Bigger deposit, better position
While some lenders can offer low-deposit loans for less than 5 percent of the purchase price, saving around 20 percent can offer you big benefits:
- Access to a wider pool of lenders and products
- You need to borrow less money overall
- It’s a clear sign to potential lenders that you’re good at managing money.
If you’ve saved less than 20 per cent there are lenders who can help, but deposits of that size may require Lenders Mortgage Insurance (LMI). This adds more fees and another layer of assessment of your suitability because LMI providers are separate businesses and often have quite strict rules.
Know your credit rating
Lenders use your credit rating to judge whether your circumstances are suitable for a loan. Some non-bank lenders will review your financial situation as a whole, so your credit rating’s not always the defining factor when you apply for a loan. But it does matter. Credit scores are closely linked to the success of home loan applications, so understanding what makes up and affects your credit rating is important for any homebuyer. Get hold of a copy of your personal credit file and review your own credit rating – including any defaults listed against your name. There can be mistakes on your report – if you pick up on them you can request they get altered.
You can easily get a free credit score online. You can Google it or check the Australian Government’s Money Smart Website for quick links.
Work out what your bottom line looks like
You probably know where you want to buy and how much you want to pay; now it’s time to work out how much you can reasonably borrow. You’ll need to take the various home loan fees into account, like stamp duty, legal fees or Lender Protection Fees (LPF). You should also think about your current situation, your income and expenses, any dependents (kids or parents), and any lifestyle changes you can see coming up – like a job change or starting a family. Think about what’s likely to happen in the near future – as well as how it is right now.
If the home loan doesn’t fit, don’t sign up for it
There are more things to consider with a home loan than just the interest rate. There are redraw and offset facilities, refinance costs, repayment flexibility, fixed or variable interest rates, loan terms and fees to consider. Make sure you research the loan options available and examine them all.
Research, research, research
Did we mention research? Often the difference between a diamond in the rough and a dodgy deal is simply the buyer’s level of market knowledge. The more you know about the property market and where you want to buy, the better. Look at average prices over the last decade, whether it’s near to shops, schools and transport, potential rental returns, etc. You want to be sure the area has what you need in terms of both lifestyle, now and future growth opportunity.
Speaking of growth opportunity, remember that sometimes the best locations for property growth are not the ‘hot’ suburbs but the suburbs next door. These often provide a cheaper entry point and greater potential for development.
Likewise, a brand new or newly renovated property will generally charge a premium for the look. An existing, lived-in home may not look as pretty, but it can be much better value and let’s you add your own personality to it.
If you don’t have the finance, don’t make a bid
There’s no cooling-off period at auctions, once you’ve made an accepted bid that’s it. Buyers without finance approval can find themselves in serious strife if they sign a sale contract.
Stay on the safe side, make sure you hold a letter of finance approval from your lender. That way you can negotiate your purchase price without worry.
If you’re a first home buyer ready to enter the market, keep these hot tips in mind. They can help you be a savvy home buyer.
At Find Your Mortgage we have all the resources you need to make an informed decision plus, we offer a free credit report and a free financial assessment without listing anything on your credit file. Give us a call today on 1300 469 667 or visit findyourmortgage.com.au, and find out how we can help you with property financing.
Disclaimer: Content is not intended to imply any recommendation about any financial product(s) or to constitute tax advice. If you need financial or tax advice you should consult a licensed financial or tax adviser. The information in the article is believed to be reliable at the time of distribution, but neither Bird and Young nor its accredited brokers warrant its completeness or accuracy. For information about whether a non-bank loan may be suitable for you, call us on 1300 469 667
Lots of things can affect someone’s credit history; getting sick, redundancy, divorce, forgetting to redirect bills if you move, or just an accidental slip on timing can mean late or even missed payments.
If you have credit issues from these sorts of situations there are things you can do to help your chances of buying a home.
Here are five tips to help you get back on top.
Managing cash flow is a critical component of every business and one that must be effective if it is to remain profitable after all, cashflow is the lifeblood of all businesses particularly start-ups and small enterprises.
There are always times of peaks and troughs and this will have a direct effect on revenue. The good news is that there is plenty of help for small businesses going through seasonal downturns and rough times.
Here’s 3 tips to manage cash flow for small business;
When you are thinking about your first home, finding out you should be thinking about saving for a 20 per cent deposit can seem really overwhelming. The good news is that for some of the big non-bank lenders, a minimum deposit required on some products can be as little as five percent of the purchase price of the property, but it’s always a good idea to have a deposit of 20 per cent or more if possible.
So, let’s look at how to get there.
There are many reasons why an application for a home loan can be declined and we’ve listed some of the most common ones below.
Right now is one of the best times to be a homeowner!
Interest rates are still at record lows with most lenders offering home loans with interest rates below 4% p.a. There’s also a number of different incentives for first home buyers (depending on where you live) which could go towards those “hidden fees” that all add up such as building and pest inspection, conveyancing and legal and loan application fees to name a few. When purchasing a property around $500,000 you can expect to pay anywhere up to $20,000 on top of this. Check out the State Revenue Office Victoria website for more information.
Recovering from bankruptcy can be a long and difficult process. And even when you’ve been discharged or completed a debt agreement, some lenders will automatically decline your application for a home loan because of the history.
When deciding if a loan application is acceptable or not, the major banks all have a standard set of rules that are followed. If people don’t fit those rules then there are home loans designed especially for this and the term is a “non-conforming” home loan.
If you’re self-employed or you own your own business, you’ll know all about the challenges of admin – keeping your accounts, finances and income flow all on track.
It’s not easy. The last thing you need is a ‘no’ on your home loan application because of the paperwork.
But here’s some good news. There are alternatives. Here are four steps that anyone who’s self-employed can take to help get a home loan sorted.