Tuesday, February 20, 2018

Ask Michael Anything [Video] | How to pick a buyers agent?

When it comes to choosing a buyers agent, do you know what to look out for?

Watch as I discuss all the things you need to consider in order to find the perfect agent.

This week’s question:

Real Estate Agent Holding A Model House

I’m looking to buy an investment property in a different state in which I live (Adelaide) – I haven’t really decided where yet.

Should I use a buyers agent who operates from that state or can I go with someone who’s based in a different state and fly’s into the various states around the country.

– Thanks

Simon, Adelaide

You may also be interested in:

ASK MICHAEL ANYTHING [VIDEO] – CASH FLOW OR CAPITAL GROWTH?

ASK MICHAEL ANYTHING [VIDEO] – DOES THE BUY 10 SELL 5 STRATEGY WORK?

ASK MICHAEL ANYTHING [VIDEO] – WHAT STRATEGY TO USE WHEN BIDDING AT AUCTION?

ASK MICHAEL ANYTHING – WHAT’S THE RIGHT PROPERTY INVESTMENT STRATEGY?

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from Property UpdateProperty Update https://propertyupdate.com.au/ask-michael-anything-how-to-pick-a-buyers-agent-video/

Admit it- no one really knows what’s going on in the property markets!

The evidence is overwhelming that we know much less than we think we do, even when we’re armed with all the data and reports.

Sometimes especially when we’re armed with data and reports, because it gives us a false sense of confidence.

Just look at some of the headlines that have come out so far this year: house computer search property news media web

  • The boom is over for the property market– reported last week.
  • Property prices will finish off the year better than they started – reported this week.
  • Here are the hot spots for 2018 – I get an email like this almost every week!

The problem is investors tend to read and believe what they want to – it’s called confirmation bias.

This is the psychological phenomenon that explains how people tend to seek out information that confirms their existing opinions and overlook or ignore information that refutes their beliefs.

Confirmation bias can thus cause investors to make poor decisions, and explains why markets don’t always behave rationally, as it is a source of investor overconfidence.

So let’s step back from all the hype and look at what really happened over the last year and see if we can extract some lessons for 2018.

FIRSTLY, HERE WHAT HAPPENED TO HOUSE PRICES OVER THE LAST DECADE:

Housing Graph 01

 

While this graph shows that capital cities significantly outperformed regional locations what his doesn’t show is how fragmented the markets really are.   

Housing Graph 03

The chart above shows how Melbourne and Sydney have decoupled from the rest of Australia and of course within those markets some locations are performing much more strongly than others.

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And even though our property markets lost their oomph as last year progressed, some properties are still selling well and increasing in value while others aren’t.

For example, what I call “investment grade properties” in the middle price range (say $550,000 – $950,000), in prime locations and with an element of scarcity, are still selling well, even though there is clearly less interest from both owner occupiers and investors than there was before.

However, “B” & “C” class properties are not selling well.

Some have dropped in value by up to 10% and some can’t be given away (well…it’s not really as bad as that, but you’d have to give a very steep discount for someone to buy them).

While the market has only just begun to be tested this year, the key indicators suggest this slow down will continue well into 2018 – this “flight to quality” is normal at this stage of the property cycle.

EXPECT THE UNEXPECTED IN 2018New Year Concept

If our property markets taught us anything over the last few years, it is to expect the unexpected.

There are always “X Factors” – unforeseen events or influences, either from overseas or locally that impact our markets – either positively or negatively.

Of course I don’t know what they will be this year  – over the last few years the “X Factors” that blindsided some investors all had to do with finance.

In the past it has been finance this is brought an end to previous property cycles – either through rising interest rates or a credit squeeze.

What will bring an end to this property cycle?

This is something I have been turning a lot of my attention to as has our research department and my professional colleagues.

And this is exactly the type of information I’m going to share with attendees at my upcoming one day trainings – my Property Market and Economic Updates around Australia in the next few weeks. property cycle

If you haven’t yet booked in click here now, find out all about these sessions and reserve your seat.

