Melbourne locals and Mortgage Choice customers Hilary and Alexander Nanopoulos have recently secured pre-approval on a loan to buy their first home through their broker, Paul Williams.
“We have been approved for a purchase of $970,000. As a couple, we don’t like to have a lot of debt, so we are looking for a purchase a home up to $900,000 excluding stamp duty. This would make the repayments easy for us, and ensure that we could put a bit more towards paying off the loan.”
About Hilary and Alex
Hilary, runs her own marketing agency and her husband Alex is an architectural draftsman. They had a small deposit when they got married in 2010, but a couple of the properties they were looking at fell through. They decided to keep saving up for a bigger house in a better area when the time was right and were able to save a deposit while they rented a family owned unit in the meantime.
Once they felt they had a sufficient deposit saved, Hilary and Alex discussed whether they should buy a home or investment property and ‘rent-vest’. In the end, they decided to buy a home as they have a baby on the way and felt it would be a good financial strategy to start building their equity.
Hilary said, “We absolutely see the merits of owning property, but weren’t ready to enter the property market as newlyweds so we were happy to be renting and spending a bit more on travel while still saving for a house deposit. In the last few years, we decided that we wanted to purchase a home and start building equity for ourselves. So we have been working toward a set goal that we wanted to have for our deposit.
How they saved for their home deposit
Hilary and Alex’s property ownership story is a long time in the making and Hilary said that the secret to saving their deposit was setting a goal early on. “When we first got married we had a tiny deposit, but a few of the houses we were looking at fell through due to a bit of a lull in the market. Many vendors were struggling to get the price they wanted, but unwilling to let go of them for less, so we decided that we would rent for a few years (turned into 8 years!) and save up a bigger deposit while doing some travelling. We are both fairly good with finances and saving, but we did find that once we decided that we wanted to have a certain amount saved, and started living on a budget with a defined goal in mind, we saved a lot more.”
The couple went back to basics and decided to enter all their expenses into a spreadsheet - this included their planned annual expenses and when they needed to pay them as well as monthly expenses so they could figure out how much they could afford to save each payday. The couple also decided to set up what they call a ‘buffer account’ for annual expenses, which included a contingency fund for unexpected expenses. It was also easy for them to go through past expenses and see where the majority of their money was going and where they were overspending, which was quite a lot at the start!
“I think the key for us was ‘knowing exactly’ where our money was going - it’s hard to save when you have no idea where you’re spending. So we made it our mission to know where every dollar was being spent, until we got good at it.”
Speaking about some of the luxuries they had to forgo, Hilary said, “We love eating out and we knew we didn’t want to give that up, we just cut back on the number of times we ate out and hosted people at home instead, which is actually a lot more fun and less expensive! We have also cut back on travel over the last few years just to help us save a bit, and instead gone on weekends away to give us the break we want.”
How a broker helped them secure pre-approval
Speaking about their experience with their Mortgage Choice broker Paul Williams, Hilary said, “We approached Paul because we had no idea what we were doing, and what property we could afford to purchase.
During our first appointment, Paul assessed our financial position and looked at our budget to determine our borrowing power. He wanted to ensure the bank would lend us the money we wanted, and that we could comfortably afford the repayments - even if I had to take time off work for maternity leave. My marketing business was less than a year old, and Alex was on a contract role which meant that we needed all the help we could get in preparing our home loan application.”
“To be honest, there were so many things we learnt in our initial meeting with Paul that we could not have guessed lenders would be asking for. For example, Paul told us to get a letter from Alex’s employer to provide evidence that his employment was stable and he also explained to me what I needed to do to prove my new business was making money. He took my through the ins and outs of getting a home loan when you’re self-employed, which comes with its challenges. Paul also walked through a range of home loan products, structures, features and pricing and once we decided on a loan, fought to get us a permanent discount on the loan we chose. He was fantastic!”
“One piece of advice Paul gave us during our first meeting was to wait three months until my business had hit it’s 1 year anniversary before submitting our application. The 1 year milestone allowed me to supply my business financial statements with my loan application. This gave us access to a wider range of lenders and loans and improve the odds of our loan application being viewed favourably by the lender.”
When asked what their key learnings were about the home buying process Hilary said, “we thought all we needed was to have a 20% deposit saved up, however what we learnt was the importance of making ourselves look good on paper. In the lead up to submitting our loan application Paul told us cut back on our discretionary spending and avoid atypical or larger than normal transactions on our credit card and bank account statements so we wouldn’t be questioned on our loan application.”
“Paul really did all the legwork for us when the time came to submit our loan, which meant that once we gave him our paperwork we didn’t have to worry about a thing! The next time we heard from Paul was to hear that our loan had been pre-approved”