Spring is traditionally a busy time for buying and selling homes.
After wrapping up the financial year at the end of June, many homeowners start planning a move in Spring, which means a flood of new listings into the market. If you’ve been planning to buy a home, it might be a good time to see what’s out there.
Here are five things to consider adding to your Spring home buying checklist to make sure you’re ready to go when you find your perfect property.
1. Decide whether now is the right time for you
2020 has been an eventful year, which may have derailed even the best of plans. If your employment situation has been affected, you may need to reassess whether this year is an appropriate time to purchase a property. Ensuring that you’re financially secure during this period of uncertainty may be more important than moving forward with your plan to buy a home.
2. Understand all of the costs involved when buying a new home
When buying any property, there can be a range of additional costs on top of the ‘list price’ for a home, including:
- Stamp duty
- Conveyancing fees
- Mortgage insurance
- Building insurance
- Moving costs
- Strata fees
- Ongoing mortgage repayment costs.
Many of these fees will depend on the cost of your property, so it’s important to consider all of these in your financial calculations when deciding which property to purchase.
One of the positives of the current economic circumstances is that home loan rates are at the lowest they’ve been for a very long time.
If you’re considering buying a home then taking advantage of these low rates could mean your monthly repayments are significantly lower than if you were applying last year.
When reviewing home loans, it’s important to understand the balance between fees and features that each loan offers to find the one that’s right for you. Some home loans come with more features like discounts on insurance, or even Qantas points. Others take a no frills approach with fewer features but also lower rates. There’s no right or wrong choice here, it’s all about finding the loan that fits your needs best.
4. Get prepared to buy
A major step in your journey to buying a home is getting approval for your mortgage. There are a number of factors that go into considering your home loan application. A few of them include:
- Credit history - lenders are generally less likely to approve loans to people with a poor credit history. You might consider paying off some of your debts and avoid applying for too many credit cards in the 12 months prior to applying for your home loan to maximise your chances of getting approved.
- Deposit size - most lenders generally consider loans of 80% of the value of the property to be ‘safe’, which means that borrowers require 20% of the value of the property as a deposit. If you are planning on applying for a home loan with a deposit of less than 20%, it’s likely that you will be required to pay Lenders Mortgage Insurance.
- Savings - as well as being able to save for the deposit on a home, lenders can also look favourably on applications where the applicants have saved at least 5% of the purchase price as additional savings. This reassures the lender that a borrower will be able to continue to repay the loan even if their circumstances change.
- Payment history - a history of missing payments, whether that’s credit cards, phone bills or rent, is unlikely to be looked on favourably by a home loan lender. After all, if you can’t pay your phone bill on time, how can a bank be sure that you will be able to repay your mortgage? Make sure you are on time with all payments in the period up to applying for your home loan.
5. Stay positive, even if you miss out
Buying a home can sometimes be long and arduous journey, and it’s common for a buyer to miss out on a property they were sure was ‘the one’ only to find another they prefer further down the track. It’s called ‘house hunting’ for a reason.
Luckily, Spring is a busy time for new listings and over the next few months, it’s likely that new properties will be available to view each week.
If you’d like to understand how much you could borrow to put towards your Spring move, use our Borrowing Power Calculator. Or, if you have any questions about any of our award-winning home loans then we’d love to hear from you - just contact us.
Published September 2020