Oct 3, 2008
If you're thinking of seeking advice or doing it yourself, there are a few things you should be informed of before you waste valuable time and money. Remember, buying a home whether it be for your family or someone elses is one of the biggest investments you will make in your lifetime. Don't get caught up in financial stress: the tips below will get you started.
Make sure you know your limit and be ready for the buy.
We've all heard of 'eyes being too big for our pockets' so before you fall in love with a property make sure you've got your finances sorted.
Inexperienced borrowers, or those who are naturally impulsive should take extra care - it's one thing to overstretch when you're buying a dress, but it's another thing when you're buying a house. It's a great idea to have pre-approval for your borrowing capacity before beginning your property search - this way you have a set limit and can't get into trouble.
Don't sugar coat reality and a bad credit rating.
It's best to be honest here (as always!) and accurately report your credit rating, card debts and personal debts. If you try to fudge the truth, this sort of stunt can stay with you forever.
Lenders consult major credit reporting agencies that record debts before they complete your loan application and a tarnished reputation can prevent you from owning your ultimate dream pad not once or twice, but probably a few times over.
Don't assume your assests substitute your income.
When considering how much your budget is for your new home, you must consider your borrowing capacity -- your ability to make regular payments on your possible home loan. This figure is based on your income earning ability, not what assets you have.
No matter what your assets are, what counts is your capacity to repay the loan through a regular income.
Make sure you choose a qualified advisor.
Modern services bring many modern people in the know who make a living from offering advice. Vendor's agents (the agent selling the home for the current owner) aslo want to get the best possible price for their clients so be sure that you're not getting taken for a ride.
While the services of a buyer's agent or a property advisor may not come cheap, the gamble might just pay off with professional opinions on the structure, age, surrounding areas, infrastructure and potential growth in price of your possible future home. Ultimately these guys are professionals and can tell you whether the property as a whole should be given the thumbs up or down.
But be sure to select your mortgage broker, manager or lender very carefully; look for someone who will meet your needs above everything else and remember, the lowest rate is not always the best.
Understand your mortgage options. Gone are the days when you had to save up for a 20% deposit to own your dream home. Now you can take out 97% (or even 100%, if you are a Veteran) of the value of the property which means you don't have to spend years saving for a deposit before getting into the property market.
Keep in mind though, if you have less than 20% deposit there's generally a lender's mortgage insurance involved, adding further costs. This protects the lender, not you, and the less deposit you have, the higher the fee may be - so if you have a 20% deposit, use it.
Never underestimate the costs involved in buying a property. Remember to budget in the following when settling your finances.
- Building and pest reports
- Valuation costs
- Application fee
- Solicitor's costs
- Stamp duty on properties and mortgage (Australia)
- Transfer fees
- Council rates
Make sure you adequately research or check out the home first hand.
The world may be your oyster, but if you don't want to fork out thousands of dollars for professional advisors, then the internet, dedicated research and good old fashioned haggling are just as good.
Make sure you check the following before you settle on a property, because in this case what you don't see will definitely hurt you.
- Check out the lighting and mood of the home, street and area at night
- Listen for noisy neighbours from outside the property
- Is public transport within walking distance?
- Does the local area have all your living and social needs?
- Research the area on property websites
- Research the three Ps (position, price and potential)
- Keep your eye out for information regarding trends in the area/suburb.
- Check out the local council's and services' websites - does your area have what you're after?
Make sure you keep your eyes open for any 'Cover ups' and if it's something you feel you can fix, don't forget to get that price dropped for the time and money involved in repairs!
Take the time to figure out your mortgage repayment strategy.
If you can afford to make more regular repayments on your home loan, go for it. With interest calculated daily and charged monthly, extra repayments will reduce your mortgage term and the interest paid on the life of the loan.
Decide whether you're buying for living or buying for investment.
When browsing for an investment property you should be thinking of your prospective rental market needs and wants - not where you'd place your chiffonier or what you'd put on your feature wall. In this instance, a property advisor or real estate agent would be great at letting you know what the local renters have been asking for in a rental property.
This will ensure your property is distinguished among the rest and will guarantee a good investment stays that way. When emotions are involved, irrationality sometimes follows. This could mean dangerous results for both the inexperienced and experienced homebuyer.
Remember, don't get too upset if a bid falls through - there are plenty more fish in the sea.
Posted by Jane at Friday, October 03, 2008 |