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A Comprehensive Guide to Buying Property in Australia

So you decided to buy a house. Out of all life’s decisions that you may take, buying a house would be one of the most complex and unnerving ones. While buying a property, the one thing that you cannot overdo is research. So before jumping right in, why don’t you go through our comprehensive guide to buying a property?

  • Valuate your decision

Since buying a house is probably the largest investment that you’ll make, it will not hurt to think twice. What will your lifestyle be after a few years? Do you have a job security of more than 12 months? High job security will present you as a low-risk candidate to the lender. Are you planning to have kids? You should be aware that each dependent will reduce your borrowing amount by $50,000 to $ 60,000. Will you stick around in the new place for at least the next 5-6 years to build up sufficient equity? If not, then it’s better to wait or rethink.

  • What is your budget?

This amount will vary according to the lender you choose and many of them offer online calculators to evaluate your borrowing limit. You can also hire a mortgage broker who will advise you on the amount that you can expect from lenders based on your income, assets, debts, expenses, dependants etc. You could apply for a copy of your credit file to review your financial status. Try to minimise your debts and reduce the limit on your credit cards. This will help you to secure a higher amount. If you have bad credit then you may have to contact lenders who specialize in bad credit loans.

It is advisable to come up with a 20% deposit to avoid paying lender’s mortgage insured. Though there are low deposit mortgages available, the mortgage insurance will be much higher.

  • Costs Involved

An accountant or lender will let you know of the actual costs that you will incur. Here is a list of expected costs:

i) Stamp duty – Amount will vary depending on the state you want to live in and the purchase value of the property

ii) Legal charges – Depending upon the legal work involved often amounting $2000-$3000.

iii) Loan application fees – Depends upon the lender. For foreign applicants, this may be up to 4% of the loan amount.

iv) FIRB approval fees – for temporary residents or foreign investors with no Australian visa ( Not applicable to residents)

v) Building and pest inspection fees

vi) Lender’s Mortgage insurance

vii) Building insurance

viii) Other costs such as utilities, moving costs, council rates, mortgage protection insurance, repairs and maintenance – approximately 0.5% of the total property value.

  • Location research

Buying a home is an emotional process. However, it is important to stay focused till the final settlement. Listing down your priorities will help you focus on them. Following are some of the questions that you should ask to determine your must-haves:

What is your priority in choosing a location? The location should be a balance between your requirements and lifestyle choices. Would you like to live in some business area or regional area? Would you like to live close to your workplace? Are there good schools around your home? Is public transport easily available?

You may feel staggered by the huge amount of information that you’ll have to digest before making a location-specific choice. But due perseverance will help you make the right choice. It is always better to make a conscious and well-informed choice rather than a hasty one and then regretting it later.

  • Property Type

You should have a rough idea of the size of the house that you are going to purchase. How many bedrooms and extra rooms like- nursery, study room, guest room will you need?

Do you want a house or unit?

  • Probing Mortgages and Interest Rates

What kind of interest rates would you prefer? Fixed or variable? A fixed interest rate will enable you to know exactly the amount of repayments. If there are chances of interest rates falling in the near future, then it’s better to go for a variable interest rate. Ideally, you will want a home loan with a lower interest rate. This will help to maximise savings. There are many competitive loan features in the market that help to save money. Does your lender offer free redraw facilities?

An all-in-one loan or 100% offset account will help if you have surplus disposable income.

  • Getting Approved

i) Pre-approval – This means that the lender will approve your loan when you find the property you want to purchase.

ii) Conditional approval – The lender will verify your documents and perform checks on your income and documents.

iii) Full approval – Once the deposit is paid, you will sign a binding contract with the lender

  • Inspections

Since you have so many expenses to handle while buying a house it is likely that you will be tempted to skip building inspections. Believe us, this would be a grave mistake. There are many defective structures out there and you don’t want to end up with one of those. Following are some inspections that you will have to carry out.

  • Building inspections(for houses), Strata inspection (for units)
  • Pest inspection
  • Electrical inspection
  • Checks on whether the fittings and structures that come with the house (carpets, furniture) are in good working condition.

These inspections are likely to cost you about $200-$600 each. So it’s better to get them done only if you are going to buy a particular house. Else, you can check for damages or repair works yourself.

  • Check the walls and ceiling for cracks or moulds
  • Test the doors and windows for any repairs
  • Check under the sinks for any defects in the plumbing system
  • Have a quick look at the neighbourhood, whether it suits you well.

These checks will help you to make a final decision whether you can adjust the repair costs in the purchase price or drop the deal and look for something better.

  • How are you planning to buy your property?

In Australia, you can buy your property through private treaty or auction. When the property owner fixes a price and the real estate agent negotiates the price with potential buyers – it is a private treaty. When the buyers come together at a fixed location and time and bid for the property – it is an auction. The highest bidder gets the house provided he has 10% of the property price available for a deposit.

You have to be cautious while making an offer. Don’t lowball to less 10% of the asking price else you may miss out on the deal altogether. It’s always advisable to verbally inform the real estate agent about your offer.

  • Settlement

It is now time to exchange contracts. It is better to have a solicitor or conveyancer to have a look at the contract documents before exchange of contracts. Once you are satisfied with the contract details, you can pay the deposit. Then you’ll have a cooling off period of 6 weeks before settlement day (not applicable if the sale is made by auction). During this time you can arrange finances and get the building insured. Finally, settlement day had arrived!! You will now have to pay the balance purchase price and stamp duty and get the property transferred to your name.

