Surf Coast property rise means residents reap benefits

Surf Coast residents are reaping rewards from steady growth in property prices, tapping into their properties value for financial freedom.

Between October 2013 and October 2017, the average property price growth for Torquay was 26 per cent, Jan Juc 44 per cent, Anglesea 34 per cent, and 36 per cent for properties in Lorne.

On average, a property price increase of 35 per cent over four years has given home owners options to upgrade, fund major expenses, pay down debt or top up other investments including superannuation.

Price increases on the Surf Coast are likened in percentage terms to some of Melbourne’s best suburbs with the hidden benefit being owners can unlock that increase to fund other projects or expenses.

According to Lanie Conquest, director of Surfcoast Life & Lending, home equity is a perfectly valid strategy to fund a number of projects or investments.

“Most people I see believe they have limited financial options because cash flow is tight. The reality is refinancing generally gives clients at least two wins – a lower rate and additional funds to expand their horizons.

“While paying the mortgage down, more equity has also been building in the home. The same repayments can buy a step upgrade in quality or size without impacting day to day living.”

She said renovating saves on stamp duty but often an upgrade to a better location can be the smartest way to ensure long-term capital growth.

“Principal home ownership provides a lot of lifestyle befits it’s also arguably one of the best most tax effective investment strategies with no capital gains tax payable.”

Lanie said investments in other assets such as investment property shares or even additional super contribution would accelerate wealth creation faster and was also tax effective.

“Interest on debt transferred over to fund an investment such as shares or an investment property is tax-deductible and loans can be split to separate good debt (deductible) from bad debt (nondeductible) with banks offering some excellent rates on these too.”

She said using home equity to top up super worked a little differently, and the low tax rates within super and tax free income in retirement made super a smart place to save.

“A lot of small business owners in their 40s and 50s start to worry about how little they’ve contributed to super. It’s a good time to start using home equity to catch up.

“The sooner the better, too, as tight restrictions now limit how much you can get in each year.”

Debt recycling is not dissimilar to any other investment strategy, however, the focus is on releasing equity to hold an income generating portfolio of shares or managed funds and income is then redirected back into an offset account or redraw facility as opposed to a focus capital growth.

“There are so many options which to choose often has to do with what clients understand or what unfair advantage they have (like a builder for example). Sometimes the spread sheet results are less important then what gets them motivated or helps them sleep at night,” Lanie said.

“The fact that options exist is a great starting point for achieving either of the outcomes.”

With more than 25 years’ banking and financial services experience Lanie Conquest has established Surfcoast Life & Lending to help local families and businesses make smart financial decisions. For more information, phone 0418 938 646 or email [email protected].