So, you’ve decided to buy your first home or your next property….. now the daunting task of where to start!? The very first thing I recommend you do is get your finance pre-approved. The banks have really tightened up since the Royal Commission so the process takes a bit longer than it used to, and they are wanting a lot more information than they ever have. Due to this, making your offer unconditional (not subject to finance) is becoming really attractive to sellers. We are finding many sellers are opting to take the lower offer due to the fact it is not subject to finance. This is a real sign of the times with many buyers having their finance rejected or the process taking a lot longer than it used too.
Personally, my preference or suggestion would be to see a mortgage broker. Even if you have banked with the same bank for many years, get a broker to check that the deal the bank has offered you is the best one for you. Brokers deal with many lending institutions and have lots of products they can offer or recommend to you. Banks tend just to have their few options which may or may not be the best for your situation. The service of a broker is FREE to you. The banks pay them a referral fee once your loan has gone through.
The main thing you need to do is organise a full pre-approval where you have to submit all your documents. It is important to note that once you have a pre-approval from the bank or lending institution that you will get a letter advising of this. I’d suggest you ask them what the maximum is you can borrow – then you know exactly where you stand when making offers. Please be aware that pre-approval is still subject to the valuation on the property you have purchased and your mortgage insurance (if applicable).
You do need to be aware that “borrowing capacity” is different to pre-approval. Just because you earn enough income to have a certain “borrowing capacity” does not mean you can actually get a loan. Along with your income, the banks will also look at your savings. So, if you are a first home buyer and have no or little savings then they are unlikely to lend you money for a house despite your income.
If you already have a house and you are looking at upgrading or buying an investment property then it is important, as well getting pre-approval, to also ensure you work out how you will pay the deposit for your next property. Pre-approval does not give you access to money for a 10% deposit. So, there are a few main options:
Once you have pre-approval and your deposit organised, you’re ready to make an offer! Happy House Hunting!! If you’d like a recommendation to a fantastic Mortgage Broker give me a call 0408 585 319.