Better Positioned With A Bigger Deposit
It’s possible to find a lender who will provide you with a low-deposit loan if you have saved less than 5% deposit. However, there are major benefits that come from saving for that magic 20% deposit.
The 20% deposit will win you a wide pool of products and potential lenders.
A higher deposit means a lower loan amount.
A 20% deposit highlights your ability to manage money, which is one of the most important things lenders look at.
There are still options for you if you’re working with less than a 20% deposit, but they tend to be subject to Lenders Mortgage Insurance, which just adds more fees and checklists.
Pay Attention To Your Credit
Your credit rating will be used by potential lenders to judge your suitability for a loan. Non-bank lenders, however, review your total situation so your credit rating isn’t always the most important thing when it comes to securing the loan. It still matters, though, in any situation.
A credit score is linked to home loan application success. This is why it’s important to understand your credit rating and what goes into making it up. First things first, get a copy of your credit report and review your rating. You can review whether there are defaults against your name, mistakes in the information or someone else has secured credit using your information. If you catch any mistakes, you should rectify them immediately.
The Bottom Line
At this point, you likely know where you plan to buy and how much you are going to spend. Now is the time to determine how much you can afford to borrow reasonably. There are a variety of fees to consider, including legal fees, lender protection fees, and stamp duty.
Take your current situation into consideration, as well as income, expenses, dependents, and upcoming lifestyle changes.
Don't Sign Up If It Doesn't Fit
There is a lot to consider in terms of home loans, it goes beyond interest rates. There is a lot to consider and it’s important you understand what is right for you and if a home loan doesn’t fit, then you shouldn’t be signing up for it.
Research is going to be your best friend. The difference between dodgy deals and hidden diamonds is going to be down to your market knowledge. Something you can increase by doing your research. The more you learn about the market and where you’re buying the better off you’ll be. Take a look at the amenities, transport options, schools, rental returns, and the average house price over the last decade or so. You want to know the area and be sure it provides you with the lifestyle you want and offers the opportunity for growth.
Sometimes the greatest property growth locations aren’t the up and coming suburbs. They’re the ones right next door. It’s a cheaper entry point that provides you with development potential. Likewise, if you plan to buy a brand new property or one that has been recently renovated, you’re going to pay a premium. While a lived-in home as is might not be as pretty, it’s better value. Plus, you can add your own personal touches and put your stamp on things properly.
Don't Bid Without Finance
If you are buying at auction, know there is no cooling-off period. If you make a bid and it’s accepted, the deal is done. If you haven’t received finance approval you are putting yourself in a dangerous position. Be safe and don’t make any moves until you have a letter of finance in your possess. Once you have approval you can negotiate without worry.
For first time buyers, these tips will be important if you want to make a savvy purchase. If you would like to learn more, get in touch with us to discuss your needs, circumstances, and options.