Private Health insurance Australia: What, When & How.

This article may contain affiliate links. If there are any in this article they are marked *. An affiliate link means if you click on the link and purchase a product, at no extra cost to yourself, I will receive a small commission.

Are you considering purchasing health insurance?  Confused and don’t know where to start? 

First consider whether you will really benefit from a policy. I have quoted statistics from the March 2020 APRA private health report

Those paying for private healthcare are takin strain off the public system.  Most of us would prefer insurance premiums provided value for money as well.

Private health insurance is encouraged by the government.  The public are motivated to pay for a policy to avoid Medicare Levy surcharge and Lifetime Health cover.  Their strategy seems to be working – 43.8% of Australians have private health insurance in 2020.

Insurance companies exist, like all businesses, to make a profit. 

Private Health Insurance is Expensive.

An average person pays more premiums than benefits received.  Premiums range from ~$1200 to $12000 per year! 

After paying premiums, extra costs are charged for treatment in the private system. 

There is usually an excess to pay (commonly $500 per admission).  “Gap” charges are the difference between benefit paid for a service and fee charged.  Unfortunately, insurance companies will often not cover the gap.  

The average out of pocket expense for all private hospital episodes in the first quarter or 2020 was $324.04.  

Types of Private Health Insurance Australia: Hospital and Extras

You can choose hospital cover, extras, both or neither. 

Hospital cover, as the name suggests, covers admission to a private hospital. 

Extras cover pays most generously for dental check-ups and treatment.  It also pays benefits for glasses or contacts, physiotherapy, remedial massage and more.

Surprisingly, there is no benefit to getting hospital and extras cover together.  So research the policies you need separately.  This will allow you to optimize benefits to suit your family and price paid.

Medicare Levy Surcharge (MLS)

The MLS starts at 1% of income of $90,000 or more, unless you have hospital cover.  Extras cover is irrelevant here. 

On a gross salary of $90,000, $900 MLS tax is incurred.  Although you will avoid paying MLS with hospital cover, the premium is likely to be cost even more.  The benefits paid for this level of premium are often small, with lots of out of pocket costs.  It is not worth getting hospital cover at this income unless you value the insurance itself.

MLS increases to 1.25% when your income reaches $105,000, costing $1312 if you don’t have hospital cover.  You should be able to pay similar or less for a hospital cover policy.   You may as well get a policy at this stage.

MLS Increases to 1.5% once your income reaches $140,000, minimum MLS payable $2100.  From here, private hospital cover is worthwhile purely for tax savings alone.  Other ways to save on tax discussed here.

Lifetime Health Cover (LHC)

Health insurance companies love to advertise the LHC. 

They give the impression that premiums will increase exponentially if a policy is not started before your 31st birthday. 

But as this article illustrates so well, the LHC only increases 2% per year from 31 years of age.

If you earn less than $90,000, you will save money in premiums by delaying health cover until you want or need it.

The LHC continues to increase until age 65, when a 70% premium will apply!  LHC loading continues to apply for ten long years before you are forgiven and premiums reduce.  But that is still cheaper than paying for decades of cover you don’t want!

A break in cover of 1094 days is allowed over a lifetime before the LHC is reapplied.   If you take 1 day longer (3 years) the LHC will be reapplied for ten years. When you take a break from private health insurance after the age of 31, set reminders!   

If you move overseas for more than 12 months and cancel your insurance, this is excluded from the 1094 day limit.  You must reinstate a policy on return to avoid LHC though.

You may even be able to suspend your health insurance for an extended holiday.  This also is excluded from the 1094 day limit.  The MLS will then apply for the time you were without insurance.

Insurance companies may let you suspend cover for COVID related financial stress. 

Exemptions from the LHC

You are considered to have had private health insurance before age 31 if you:

  • Are a new migrant to Australia
  • Were in the defense force
  • Have a gold card awarded after 1999 (considered equivalent to private health insurance)
  • Were overseas when you turned 31
  • Are a non-resident (Not eligible for green or blue medicare card)
  • Have had health services provided by the Australian Antarctic division

In these situations, you have 1094 days after turning 31 to secure a policy before  LHC applies.    See Private Health cover website for more details on LHC.