As I said… I’m going to share with you what I think is going to happen to the Australian property market, and will have expert commentary from Dr Andrew Wilson, Australia’s leading property economist, who in previous years has always wowed our audience with his market insights.

Click here now to find out all about these trainings and reserve your place now

Interestingly high property values on their own won’t end the property cycle.

There will need to be a precipitating factor to end this cycle.

And while exactly what this is and when it will occur is unknown, I have identified five possible precipitating factors that could end this property cycle and will be explaining these in detail at my upcoming trainings.

Please click here now and reserve your place and learn how to maximise your upside while minimizing your risks and protecting your assets from my faculty of experts.

And of course, since we have no properties for sale, our recommendations are unbiased and independent.

5 PROPERTY LESSONS FOR 2018

To ensure you don’t get burned in the coming year and to give you a chance to make the most out of our changing property markets, I would like to share some important lessons I’ve learned from previous cycles.

Probably the most important lesson we can all learn is to never get too carried away when the market is booming or too disenchanted during property slumps.

Letting your emotions drive your investments is a sure-fire way to disaster.

LESSON 1. BOOMS DON’T LAST FOREVER

During a boom everyone is optimistic and expects the good times to last forever, just as we lose our confidence during a downturn. property market

Our property market behaves cyclically and each boom sets us up for the next downturn, just as each downturn paves the way for the next boom.

Let’s face it…while the news is much less positive today, we know that over the next few years the flatter market conditions will be followed by another property boom and then another downturn.

And over the next decade we’re likley to have another recession (we haven’t had one for a long, long time) and we may even have a depression one day.

The lesson from all this is get prepared for the next phase of the property cycle.

During the last cycle, most investors didn’t really have their upsides maximized or their downside covered.

LESSON 2. BEWARE OF DOOMSAYERS.

For as long as I have been investing, and that’s over 40 years now, I remember hearing people with excuses why property prices will stop rising, or even worse, why property values will plummet.

However in that time, well located properties have doubled in value every 10 years or so.

Fear is a very powerful emotion, and one that the media used to grab our attention.

Sadly some people miss out on the opportunity to develop their own financial independence because they listen to the messages of those who want to deflate the financial dreams of their fellow Australians.

Fear is a very powerful emotion, and one that the media used to grab our attention.

Sadly some people miss out on the opportunity to develop their own financial independence because they listen to the messages of those who want to deflate the financial dreams of their fellow Australians.

 LESSON 3. FOLLOW A SYSTEM

Smart investors follow a system to take the emotion out of their decisions and ensure they don’t speculate.

This may be boring, but it’s profitable. property

Let’s be honest, almost anyone can make money during a property boom because the market covers up most mistakes.

But many investors without a system found themselves in financial trouble when the market turned.

Warren Buffet said it succinctly: “You only find out who is swimming naked when the tide goes out.”

In other words, if you aren’t following a system that works in all market conditions you will be caught naked when the market changes.

If you prefer to have consistent profits and reduced risk, follow a proven system.

Make your investing boring, so the rest of your life can be exciting.

LESSON 4. GET RICH QUICK = GET POOR QUICK

Real estate is a long term investment yet some investors chase the “fast money.”

You’ve probably met people like that – they look for that deal that will make them fabulously rich.

When you see them a year later, they’re usually no better off financially and still talking about the next deal that will make them rich.

They are often influenced by the latest get-rich-quick artist with a great story about how you can join them and become stupendously wealthy.

Their stories can be very compelling, even hard to resist.

They often pander to the wishes of people who would like to give up their day job to get involved in property full time, but in reality it takes most people many years to accumulate sufficient assets to do this.

Patience is an investment virtue.

Warren Buffet said it right when he explained that: “Wealth is the transfer on money from the impatient to the patient.”

LESSON 5. IT’S ABOUT THE PROPERTY

You’re in the business of property investment, yet during the last boom many investors forgot the age-old property fundamentals of buying the best property they could afford in proven locations.

