Home Finance

7 Steps to Buying Your Dream Home

Is this the year you buy your first home, or upgrade to a better home? It’s no secret that searching for a home that fits every want and need can be a frustrating process. Kim Clarke, founder of Xcel Properties, shares his top seven tips to secure your dream home in 2014.

1. Prioritise your needs and wants
It’s easy to get carried away with add-ons and extras. Map out what you can afford to spend and then outline what you ‘need’, sourcing what this will cost you. If you have a reserve to play after that, you can then begin choosing the luxuries that you ‘want’. If this is your first home, consider purchasing a new-build that you can afford that’s also a great investment. That way you’re only paying for what you need right now – an upgrade to a larger or more luxurious home can happen when you’re ready.

2. Take advantage of low interest rates
With interest rates currently sitting at a 40-year low, now is a better time than ever to apply for a mortgage. Remember to factor in at least a five per cent rate increase over the life of your mortgage to help determine how much you can afford to borrow and the size of your repayments.

3. Buy a house and land package
Being on a similar price level to second-hand properties, house and land packages are an increasingly popular choice in suburbs with room for growth. These communities in development maximise choice in terms of the size and shape of the land, and the positioning, size and design of the home – including all the key features buyers need to suit their living needs.

4. Apply for grants
Don’t forget to search online to see if you’re eligible for a government first home buyer’s grant. Some states such as Queensland offer up to $15,000 to those buying a new home.

5. Negotiate with builders
Do your homework by researching builders in regards to reputation and price. One increasingly popular way to research is through online reviews and forums. Choose your top five builders and source costs. Let each know what the other is offering. It’s likely that they’ll be able to compete on price or offer additional extras. Remember, a quick and cheap service is not necessarily the best service.

6. Ensure the community is a good fit for you
While the property is important, it’s the community that makes it a home. Before buying, take the time to speak with the neighbours, try the amenities and find information about funding of local facilities, reputation of the local schools and public transport. If you’re looking into a development, a good development should have a sales team that takes you around the neighbourhood and discuss the plans and services in our community.

7. Use the First Home Savers account
For those whose first-home purchase is a longer-term plan, the First Home Saver Account can help. Each year the government will make a 17 per cent contribution on the first $6000 deposited into this account each year – that’s an additional $1020 each year. Withdrawals can only be made after four years. First Home Saver accounts are available from some banks, building societies, credit unions, friendly societies, life insurance companies and super funds.

Are you thinking of buying a home this year?

January 31, 2014

5 Things Your Real Estate Agent Might Not Be Telling You

House hunting this weekend? Did you know that while sellers have a duty to inform their agents of any issues surrounding a property, many simply neglect to disclose issues if they are likely to influence a buyer’s purchasing decision.

As such, buyers are often kept in the dark about what they are actually purchasing. Nicole Ciantar of Vogue Real Estate Australia has devised a list of five things that your real estate agent may not be telling you about when renting or buying a property – so make sure you ask the right questions.

1. Urban development and infrastructure projects
For buyers, the environmental surroundings of the property are a key determinant in the purchase decision. Real estate agents may fail to inform buyers of any government projects or new infrastructure, such as roads or housing blocks being built near the home if they haven’t been notified by the seller.

2. Criminal history of the home
Any crimes committed in the house are often left undisclosed, from drug-labs to shoot-outs to cases of abuse. “Although these types of crimes may not result in death, the sensitive type of consumer is still going to feel distressed,” Ms Ciantar said.

3. Termite damage or impact
Annually, termites damage over 180,000 Australian homes and buildings. Estimates of the combined cost of termite damage range from $700-1 billion when agriculture and horticulture are taken into account. Despite this, many buyers are unaware of homes affected by termites and are generally only made aware after conducting a termite inspection. Often people don’t consider doing this.

4. Changes to Residential Tenancy Agreement
Previously, if a tenant wished to break free of their property lease before the end of the fixed term of the agreement, they were obliged by contract to continue paying rent and property fees until a suitable replacement tenant was found. Changes to the Residential Tenancy Agreement provide an alternative for tenants, allowing them to break free of the lease so long as notice is given and they pay six weeks of rent upfront. “Many renters are unaware of this new clause and feel stuck living in a property when they simply want to move on” Ms Ciantar said.

5. Suicide, deaths and backyard burial sites
“The gory history of a home often remains hidden,” said Ms Ciantar. The previous owner may have committed suicide with new buyers completely oblivious. “This is concerning, as many people would probably feel uncomfortable living in a ‘haunted’ and stigmatised house.”

