1. How much of a deposit do I need?
This depends if you are okay with paying mortgage insurance or not. To avoid mortgage insurance, you will need 20% + costs, I generally use a rule of thumb of 3-4% of the purchase price for costs.
When looking at maximum lend, I generally use the rule of thumb of a 8-9% deposit, this includes the costs to purchase. (which is often something first home buyers don’t account for).
If you have a guarantor this can all be done without a deposit.
2. How much can I Borrow?
It is always best to book an appointment with a specialist, online calculators are always a great starting point. But, they make a lot of assumptions, and these assumption can often make a big difference.
There is a fair bit that goes into a home lending application/ borrowing capacity these days, and it is beat to speak with a lender, who'll go through your information in details and give you the right figures.
It is always important to then know the monthly commitment amount going forward for you to understand your own budget and what figure is going to suit you and your family.
3. What is the benefit of a pre-approval
A pre-approval, or approval-in-principle or conditional approval are all terms used to describe the same thing. Pre-approvals allow you to get a step up in the market, and an understanding of the amount a lender may be able to lend you, based on your current financial situation. The important things to note about a pre-approval;
· It is generally free, and valid for 90 days
· Banks policies can change, especially in the climate that we are currently in, and a pre-approval can protect you in the instances where your situation doesn’t change, but the banks policy does.
· Peace of mind- allows you to have confidence in knowing how much you can purchase for, and what you can afford.
· Helps you understand the 'other' costs associated with purchasing a home
· Can give you a competitive edge with the real estate agent, as it shows you are a serious buyer.
4. When should I buy?
When it comes to property, everyone has an opinion- from your Uber driver, to your parent, to your friends and work colleagues.
Best piece of advice I ever got, was timing is everything, not timing exactly, but time in the market. When buying, it's important to not be influenced by the market, like any investment market, it moves in cycles and throughout these cycles there is going to be times when it benefits the buyer, and times when it benefits the seller.
However, trying to wait for the 'right' time when property prices will drop, is as good as any ones guess, and can leave you gambling with your future.
The media tends to give mixed messages, about Booming markets, or being on the verge of a collapse. The advice I give my clients is to focus on your own long-term goals and not let short-term market conditions influence your longer-term lifestyle goals.
5. What is the difference between a Bank and a Broker?
This is another piece of advice I give to my clients, especially when they are at the 'shopping around' phase. All banks, and in turn brokers, are going to be within a stones through of each other. One month 'X' bank is going to be cheaper, and the next RBA rate cut happens and 'Y' bank is now the cheaper option.
Rates and fees are absolutely things to take into consideration. But, you need to also base your decision on how you feel, and who is the right fit for you. This is one of the biggest financial decisions you will make in your life, so you need to surround yourself with people you trust, this includes, your lender, you solicitor/conveyancer, building and pest inspector and your real estate agent.
For more information or if you have any questions, be sure to contact Zoe Kowalski at +61 466 4416 48 or firstname.lastname@example.org