How to buy property like a pro
What is it for? This is a very important question. Are you buying this for yourself to live in or do you see this as an investment property? This will determine the purchasing fees (such as the stamp duty) and will usually have an effect on the interest rate of the property. You need to consider this prior to doing anything more.
Get pre-approval: Before you decide to start scoping the market, you need to find out how much you can actually borrow. I am going to assume that you have a deposit of some sort if you are reading this, so meet up with your bank manager or a mortgage broker to find out what you can get. Remember a pre-approval is the absolute maximum that you can borrow. (If you need any recommendations, just get in touch with me, I’ll point you in the right direction)
Do the sums: Before you take your pre-approval and start putting offers on homes, you need to figure out how much you can actually afford to spend. Just because the bank has approved a loan amount, doesn’t mean that you should borrow that much. It’s important to rework your budget with the new loan and all estimated home expenses to make sure you can cover the loan repayments. This is a trap for young players. The last thing you want to do is sell your home in a fire sale if the interest rates increase and you have maxed yourself to capacity. If you want an excellent budgeting tool, let us know and we can send you a copy.
Create a buffer: Most people completely skip this when creating a new home budget, but you need some wiggle room when it comes to maintenance, repairs and renos. This should be included in your figures to make sure that the new French doors you intend on putting in can actually be funded without you having to live on noodles for the first year of home ownership.
Give yourself as much time as you need: When putting an offer on a property, you will need to determine the time periods that you have to secure your loan and to allow a building and pest specialist to assess the property. A stock standard contract will usually have a 7 day building a pest and a 14 day finance clause. To give yourself more time and wiggle room, push it out to 14 day building and pest and 21 day finance when filling in the contract. This will just allow you more time to get things sorted.
Get the right people: When you are buying your home, there are certain people that you need on your team:
- Conveyancing Solicitor
- Bank or Mortgage Broker
- and a Building and Pest Inspector.
These people make up your initial ‘property A team’. You will want to make sure you have some good people behind you because this is a pretty important thing you’re about to do.
You may also like to consider talking to your financial adviser/planner (if you have one) or meeting with one. This is a perfect time to engage a financial adviser as they will be able to address how you are going to fit the new purchase into the rest of your financial life including your insurance and super considerations. A buyers agent can also be an asset depending on what the property is for. If it is going to be an investment property, you need to make sure you are buying the right property to actually make you some money. Contrary to popular belief not all property will make you money.
There you have it, set yourself up for success when it comes to buying a property. Over the next few months we will delve into the more intricate details about the specific parts of property purchasing, but if you have any questions in the meantime feel free to get in touch.
This post is from our resident Financial Planner Cara Brett, check out her details in the About Us section.