Private Health Insurance Australia: Hospital Cover

Why You May Not Want Hospital Cover

Treatment provided in public hospitals is of high quality, with rigorous processes to continuously improve patient care.

If you are involved in a serious accident, or are severely unwell, you will usually be treated in a public hospital. 

Public hospitals are generally better equipped to deal with severe illness or injury. 

On the other hand, private hospitals are well suited to non-urgent surgery and medical management.

Private hospitals are usually staffed by independent contractors.  When the orthopaedic surgeon goes on holiday in a smaller private hospital, no-one gets admitted privately with a broken hip. 

Over popular holiday periods, this can mean minimal services available in a private hospital, particularly in regional towns.

People aged 60-84 years of age claim the most benefits from hospital cover.  Premiums don’t increase with age (excluding LHC).  So younger premium payers subsidize the healthcare of older members.

Why You May Want Hospital Cover

Public hospitals do tend to be noisy.  There is almost bed pressure and elective surgery cancellations due to emergencies. 

In a public hospital, you are treated in order of urgency, which can mean longer waits if you are not severely unwell. 

Waiting times for planned non-urgent surgery such as joint replacement can be long and painful. 

Public hospitals are busy, often chaotic and can be inefficient.

In private hospitals, there are usually less severely unwell patients, and more predictability. 

Private hospitals tend to be nicer, calmer and quieter environments to be in, feeling more like a cross between a hospital and an odd hotel!

Being cared for in a private hospital can also be a more personal experience.  You will see the same doctor each time more often. Also, you can request a particular specialist (though they are under no obligation to accept you as a patient).

It could be cost effective to invest premiums instead and pay out of pocket for treatments. 

Unfortunately, private hospitals usually won’t accept patients without insurance, due to the risk of costs spiraling if treatment does not go according to plan. 

Private Health Insurance Australia: Extras Cover

“Extras” insurance is separate.  This type of cover pays for dental, orthodontic, physiotherapy, massage, opticians, gym membership and weight loss programs.  Benefits rarely cover the entire cost of treatment.  The average benefit paid per person in the first quarter of 2020 was $434.  The average out of pocket cost was $50.46. 

Whereas older Australians benefit most from hospital cover, extras benefits are more evenly spread among age groups.  Most benefits are paid for dental treatment.

There are hundreds of policies available.  They all have benefits and limits on what you can claim annually. 

Most people pay more in premiums than they receive in benefits. Large families with several children requiring regular dental check-ups and orthodontics are likely to benefit most.   

Cost/Benefit Analysis

My eldest child will likely need orthodontic treatment in the next few years, which was the precipitant for a lot of research this week. 

The waiting period for dental check ups is often 2 months, for orthodontics usually a year.  Premiums would be paid for a year before being eligible for orthodontic benefits. 

I assessed the expected benefits vs premium paid for my family.  Calculations were based on my expectations of routine dental check-ups every 6 months, and my eldest to start orthodontic treatment within 2 years. 

I found one policy that I’d expect to claim more in benefits than premium paid over two years. 

Most of the policies I looked at limited claims for orthodontist treatment to ~$1000 per year.  Several of the policies included the orthodontic treatment within the dental claim limit.  Thousands of dollars out of pocket costs should be expected for orthodontic work, despite extras insurance. 

The benefit vs premium outcome depends on number of children, frequency of dentist visits, need for significant dental work or orthodontics.  In major cities, you may be able to access a fund’s preferred providers – resulting in more generous benefits.  

Private Health Insurance Australia: How to Choose a Policy

With hundreds, if not thousands of policies available, assessing and choosing a policy can be overwhelming. 

I found Compare the Market to be the easiest comparison website.  There are several comparison websites but I found this one laid out the benefits you can claim in a comparable way. 

Decide which benefits you need.  Don’t be fooled into thinking you will get free massages with your policy.  Almost everything has out of pocket costs.  Only consider the services you would use without insurance.  Any extra benefits claimed can be a bonus if they occur.

Compare the different policies with expected benefits for your own family and premiums over 2 years.  You will then be able to quickly find any short-listed policies expected to pay more in benefits than premium paid.   

