28 January 2020
Think about the next 5-10 years. Is home ownership in the picture? Maybe you want to buy shares, travel or even get an investment property while you rent (also known as ‘rentvesting’).
Talking to friends and family who’ve already bought property can give you an idea of what’s involved. You’ve probably got your eye on the property market and social media too. Talking to an expert like a Home Lending Specialist or Broker can also help you understand your options and answer any questions about the home buying process.
But ultimately, it comes down to what’s right for you and your future goals. Working out what’s important to you can help you cut through the noise and make a more confident decision.
"Property is a very individual and unique thing. The advice can only go so far. You need to be clear about what’s important to you.”
– Gavin Hegney, property valuer and industry expert – see full article
Now’s the time to get real about your financial situation. Look at your bank e-statements or online banking to see where you’re spending and where you can save.
Start paying off your credit cards, store cards and personal loans. Got multiple debts? Consolidating them could make them easier to manage.
Also check your credit score – it’s something lenders look at when you apply for a home loan. You can then take steps to build a healthy credit report if you need to.
To kick-start your savings, roughly estimate how much you’ll need for a deposit and other home buying costs (like stamp duty).
Generally, a deposit of 20% of the property value is ideal, but not always needed. In some cases, you may only need 5%. Keep in mind that if it’s less than 20%, you’ll usually need to pay Lenders’ Mortgage Insurance (LMI). To work out potential costs outside the deposit, use our online home loan fees calculator. You can then set a savings goal in our app and track your progress 24/7.
We can help with your savings plan to get you those new house keys even faster.
Different property types come with different considerations depending on your goals and financial situation. For instance, are you looking for your forever home or one to get you on the property ladder? A house or an apartment? A fixer-upper or one that’s brand new? Perhaps you’d like to build a home. Our handy checklist can help you weigh up the pros and cons and work out what property type might be right for you.
Also consider whether you need to be near transport, schools or other amenities. To get a feel for certain suburbs and property types, look at real estate websites, talk to real estate agents and go to home opens.
Our Home Lending Specialists can give you as many free property reports as you want with handy info about a property itself or suburb as whole – no strings attached. Our Mobile Lending Managers can even come to you.
Be aware of less obvious costs associated with each property type - like strata fees, council rates, maintenance costs and utilities.
Now you have a better idea of what property types suit you, you can more accurately work out how much you’ll need for a deposit and other upfront home buying costs. This can motivate you, as you’ll have a firmer figure to work towards. Online calculators, lenders and Brokers can also give you an idea of how much you could borrow and your potential home loan repayments.
It can also pay to check your eligibility for financial help like stamp duty exemptions or other government concessions, including the First Home Owner Grant (FHOG) and First Home Super Saver (FHSS) scheme. If you’re eligible, it could mean you don’t need to save as much.
With more ‘real’ figures, you might rethink your property type, adjust your budget or consider alternative ways to buy a home (like getting a home loan guarantor, buying with friends or buying an investment property in a cheaper area while you continue to rent).
It’s also smart to brush up on the home loan lingo and understand how different home loan features might suit you (like fixed and variable rates, offset accounts and redraw facilities). Check out comparison sites and meet with lenders or Brokers – they can help you find the right home loan. If you're planning on building, ask lenders and Brokers about taking out a construction loan.
Loan to Value Ratio (LVR) is the total percentage of the property value that you borrow. For example, if the property is worth $400,000 and you borrow $320,000, your LVR is 80%.
Lenders’ Mortgage Insurance (LMI) is a type of insurance that’s applied to your home loan if your deposit is less than 20% of the property value.
Before you start house hunting, it’s smart to get pre-approved finance. Also known as conditional approval, it’s a letter from your lender that tells you how much they’re likely to let you borrow based on your financial situation, objectives and needs.
Pre-approved finance gives you a clear idea of what you can afford and puts you in a strong position when you make an offer on a home. Having conditional approval is also a requirement to be able to bid at some auctions.
When looking for a property you love, talk to real estate agents, go to home opens and get free property reports from our Home Lending Specialists. They'll show you the median price for units and houses in the area – including a ballpark price range for the property you want.
“Building relationships with agents could mean you get info before it hits the real estate websites, like those properties that don’t even go to market.”
Michael Keil, Director and Auctioneer at the Agency – see full article
Your pre-approved finance, coupled with your knowledge of the area and property, come in handy when working out how much to offer on a property.
When you make an offer through a private sale, you usually sign a contract ‘subject to finance’, property inspections and timings – including a settlement date. Meet with the sales agent to help you prepare a formal written offer.
Bidding at auction? Carry out an inspection beforehand and talk to the agent about your obligations if you’re the highest bidder. Winning bids lock the buyer into the sale, and a 10% deposit is usually required upfront, so it’s important to determine your ‘like to pay’ and ‘have to pay’ price first and stick to it during the auction.
Offer accepted? Carry out the necessary property and pest inspections, and apply for full loan approval with your lender. You can track the progress of your Bankwest home loan application in real time with our Home Loan Application Tracker.
Your lender will assess your application and order a property valuation. This can take a week or two, depending on your situation and the settlement period.
Property settlement is the legal process of transferring ownership of a property from seller to buyer. To put it in more exciting terms, it’s when you become the new home owner and pick up the keys.
Get in touch with a settlement agent (also known as a conveyancer) to help you prepare. Ask your real estate agent to recommend one, and get a few quotes from reputable companies. Make sure they’re in writing and outline all fees and charges, including any government costs.
In the lead up to settlement, you’ll need to apply for any applicable grants or concessions, prepare the settlement documents with your settlement agent or solicitor, and arrange home insurance.
Your lender will send you the contract documents. Send them back with your building insurance documents. The contracts are then verified and settlement booked. If you’ve applied for a home loan with Bankwest, you can use our Home Loan Application Tracker to get updates on your application milestones along the way.
About a week before settlement, you’ll have a settlement inspection to make sure the property’s as you expect.
On settlement day, you’ll pick up the keys and become the proud owner of a new home.
As you’re preparing for settlement, you’re probably working your way through a moving in to-do list. You’ll be arranging movers, changing your address, giving notice on your rental property, setting up utilities and making sure your salary is going to the right account so you’re ready for any direct debits.
Straight after settlement, you’ll get a settlement statement, and your new loan will be up and running. You’ll also be adjusting to a new budget that accommodates your home loan repayments. Check when your first repayment is due (it’s usually one month after the settlement date). Handy ways to make sure you don’t miss it include marking it in your calendar and setting up direct payments.
You could also start saving money on your mortgage by using an offset account and making extra repayments.
Even little changes you make now to save on home loan interest can have a big impact on how much you end up saving on your mortgage – and the time it takes to pay off.