achieve them sooner.
  • Once you have established your new budget and how much surplus you have, perhaps it’s time to visit a financial advisor and review your superannuation and insurances. Do you have dependants and are you covered in the event something happens to you?

Tina Howes

Mortgage & Finance Advisor

SmartMove

Main image: Freepik

Tina Howes