So many people are saying that this year is the best time ever to buy a property, interest rates are low, the first home buyer’s grant has been extended and the market is strong. I think differently – if you buy the right property and have a process then any time is a good time to buy.
Are you in the financial position to buy the property that you want? May be a better question is are you in any position to buy a property?
Your first step is to see a finance broker who will sit down with you and tell you exactly how much lenders are willing to loan to you. A good broker is absolutely essential to the whole process. A good broker will choose a lender to suit your situation and financial needs, they are not bound to the big banks and so can find you the best deal that saves you thousands over the years.
Go online and see what is selling in your area. Realestate.com and Domain.com are good references and will show you exactly how much homes are selling for and whether you can afford the home of your choice. Sometimes a compromise is necessary if you want to buy in that suburb, but at least you will know before you start.
If you are buying a new house and land package call a couple of local builders to get a finished price. Many of the listings for house and land do not include things like landscaping and other necessary items can be left out, so you want to know the total package price.
Increase your chances of securing a loan by considering the following:
- Paying off your credit card debt and reducing the card limit.
- Reducing or paying off other debt
- If you cannot reduce debt then consolidate it, a good broker can save you thousands on your debt repayments and make it look good on your loan application
- Most lenders take a very close look at your annual expenditure and can even figure out if it is accurate by what you spend your money on. Reducing daily, weekly and monthly expenditures will go a long way to securing a loan.
- A good job that pays regularly is a must. You have to show that you receive regular wages and are in a secure position.
Having enough for a deposit is also essential. The first home buyer grant in most cases requires only a 5% deposit compared to the 20% that most lenders want. On a $500,000 home that is the difference between $25,000 and $100,000.
You also have to account for stamp duty and other costs, something that your broker will include when calculating your borrowing capacity.
If you cannot afford the deposit then you will not obtain the government grant for first home buyers.
If you are not going for the first home buyer grant then many lenders are prepared to lend the required amount if the buyer does not have a 20% deposit, but they charge a Lender’s Mortgage Insurance (LMI) which can cost around $10,000 and upwards.
Find someone who can help you through the contract process and through the whole build. It is so much easier when this is being managed for you.
A good solicitor will make sure that the contract is in your favour and subject to finance. They will walk you through the contract using plain English and take care of any last minute changes that you or the builder may have.