What an amazing quarter it has been. If you believe everything you read, we were due a number of interest rate rises this year. However the good news is that again this quarter they did not move. Mind you, with interest rate rises somewhat of a gamble at times, many have taken the opportunity to fix rates and secure a little peace of mind…more on that in a moment.

Thank you to those who have sent feedback on the newsletter; in response we have beefed up the monthly newsletter to a quarterly newsletter with more content. On a personal note renovation number six - featured in the March edition of Money magazine - is now complete ( Check it out under the About Us / Media menu item on the website) and the next big project is underway, Todd and are expecting a baby in November.

I have put together a Renovation Survival Guide with tips and some handy hints from my experience. This is available to newsletter members under the InvestKit.

In this newsletter we concentrate on protecting yourself, through fixing interest rates ( 3 and 5 yr rates starting moving up on 18th June 07), insurance for your mortgage, cashflow management and making the most out of the budget changes.

As always, I hope you enjoy this newsletter and that you make use of the ‘members only’ InvestKit full of practical spreadsheets and handy information. I have also added a Loan Processing timeframe flowsheet on the InvestKit. Since Easter lenders have been lagging in meeting their service level commitments. Where it use to be the norm to have a Conditional Approval in 48 hours one lender in particular is taking 14 days. So if you are thinking about buying and especially if you are using finance clauses and settlement times as a negotiation tool be aware that you may not be able to meet these commitments. 14 days for finance and a 6 week settlement is currently more achievable. So if looking for a property get your preapproval in now and save time.

As always I hope you find the information in this newsletter
relevant and useful.

Jane

InvestKit As a Newsletter Member you also have access to the InvestKit containing easy to use spreadsheets for researching and locating the right property. If you haven’t yet looked inside the Invest Kit to see what’s on offer, don’t delay because you could be missing out on something that will make a difference to your investment strategy.  The link to the InvestKit has been removed. If you sign up for the newsletter you will have access to the InvestKit

Fixing rates: what you should know before you commit The majority of investors who fix rates do so for three years. You might not be aware however that rates can be fixed from one year up to 15 years under standard bank products. Surprisingly for many lenders, the current 10 and 15 year rates are similar to the five and three year fixed rates, so it’s up to you the borrower, to decide the term that suits your needs. ‘Peace of mind’ vs flexibility On one hand, fixing rates for a lengthy period gives you some ‘insurance’ on your repayment amounts for the next few years, while on the other hand if you need some flexibility then this may not be the best approach. For instance if you wanted to use some of your capital growth in five years time to buy another property then a top-up with the same lender may not suit (which without breaking the fixed rate period is all you can do); you might want to consider another lender with a better product or rate. If you have a seven year fixed term loan and you do choose to move to another lender then you will have to pay ‘economic break’ fees. Essentially many lenders will charge you for breaking the contract you have made. This is calculated on a very complex formula and can add up to thousands. So be aware before you commit.

Are your tax savings working for you? Once again, come 1st July there will be further tax cuts. Obviously these will affect everyone differently depending on circumstances. For those using negative gearing as an investment strategy it may mean you’ll need to find a few more dollars to cover costs. However for those who will benefit from the tax cuts, a recent article in SMH Money Magazine ( 30th May 2007) poses an interesting question. What will you do with the savings you’ll get? Based on a salary of $50,000 p.a. the savings will equate to $14.42 per week or $750 per year. Here are some options to get you thinking: 1) A co-contribution super investment. For instance for someone on $35,000 who contributed $750 to their super would receive an addional $1125 from the Government. At 6.8% this equates to $26,005 in 10 years (if $750 is added every year). 2) A managed fund. Put $750 a year into a managed fund returning 8% and you’ll have an investment worth $10,865 in 10 years. 3) Attack your home loan. On a loan of $200,000 at a rate of 7.15% with 22 years and 9 months to run, just by contributing an extra $750 a year your interest payments could be reduced by $22,559, knocking your loan term down by 2 years. 4)Purchase life insurance and protect your family. With $750, a 40 year old non-smoking male could fund $1.13million worth of cover to help protect his family. So before July 1st rolls around, decide what you are going to do with your potential tax saving…if you don’t, it could slip through your fingers.

