If you’re considering buying a home, our Home Loan Specialists are here to help.
Things to consider when you buy a house
Whether you are buying your first home or your next home, there is a lot to consider. Could you own your own home sooner than you think?
How to buy a house
Being prepared before you buy a house is a good idea. Find out all you need to know, so you are ready when you find the right house.
3 reasons to stop renting and buy
Home loan repayments are probably more affordable than you think.
Calculate what you’re currently spending on rent every month and compare what your repayments might be on a home loan. Our repayments calculator can estimate your home loan repayments for you. You might be surprised to find there’s not that much difference in the payments.
When you purchase a house, usually the house will increase in value over time. So as you make your home loan repayments, you are investing your money towards an asset that may appreciate over time. Once your property value has increased, you can potentially use the additional equity for other uses, or simply enjoy a nice profit if you sell.
You can make changes to your home as you wish.
When you’re renting, you don’t have the freedom to mount your TV on the wall, update the carpet or recreate that gallery wall you saw on Pinterest. When you’re living in your own home, you can make all the changes you want to reflect who you are.
Making sense of first home buyer jargon
These change from state to state, but a government grant is money you could be eligible for to help you with the costs of buying your first home. One common grant is the First Home Owners Grant, often abbreviated to FHOG. If you’re building your home, there may be other building grants you can apply for, so this is worth investigating if you are unsure whether to buy an established home or build your own.
This is a tax that is charged for your legal documents to be stamped. Literally. Depending on your circumstances and where you live, you could get stamp duty exemptions (meaning no stamp duty!) or concessions (discounted stamp duty) when you buy your first home. The laws on stamp duty are always subject to change, so please check your state government’s housing website for the most recent information. You can also use use our stamp duty calculator to find out more.
This stands for the Real Estate and Business Agents grant. If you’re buying an existing home that meets the REBA criteria – and you’re buying from a licensed real estate agent, you could be eligible to receive a REBA grant to go towards the costs of buying your new home.
This is the name given to the process of transferring a property from one owner to the next. You’ll need a settlement agent or licensed conveyancer to do this for you. They will also ensure that all outstanding bills (such as water and land rates) are paid up in full by the existing owners before you settle.
Loan to Value Ratio
Your Loan to Valuation Ratio (LVR) is calculated by taking your loan amount and dividing it by the value of your property. If your LVR is more than 80%, you may need to pay for Lenders Mortgage Insurance.
Lenders Mortgage Insurance
This is commonly mistaken as a home insurance policy: it’s insurance to protect your lender if you have trouble with your repayments in the future. Lenders Mortgage Insurance (LMI) can be an added expense when you’re buying your home, but you can avoid it if you save more than 20% of the value of your property to pay as a deposit.
It pays to do your homework and make sure you understand what’s involved in buying your first home. Make use of our tools and calculators or read about what’s involved when you make an offer on a home.
What do you need to look for in a property?
Arguably the three most important factors of a home – location, location, location! Everyone has heard the saying, “buy the worst home on the best street” but this doesn’t necessarily need to be the case. When choosing a location to live in, consider your proximity to the things that are most important – work, good public transport options, freeway access, lifestyle (schools, cafes, parks etc.) and friends. While you may pay a little extra to live closer to these things, in the long run you will save money on transportation.
Stick to a budget
You need to work out what you can realistically afford. Your mortgage repayments may be very similar to what your current rental payments are, but it’s important to remember that when you own your own home, there are other costs to consider that you previously didn’t need to worry about when renting, such as council rates, strata fees and property upkeep. You don’t want to become a slave to your mortgage, you want to maintain a lifestyle, so make sure you work out your budget before you buy.
Size does matter
When considering size – plan ahead. There are so many different property options to choose from – apartment, villa, duplex, and townhouse, so think about how long you plan living in this property for. If having a bigger family falls in the middle of this time period, it may be worth considering buying a property with an extra bedroom, or the extra land space for a possible extension. Learn more about renovations to see if it is something you would consider, or if buying that little bit bigger house upfront may be beneficial.
