WE ARE finding it hard to find a financial adviser to get some advice from. We have a very large mortgage of $470,000 with no other assets. We have a 60 per cent fixed mortgage at 5.99 per cent for another 18 months. We are coming to the realisation that we will not be able to pay the monthly mortgage payments when the fixed rate is gone (we are struggling now). Should we cut our losses, sell the property, rent and invest the money we have made, or sell and buy something more affordable. We are both 29, with a combined income of $110,000 a year.
I think you need a financial counsellor more than a financial adviser. It would be very sad for you to lose your house at a time when the market is down and you could be severely out of pocket if you sold on a down market and then had to buy back when it was much higher. You should look at all your expenses and try to cut out anything that is not essential. As a last resort consider moving and renting the property out the tax deductibility would reduce the effect of the mortgage payments and you could be absent for six years without losing the Capital Gains Tax exemption.
I'm 61, still working full time, and want to access my super to pay off my home mortgage, is it possible?
Now that you have reached 60 you can access your super by resigning from a job. It need not be your main job. If this is not possible, take advice about starting a transition-to-retirement pension the income stream from this would enable you to boost your loan repayments.
I am in my 20s, have a good job, am well paid and have accumulated about $30,000 in savings. I feel like the money is being wasted in my savings account and that I can use it for something more productive. However, I am reluctant to do anything too risky. I would be devastated if my very first nest egg, that I have worked so hard for, disappears into the well of a bad investment. What is a relatively secure investment option?
You have done well to date but you need to understand that cash can be unsatisfactory as a long term investment because there is no possibility of growth or tax benefits. Your best strategy will depend on what you want the money to do. For example, if you intend to buy a house in the next few years it is fine where it is but if you are prepared to take a seven to 10-year view, you could take advice about investing it in shares or managed funds.
Noel Whittaker AM is a co-founder of Whittaker Macnaught. Advice is general and readers should seek their own professional advice.
Contact
noel.whittaker@whittaker macnaught.com.au.
Questions to: Ask Noel, Money, GPO Box 2571, Qld, 4000, or see moneymanager.com.au/ask-an-expert.
Frequently Asked Questions about this Article…
Should I sell my home now if I can’t afford mortgage payments when my fixed-rate loan ends?
Selling in a down market can leave you severely out of pocket, so it’s not automatically the best option. The article suggests first cutting non‑essential expenses, seeking professional help (a financial counsellor is recommended), and only as a last resort consider moving and renting out the property or buying something more affordable.
Do I need a financial adviser or a financial counsellor if I’m struggling to make mortgage payments?
The advice in the article is that a financial counsellor may be more appropriate than a financial adviser when you’re struggling to meet mortgage payments. A counsellor can help prioritise bills, negotiate with lenders and identify immediate cost cuts.
Could renting out my property help reduce the burden of mortgage payments and will I lose the main residence capital gains tax exemption?
Renting out the property can help because the tax deductibility of investment expenses may reduce the net effect of the mortgage payments. The article notes you could be absent from the property for up to six years without losing the main residence capital gains tax exemption.
I’m 61 and still working full time — can I access my super to pay off my mortgage?
According to the article, once you reach age 60 you can access your super by resigning from a job (it need not be your main job). If resigning is not feasible, the article recommends seeking advice about starting a transition‑to‑retirement pension as an alternative way to generate income for loan repayments.
What is a transition-to-retirement pension and can it help with mortgage repayments?
A transition‑to‑retirement pension is an income stream from your super that the article says could enable you to boost your loan repayments. The piece recommends getting specific advice to see if this strategy fits your situation.
I’m in my 20s with about $30,000 in savings — what relatively secure investment options should I consider?
The article suggests your choice depends on your timeframe. If you plan to buy a house in the next few years, keeping cash may be appropriate. If you can take a seven‑ to ten‑year view, consider seeking advice about investing some funds in shares or managed funds rather than leaving it in cash.
Why might cash be an unsatisfactory long-term investment for young investors?
The article points out that cash offers little possibility of growth and provides no tax benefits, which can make it unsatisfactory over the long term if you want your savings to grow.
Who provides the advice in this article and should I seek personalised guidance?
The guidance is from Noel Whittaker AM, co‑founder of Whittaker Macnaught. The article stresses the advice is general and recommends readers seek their own professional, personalised advice for their circumstances.
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