How to get a tax return every pay day…Tax Variation Schedules Did you know that if you have a negatively geared investment property you don’t have to wait until your annual return is processed before you can access your annual tax return? It always surprises me how well this secret is kept and the truth of the matter is that if you own an investment property this could greatly improve your cashflow. If you own a negatively geared investment property, chances are you receive an annual cheque from the ATO for the tax you overpaid during the year (calculated on deductions for interest, costs, depreciation etc). By completing an ATO tax variation schedule, your PAYG tax rate will be adjusted to reflect your net income position when negatively geared investments are taken into account. Make sure you speak to your accountant about this and get him or her to complete your first schedule to show you how it is done. Once you or your tax accountant have completed the form, the ATO will calculate your new effective tax rate and notify your employer so that instead of getting that end of year cheque, the refund will be reflected in your monthly or weekly pay packet. Clearly this strategy will help with your cash flow because you’ll get your money now rather than later. NOTE: If you’re going to complete the tax variation schedule form yourself, be very conservative with your numbers or you may find the ATO will reject future adjustment applications if you end the year with a large tax bill. The 2008 tax year variation form is now available on the ATO website and you can even complete it online. Search the website for Tax Variation or 221D ( the old form name) ATO website

Mortgages and Life Insurance - Could your family cope if something happened to you While I don’t mean to be a pessimist, I was reminded earlier this month of the importance of considering the need to future-proof your lifestyle and protect your family should the unthinkable occur. I was doing some reading and came across a story about the clients of a mortgage broker in South Australia which reminded me just how vulnerable most of us are in the event of an injury, illness or god forbid, death. After reading about Tate and Sarah* – a young couple whose lives could have turned out very differently if not for the fact that they had arranged appropriate insurance cover through their mortgage broker when they took on their mortgage – I thought it was important to share with you some information about insurance and its role in helping you protect everything you’ve worked so hard to achieve. You should speak to your financial planner about your total insurance needs considering any cover you may already have in your Super. THE STATISTICS SHOW THAT IN AUSTRALIA: *Between the ages of 25 and 65: 1 in 3 people will suffer a serious illness such as cancer, heart disease or stroke; and 1 in 8 people will die. * By age 40, the lifetime chance of having coronary heart disease is 1 in 2 for males and 1 in 3 for females. * 4,400 people with dependant children die each year. When you are young and healthy it’s all too easy to assume that death or serious illness is something that won’t happen to you but these statistics seem to suggest otherwise. Consider this for a moment, would you or your dependants suffer financially if you died or suffered a serious medical condition? With a loss of income, how would the mortgage, school fees, regular expenses and any additional medical costs be paid? If you or your family were faced with a mortgage that couldn’t be serviced, you could be forced into selling your home or investment property if it became necessary for the lender to take action to recover loan repayments. PLANNING AHEAD Clearly by planning ahead you can minimise the financial consequences of these type of unforeseen events for both you and your family. In order to assist in this regard, I’ve recently arranged to make made available to my clients (including those with a mortgage taken out within the last twelve months), a product that provides three months free cover whilst you do your insurance comparisons, if you cancel within this time it will not cost you a cent. There is no medical examination involved and even if you decide not to go ahead you’ll still receive a 5 year $10,000 complimentary accident benefit. If you wish to find out more about the insurance cover that I can make available to you, feel free to call or email me for a Product Disclosure Statement. *TATE AND SARAH’S STORY. How one family coped when the unthinkable occurred “After self examination, I went to my doctor and was told that I had testicular cancer, something I never expected to happen as a 30 something. I had surgery followed by chemotherapy, and have now recovered, but for the next 5 years I need to have regular blood tests and scans to make sure the cancer hasn’t reoccurred” said Tate when recalling how he and Sarah could have been in serious financial trouble. Tate and Sarah were aged 30 and 26 respectively when they took out a mortgage in November 2005. Fifteen months later in February 2007, Tate was diagnosed with cancer. In March 2007, thanks to his insurance cover, Tate received a cheque for $61,800. Tate did not have private health insurance, but was treated privately and the money from his insurance policy ensured his medical bills were paid and the mortgage repayments were covered. “We probably wouldn’t have thought about protection for our mortgage unless Jo had offered it to us. You never know what life is going to throw at you” said Tate. At about the same time as finding out about the cancer, Tate and Sarah also discovered that Sarah was pregnant. Discovering both of these things at the same time was made a lot easier knowing that thanks to their mortgage broker suggesting that they consider their need for protection, they had taken out life insurance, and would not have the financial worries they might otherwise have been exposed to. Jo had arranged life insurance protection for both Tate and Sarah through Australian Life Insurance (ALI). They were each covered for $200,000 for death and $60,000 for serious illness; otherwise know as a Living Benefit^. As a result of his illness, Tate would be unlikely to obtain insurance protection in the future. At least the remaining protection is in place and in the event of his death; Sarah will have some financial security. ^The Living Benefit provides cover for any one of 11 specific medical conditions and the proceeds of a claim can be used for any purpose, including: • Paying for expensive medical treatment, • Helping with the mortgage • Covering living expenses, especially where income is lost • Taking a well deserved break to assist the recovery process. Disclaimer: Loan Cover & Loan Cover Plus are issued by TOWER Australia Ltd. You should consider the Product Disclosure Statement in deciding whether to acquire these products. If you require any advice with insurance related matters, we recommend that you consult an independent financial adviser.