Over 2 years Dental check ups Dental clean Braces Total benefit Premium Paid
Benefits payable with policy 1 6 monthly for 2 years 6 monthly for 2 years Kid 1 x 1 orthodontic limit Total benefits expected over 2 years Premium payable over 2 years
Benefits payable with policy 2          

Summary

Health insurance is not for everyone.  It is expensive and difficult to get value for money.  Higher income earners will need hospital cover to save money on tax.  Private hospital cover can also let you skip the public queue for non-urgent but quality of life destroying conditions.  You are more likely to benefit from hospital cover after age 60.

Extras cover maybe be worthwhile for families visiting dentists regularly or requiring orthodontic treatment.  Benefits payable, limits and small print need to be examined in detail to ensure it the policy is worthwhile.  If you decide to go without private health insurance have a policy consider investing the premium money instead.

Aussie Doc Freedom is not a financial adviser and does need offer any advise.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

See full terms and conditions in footer

How to Save on Tax: Salary Sacrifice for Doctors

How to Save on Tax: Salary Sacrifice for Doctors

Salary sacrifice aka salary packaging means you save on tax.  Employers pay for specified employee expenses (eg rent or mortgage) from TAX FREE pay.  It is generally advantageous to those earning over $45,000.  Salary packaging is particularly generous to health care workers, and even more so to public benevolent institution employees.

Savings vary depend on which health service you work for, fees charged by the salary packaging company and according to some special circumstances discussed below.  You should only salary sacrifice expenses you would have paid for anyway.

Many health care professionals are put off by the complexities, and as a result miss out on significant tax savings

Four Ways to Save on Tax

1. Superannuation

One important thing to check is that your employer won’t decrease their 9.5% payments in to your account as a result of salary sacrificing.  As long as this is not the case, you are likely to benefit from salary sacrificing into superannuation.

Another consideration is that the money you “Sacrifice” will be locked into your super potentially until your preservation age (60 years+).  You will probably never miss this small amount of money going from your pay check each cycle.  If you are forced to leave it, through the miracle of compound interest over 35 years or so, it will grow incredibly.

The first home super savers scheme allows eligible individuals who have made voluntary contributions to super withdraw up to $30,000 of those voluntary contributions for their first home deposit.

Those on higher incomes (fully qualified specialists) need to keep within the super caps – a total of $25000 (from July 2021 $27,500) can be contributed to super in total.  If you contribute more than this, you will get taxed at the top marginal rate anyway, and have fees added as well.

2. Sacrifice “Fringe Benefit Items”

Certain items can be sacrificed up to a value known as the “FBT Cap”. This is depending on your employer but often include:

  • Mortgage or rent payments
  • General living expenses
  • Childcare expenses
  • Credit card repayments
  • Health insurance premiums

Because you are theoretically being renumerated with services/goods instead of cash, the employer has to pay fringe benefits tax on these.  As a result,  employers put a limit on how much you can package under this category – Known as the “FBT Cap”.  For health services, this is generally around $9010.  This is a limit imposed by your employer, not the ATO, meaning that if you have more than one employer you can salary package up to the FBT cap with each employer!

You can salary package up to the FBT package with each employer if you have more than one job!  This could be very handy for those with large mortgages

Sally is an intern hoping to pay her rent from tax free money with a gross income of $70000?

In the table below I have calculated the difference in tax paid by Sally when the $9000 FBT allowance is packaged.  Fees have not been included, as each health service uses a different salary packaging company.

No Salary Sacrifice $9000 FBT Cap packaged NSW $9000 FBT cap packaged
Gross Pay $70,000 $70,000 $70,000
Tax paid $14,297 $11,372 $11,372
Benefit 0 $2,925 $1,462.50

The benefit in NSW is not as generous, as NSW health “Shares” the tax benefit 50% with the employee.

Of course, it’s not that simple.  Sally’s total reportable taxable income increases from $70,000 to a “Grossed up” amount of $78000 (Including tax saved at highest tax rate).  This higher income is used to assess:

  • Medicare levy surcharge (1-1.5% of your income after you start earning $90000, unless you pay for private health insurance instead)
  • Super co-contribution – Maximum benefit of $500 if you earn less than $53564 in 2019-20
  • Private health insurance rebate
  • Required student loan repayments
  • Child support obligations
  • Your entitlement to certain income-tested government benefits.

The medicare levy surcharge is not relevant to Sally, as her grossed up income is still under the $90000 MLS threshold. Yay!

