FIRST HOME BUYER DO’S AND DON’T’S
November 10, 2019
WA property prices are as low as they have been in 12-13 years.
Property is no different to any other asset class in that if you want to maximise the potential of your asset growing in value, timing of purchase is essential.
So, a big shout out to First Homebuyers – the time may be now.
How do you get yourself into the absolute best position to buy your first home? Read on……
Step 1: Meet with a Better Choice Mortgage Broker
Before you start looking at purchasing or building a home you need to work out
- Your borrowing power
- The deposit you will require
- What government rebates you may qualify for
- The merits of buying established or building
- What will your loan repayment be
- What else you need to do to get your financial house in order
If you have been financially disciplined and your mortgage broker determines you are ready to buy right now, the broker will suggest you submit a home loan pre-approval application.
Get your finances in order before you find your property. It takes a huge amount of stress out of the process. The beauty of a home loan pre-approval is:
- It gets your finance sorted before you find the property and any possible finance issues are dealt with.
- Your mortgage broker or lender does not charge a fee to process a home loan pre-approval.
- A home loan pre approval lasts for 3-6 months.
- A home loan pre-approval does not obligate you to anything. If you change your minds about buying a property, the finance offer will lapse and neither your mortgage broker or the lender will charge a fee.
Do’s and Don’ts
Now that you have met with your mortgage broker and together you have worked out a plan to get you buyer ready, there are a number of do’s and don’ts, i.e.
- Do keep saving money regularly in a bank account in your name solely. If you have been saving money in your parents’ bank account, stop now. Transfer the funds from your parents’ bank account to your bank account. Money saved in your parents’ bank account is not treated as genuine savings by the lenders.
- Don’t take on any debt. Don’t take on any credit cards, store cards, zip pays, after pays, personal loans or car loans. Short term credit is expensive and your credit score is marked down if you have a number of short-term credit facilities.
- Don’t keep changing jobs. Lenders and mortgage insurers love job stability. Numerous employers in a short period of time marks down your credit score.
- Keep paying all of your bills on time. Lenders have so much information about how you conduct your financial matters, they even know if your pay bills late. Avoid getting any black marks on your credit file.
- If you have an online betting account, either delete it or minimise your use.
- Reduce your overall living expenses. Lenders and mortgage insurers are forensically going through your bank statements to ascertain your true monthly living expenses. “Living it up” just prior to your home loan application may severely impact your borrowing power, so you may want to ease up a little on restaurants, bottle shops, concert tickets and that friend’s wedding in Bali.
- If you plan on becoming self-employed you will have to trade for at least one complete tax year before you think about making a home loan application.
As we all know, the regulators have had the lenders under a bright spotlight for the last 2-3 years, making sure they are not recklessly lending money to people.
Therefore, it is more important now than ever to demonstrate to the lenders that you are a credit worthy person deserving of a home loan.
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