At Bankwest, we have a dedicated team of Home Loan Specialists that can provide you with a property report. A property report can provide you information on a property itself, or a suburb as a whole, including information about the local amenities, average house and unit sales, population mix plus much more. Make an appointment with a Home Loan Specialist.
Are you ready to move?
You’d like a bigger home.
After a few years, your situation may have changed – e.g. you might have a new family or pets to think about – so it could be worth upgrading to a home with more bedrooms and more outdoor or living space. You might be planning on a bigger family later on, so a home on a bigger block may give you options to extend.
You’d like to experience living in a new area.
There are many reasons you might want to live in a new area. You might want to live closer to work, closer to certain schools or even being closer to restaurants and bars for a lifestyle change.
You want to expand your property portfolio.
You might be able to keep your current home as an investment property and rent it out. This might involve applying for an interest only home loan for your investment property and buying a new home to live in with a new home loan.
You dream of building your own home.
If you have a vision of exactly the kind of house you’d like to live in, you might love the chance to build your own home.
When you decide to buy a new home, it’s a good idea to explore your options and work out some long term goals you’d like to achieve. Find out why you should choose Bankwest for your new home loan.
What deposit do you need to buy a house?
Traditionally, when buying a home you need to provide a 20% deposit based on the purchase price of a property, in addition to any stamp duty and fees that are applicable. Our stamp duty and fees calculator will help you budget for the additional costs you may need to consider when purchasing a property.
At Bankwest, we understand that it can be difficult to save a large amount, especially when you have competing expenses like rent and board. To help get you in to your home faster, we can lend you up to 95% of the property price on some home loans – which means you would only need to save a 5% deposit. Whenever a bank lends you over 80% of the property price, you may need to pay Lenders Mortgage Insurance (or LMI) which protects us in the event you default on repayments. But don’t worry, you can include this in your loan amount, so you don’t need to save any additional deposit.
You may have an immediate relative who is in a position to help as a home loan guarantor towards your loan. Find out more about buying your first property with our Family Guarantee option.
Buying a house - the finance process
1. Initial conversation
So you have decided it is time to buy a house. Where to start? It is a good idea to first find out how much you can borrow, so you can be realistic about the houses you are looking for. It is also a good idea to have an initial discussion with a Home Loan Specialist, who will make sure you understand what is required to apply for a home loan, such as; deposit and fees you need to plan for.
2. Conditional Pre-approval
When you get serious about finding a property, it is important to arrange a pre-approval for two reasons. Firstly, so you can search for properties within your budget, and secondly, it is common for real estate agents to want to know that you have conditional pre-approval before you make any offers. You can make an appointment with a Home Loan Specialist to arrange a conditional pre-approval, which lasts for three months. If you don’t find a property within the three months, that’s OK because we can extend your conditional pre-approval for a further three months (a new credit check will be completed).
3. Full application
So you have had an offer accepted on a house, what’s next? Now is the time for the bank to formalise your pre-approval. It is at this stage that the bank will require you to provide documentation to support your application (such as income details, copies of your accepted offer etc.). On your contract of sale, you will stipulate how long you require for your finance to be approved. This is usually between 21 - 30 days, but is varied based on your situation.
4. Government grants
When you have submitted your full finance application, it is a good idea to start applying for any government grants you may be eligible for, such as the First Home Buyers Grant. These are state based grants, so check out your state’s Office of State Revenue website to find out more information and download the application form. Your Home Loan Specialist can help you to complete the paperwork, and we can even assist with the processing here at Bankwest.
5. Formal approval
Once the bank has assessed your application and completed a valuation on the property, if approved, we will provide you with an approval letter and send out your home loan contracts. These will need to be signed properly, so your Home Loan Specialist can take you through them. You may also want to obtain your own independent professional advice if you don’t understand anything before signing. Your approval letter is what you will provide to the real estate agent before the finance due date to secure the purchase.