Sally would have to pay an extra $1140 HECS repayments if she chooses to salary sacrifice but will still end up with $1785 cash in their pocket.

If Sally was working for NSW health, she will only have an extra $322.50 in your pocket (excluding fees).

Remember, the extra $1140 in HECS payments isn’t really lost – it’s paying down Sally’s debt instead of going to the tax man.

Lets look at another case

Tom is PGY 3 hoping to pay his mortgage from tax free pay.  He earns $83000 per annum

In the table below I have calculated the difference in tax paid by Sally when the $9000 FBT allowance is packaged.  Fees have not been included, as each health service uses a different salary packaging company.

No salary Packaging $9000 FBT Cap sacrificed $9000 FBT cap sacrificed in NSW
Gross pay $83,000 $83,000 $83,000.00
Tax paid $17,872 $20,797 $20,797.00
Benefit $0 $2,925 $1,462.50
“Grossed up Pay” $83,000 $91,000 $91,000.00

.

Medicare Levy Surcharge

Looks good, but Tom is close to the Medicare levy surcharge threshold ($90,000) and the salary packaging pushes his “Grossed up” pay over.

He will have to pay $910 extra towards a medicare levy surcharge, which reduces his overall benefit to $2015 per annum, or just $552.50 if he is working in NSW health.

If Tom has private health insurance hospital cover, he will not have to pay the MLS, and benefits will return to the original table.

Tom will have to pay MLS if his wage increases to over $90,000 next year, so it’s time to start considering private health insurance.

Student Loan Debt

Tom is still paying off his student loan (there’s no hurry!) but salary packaging will mean he will have to make additional HECS repayments – $1350 per year above his usual payments.  This money goes to paying off debt rather than being lost to tax, so I don’t consider it lost.  But it will mean that Tom’s net pay packet will now be only $665 larger by salary packaging.  If Tom works for NSW, he will be paid $797.50 LESS net pay by salary packaging, but is still better off when debt pay off is considered.

As you can see, if your employer has a “Benefit sharing” scheme, or make the employer pay the fringe benefits tax themselves, it becomes borderline whether there is a benefit to the employee.  For most employers that allow the employee to enjoy their tax savings benefits there is clear cut benefit even despite extra HECS repayments.

If Tom or Sally have child support payments, it will be even more complex. Personal professional advice is recommended.

Benefits of salary packaging increase as your wage increases, with a potential benefit of $4050 per year to a specialist earning $200000 who has private health insurance, has paid off student loans and hasn’t gained child support payments

3. Salary package other Items Unlimited by a FBT Cap

Again, benefits are depending on your employer, but include:

    • Entertainment Cards

Alas not all employers offer this (but NSW health does!)  Up to $2650 can be spent, usually on meals out and entertainment venues tax free!

    • Otherwise Tax Deductible Items

Professional fees, a stethoscope, specific branded work clothes (eg scrubs), laptops or mobile phones used more than 51% for work can be packaged. These are all tax deductible anyway, so salary sacrifice just means you get that tax benefit spread through the year rather than after you do your tax return.  Never seemed worth the effort to me.

However, equipment (including laptops and mobile phones) brought for more than $300 cannot be immediately tax deducted in the same year, but undergo a depreciation schedule. This means you get the tax back spread out over three years for laptops or mobiles – annoying.  This might be worth the effort of filling in a form – through salary sacrifice you will reap the tax benefit back spread over the first year instead.

4. A Tax Free Car and Car Running Costs?

Sounds too good to be true, and it maybe is.  This is a complex arrangement between yourself, a car company that is “leased” by you for a predetermined period of time.  At the end of the lease, you give the car back or pay the book price the car leasing company have listed.

Lots of doctors have regretted entering into these arrangements, the complexities can make it really difficult to work out whether there is a real benefit or not.  The tax savings are often eaten up by excessive interest rates and charges from the car leasing company.

At least a second hand car is now an option through leasing, which may make the strategy more financially sensible

A detailed assessment and independent financial advice is necessary to know whether the benefits go to the employee or car leasing company.  Buyer beware!

Detailed assessment to follow!

