Whether you’re a first-time buyer or looking to buy additional property as an investment, it’s wise to do some spring cleaning to ensure you’re in the best possible position to land the deal you want.
“When it comes to applying for a home loan, it’s a good idea to plan well before you’re ready to buy a property,” said ANZ Home Loans Manager John Campbell.
“As part of the home loan application process, the lender will want to know what you are earning, details of your large and regular expenses and other debts you already have. [like credit card balances or personal loans] so that we can determine how much you are borrowing while comfortably meeting all of your other spending commitments.
First, seek advice. Mortgage Choice broker Paul Robinson says speaking with a broker is a great place to start.
They can review your finances and suggest changes that could be made to improve your financial situation and your ability to borrow.
“While there are great tools online, talking to someone who will be unbiased can give you a cross section of lenders to fit your scenario and know your borrowing capacity,” he said. declared.
Next, make a budget and stick to it, because not only does it put you on the path to saving for a deposit, but it’s also your chance to show the lender that you’re committed to a schedule. savings.
“An effective savings plan starts with establishing a realistic budget,” Campbell said.
“Popular theory is that the best budgets follow the 50/30/20 rule where 50% goes to your needs, such as the costs of your daily life, 30% to your wants, such as the things you love, and 20 % to your goals, which could be financial, vacation or other.
Don’t forget to check your expenses, like reviewing any insurance policies you pay for, like health or car insurance, and shop around for a better deal.
Look at regular monthly expenses — streaming services, gym memberships — and assess what you can live without.
If you use buy-it-now, pay-later services such as Afterpay or Humm, cut the cord.
“It’s good to check your credit report regularly because it shows that no one is taking advantage of your reputation and score,” Robinson said.
Next, give yourself time, as lenders won’t just look at your last month’s savings deposits, so give yourself time to save regularly to give yourself the best chance.
“As for the real savings, those are usually looked at by the balance you had almost three months ago,” Robinson said.
“If you had $30,000 in your account three months ago but today you have $50,000, they will consider the $30,000 more genuine than the $50,000 because it could be a gift from nah, or help from mom and dad.”
Finally, prepare for the future and plan ahead and ensure that if your personal circumstances change or unforeseen events occur, you can still meet your financial commitments.
Mr Campbell suggested using a free online calculator to find out how much you can comfortably borrow and calculate what your regular repayments might be.
“Remember that there are other costs to consider in addition to the security deposit and mortgage repayments, including stamp duty, home and contents insurance, legal fees and move,” he said.
– WITH REALISTATEVIEW.COM.AU