10 tips on seeking home finance
Whether it is your first home, an upgrade from your existing home, renovations or refinancing your existing home loan, speaking to a mortgage broker is a step in the right direction. A mortgage broker is able to meet at your premises or at a place convenient to you. Through discussions they will be able to understand your financial circumstances, your future goals and your loan requirements.
They have the ability to show you a range of products from a variety of financiers including both banks and non-banks. From there you will be able to narrow down to the correct product that will meet your needs.
- Arrange supporting documents to demonstrate a deposit (i.e payslips, group certificates, credit card statements and savings accounts, to name a few)
- Borrow within your means. Determine what your monthly income and expenditure are and then discuss with your mortgage broker your borrowing capacity. Ensure that no more than 35% of your gross income goes towards paying your loan and you should qualify with most financiers.
- Check if you qualify for any government allowances. If you are over the age of 18, an Australian citizen or permanent resident and about to buy your first home, you may qualify for the First Home Owners Grant (FHOG) which is a once off payment from the Federal Government. These funds can be used towards the deposit or other associated costs of your purchase. There is also State Stamp Duty exemptions and concessions available which differ from state to state.
- If you are looking to purchase a block, ensure you speak to a building designer in order to determine whether your proposed home will fit on the block. You must also make sure you have enough funding to build. Too often people buy a block and are unable to build their dream home because either the plot ratio exceeds council approvals or they cannot source funding as their borrowings exceed their capacity to service the loan.
- Ensure you have plans, specifications, a fixed price contract or a contract to build to provide your mortgage broker, as financiers will need to see these to engage with a licensed property value.
- The financier will also need to see council approvals and builder’s insurance before any funds are released.
- If you are looking at refinancing, there are some fantastic offers in the finance market. A simple review could save you thousands in interest or reduce your loan term.
- Consider consolidating all your credit cards (average interest rate of 16% pa) and roll them into your home loan and you could be saving hundreds of dollars per month in interest. Ideally, you will only have one card to use for emergencies thereafter.
- Make sure you take out a Home & Contents insurance policy to cover for any form of damage to your home. It is normally a requirement by your financier to have this in place before they draw your loan. You also need to advise your insurer that there is finance on your property.
- Insure yourself too! It is best to speak to a licensed Financial Advisor on products like life insurance and income protection insurance. They give you peace of mind that your assets and loved ones will be protected.