Summary

  • Salary sacrificing into super is as close to a no brainer as you can get.  Sign up now if:
    • Your employer will still contribute at least 9.5%
    • You earn more than $45000 and less than $289,000
  • Salary packaging ~$9000 “FBT cap items” (usually mortgage or rent) will result in money saved on tax and you will pay any student loan debt off faster.
    • You will end up with more money in your pocket UNLESS you work for an employer that “Shares the tax benefit” eg NSW and are earning between $80,000 to $90,000 and don’t have health insurance, or multiple student debts.
  • An entertainment card means you can pay for meals out and venue hire from tax free money, but is not offered by all employers.
  • You will save money as long as you don’t package more than you would have spent anyway.
  • Other Non-FBT items are those that are tax deductible anyway- you may want to salary package your laptop or mobile phone to get the tax back in 1 year rather than spread over 3
  • Novated Lease – Buyer beware! Get a professional to assess whether you will really get any benefit

For more information check out making doctors’ income more efficient and the ATO website.

Subscribe to Aussie doc to receive weekly blog posts in your inbox as they are released

Interns may want to sign up to the Intern Crash course – ten emails delivered once a week that cover the basics of what you need to know about finance when you start getting paid.

Prepare for the current financial year end.

Subscribe to receive weekly blog posts and NO spam

* indicates required


Intern course

Aussie doc subscribers





Facebook


Twitter


Google-plus

Independent Empower Wealth Review: Getting the Property Experts in.

 

 

This is a part of a series of articles outlining my experience buying properties with Empower Wealth. I had carefully considered whether to invest in property or the stock market. I am doing both! But my financial plan required us to invest in property first. We plan to purchase two (or maybe three) properties and pivot to index ETF investing. Five years before a fairly early retirement at 55, we will enter debt repayment.

I first heard about Empower wealth by stumbling across the Property Couch podcasts. I greedily consumed 200+ free episodes full of property intelligence. 

Being a natural cheapskate shrewd financial manager, I intended to educate myself, select a property and purchase using as much cheap/free information as I could find.  

See my article on what convinced me to fork out for professional assistance.

Hopefully, budding property investors will find this article helpful in deciding whether to use the Empower Wealth business to achieve their property purchase.

This is a completely independent review without sponsorship or commissions based on my own experience. 

 

A Warning About Free Advice

Remember to consider who is paying your financial planner or property advisor. Free advice can be far more expensive in the long run. Most family and friends I know who have invested in property now regret it. They took guidance from commission-based property developers.

What started for them as high expectations to achieve a retirement funded by property ended in stress and financial loss.

Be very careful who you take advice from. If they are well-meaning family or friends, make sure they are now in the financial position you want to be in (ie they have achieved their goals). If it is a professional, you need to pay them (or you are the product!).

Empower Wealth Review: Initial Contact

I was initially unsure which of the Empower Wealth Services I required. So I spent time talking to several Empower Wealth professionals to understand their respective roles.

It took a couple of weeks each time to get an appointment. 

Between my first contact with the company and the actual property purchase was around four months. Part of that was our fault, a family holiday meant we were away from home, unable to give house valuers access and send paperwork promptly.

Empower wealth is based in Melbourne, but offer appointments face to face, by phone or online video conference via Zoom. I chose to video conference via zoom and the process was pretty simple.

How it Works

The team send a request for you to complete detailed financial information on their website.

This is used to check your current financial situation, that you can afford an investment property, and are likely to secure lending.

If you have already gathered all the information to do your own sums, it doesn’t take too long to put it into the database, and I also found it useful to double-check my numbers.

It’s really important you spend the time inputting as accurate data as possible before your appointment. The information gathered will be used to give initial advice, and then to form a property portfolio plan.

Empower wealth offer lots of different services, including a property portfolio plan, mortgage broker, buyers agent, tax agents and asset protection advice.

If you’re not sure which services you want or need, the initial chat will help clarify.

Services I Used

I did not use the property portfolio plan service. At the time I was scraping together every dollar I could get my hands on.

The buyers agent fee seemed like a lot of money, and the empower wealth property plan cost just seemed too much. I felt the first few steps I needed to take were pretty obvious. I found The Armchair Guide to Property Investing very helpful, had made a basic plan of my own with the mother of excel sheets. My first step was to buy a growth focussed property.