Instead they got sidetracked by glamorous finance or tax strategies and some lost out.

Smart investors do it differently. house property

They make educated investment decisions based on research and buy a property below it’s intrinsic value, in an area that has above average long term capital growth and then add value creating some extra capital growth.

These are just 5 of the many lessons that I learned investing through previous property cycles.

The markets are slowing down, but they’re not in reverse – they’ve just slipped from fifth gear to third gear in some locations and second gear in others.

We know that over the last few years ago the pendulum swung too far in some regions and the markets are catching their breath.

In some areas property prices are flat and in others they have fallen and will continue to languish for a while.

We also know that if history repeats itself, some markets will swing too far into the negative, driven by fear.

If you learn these lessons from previous cycles the roller-coaster ride will not be as dramatic this time around because you won’t let your emotions drive your investment decisions.

Remember both fear and greed will drive you down the wrong path.

A year of uncertainty ahead

I started this blog by explaining that no one really knows what lies ahead, but there are some amazing similarities to one previous cycle – one I remember very well.

Boy I wish I knew then what I know now! Property-Investment-Checklist-300x199

Click here now and get all the details of my upcoming Property Market and Economic 1 day trainings, reserve your place and….

  • Learn some new information – I’m presenting some new ideas and the markets are very, very different to last year.
  • Reinforce some thinks you already know.
  • Gain some distinctions – just to fine tune how you’re doing things.

I am keen to help you protect your assets and maximise the return of your property portfolio, so I look forward to seeing you at this event.

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from Property UpdateProperty Update https://propertyupdate.com.au/admit-one-really-knows-whats-going-property-markets/

Monday, February 19, 2018

9 pearls of ancient wisdom for property investment success

Confucius says… “property investor looking to create wealth from real estate can learn much from ancient Chinese proverbs.” house gold area suburb location property market

Okay, so I’m not quoting Confucius verbatim, however the teachings of the ancient Chinese philosophers still ring true in today’s very different, modern world and have clear application when it comes to the business of real estate investment.

Those property investors who understand the importance that mindset plays in their wealth creation journey should gain some insights from the following Chinese proverbs – a handful of my favourites…

Click here to view the video on YouTube.

“Sow a thought, reap an action; sow an action, reap a habit; sow a habit, reap a character; sow a character, reap a destiny.”

I have found that your level of wealth will seldom exceed your own personal development. 

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That’s because your way of thinking regarding money, wealth and prosperity will determine the financial heights you reach.

You see… your thoughts lead to your feelings; your feelings lead to your actions and your actions lead to your results.

Your inner world (your thoughts and feelings will determine your outer world (your results and destiny.)

So first work on yourself, because your wealth won’t grow unless you do.

And if per chance you do happen to stumble upon a financial windfall and your wealth takes a lucky jump, unless you grow out to where it is, it will go back to where you are because it is very likely you’ll lose your money through mistakes or mismanagement.

“He who asks is a fool for five minutes, but he who does not ask remains a fool forever.”

One of the big mistakes beginning investors make is to think they can do everything themselves.

They do a bit of research, crunch some numbers and suddenly they’re industry experts. light bulb idea leader think smart clever property house

And of course you can’t tell them anything because they know it all.

As I frequently say: if you’re the smartest person in the room, you’re in the wrong room, so recognise the areas where you need help and don’t be afraid to seek out expert advice.

There are no foolish questions, just foolish people who were reluctant to ask.

One more thing: don’t be put off because a learning opportunity costs money.

We all pay learning fees – either to someone who helps us or to the market because of our mistakes (which are usually very expensive.)

“A single conversation with a wise man is better than ten years of study.”

Finding a mentor is the fast track to acquiring the type of property investment insights that can never be found in a book.

Seek out mentors who have already achieved the goals that you aspire to by successfully investing through a number of property cycles and just as importantly who’ve managed to retain their wealth.

“One mouse dropping ruins the whole pot of porridge.”

