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Create a research report on the procedures a person must consider when purchasing a house. Present an evaluation recommending which home loan to consider and its implications on one’s lifestyle.
Introducing the Report
Purchasing a house for the first time, moving from one neighbourhood to another, moving into a new job or position as example can all be part of new goals to pursue. Although the transition to a new life may seem enjoyable and exciting it can be very misunderstood as there are several procedures which if you don’t attain the knowledge of, can make purchasing your first home the last thing on your bucket list. As according to William Jolly from savings.com.au in 2018 St. George Bank’s latest Home Buying survey of more than 1,100 Australian home buyers reported 51% of first home buyers found the process “stressful” while 42% went so far as to describe it as “overwhelming”. This report will be reviewing and examining a thorough analysis into the hidden costs and procedures that are associated with buying a house. This will be achieved by creating a lifestyle through a couple who are attaining the knowledge in order to buy a house. It will highlight and outline different aspects that are required in order to be eligible to buy a house and to qualify for first homeowners grant.
Family Scenario, Job and Qualifications
Lyndon Dykes is a 31-year-old young man that lives happily on the Gold Coast with his wife Joanna Dykes who is 30 years old. Lyndon and Joanna have been married for 5 years and have decided that it is the appropriate time to purchase a house as they are looking to have a kid in the coming years and settle down (Appendices 1.1). Lyndon and Joanna have been saving for 5 years and have now accumulated $231,450 to put towards a deposit on their first house. Lyndon’s current occupation is a maintenance electrician on a salary of $75,000 p.a. Lyndon owns a 2016 Toyota Hilux as his jobs can be a substantial distance from his apartment. (Appendices 1.2). In order for Lyndon to have the qualifications in order to be eligible to be a maintenance he had to complete a level three diploma in electrotechnical services as well as receive an electrician licence, once he completed this at TAFE QLD he was then an apprentice for 2 years before becoming a fully qualified maintenance electrician. (Appendices 1.3). Joanna is currently on a salary of $65,000 p.a. as a registered nurse at the Gold Coast hospital, she does not have a car as her rental property is close to public transport and is of easy access. (Appendices 1.2). She completed her certificate of diploma of nursing over the course of 18 months as a full-time student at the University of Queensland and is now a fully registered nurse. Lyndon and Joanna are currently living in a 2-bedroom apartment that is of easy access to the beach, shopping centre and public transport, the apartment is at a mid-class range of $430 per week as Lyndon and Joanna earn a comfortable amount and like to treat themselves to nice things.
Whether you are in a couple or not taxes are applied to everyone who has an occupation and is receiving a net income of $18,200 with age not a factor in this process. Tax is a compulsory financial charge which is applied towards Lyndon and Joanna
Harry has a gross annual income of $72,000 per year. Harry’s salary is paid to him weekly by his employer and this equates to a before tax amount of $1384.62 per week. PAYG withholding tax and Medicare levy is deducted from Harry’s pay by his employer in the amount of $316 before it is paid to him.
The HECs – HELP system is a government subsidy to help eligible students pay for their education. An eligible student can sign up and the government will provide an interest free loan to the student to complete their approved course. Because there is no interest charged, this is a good way to finance your education. Students aren’t required to start repaying the loan until a point in the future when their employment income reaches certain limits. Refer to appendix 2.2 for rates for the 2017-2018 year.
Because Harry’s employment income is $72,000, he needs to make repayments towards his HECs -HELP debt. Harry’s employer will be required to withhold an additional amount of his wages as a loan repayment for his debt. This will reduce Harry’s net pay by a further $3,588 per year (or $69 per week). See appendix 2.2 for rates and calculations.
After tax and HECS- HELP is taken out of Harry’s pay he is left with a weekly take home pay of $999.62 or $51,980 annually. Harry does not have any other sources of income and minimal deductions to claim in his tax return. He normally only claims $300 related to cleaning his work-related uniforms. This results in a very small refund of approximately $60 at tax time.
Katelin has a gross income before tax of $77,000 paid to her weekly by her employer equating to a before tax amount of $1480.77 per week. After PAYG withholding tax and Medicare levy is deducted in the amount of $349, Katelin is left with a take home pay of $1131.77 per week or $58,852 annually.
Together, this gives Harry and Katelin have a combined after-tax income of $110,832 which they need to pay all their living expenses from. See appendix 2.1 for calculations.
Superannuation will be paid by Harry and Katelin’s employer at the rate of 9.5% on earnings as per legislation. This amount is paid by the employer in addition to the wages paid and so it will not reduce Harry and Katelin’s take-home pay. Paid Superannuation is an attractive benefit of being an employee (as opposed to self-employed) as it ensures saving for retirement. The purpose of superannuation is to provide an income stream for retirement. Employers are required to pay an amount equal to 9.5% of their employees’ gross wages to a complying superannuation fund.
Harry and Katelin have different superannuation because the contribution is calculated on an employee’s ordinary time earnings (their normal weekly wage). As Katelin earns more than Harry her Superannuation contributions will also be slightly higher. See appendices 3. For contribution calculations.
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