Buying a property especially your own dream home can be a daunting process. There are terms that you need to learn, processes that you never imagined ever existed and other confusing laws and legalities. However, if you are really serious in buying your own home, then knowledge is an essential key to have a successful purchase.
Here at Aussem, we make things simpler, informative and stress-free in order to help you
take it one step further in achieving your “dream home”.
To start off, you need to answer a simple question. Why buy a home when you can rent? For some, renting may seem to be the best option for their current lifestyle but for others owning a home is much better. However, the decision to buy or keep on renting falls ultimately in your hands.
Renting versus Owning
Here’s a quick comparison for you to consider
When you have your own house, it makes you profitable while selling it in a high-priced market but renting a place may result on higher rent payments..
If you are renting, maintenance of the house is shouldered by the landowner while having your own house needs a lot of savings in case there are things that needed to be fixed
Rent is fixed while the repayments for your mortgage may fluctuate due to the changing interest rates.
Limited changes can be done in your home when you are renting. If you have your own property, you can do anything you want.
The length of stay on a rented home depends on the terms of your rental agreement while having your own home won’t have that problem.
To rent means someone owns that property while having your dream home simply means, “A place that you can call your own”.
Choose the right type of loan
Let me show you some of the different types of loans available in the market to be able to assist you in processing your home loan.
If you are the type of person who plans ahead and prefers predictability then having a fixed rate loan is the right choice. This kind of loan features regular fixed payments that aren’t affected in case any inflation occurs. Thus you would be able to stay on your budget and continue having regular payments making it faster for you to pay-off your equity. However, in case interest rates decrease, you won’t be able to enjoy the benefit of making lower payments and early payments can acquire penalties.
For people who have a habit of saving up during payday, then a variable loan might work for you. This type of loan features payment that depends on the fluctuation of interest rates. So if you are the kind of person who is okay with this arrangement, then you can certainly avail this kind of loan. Keep in mind though that payments are higher when interest rates are also high, so you might want to make adjustments with your budget.
If you want a mix of both fixed and variable rates, then consider taking the split loan. The good thing about this loan is that payments will not fluctuate too much when interest rates go up. You can still make additional payments for the variable part, however on the fixed portion, terminating it earlier might result to in some penalties.
If you are an investor and wants to purchase properties as your investment, the interest only loan is a good fit. It’s a type of loan that allows you to pay off only the interests in your mortgage that usually takes 1-5 years. The lower monthly payments allow you to have more savings that will help you maximize your tax deductions.
Considerations in choosing your property
Before applying for your dream home, it’s always better to have a property in mind. One important consideration is the location.
You may want to check out a few of these things that really matter to you
Do a bit of a research on the area where you want to purchase your home. Visit the places around it and check the atmosphere. Try to look for developments or other infrastructure in the area and weigh the advantages if ever you will live there. Most of all, you should ask questions and inspect wisely.
There are homes that look good aesthetically but if you try to look closely, there might be hidden cracks or other big problems such as plumbing or electrical problems; that’s why it’s always best to ask the right questions.
Getting ready to buy your home
Now that you have already have a property in mind and of course the decision to push through with your purchase, it’s time to take care of the finances and legalities when it comes to buying your own home:
Consider having your own broker
in order to purchase your dream home smoothly, these experts will help you along the process. A broker is like a friend who will be there to help you make that decision in having the suitable home loan for you. If this is the first time you will purchase your own home, then it’s best to have an expert be there to guide you, show you the different steps and explain them to avoid delays and problems during the buying process.
Check your finances
The deposit is an important part of the home loan. Deposit can have an impact on the interest rate of the loan. The bigger your deposit, the more negotiating power and choice of lenders you may have. If you have a bigger deposit, you may even be able to secure a discounted interest rate from a lender.
Establish your savings habit
lenders need to understand your savings habit and providing a good history will assure your lender that you are capable of repaying your mortgage.
Pay off excess debts
as mentioned, a good financial history provides a higher chance of getting your loan approved. If you have a record of having large sum of debts, this might be pose a problem in getting your loan approved.
Have additional savings
This will act as your buffer especially if interest rates become high and repayments rise. Another good thing about this is that you will have the funds to use for other fees that need to be paid such as stamp duty, legal fees, insurance etc. just to name a few.
Submit an application for the First Home Owner Grant
FHOG is a national scheme that was established in order to assist eligible first home owners to buy or build a new home by offering a certain amount of grant. This scheme applies specifically to new homes only. You can lodge your application through most of the lenders or you can talk to your mortgage broker, they will be able to give the support. Take note that FHOG policies differ depending on the state or territory.
Loan pre-approval information
ask your lender for a key fact sheet. This will tell you the total amount that you need to pay, schedule of payments through the life of the loan and fees and charges. It will provide you a personalized rate comparison to help you check the cost of your loan against other loans. You can readily get them with your lender.
Home buying is giant step in your life. There are things that you can do to make sure that you don’t fall prey to financial difficulties. Let us help you in making that purchase a reality. Remember that information is power and we are here to provide you all the necessary information you need.
