May 28, 2013
Often the decision to purchase your first property, whether it is a home or an investment, involves equal measures of excitement and anxiety, and the magnitude of the process can be daunting. With only 15% of Australians feeling ‘confident’ about the property purchase process last year, Mortgage Choice encourages those considering buying property to break the process into six manageable steps.
1) Start the savings habit early
Most lenders require a deposit of at least five per cent of the property’s value but bigger is even better and may help you avoid costly Lenders' Mortgage Insurance. The discipline of budgeting and saving regularly is also great preparation for managing the ongoing costs of property ownership.
2) Explore your home loan options
A home loan is likely to be the key to your property purchase. Potential property owners should have a good grasp on their ability to borrow money before they start the property search. There is a range of home loan options on offer. That's why it is crucial to set aside time with a professional mortgage broker to explore the loan types available to you, including how much you can borrow and the deposit size needed. This will help you to set realistic savings targets and timeframes.
3) Get ahead of the pack by having your finance pre-approved
Property sellers may be attracted to buyers who have pre-approved finance over those who don’t. Loan pre-approval lets you head into the purchase process knowing the maximum amount you have to spend on the property, giving you confidence to buy at auction or negotiate on price and saving you time looking at places that aren’t in your price range. Keep in mind pre-approved finance is typically a limited time offer and it does not lock you into a loan.
4) Look carefully at the contract, the devil can be in the detail
Once you have found a suitable property, go through the contract with a fine tooth comb and ensure that there is enough time built in for pest and building inspections. If making an offer on a property as opposed to buying at auction, check to see if the contract includes a cooling off period and/or subject to finance clause, and the settlement period suits you and your current living arrangements. Your solicitor or conveyancer can help with this step and may request changes on your behalf.
5) Finalise your finance by having current information on hand
After making an offer/placing a bid on a property, it is time to finalise your finance. For final loan approval you will need all your up to date financial details. This includes verifying your current income, savings and assets as well as liabilities, including any outstanding debts, loans, etc. In preparation for unconditional loan approval, I can provide a list of all the documentation you will need to have ready so that the application proceeds as quickly as possible.
6) Before settlement, gather useful information from the agent and seller
To help you plan your new budget as a property owner, find out information about the property such as electricity and gas suppliers, when the strata and/or council rates are due, priority repairs or maintenance and any other costs associated with the property so that you can start to shop around for the savviest deals.
There will always be eventualities that can’t be planned for but if property buyers start with the aspects of the property purchase process that are within their control then the sale will typically run smoothly. I would also suggest that buyers-to-be keep in touch with their mortgage broker after the purchase to make sure they are always receiving the most competitive, well-suited loan possible. If you want to learn more about the home loan process please call me on 0414 259 699