One bad asset can be the proverbial fly in the ointment that hold back your portfolios overall growth.

So review your property portfolio regularly.

If you find a property that, knowing what you know now, you would not buy again today consider selling the, err, “mouse dropping” in order to make room for a better addition to your “pot of (property) porridge.”

“A single spark can start a fire that burns your entire house down.”protect umbrella portfolio saving money coin insurance rainy day

Every year unforeseen X Factors come out of the blue to test us, so look forward to the best of times, but prepare yourself for the worst.

Protect yourself and your portfolio against unforeseen crises – be it a personal one, like losing income due to ailing health, or something on a larger scale.

Insure yourself as well as your assets and maintain a financial buffer you can dip into, should the need arise.

“Don’t be afraid of growing slowly, be afraid only of standing still.”

Sustainable wealth creation through property investment is not a process you can rush.

It takes time for compounding and leverage to work it’s magic.

Warren Buffet put it a different way: “Wealth is the transfer of money from the impatient to the patient.”

“The Best Time To Plant A Tree Was 20 Years Ago. The Second Best Time Is Now.”

It’s never to late to get into the property game.

Sure it would have been nice to do it when the median price of a house was $100,000, but interestingly that seemed expensive to most investors twenty years ago.

There are always opportunities in the property market.

The sooner you start, the sooner you are on track to reaping long-term riches.

“Man who stand on hill with mouth open will wait long time for roast duck to drop in.”  goals planning inspiration

Some people think that announcing their plans to become a rich real estate tycoon to friends and family over the dinner table, will somehow make the magic just happen.

In property, opportunities rarely come knocking or fall in your lap.

You have to seek them out and be prepared to create your own.

The big difference between successful investors and the average Australian is that they set themselves goals and then take decisive action to achieve them.

“A fall into a ditch makes you wiser.”

Fact is: you’re going to make mistakes when you invest.

We all do.

However it’s not how often you fall in the ditch that matters, it’s how often you get up, dust yourself off and try again that matters.

Hopefully you will minimize your mistakes by learning from these wise Chinese sayings.

Here’s what you can do from what you’ve learned today…

If you want to take advantage of the opportunities our growing property markets will offer you now is a good time to consider your options. 

1-percent

If you’re looking for independent advice, no one can help you quite like the independent property investment strategists at Metropole.

Remember the multi award winning team of property investment strategists at Metropole have no properties to sell, so their advice is unbiased.

Whether you are a beginner or a seasoned property investor, we would love to help you formulate an investment strategy or do a review of your existing portfolio, and help you take your property investment to the next level.

Please click here to organise a time for a chat. Or call us on 1300 20 30 30.

When you attend our offices in Melbourne, Sydney or Brisbane you will receive a free copy of my latest 2 x DVD program Building Wealth through Property Investment in the new Economy valued at $49.



from Property UpdateProperty Update https://propertyupdate.com.au/9-pearls-ancient-wisdom-property-investment-success/

6 essential questions to ask before turning your home into an investment

Moving interstate for work?

Need to upsize to fit the kiddies in or downsize now they’ve all left the nest? 15563628_l

Are you thinking of keeping your current home as an investment property when you move?

Holding onto your home has a couple of distinct advantages.

You won’t be forking out the various fees payable for selling it, such as agents’ commission and advertising.

Plus, it may also serve as a kind of security, knowing you have a place to go back to should your plans or circumstances change.

However, there are a few key factors you should consider and questions you should ask yourself, before taking the leap from owner-occupier to landlord

1. Can you keep your emotions in check? 

investor-enquiry-form

Renting out your own home – a place you love, full of memories and sentimental attachment – can prove to be a major tug on the heartstrings.

Are you ready to see your beloved baby’s nursery turned into the new tenant’s man cave or home office?

As an investor, you need to trust your head, not your heart, and this can be difficult when you are emotionally tied to a property.

Of course, as an investor you shouldn’t think that way, but I know many people do, and if that’s the case, buying a new place to use as an investment may be a better option.

