Case Study: Mapping out an updated strategy for an active investor in her early 30s who is ready to purchase a home with her partner

Background:

Our client is in her early 30’s with an income of $112,000/annum and net assets of $590,000. Her net asset position is made up mostly of the equity in her investment property which was purchased with a large deposit and has been supported by an aggressive mortgage reduction strategy.

For her plan’s annual review meeting we were focused on mapping out an updated strategy for her to purchase a home with her partner in the next 12-24 months.

Goals:

  • To purchase a home in Sydney for up to $1.8M in the next 12 – 24 months.
  • All other goals and strategies except the annual holiday savings strategy will be put on hold while we work towards the attainment of her number one goal above.

Strategy:

  • Cease monthly share contribution strategy and redirect funds to a property savings strategy.
  • The above strategy will lead to an 80% increase to the money she is saving towards her property deposit target.
  • Use equity in existing investment property to boost property deposit savings for home purchase to cover her share of the funds needed for the purchase.

Advice Outcomes:

It is likely that our client is going to have a significantly bigger deposit than her partner (because of the equity available in her investment property) for the purchase.

So we explored two scenario’s in her review meeting to consider when exploring purchase structure options

  • Scenario 1 – our clients own a larger percentage of the property and they split the home loan needed for the purchase 50/50
  • Scenario 2 – both partners own the same percentage of the property which would mean that her partner’s home loan would be larger than hers to increase his ownership percentage of the property

For each of the above scenarios, we provided our client with the purchase numbers and potential structure options to help with her have the conversation with her partner and determine which scenario will be the right one for her.

We also set a very clear property deposit savings target for 2022 following the increase to her monthly savings contribution. Which will be the focus of all our reviews and catch up’s in the year ahead.

Ryan Porter is a Wealth Coach at Catalyst Wealth Group. His mission is to help his clients achieve financial success and live their ideal life.

Any advice or information in this publication is of a general nature only and has not taken into account your personal circumstances, needs or objectives. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your objectives, financial situation or needs.