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If you are starting a family or have a young family then the mortgage is quite probably your biggest financial challenge, especially if you are reduced to one income. The reality is that starting a family is financially challenging. The good news is that mortgage products have become fairly flexible provided you plan around them properly. We deal with a large number of young professionals that are planning to start a family, but whose large mortgage also means they rely on two incomes.
Put all of your savings into the mortgage using revolving credit. Before you have kids focus on repaying the mortgage as fast as possible. Aim to repay enough so that you can cover at least 12 months of income shortfall. With revolving credit you can access the funds you pay off at any time. Provided you are below 80% then you can also put your mortgage onto interest-only for a period of time to reduce repayments.
Make sure you have your life insurances properly sorted out, which we can do for you. The risks are so much greater when you have dependents and are reliant on two incomes. At an absolute minimum you should have enough life cover each to repay the mortgage. In reality you should also have some trauma cover (to protect from cancer, amongst other things) and income or mortgage protection insurance. With trauma cover you get free cover for your kids between 3 and 18, which is an added benefit. We recommend budgeting on between $100 and $160 per month.
You will be entitled to 12 weeks paid parental leave and if the household earns less than $80,000 (whilst one of you is off work) may be entitled to Working for Families benefits.
With planning in place, you can reduce the financial stress that can come with young children and instead concentrate on enjoying time spent with your family.
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We can help. Have a chat to one of our advisers.