2. Have you considered Capital Gains Tax?

If you don’t seek professional advice, you could find yourself stung with a nasty Capital Gains Tax (CGT) bill when it comes time to sell the property.

It’s a tax that owner-occupiers never have to worry about as it’s not applicable to your primary place of residence.

However, if you’ve rented the property out you might find yourself slugged with a CGT bill when you sell it.

The ATO does allow you a 6 year grace period to decide which property will be treated as your principal place of residence when you move out, but be sure to check with your financial advisor or accountant about the potential implications before the “For Lease” sign goes up in your front yard.

3. Does the property have capital growth potential? Property Investment Checklist 300x199 300x199

If your home is in a low-growth area, you might be better off selling up and buying a new “investment grade” property with more potential for capital growth.

Weigh up the fees and costs associated with buying and selling, against the likelihood of the property growing in value and the length of time you hope to keep it as an investment.

While there’s no sure way to predict how the market will fare in the future, you can certainly take an educated guess on which option will give you the best chance of a good profit down the track.

4. Is the rental market strong in your suburb?

Living there as an owner-occupier, it’s probably never occurred to you to notice how many of your neighbours are renting their homes.

But now as a new property investor, it’s vital you find out stats like vacancy rates, median rents and the percentage of renters versus owners before your convert the family home into an investment property.

You can find this information online, and calling a few local property managers doesn’t hurt, too.

5. Does your property appeal to the tenant base? 25849329_l1

A large family home with a sprawling, high maintenance backyard probably won’t appeal to students on a budget, just as a studio apartment in an outer suburb surrounded by quarter-acre blocks may not be the best fit for an urban professional couple.

You need to be sure that your property is suited to the local tenancy market.

That’s because trying to rent out a property that doesn’t appeal to the local tenant base could leave you vulnerable to long-term vacancies and expensive advertising fees.

Chat with local property managers to find out what local tenants want, and if your place doesn’t meet the market, you may want to consider investing elsewhere.

6. How will the property be financed? property purchase money

If you’ve got significant equity in your home, chances are you’ll want to use it to buy your next home.

Before you do anything get advice from a proficient finance broker to make sure you structure things correctly.

Just because you’re using your new investment property (which was your old home) as security for your loan won’t make the interest on the loan tax deductible.

It’s the purpose of the loan that counts in the eyes of the tax department – so it’s critical to set things up correctly.

Getting the numbers right is the element of investing that can make or break your future wealth, so don’t try to tackle it yourself unless you’re a real finance guru.



from Property UpdateProperty Update https://propertyupdate.com.au/6-essential-questions-to-ask-before-turning-your-home-into-an-investment/

5 facts about financial freedom

We’re living longer nowadays and our standard of living is increasing.  Moneygrowth K8rf 621x414@livemint

As has our desire to live better lives – ones where we’re not tied to a job for 40 or 50 years!

One of the greatest freedoms that we enjoy today is the ability to add value to society and collect wealth as a result.

If one of your goals is to achieve financial freedom let’s look at some of its facts.

Fact 1: Spend less than you earn

This may sound simple, but don’t underestimate its importance, because if you don’t spend less than you earn you’ll always owe other people money.

Fact 2. You need to save to invest

When you spend less than you earn, you should save the difference.

However most Australians who save, save to consume, not to invest. 

investor-needs-to-know-about-finance-tax-and-the-law

You know…once they’ve accumulated a tidy sum they spend it.

Of course, no one ever saved their way to true wealth – it’s just too hard with today’s low interest rates and then tax eating away at the little interest you receive.

The only way to take advantage of true money-growing opportunities is to invest in assets that grow in value and to recognise that becoming financially independent takes time –  so be patient.

If you continue to funnel money into your investment accounts, you’ll grow your wealth on a larger scale through the magic of compounding.

You can’t get much compounding if you’re saving just to save (or to spend it like most people do.)

Stay disciplined and keep saving so you can eventually have a big enough sum to invest in property or shares where your return will be greater than the paltry interest you get on your savings.

