When you buy a home it’s crucial to do whatever’s possible to protect your property. There are both physical and financial steps to take to ensure you’re safeguarding your investment.
Here are five big ones to cover off to make sure everything is, well, as safe as houses.
Get the best mortgage deal
It goes without saying that the less you end up paying for your investment, the safer it is. Shopping around for the best possible mortgage deal will make a big difference to your bottom line.
Consider the reputation, experience and history of the lenders you are considering. Some will be ‘higher risk’ than others and, depending on your risk tolerance, this will have more or less impact on who you feel comfortable going with. Then, follow these quick steps to land a good deal:
- Use a comparison websites – comparison sites like Canstar, Finder and RateCity have already done the heavy lifting for you. Make sure you uncheck any ‘partner deals’ boxes to ensure you’re seeing the broadest range of mortgages and not just the products that the site has a commercial deal with. Play around with the figures the site generates – higher deposit, shorter loan term, etc.
- Consider the comparison rate – not just the advertised rate of interest. The comparison rate factors in any upfront and ongoing fees attached to the loan. Depending on the lender, fees can make a massive difference to how much your loan will cost you.
- Make a list of your top three – once you’ve found the best looking loans for your circumstances, ask for more information. The loan fact sheet and product disclosure statement will give you all the fine details that can really make a difference to your loan. Look for an offset account at the very least.
More info here: 5 ways to negotiate a better deal and save plenty of money
Physically protect your home
To protect your property you need to physically secure it. Pay attention to things like:
- Double locks on doors and windows – and security bars, too, if your area demands it
- Adequate fencing – of course, check Council requirements before you go erecting a two meter barbed-wire fence…
- Outdoor lighting – especially along access points like side paths and back entrances
- Security system – an onsite alarm or a ‘back to base’ style with back up security presence
- Garage security – stealing from garages is more common than you think, so secure that roller door well
- Landscape maintenance – cut back overhanging trees and bushes to eliminate access points and hiding places
- CCTV – it might seem OTT in some areas, but find out whether installing cameras would be beneficial in yours
To physically safeguard your home, you also need to consider how safe it is to live in. Make sure the electrics and plumbing are up-to-scratch and always keep on top of safety issues like moss-covered paths, loose tiles on footpaths, sliding mats and rugs and things like that.
Take out adequate home and contents insurance
No matter where you live, home and contents insurance is a must-have. In a nutshell, insurance policies involve transferring risk from yourself to the insurer in the event of any damage, theft or accident.
Hit up the comparison websites to find the best policy for your needs. A few in the home and contents space are iSelect, Compare the Market and Canstar. CHOICE also offer a home and contents comparison and unlike other comparison sites, they don’t get paid by any of the insurers they are comparing.
You’ll need to pay an annual premium for your home and contents policy (and every policy and insurer will be different) so do plenty of research. Consider your own needs and assets and find a comprehensive policy which best suits you. It might even pay to have your home insurance with one lender and your contents with another.
Make larger or more regular loan repayments
With interest rates at record lows, now is a great time to make extra payments against your loan. Rates can only really go up from here, so paying more now will help secure your property faster and reduce the amount of interest you pay.
Find out more here: 5 ways to pay off your mortgage faster
It will also build a buffer against future rate hikes and build equity which you might be able to be redrawn later. If redrawing on your mortgage isn’t appealing, look at getting a mortgage offset account where your extra deposits are offset against the loan balance, reducing the interest charged on the loan.
Take out life and other insurance
Your ability to earn an income is an important way to protect your property, so it makes sense to insure it.
Life insurance, total and permanent disability insurance, income protection insurance and trauma insurance are some of the different policies to consider. If you’re not able to work, these insurances can help cover everyday expenses, medical costs, and paying the mortgage if you can’t.
Your superannuation fund will also offer life insurance. Make sure it covers everything you need and be sure to nominate a beneficiary. The premiums for your insurance will come out of your superannuation. Beware that while this may seem like an easy fix for now, it may cost you in the long term. Every dollar out of your superannuation now equates to many more dollars you’ll be out of pocket by in future.
This article contains general information only. It should not be relied on as finance or tax advice. You should obtain specific, independent professional advice from a registered tax agent or financial adviser in relation to your particular circumstances and issues.