Investing in a property is serious business. No doubt, it is one of the biggest purchases you will ever make in your life.
There is little room for error when making this huge, life-changing financial decision, so make sure you know the lay of the land.
Interested in knowing the finance secrets to making a successful home purchase? Read on to know more.
Things savvy people do before buying a home
1. Pay personal loans and debts
While it makes sense to invest in a new home if you have enough money in savings, people without a cash cushion shouldn’t be having major purchases like a property unless they are willing to spend more than what they earn.
Those with debt should focus on paying off their debts before diving into property investment. This way, you won’t be having multiple debts to pay off at a given time, you can have a margin of safety, and strengthen your credit. This brings us to our next point:
2. Strengthen your credit
Your credit score will determine whether or not you qualify for a mortgage. Good credit score translates to being a “strong borrower”.
To build and strengthen your credit score, pay your credit card bills on time and keep credit card balances low. Close out old accounts before opening new ones. Check your credit report for any inaccuracies. Lastly, only hold onto credit cards you can manage. Although the buy now, pay later trend is huge, it is terrible for your credit rating. If you use payment options like afterpay, you are telling your lender you cannot budget until “payday”, which tells them you will struggle with mortgage repayments.
3. Secure a larger deposit
You need to come up with a 20% deposit to secure a home loan and avoid paying the Lender’s Mortgage Insurance (LMI). Low deposit home loans are not really all that helpful when your mortgage insurance costs keep climbing up.
When applying for a home loan, you must keep in mind the costs you will have and whether they can be rolled into your mortgage or if you will need to pay them on settlement. A professional mortgage broker will explain all of the ins and outs with fees and how your deposit amount stacks up. If you think you will need LMI, the biggest deposit you can save will put you in the best position. Another option to grow your larger deposit without having to save the cash can be to use a guarantor as part of your home loan application. Speak to us to learn more about guarantor loans.
4. Compare mortgage rates and fees from different lenders
It pays to know you have many options. There are a lot of associated costs to buying a new house like stamp duty, interest rates, legal and conveyancing fees, insurance costs, property inspections, council rates and strata fees, and many more.
Shop around to find the right financing for you. Make sure you understand all the finance jargons as they will appear a lot on documents for terms of agreement.
5. Set your personal criteria for buying a home
Make a checklist of all the things that your house must have or be so you have a clear sense of what you are looking for. For example:
- Is the neighbourhood friendly and safe?
- Does it have access to public transport, services, and shops?
- Is it close to work, family, schools, friends, hospital, etc?
- Are there any plans to develop the area?
- Is it within your budget?
- Can your family live comfortably in it?
- Are you looking for a house, unit, townhouse, studio, etc?
- What is your style preference?
- Do you need a parking space?
6. Research first time home buyer assistance programs
- First Home Buyers Grant (FHOG) –
- Stamp duty concessions
- New Home Guarantee
- First Home Super Saver Scheme
- First Home Loan Deposit Scheme
- HomeBuilder Grant
7. Educate yourself
It always pays to know that you are on top of all the things you need to know about buying your home. There are home loan features that can help you save thousands of dollars, and it would be in your best interest to access this kind of information so you can make informed choices.
Google is your friend when doing your research. However, you might get overwhelmed with the wealth of information available to you and no one to help you make sense of them — not to mention the amount of time you spend turning every stone on the internet that you could be using instead to build your finances and other more important matters.
Talk to a home loan expert
To get the best deals and be privy to valuable pieces of information around your property purchase, talk to real estate agents and brokers to get a feel for what’s going on in the market. Understand how property values are determined.
At Professional Lending Solutions, we will help you get that dream home you’ve always wanted. We have a wide range of major banks and lenders, and specialist lenders so you can have as many options as you can. We can negotiate with them too for sound rate discounts on your behalf!
Reach out to us so you can fast track your home buyer journey.
Contact me on 0421 934 033.