New year, new home? If next year is the year you plan to get into the property market, there are a few things you can do to help you reach your home ownership goals.
Here are five things to consider to make your property search.
Understand your borrowing capacity
The amount of money you can borrow will determine what properties you can potentially buy. This should be one of the first things you work out so you can narrow, or widen, your property search.
There are several factors that will affect how much a lender is willing to loan you. These include your income, living expenses, debts, assets, savings and the value of the property you want to buy.
The lender’s main concerns are your ability to secure the property with a deposit and your ongoing ability to make repayments.
Save your deposit
It takes time and discipline to save for something as sizeable as a house deposit. Saving a large deposit, at least 20 per cent of the property’s value, shows a lender your ability to save and manage money over time. This is also known as genuine savings.
Lenders will take your deposit into consideration when calculating your loan-to-value ratio (LVR). The higher the LVR percentage, the higher risk the loan is for the lender.
You can reduce your LVR by saving a larger deposit or buying a less expensive property.
A 20 per cent deposit will also save you from paying lenders mortgage insurance.
Find out about government incentives
If you’re a first-home buyer, you may qualify for incentives that will make it easier for you to get your foot on the property ladder.
The federal government’s Home Guarantee Scheme supports eligible low and middle-income first-home buyers so that they can purchase a home with a deposit of as little as 5 per cent. The state and territory governments also offer the First Home Owners Grant and other state-specific grants and schemes.
We can help you find out what incentives you’re eligible for and guide you through the application process.
Get us to organise pre-approval
Pre-approval is an indication of what a lender is currently prepared to lend you. There’s no obligation for you to take out the loan and you still have to go through an application process to secure it.
There are several reasons why getting us to organise pre-approved finance is beneficial for your property search. Firstly, it will give you peace of mind and take away some of the uncertainty around what finance you will have access to when the time comes to make an offer.
It also shows sellers you are a serious buyer who is confident in the amount you can spend and able to move quickly to secure your dream home.
Find the right property
Now that you know what you can afford to buy and what incentives you’re eligible for, you can base your search around those parameters. Rather than going to dozens of open homes, you can focus your efforts on a smaller number of properties that suit your needs and budget.
Armed with your pre-approval, you can compare what your money will get you in different areas and weigh up your options. For example, would you rather buy a larger home in a more remote suburb and have a longer commute, or live in a smaller property that’s closer to work, family or your children’s school?
With your finances in order, you’ll be able to jump on the right property when you find it.
We’re here to help
Whether you’re looking to buy your first home, your next home, an investment property or refinance to a home loan that better suits your needs, we can help. Get in touch today.