Protecting your home if repayments are getting too much With the rising cost of living and interest rates on the move some Australians are finding it hard to keep up with mortgage repayments. Selling your home or property may not be the only solution. Some Australians have turned to their Super Fund to access their Super early to help them through this financial hardship. Last year, 16,500 people applied for early access to their super accounts, and the Australian Prudential Regulation Authority approved 13,871 applications -- more than double the approvals in 2001. Applications for early access to super are approved in cases of severe hardship. Money may also be released to prevent foreclosure of a mortgage or the forced sale of one's home. To qualify for an early release due to hardship, the individual must have received federal income support for 26 weeks and must satisfy the trustee that the money is essential for living expenses. "If you satisfy both of the above tests, the trustee/RSA (retirement savings account) provider may, in any 12-month period, release to you one lump sum payment," the guidelines say. If you are one of those doing it tough with your mortgage there may be a way to protect your home. Speak to your financial adviser and/or your Super Fund if you need help. There are new mortgage products on the market these days that can also assist but these should only be considered as part of your overall financial strategy. If you would like more information on these shared equity or cashflow mortgages please don't hesitate to give us a call.

New Property book on the shelf Those Yardney's are at it again. I have just started reading "All you need to know about buying and selling your home" by Michael and Pamela Yardney. I have found Michael's last book "Grow a Multi-Million Dollar Property Portfolio - in your spare time" a good reference for those just getting into Property Investing. So I was pleased to find this next book just as easy to read. At Investors Choice we are always looking at ways of improving. I have one copy of each book to give away to those who email me with suggestions for future newsletter topics and suggested improvements. Two names will be drawn at random at the end of the month. Email me at jane@investorschoice.com.au If you would like to purchase a copy of Michael and Pam's new book you can do so directly from their website. Check out the InvestKit later in July as Michael has promised a free exert from the book. All You Need to Know About Buying and Selling Your Home

A final comment.

The good news is that the lead indicators are rosy; ie auction result clearance rates and bank application timeframes show that the market on the East coast is moving again. The investors are back and an uncertain share market is seeing the movement of money back into property. For those in the WA and NT market who have been enjoying a market revival for the last few years, now may be the time to refinance and access some of that equity before the slow down occurs, there seem to be many opportunities out east for you to consider.

I hope you have enjoyed the information shared in this newsletter, if you have any questions or queries please contact us at askus@investorschoice.com.au

As always, if you find the information in this newsletter useful or at the very least, thought provoking please forward it to others who may benefit. My business is based on referrals and I appreciate your support.


Until Spring, I wish you prosperous investing and happy house hunting.

Jane


PS: at Investors Choice we believe in sharing our systems, information and resources. Our website is continually updated to reflect any new information we think you might find of benefit. Check out the website at www.investorschoice.com.au

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Disclaimer: You should always speak to a financial planner or accountant about your particular circumstances, the hints mentioned here are for general discussion only and do not relate to your particular circumstances