I retrospect, it probably would have been better to use the planning service. Empower wealth could check my thinking, maths and confirm or tweak the plan. I am still unsure whether to buy a 3rd property, but for now, have paused and pivoted to shares. I may still go back to use the planning service to help with this decision.

I did use the Mortgage broker and buyers agent service.

Empower Wealth Review: Mortgage Broker

I met first with my mortgage Broker, Sarah, who was lovely and keen to answer all my questions.

The entire company have a streamlined process, so after that initial appointment, things ran extremely smoothly. Maybe the health system could pick up a few hints to provide a more efficient service!

Securing lending was somewhat time-consuming. It involved organizing and sending in lots of paperwork then getting our house valued in person. It is possible sometimes to base lending on a “Desktop valuation” that is performed without a visit to the property, although for us this came in far lower than expected. Our house is quite different from the surrounding properties, I am guessing this is why the algorithms struggle to value it.

Getting the mortgages structured in the most cost-effective way took some extra time. It took around three weeks for the pre-approval in order for us to start house hunting.

There are many factors other than interest rates that matter for mortgages, particularly for those building a property portfolio. Your mortgage broker can help you navigate the options.

We’re used Empower wealth mortgage brokers for our second investment property in March 2021. Things were not as well streamlined this time.  I’m sure a lot of this was due to COVID, with staff working from home (some no doubt trying to home school as well). I have the impression though that Empower Wealth are suffering growing pains with rapid expansion of their business as word is spreading.

Leave plenty of time. I would suggest contacting Empower wealth before you are ready to buy, to get all the initial processes sorted whilst you continue to save. Remember to check your credit score, and avoid any credit checks (eg for credit cards) in the six months leading up to loan application.

Using Empower wealth’s mortgage broking team gave me a $1000 discount on the buyer’s agent fee.

Empower Wealth Review: Buyers Agent

My initial contact with the buyer’s agent process was for an introductory chat.

I didn’t warm to the gentleman I spoke to. I was horrified at the suggestion that I should buy a property unseen.

I had developed a fair degree of trust in the Empower wealth team, through listening to their friendly and informative Property Couch podcast. But I was still very nervous, terrified of making a mistake with what would be my biggest financial decision so far.

Like a jittery first-time mum being wheeled into theatre for an unplanned caesarean, I needed a lot of reassurance and hand-holding to feel more confident in the process.

I reached out to colleagues online, to find if anyone had used Empower wealth – and the response I got was overwhelmingly positive.

“They are one of the good guys,” wrote one of the doctors I had never met.

“Growth so far has been on target,” said another.

In general, our profession has strong ethics.

I trust reviews from one of us far more than that of the testimonials on a website, or Google reviews.

It’s just reassuring to hear from one of your own tribe.

I went ahead with the process and asked to be allocated to a buyer’s agent.

My Buyers Agent

A buyers agent is a property investment advisor who will help you select a great property with good future value expectations. I spoke to mine, Nicole, via zoom. The experience of meeting her by video chat was great.

She told me about her career and property investment journey. Previously, with financial planners, these transparent attempts to relax a client and build rapport make me cringe and felt incredibly fake, but not with Nicole.

There had to be a leap of faith at some point, where I trusted my property investment advisor Nicole knew what she was doing and pointing me in the right direction, getting to know her helped this.

My buyer’s agent was a very personable, bubbly person oozing with knowledge and confidence, without arrogance. She made me feel completely at ease and comfortable talking with her. Her professionalism, expertise and interpersonal skills showed in each interaction (and there were many).

The first chat with Nicole was for over an hour, we talked through my goals, my pre-conceived ideas about what I would purchase, and my knowledge level.

She explained the process step by step and what would happen next.

A Property Bluprint

Based on this conversation, she compiled a “Property blueprint” – a lengthy document shortlisting twelve suburbs (Brisbane and Geelong) that she thought were promising.

The document listed key data and explained why the buyer’s agents thought they were a good fit. I had spent quite a bit of time looking at data and trying to narrow down suburbs on my own, before giving up and going with Empower wealth. Only one of the suburbs matched my own shortlist…interesting!

At this point, guided strongly by Nicole, I confirmed Brisbane as my target area, and then the wait began. Nicole was very familiar with the Brisbane market, having purchased many properties there beforehand.