Fact 3: Income won’t make you rich

Many people believe that a high-paying job will be their ticket to financial independence, but unfortunately they’re wrong.

Of course it will be easier to become wealthy if you have a lot of money flowing to you but as I’ve already explained, you have to spend less than you earn.

It seems like common sense, but studies have demonstrated that high-earning doctors are the least likely group to amass significant wealth.

So use your income to buy assets which will grow in value and give you cash flow.

Things like well located residential real estate or blue chip shares.

Fact 4: Get good tax advice Financial Meeting At Office

Wealth creation doesn’t happen by chance, it needs a plan and is a team effort.

So when it comes to taxes, get the best advice that you can afford.

Everyone’s tax liability is different, so you must consult a professional who understands your personal situation.

There are a myriad of tax deductions available to investors and business owners and it is your responsibility to legally minimise your tax liability.

Fact 5: Don’t forget to smell the roses 36304772_l

This requires a fine balance because you don’t want to sacrifice tomorrow for today, but you don’t want to be miserable today either.

Financial independence is a journey that requires some long stretches and it certainly requires patience.

Enjoy your journey, because if you don’t it’s unlikely you’ll enjoy the destination.

If there’s something that you’ve always wanted to do, don’t postpone your happiness, because none of us knows what tomorrow may bring.



from Property UpdateProperty Update https://propertyupdate.com.au/5-facts-about-financial-freedom/

[Podcast] Why 2018 is going to be a boom year | Rich habits you must teach your children I It’s all a matter of perspective

2018 is going to be a boom year.

But before you get to concerned about “what I’m on” to make a statement like that, listen to today’s podcast as I share my perspective and why I think this going to be so. Depositphotos 8227086 M 2015 1 300x217

In my mindset moment, I’m going to talk about some interesting perspectives.

Then I have a chat with my good friend Tom Corley about the rich habits that you must teach your children.

Even if you are not a parent, these are still very important lessons.

2018 is going to be a boom year:

  • My prediction is that 2018 is going to be a boom year for fright.
  • The media is at it again and there is no shortage of scary stuff.
  • If you look back every year has been predicted to be a boom year for fright.
  • I have invested during property slowdowns, high interest rates, and times when prices were thought to never go up again.
  • Despite all of this, the value of my properties keeps doubling allowing me to refinance and buy even more properties.
  • There is always bad news and scary headlines in the media. New Year Concept
  • This could have given me plenty of reasons not to invest in properties.
  • To be a successful property investor, you need to step back and not be scared by every doom and gloom rumour and report.
  • People are still living their lives, getting married, having babies moving house etc and a lot of people are getting rich.
  • We’re still experiencing strong population growth and all these people have to live somewhere.
  • The fundamentals are sound when taking a long-term perspective.
  • There are opportunities out there with less competition than last year.
  • We are now entering a buyers’ market. Smart investors buy in a buyers’ market.
  • 2018 is a great time to educate yourself and take advantage of opportunities.

Mindset Message: It’s all a matter of perspective

  1. I want to put things into perspective. What are your most important priorities? What are you going to focus on and what are you going to ignore?
  2. What if you only had 15, 10, or 5 years to live? How much time would you spend obsessing about investments and property rates?
  3. What if you only had 1 year, 1 month, 5 days, or 24 hours to live what would you spend your time on?
  4. Now that you have perspective, what are you going to do with the time that you have?

Rich habits you must teach your children:

  1. Will your child be rich or poor? Are you, as their mentor, teaching them rich or poverty habits.
  2. Science shows that by the age of nine we have learned most of our habits. 12426376 L
  3. These habits come from our parents. We mirror our parents thinking, habits, and emotions.
  4. Emulating bad habits can force you into a situation where you are eeking out a living.
  5. The beauty of rich habits is that you only need one or two of them to transform your life. Habits like reading and exercising will change your future.
  6. If you don’t accept responsibility for your life, you won’t even be aware of the issues that are causing you struggles.
  7. Once you are aware and take responsibility you can make the changes in your life.
  8. Parents are responsible for most of the poverty in the world by not teaching their kids success habits.
  9. This is part of the reason why the rich get richer. It’s not too late. People can change and become success oriented.
  10. You can change your habits anytime all throughout your life no matter what your age.

