Before You Buy Your Next Property
Are you looking to buy your first home? Or wanting to increase your investment portfolio?
We compiled a guide below to help you kick-start your next property search.
- Lifestyle Litmus Test
Ask yourself those fundamental questions. What’s my long-term job security? How large is my family? Will it expand? How long do I want to live in my new home? Your answers to these questions will help you decide if the time is right to buy and what you should be looking for.
- What’s Your Budget?
- Figure out what you can actually afford. Finding a good accountant or financial advisor can help you out here. And don’t forget to add the up-front costs, such as pest and building inspections, broker or lender fees, stamp duty, etc. Keeping a financial buffer is a must to ensure you can afford any unforeseen costs.
- Research your borrowing power! Tools such as an online calculator can help you source a rough estimate.
- Put together your deposit. Ideally, 20% of the purchase price is a great deposit but it’s not always viable. It’s important to remember, the less you have in a deposit, the more you’ll end up paying for your lenders mortgage insurance.
- Shop Around for Your Loan
Take the time to research the different types of home loans available; variable, fixed or split. When you’re calculating interest rates, weigh up the best option over the lifespan of your loan, not just the short term.
- Hire Those Who Know!
If it all seems too daunting or you want to make sure you get the best deal, a finance or mortgage broker can shop around for you on your behalf. Brokers are especially useful if you’re less experienced, wanting to invest or you have a unique financial situation. However, it’s worth being mindful that there are commissions involved which might influence your broker’s choice, so be attentive when enlisting a third party.
- Pre-approval / Conditional Approval
Pre-approval can help you make sure you don’t miss out on snapping up your dream property when the time is right. Essentially “pre-approval” or “conditional approval” is when your bank/lender has determined you’ll likely be able to repay them. Pre-approval helps you get financed more quickly, and lets you bid at auctions or make offers subject to finance.
Keep in mind, any pre-approval is provisional, and you’ll need to lodge a final application and meet any additional conditions before receiving your loan.
NB: Pre-approvals typically last between 3-6 months, so check the expiry date.
- Is there a discount code for this purchase?
While you may not be able to “enter HOUSE10 at checkout for 10% off!” it’s definitely worth finding out what financial concessions might be available to you as a buyer.
Perhaps you qualify for the First Home Owner Grant? In NSW, the government has abolished stamp duty on new and existing homes valued up to $650,000; and from July 2019 NSW stamp duty thresholds will be nominally reduced. Work out your stamp duty payments and any concessions using a calculator.
- Location, Location, Location
Whether you’re searching for your home or an investment property, you always want to buy in the best location you can afford. Think about the right location for both your current needs as well as your future goals. Eg. Proximity to work; public transport; parks; schools and other amenities. And if you’re seeking an investment property, don’t forget to factor in rental demand in your chosen suburb.
- Make or Break List
Compile a ‘must-have’ checklist to narrow your search. Are you certain on some requirements for you home? Eg. big backyard; a pool for the kids; secure parking; fully fenced back yard for the pet? Organise your make or break list in terms of their importance to help keep your search on track.
- Talk to the Professionals
A good real estate agent has valuable local expertise, and fine-tuned instincts on the true market value of a property. They can also assist in showing you properties that may be off-market, negotiating with the seller, or bidding at an auction.
- Buyer Beware
Once you’ve shortlisted a property, ensure the building is sound. Arrange for an inspection to uncover any structural damage or pest invasions, to avoid any unpleasant surprises down the road.
- Pick Your Number – and Stick to Your Guns!
Staying within your agreed loan amount can prove challenging, especially in the heat of a bidding war or at auction, but the number one rule is: Stick to your budget.
If the property is going to be auctioned and you’re a first-time bidder, take some ‘test runs’ to familiarise yourself with the process. Check the legal terms and conditions of auction; if your offer is accepted, and the reserve price met, you cannot withdraw.
Regarding private sales, after making your offer you’ll be given a cooling off period of 30-90 days, and you’re not legally bound until you’ve signed the contract.
- Dot Your I’s and Cross Your T’s
Last but not least, engage a solicitor or conveyancer to handle all your paperwork. They’ll prepare and lodge the contract for sale, arrange for the payment of the deposit, and complete other legal and administrative tasks to ensure you have a smooth settlement.