Nicole was soon on a plane to view several shortlisted properties. By this point, my thinking had changed quite dramatically. I trusted Nicole and was fully aware she knew what she was doing. I came to feel my viewing the property wasn’t going to add anything to the process, and may result in too much delay.

Empower Wealth Fees

The fees at the time of purchase were $15,000 buyers agent, discounted to $14,000 as I also used the mortgage broking service. This seemed like a huge amount of money at the time. In retrospect, this was excellent value.

The Search for a Property

Nicole sent me three properties with potential, including detailed video footage of the viewings.

One great property was her recommendation, and Nicole gave me the confidence to make the big decision. I have to admit I was completely terrified. Buying a property is a huge financial decision and I felt wobbly. What if this was a huge mistake? But at the end of the day, I reasoned, I couldn’t do any more meaningful research that would make me more sure of my decision. I had to (reluctantly) accept some minimized risk. I am no gambler!

Negotiation

Then came a few days of back and forth discussion and negotiations. There was another interested buyer who had also put in an offer.

Nicole helped me set an appropriate price to offer. She saved me her fee right here as I would have offered more to ensure we sealed the deal. Nicole’s experience was invaluable in knowing where to set the price and other factors that we could use to make our offer look more attractive. She also put stipulations in the contract for the seller to perform certain repairs.

I was surprised by how much negotiating power my buyer’s agent thought we had, especially as I was competing with another buyer! I think the involvement of a professional buyer’s agent made our offer more attractive – the settlement was expected to be smooth and uneventful.

It turned out a quick settlement was what motivated the seller, and I had the team execute the deal fast!

Empower Wealth Review: Settlement

The contract was signed, buildings and pest inspections and solicitor work ensued. My buyer’s agent assisted with interpreting the buildings and pest inspection report.

The team took me through everything step by step. They integrated with the solicitors, buildings and pest inspectors seamlessly as they frequently use their services. Like in a well-run resuscitation, there were clearly delineated roles and plenty of closed-loop communication. Everything ran smoothly.

The bank coughed up the cash as expected, and I was the proud owner if an investment property.

Becoming Landlords

The Empower Wealth team then suggested a choice of rental managers, and the search for a tenant began before settlement.

I got to see the names, ages, professions and even income of the tenants, and also what pets they owned.

I had planned to avoid tenants with pets, as I was concerned about damage, but all four tenants had pets. Advice from my rental agency was that it would be difficult to find a tenant without pets and that laws are changing so that tenants cannot be discriminated against for owning pets.

So again, I had to take a leap of faith that it will be OK, organized building and rental insurance. Fingers crossed these tenants and their pets are well behaved – they sound just lovely.

Cash-flow Management

Empower wealth offer a free-cash-flow management platform on their website called Money Smarts. Their system is described in their “Making money simple again book“.

The Money Smarts system is available free to anyone who wants to manage their finances for a better future.. You do not have to be an Empower wealth client!

I based my investing plan on conservative assumptions. My calculations were based on 6% interest rates (interest rates are currently <3%). I made sure I had buffer money in my account, in case of unexpected expenses.

With this (and, admittedly, a strong income) debt repayments have not been onerous. The rent lands in our account. The mortgage repayment goes back. There is a shortfall, but it’s very manageable.

Other Empower Wealth Reviews

Empower wealth advertise their testimonials from satisfied clients. Financial Advisory Client Testimonials – Empower Wealth I confess, I am always doubtful whether these testimonials displayed on websites are genuine. But I am pretty much converted to a raving fan after my experience. Empower wealth weren’t perfect, but they were a damn sight closer than any other professionals I have engaged in the past.

Investing with Empower Wealth

Overall I was extremely impressed with Empower Wealth‘s service in helping me buy an investment property. If you want to read what happened next, read the update: Do I regret investing in property: the first six months. And then, for my experience as a landlord through the global pandemic and beyond!

Find out about the Victorian residential tenancy act changes. future plans property plan retirement plans fantastic model property couch only time will tell

Aussie Doc Freedom is not a financial adviser and does not offer any advice.  Information on this website is purely a description of my experiences and learning.  Please check with your independent financial adviser or accountant before making any changes.

Subscribe to receive weekly blog posts and NO spam

* indicates required Email Address *