Now, you have a place to call your own- your home !! Cherish this moment because you’ve earned it !! The house is now ready for occupation. You may have made some grave mistakes along the way. But that’s fine. You have come a long way and learnt a lot about the property market. After all, life is about making mistakes and learning from them.



Let’s Talk Money (read: Mortgages)

So, you woke up dreaming of that house again!! The one you always wanted to own… But are you jittery of taking the leap? Are you a novice when it comes to handling finances and mortgages? Then look no more… We are here (at your fingertips) to help you in your quest.

Tips on buying your first property – What not to do…

It’s your dream… to have a place to your own name, a place you can call home. But many first time buyers end up with purchases which they would later regret due to small errors. Don’t you worry though… we’ve got your back! Though this list is not exhaustive, here are some common mistakes to avoid while buying your first property

  • Skipping on the research part
    You know what kind of place would suit you the best. Choosing the correct locality with all the necessary facilities nearby is crucial. Personally visiting the sites will also be helpful. Analyse the market value of the properties that you have shortlisted. Getting a good property will require both your time and money.
  • Getting emotional
    Though falling in love is good for you physically, it may not be so good if the object of your love interest is a property. Emotions make the price of the property go high up. So even if you MUST HAVE that house, if it’s overstretching your budget, keep looking.
  • Going overboard
    Make sure you have the adequate finance before you settle for a property. Yes, ‘a bit more expensive’ place will look attractive to you, but it’s not worth the risk of losing your sleep over repayment of loans later and putting your family through the turmoil
  • Forgetting about extra costs
    Owning a place does not just mean replacing rent with a mortgage. There are many other costs involved like inspection costs, moving costs, water rates, insurance costs etc. It is wise to keep aside a part of your finance for unexpected costs
  • Overlooking the contract
    Read the contract documents carefully. If there’s anything missing, get it added right away. It’s better to be safe than sorry
  • Thinking that a new house means all new furniture and appliances
    Well, that’s not the case. The trendy furniture can wait for some time till you get settled in your new home.
  • Asking opinions from all your relatives and friends

The adage rightly goes, ‘Too many cooks spoil the broth’. Everyone will have an advice for you when it comes to real estate. Don’t get confounded by all those dos and don ts. The only way to end up with a good buy is to put in your effort and time. Investing in a good broker will definitely help. (Pick us!!)

Refinancing – What is it all about?

You may find that everyone around you (read: irritating colleague to the pesky next door neighbour) is talking about refinancing. So what is this all about?

Since you are not ‘married’ to your bank, you can actually keep looking for better options w.r.t your home loans. Simply put, refinancing your home loans means changing your existing loan for a new one with any bank or lender with lower interest rates or fees.

Why should you go for refinancing your home loan?

  • Better interest rates

Today, the mortgage market is competitive. The loan that you got a few years ago may not be the most viable deal today. So, it’s better to be on the lookout for better interest rates. That way, you can not only save money but also pay off your loan faster.

  • Renovation

Do you have some equity in your property? You can draw on that amount to pay for renovations. Refinancing will help by increasing the cash flow during a renovation. Also, the current home loan may not support construction.

  • Consolidate your debts

Like many true blue Australians, you may have debts like car loans, personal loans, credit card loans etc. You can consolidate all these loans into a single more affordable payment by reducing the overall interest rates that you are paying. But there is a downside – you should check the new loan term and the final interests costs after consolidation.

  • Fixed rate on your home loan is expiring

When you are nearing the end of your fixed rate period, it is better to look out for refinancing since the banks will automatically switch you to a higher variable rate. Refinancing will help you to get back to a fixed rate or refinance to maximise your interest rate discounts.

  • Investment

You may want to buy another property or shares and if you have enough equity in your home, its a good practice to tap this equity into your investment.

So what do you think? Is refinancing the right thing for you? Refinancing comes with a ton of benefits but you should always remember that there are costs involved in refinancing as well. You need to make sure that you are getting the best deal possible – i.e the best combination of rates and fees.


Bad Credit Home loans

Bad credit does not mean that you are a bad person. This may be the result of wrong decisions or unforeseen incidents. You may have been rejected by many banks because of your credit history. We, however, believe in second chances. We will help you find the right home loan even if you have a poor credit.

Following are a few points to help you get approved:

  • Look for a specialist lender who will go beyond the numbers (Don’t worry, we’ll help you with that) or who does not look at the credit scoring
  • New lenders will get a positive vibe if you show that you have cleared off the outstanding debts before applying for a loan from them.
  • Stay away from Lender’s Mortgage Insurance (LMI) – If the amount you are about to borrow is more than 80% of the value of the property then the mortgage insurer comes into picture who insures the lender in case you commit a default. The criteria of the mortgage insurers tend to be stricter than the lender… So its better to avoid them.
  • Having a fixed source of income makes you a low-risk candidate which will help you find better rates
  • Do not apply for many loans at the same time as it will all be listed in your credit report and may stand against you in your qualification for the loan that you desire.

This is where we come into the picture. A good mortgage broker (us of course..!!) will help you get the right loan from the right lender after taking all our credit problems into consideration. We can provide the right and the best rates for you in the country by considering your current and future aspirations because we believe in sustainable growth. We can grow only if our customers grow