Buying a home – especially if it’s your first one – can feel like an overwhelming experience.
There are many things to consider. I am regularly asked questions, such as: ‘how much money do I need to have as a property deposit?’, and ‘what is the actual process of buying?’
There is certainly a lot of information to digest when you are just getting started. So I have penned five important things you should think about when purchasing a property. Hopefully this helps you get your mind focused and feeling comfortable.
Key 1: Build a good deposit
It is generally a good idea to have a deposit of at least 5% – 10% of the property’s value, plus costs. Lenders have criteria you will need to meet If you want to obtain finance to buy a home, evidence of genuine savings is one of these. For example, if you are looking to buy a property worth $500,000, you should aim to have a deposit in excess of $50,000. I know saving a 10% deposit can sound like a huge task, but it is important to remember that the bigger your deposit, the better you will be seen by your chosen lender and the better your interest rate will possibly be.
Key 2: There are other costs you should plan for
When buying a home, you will find the sale price isn’t the only cost you will have to think about. Other costs when buying a home can include:
Pest and building inspection (approximately $500)
Home loan application fee (will vary between lenders, but is approximately $500)
Lenders Mortgage Insurance
Bank valuation fee
Title insurance (approximately $350)
Registration of title (approximately $100)
Water and council rates
Key 3: Pre-approval is important
Loan pre-approval gives you certainty during 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. However pre-approval doesn’t last forever and will expire within three to six months.
Key 4: Formal approval takes time
Congratulations! You’ve found a home you like and have made an offer on the property. Now it is time to get your finances checked-off. To make this process seamless, 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. As your local broker, it is my job to work through this process with you, to help achieve formal approval of your home loan. It is important to note that formal approval doesn’t happen overnight; the period of time between buying the home and moving in is usually six weeks.
Key 5: Insurance is a necessity
It is important that you insure your income, your life and your property. Unforeseen circumstances can and do happen. Before you move into your home and start paying off your mortgage, it is a requirement that your property is insured. and your belongings. Insurance isn’t a ‘good to have’ – it is a must. As a mortgage holder, you should consider insuring other important things like your income and belongings. As without income, how will you pay off your mortgage?
Contact Leonard Marquart for all your home loan needs on 0420 544 268. I can help you get ready for that home loan by:
Planning your budget to save that deposit,
Work out in detail any additional costs,
Simplifying the home loan application process, including pre-approval,
Making sure you understand and have in place the insurance that suits your needs.