So how do you avoid these pitfalls? Ms Ciantar suggests that research is essential, and buyers should thoroughly inspect the home and ask detailed questions before making any purchase decisions. Examining old records, conducting termite inspections and even carrying out a simple Google search is sure to deliver valuable information. Above all, a good real estate agent can make all the difference, so buyers are encouraged to look around and find an agent that best understands their needs.

November 27, 2013

5 Tips to Help First Home Buyers Buy Property with Confidence

With interest rates sitting at historical lows, and lenders proving they are hungry for business, now may be a great time to consider your property options.

Of course buying property, particularly if it’s your first, can be a daunting prospect. According to a recent survey by Mortgage Choice*, four out of five future first homebuyers do not feel well informed about the property purchase process.

Purchasing property can be a complex process but, provided you set achievable goals, do your due diligence and seek professional advice, home ownership can be a rather fulfilling and enjoyable experience.

Mortgage Choice spokesperson Jessica Darnbrough offers a few tips to help first home buyers feel more confident about getting into the property market and achieving their goal of home ownership sooner rather than later.

1. Find out if you are eligible for government grants or concessions
For example, the First Home Owner Grant is a national scheme funded by the Federal Government that can help first time buyers get onto the property ladder sooner. The amount available varies by state and ranges from $5,000 up to $25,000 for first home buyers towards the purchase of their first home.

2. Consider Lenders Mortgage Insurance (LMI)
As a borrower, if you do not have a deposit of at least 20%, you can be forced to pay LMI. This insures your lender, protecting them against any loss incurred if you default on your loan. While LMI does not protect you as the borrower, it can potentially help you purchase property sooner if you have a smaller deposit. However, it is important to weigh up your options carefully and consider whether or not it is right to pay LMI and jump in now, or hold off, watch the property market and save a larger deposit.

3. Buying with others
If you’re struggling to put aside enough money each month to save a deposit for your first home, you could consider pooling your money with others, be it a partner, friend or family member. Combining your funds will not only give you a bigger deposit, it may also increase your borrowing power and help you secure a home loan that meets your needs.

Of course, if you decide to go down the path of co-ownership, it’s important to seek legal counsel as this will help you to address all the important issues upfront, such as what would happen if one person sold their share or defaulted on their mortgage.

4. Let your mortgage broker do the legwork
Choosing the right home loan is an extremely important part of the home buying process. At no cost to you, a broker can walk you through the mortgage minefield and help you find the right home loan for your needs – often saving you a great deal of time and money.

5. Get ahead with pre-approval
Before hitting the pavement in search of your new home, consider getting pre-approval. This will give you a good idea of your borrowing capacity and save you from looking at properties that aren’t in your price range. Contact your local mortgage broker to obtain home loan pre-approval.

If you want to learn more about your home loan options, visit www.mortgagechoice.com.au

Are you thinking of buying property in 2014?

October 17, 2013

5 Tips For First Home Buyers

You’re ready to buy your first home, but are you making a smart decision, or buying your dream home just to impress your friends?

Jeremy Cabral, publisher of Australia’s leading home loan comparison website Finder.com.au, says, “Purchasing your first home is an exciting time and it’s easy to get distracted by other people’s opinions or feel pressured to purchase a place that will impress others or make them envious of you.

“The reality though is that first home buyers need to consider the cost of keeping up with the Joneses and whether they can afford the repayments on a bigger property in a more highly desirable area. Rushing into a decision like this can end up costing first home buyers gravely down the track.

“First home buyers are always tempted to buy their dream home first. When actually, they should consider something more in line with their current budget to get them on the first rung of the property ladder and then buy bigger once the equity on the place builds up,” he says.

Mr. Cabral says first home buyers should be aware of the following crucial factors before signing up to a home loan that may be out of their budget:

1. Budget higher than the official interest rates

Although interest rates are currently at a remarkable low in Australia, variable rate home owners are encouraged to calculate the budget for their home loan 2% higher than the actual cash rate. This will safeguard them against unexpected interest rate changes that will occur down the track.

2. Economic factors

The economy is uncertain now more than ever and jobs are not as secure as they used to be. We can no longer simply rely on the annual bonus or pay increase to cover home loan debt.

First home buyers should not factor in bonuses or expected increases to their salary when calculating their home loan budget.