Links and resources:

Quotes:

“If you look back, every year is a boom year for fright. As far back as I can remember, there have always been scary stories from the media.” Michael Yardney 36308275_l

“What you look for is what you see. If you look for bad news, you are going to find it. If you look for opportunity, you will find opportunity.” Michael Yardney

“It is so important to be responsible for your life rather than being a victim.” Michael Yardney

Never miss an episode and keep up with all the good things going on at the Michael Yardney podcast by subscribing on iTunes.

You can also subscribe to MichaelYardneyPodcast.com to keep up with the latest information including bonus material that comes out between the podcasts.



from Property UpdateProperty Update https://propertyupdate.com.au/podcast-2018-is-going-to-be-a-boom-year-rich-habits-you-must-teach-your-children-i-its-all-a-matter-of-perspective/

Sunday, February 18, 2018

Who gets the house when you break up?

Relationships are much more complicated these days. Divorce 2755736 1920

It’s common for couples to purchase a property before they have walked down the aisle or even lived together, which raises the question of who gets the house if they break-up?

It’s surprising more couples don’t give this a second thought.

They assume they’ll be together forever, and don’t put a lot of research into how the mortgage will be structured or how the asset will be divided if they separate.

So today I would like to spend a bit of time explaining this law surrounding property ownership.

The nuts and bolts of joint tenancy

In Australia, if you’ve bought a property with your partner then you have entered into either a joint tenancy or a tenancy in common agreement.

These are legally binding frameworks that have very different rules depending on which agreement you choose.  

investor-enquiry-form

Let’s start by explaining joint tenancy because it is by far the most common agreement that couples enter into.

In this type of arrangement the couple own equal parts of the property.

This is regardless of who the main contributor to the mortgage is.

For example, in a joint tenancy, one partner may start earning more and hence paying more off the mortgage but this does not increase their stake in the asset.

A joint tenancy has no severable share, which means if one of the partners passes away, then the surviving spouse will enjoy the right of survivorship.

It is important to remember that this means they’ll also incur full responsibility for the outstanding debt.

The joint tenancy, therefore, is all about equality and lenders will treat the couple as one person, or one mortgagee.

Tenancy in common

In some cases, couple will opt for a tenancy in common arrangement. 17763335 - fight for money stock vector

This means that ownership is not automatically split 50-50, but is determined by the financial contribution of each person.

So if you contribute $100,000 to the $400,000 mortgage, then you’re entitled to 25 per cent of the asset, while your partner holds the other 75 per cent.

If you separate from your partner, then under a tenancy in common agreement you maintain your share of the property and you can sell your portion at any point. 

In the event your partner dies in a tenancy in common, their share doesn’t automatically default to you, but rather is delegated in accordance with their will.

That’s why if you’ve entered into a tenancy in common arrangement and have split from your partner, make sure you update your will.

However, any mortgage taken out under tenancy in common is typically a shared responsibility between all parties.

If one person defaults, then the others will need to make up the repayments. 9180619 - 3d illustration of a scale and two houses

For both frameworks, a co-ownership agreement must be made which dictates how rights and responsibilities of the property are divided.

Finally, if you are not sure whether you hold the property with your spouse as a tenancy in common or joint tenancy, then there is a quick search you can do to find out.

Simply obtain a copy of your title transfer document or land registration document, which will tell you the nature of the tenancy.

So you can see now how important it is to understand the ins and outs of both agreements.

Entering into the wrong one can have serious financial consequences.

Take some time to think about which path will work best for you and your partner.



from Property UpdateProperty Update https://propertyupdate.com.au/who-gets-the-house-when-you-break-up/