5 Steps To Get Ready To Buy A House

5 Steps To Get Ready To Buy A House

Buying a house is undisputedly one of the highest risk and highest stress purchases we can make. It’s
still the Australian dream to own a home, but getting into the market isn’t always an obvious
process.

To smooth the transition, consider the 5 Steps to help you get ready to buy a house.

1. Save a Deposit

The deposit you have will dictate the price of the house you purchase. Banks prefer a 20% deposit
for a home loan. This doesn’t mean you won’t get approved at say 10% or 5%, but approval depends
on a couple of factors.

 Can the bank easily sell the property if you default on their loan to recoup their losses? This
will depend on the condition of the property, it’s location, and your home loan application. If
you have a deposit of less than 20% you will most likely need to pay mortgage lenders
insurance.

 What type of loan are you looking for? Are you a first home buyer? Are you building a new
house in an estate? Depending on your lender, whether you buy established or build, you
could be eligible for a first home owner’s grant, cash incentives from builders, and very low
deposit loans.

Employing a broker to help you navigate this landscape will be very beneficial to you. They can
advise you on all your options for your situation and determine what sort of deposit you will need to
come up with.

2. Check Your Credit & Account Conduct

The lending institution you are applying with will run a credit history check.
In addition, if you a rejected for a home loan based on any of these credit issues that too will go onto
your credit history. With that in mind, try to avoid applying for a home loan until you have all your
affairs in order.

 Make sure you are not in arrears on any repayment plans.

 Try to resolve any unpaid tickets or fines.

 How is your account conduct? If you have utilities and subscriptions that are directly debited
from your accounts, do an account conduct check. Banks will generally prefer at least 12
weeks of no rejected payments in your accounts.

 Make sure if you have any credit card debt you are paying it off regularly.

It’s important to understand here, that if you have a good savings history and a good deposit, one
small credit hiccough will not necessarily disqualify you. The goal is to remove as many obstacles as
possible so you can show the lender you are a sure thing.

3. Decide What You Can Afford

What can you reasonably afford? This is a very important question to ask yourself. It’s possible you
might be able to borrow quite a bit more than you can afford.
You need to look at your situation and consider all the variables.

 What is the total income of the household?

 What costs are already included in your budget? What is left over to pay a mortgage? If you
are paying rent and intend to move into the new house straightaway, you can remove your
rental payment from your budget.

 What income changes do you expect in the future? Are you expecting a promotion or
income increase? Is there a partner who may be out of work due to maternity leave or
redundancy?

 Also, what sort of lifestyle are you hoping to live? If all your money is going to getting the
highest mortgage you can afford will there be anything left over to enjoy life with? Or
continue a savings account?

 Interest rates are very low right now, and if you end up with a variable interest rate on your
loan, it’s possible your payments could increase at any time in the future. Can you afford to
pay any unforeseen repayment increases?

So take at look at your household budget, consider what variables might be in your future and weigh
up the possibilities. Then you can come up with a number that you’re comfortable with. Knowing
this number in advance will save you a lot of time and heart ache.

You won’t have to waste time looking at houses you can’t afford and it’ll be easier to get approved
for a loan as you won’t have maxed out your borrowing power.

4. Find an Agent

Most people don’t employ a real estate agent to find a house, but you might be missing a trick. An
agent can help you find your house in ways real estate websites can’t.

Most people still use agents to sell their homes. What this means, is your agent will have access to
housing stock before it gets listed for sale. If you’ve already told your agent what you’re looking for,
as soon as a vendor lists a matching property with them, they can take you to see it.

This might potentially save the vendor and agent on advertising fees, and subsequently you might
get a better deal on the property. Not to mention you’ll get to see it before anyone else does.

Having an agent act for you in the purchase of a property means you’ll also have access to their
negotiating skills and their network of professionals. Your agent will be able to refer you to building
inspectors, settlement agents, and potentially get you a better price on the property by negotiating
on your behalf.

5. Make an Offer

Now it’s time to make an offer! You’ve found your property and you’re ready to buy. In theory, you
can offer any amount that you want, but it’s important to be seen as a serious buyer.

Ask your agent what a reasonable offer might be, and ask if they might do a check on comparable
properties in the area. This way you can get an idea of what similar properties have sold for.

If you’re offer is reasonable and considered, it is more likely to be accepted, saving you time and
stress.

Your agent will also be able to advise you on what conditions to put in your offer. Will the property
be subject to a building inspection? Is the property old and will the wiring need inspection? Ask your
agent how to word these conditions appropriately.

Buying a house is exciting, but it’s important to do it right from the start. If your deposit is good, you
are a good candidate, and you’re purchasing a house in your budget, then the process should go
smoothly and easily. Get a great broker and real estate agent on your team, and you can’t go wrong.

 

Nic Di Rosso | Director

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