3. Get an estimate of how much you can borrow

Historically couples relied on the sole earner to pay the mortgage. Those days are long gone it would seem as couples now rely heavily on both incomes to cover the home loan payments.

A borrowing power calculator is essential to ascertain how much first home buyers can borrow. Couples should base their home loan budget on one or at most 1.5 incomes to allow for any changes to their income that may occur.

The first step first home buyers should take before selecting their desired home is to calculate their budget. Finder.com.au has launched calculators to simplify this process for consumers:

1. First, they need to calculate how much of their income they can spend on a property. Use this home loan calculator. 2. Then they need to calculate the mortgage repayments required for the loan amount and what they would have to pay each month Try this mortgage repayment calculator.

4. Don’t take the maximum loan amount

Regardless of whether the lender offers the maximum amount, buyers should be steered by their budget and borrow less than what is offered. Consider your repayment terms rather than seeking approval for the maximum home loan.

5. Home loan market growth

The home loan market has grown considerably in the last number of years. This spells good news for first home owners but can seem confusing. It’s important to take your time, compare all the home loan options available to you before signing on the dotted line.

What is your best tip for first home buyers?

July 11, 2013

Spring Clean Your Finances

It is good practice to give your finances an annual ‘clean out’. Not only with you get things in order, you may be able to take advantage of new deals and save month at the same time. Here’s a few steps to follow:

    1. Get a better deal. If paying off your credit card debt is more of a priority than reward points, switch to a low interest rate car.

 

  1. Spot check your savings and investments. Collect statements from all of your savings and investment accounts and check them against last years to see how much they have changed. Then review them against your goals to see if they are still appropriate to your goals.
  2. Put some order into your money paperwork. If you haven’t already done so go out and buy a portable file or some folders and put all your bills, bank statements etc in an ordered filing system. It will take a bit of getting used to but once you get into the habit you won’t know how you survived beforehand.
  3. Monitor your mortgage. Run your eye down all of your statements and see if all payments etc are being put into your account properly. While you are there check out how many years you have to go before you pay off the loan. It may also pay to have a chat to a mortgage expert to see id there are nay better deals at that time as well.
  4. Check up on your health insurance. Compare your fund with the others in the marker and if you can find a cheaper alternative (for the same cover as you have now) and take it.
  5. Clean up your home insurance. Check to see if all your insurances are paid up and cover everything you think they cover you for.
  6. Ring up about a new phone deal. Don’t get mad at your phone bills – look for a better deal. Now with number portability in place there are great deals on offer so if you sport a cheaper deal take it.
  7. Get an update on your superannuation. With a great deal of activity happening in the superannuation industry it is a good idea to run your eye over your super statements. Make sure your current superannuation account includes the amounts from your previous jobs super policies.
  8. Re-check your goals. Things change and so do your needs and wants which therefore affect your goals. During your spring clean make it a special point to re-check your goals and if need be change them.

From Unlock the Secrets of your Money Personality by Greg Smith.

Unlock the Secrets of your Money Personality is a kick-up-the-bum for anyone who knows they should be sorting out their finances, but does know where to start. Through identifying your existing money habits and suggesting strategies for increasing savings through budgeting, investing and most importantly, learning about money, Unlock the Secrets of your Money Personality can transform you into a knowledgeable, money-savvy chick well on her way to financial independence and security.

September 17, 2002

How to Invest Properly in Property

How old were you when you bought your house/unit?

24.What you earning back then? How much was the deposit?

I was earning the same as I am now, and the deposit was approx. $20,000.

What made you take the plunge at such a young age?

I wanted to have something for the future! Also, I wanted to get in now before any further rise in property prices. Another reason was that interest rates were low.

Was it difficult to save for the deposit? Was it difficult getting a mortgage because of your age?

It wasn’t difficult at all getting the mortgage. Saving took a few years and I had to watch my spending.

How has your lifestyle changed since you’ve had the mortgage, do you have to sacrifice a lot?

Yes, definitely. I live at home with my parents and I have a tenant in the unit, which covers some of the loan repayments. I also have to watch my spending, particularly on entertainment as that was a major cost. I still have a bit to spend though, but the amount of money that’s left in my bank account is quite low.

Did you ever consider investing in shares rather than property?

No.

What’s your advice to other women thinking of investing in property in the future?

Save as much as you possibly can before purchasing. Don’t get in above your head. Plan a budget and stick to it (well, try).

June 22, 2001