Ask the experts

A move to a regional town provides the opportunity for a fresh financial start

NAME: Glenn Groves

STATUS: Recently moved to, and bought a house in, a regional town in Victoria.

QUESTIONS: How do I build a group of people around me with an interest in money and investing? How should I reduce my mortgage debt and build up my retirement savings in the next 20 years? Do I have the right insurance for my needs?

ANSWERS: Get your investment property renovated and rented and use the income to pay down your debt. Salary sacrifice extra to build up your super. Change your salary continuance and TPD insurance to policies with more suitable options.

Timing your entry into the property market can be tricky. If you wait for it to go down but it keeps going up you can be locked out because it is too expensive.

Glenn has given up on buying in Melbourne, where the average house price is $740,000 and it takes 9½ years of median household income to pay it off. Glenn ran his own business for 16 years and much of what he earned went into that, so he has few savings. Now he is on a mission to build his housing assets and wealth.

He bought a dilapidated house, which he is renovating, on a large block three hours out of Melbourne in the pretty town of Horsham. He would like to eventually develop a number of units on the site to build equity and income for retirement. Then he bought a two-bedroom house in Ballarat Glenn intends to retire in the Ballarat house.

All up he has paid $300,000 for the two properties and has interest-only loans with only 10% deposit. Two-thirds of the mortgage on the Ballarat home is at a fixed interest rate for the next three years while one third is variable. What is the best strategy for interest rates?

He recently moved into his Ballarat home and commutes 100 kilometres one way to Melbourne. For the amount he paid for his previous Melbourne rent, he can fund his Ballarat mortgage, pay rates and utilities plus cover his travel costs. He is renovating the other home and plans to rent it out for more than the mortgage repayments. He has a budget of $25,000 for the renovation.

One challenge with moving to a new area is finding a community to connect with. What steps should Glenn take? A few years ago he visited a financial planner about his insurance needs but was sceptical about their advice and fees. He wants to meet people who are interested in investing. “I would like to build a social circle of people who are great with money,” he says.

His superannuation balance also needs a boost after years of being self-employed. How does he juggle his mortgages and super? He has insurance through his super fund, Hostplus, but wonders if it is appropriate for him. Does he need death and TPD if he doesn’t have any dependents? Does he have the right income protection insurance (90-day wait) to cover his bills if something happens to him?