It is strongly recommended that you engage a settlement agent, conveyancer or lawyer to assist you with the settlement of your property. At settlement, not only do you exchange payment for keys, but a settlement agent arranges your name to be placed on the title and ensures that all expenses (such as rates) are paid in full up to the date of settlement.
Once you have gone through these stages, congratulations, you own a property! We will write to you to confirm everything is in place for your loan, and your first repayment will be due one month after the settlement date. To make your banking easier, you can choose to make up your home loan repayments weekly, fortnightly or monthly.
Buying a house - making an offer
1. Get pre-approval.
This is a document from your lender that states how much they’re likely to let you borrow. Having pre-approval puts you in a strong position when you need to make an offer, as the seller and their real estate agent will know you’re a serious buyer and can actually afford to make the offer.
2. Get home insurance quotes early.
You officially become the owner of your new home once the contracts have been signed, so it’s important to choose your home insurance well before you need it. If you leave it until the last minute to look into your home insurance options, you might delay the whole home-buying process.
3. Understand what you need to include in your offer.
Your offer needs to include details of how much you’re willing to pay, how long you would like for finance approval and an indication of the settlement date you’d like. You also need to clearly state any conditions of the sale, such as any repairs that need to be done to the home or building and pest inspections.
4. Submit and finalise your offer.
You might find there’s some negotiating to do on the price or conditions of sale before the contract for your new home is finalised. If your offer has been accepted, and the contracts have been signed, you’ll need to pay a deposit to the seller’s real estate agent. This amount will be taken off the total amount you need to pay at settlement.
The process of making an offer can happen quickly, or sometimes it might take some time. With the right information on hand and a lot of patience, you can actually enjoy the process. Good luck!
Buying your next home
When you feel it’s time to sell your home and buy a new one, it’s worth knowing:
The mortgage process
When you sell your home, your mortgage will come to an end therefore once you purchase your next home you’ll need to take out a new loan. This could be the perfect opportunity for you to spend some time finding the best home loan rates and to calculate your new repayments.
Depending on your circumstances, you might be able to negotiate a simultaneous settlement, when both your existing home and new home settle on the same day so there’s no gap in your living arrangements. This could help you reduce the cost of upgrading your home.
Your investment opportunity
When you look carefully into your financial situation, you might want to explore whether you can afford to keep your current home as an investment property and rent it out. Make an appointment to talk to one of our Home Loan Specialists about loan options, for example interest only home loans.
Selling your existing home
Speak with a few different real estate agents to find the right person to sell your property. They’ll help you understand current market conditions and property prices in your area, and can even make recommendations about things to update around your current home before you list it to sell.
Changing your home is a big decision, so it’s worth taking time to explore your options. Find out whether building or renovating could be right for you, or why you should choose Bankwest for your new home loan.
Buy your first home sooner with a Family Guarantee
With our Family Guarantee option, mum, dad or another family member could help you buy your first home quicker. In fact, you could borrow up to 100% of your property’s purchase price.
What is a Family Guarantee?
It’s a helping hand from a family member (the home loan guarantor) who provides additional security to the bank for the home loan. The home you buy will be the main security for the loan, however the home loan guarantor agrees to use the equity in their own property to also be used as security. This means Bankwest will also take security on the guarantor’s property.
Keep in mind you as the borrower(s) must be able to repay the home loan without support from the guarantor.
The Family Guarantee option is only available if you will live in the property.
Who can be home loan guarantor?
An immediate relative of the borrower(s) e.g. parent, adult child, sibling, grandparent, spouse, de facto.
You can find out more about what is means to be a guarantor on the ASIC’s Money Smart website.
Benefits of using a Family Guarantee option
- Spend less time and effort saving for a deposit
- Avoid costly Lenders Mortgage Insurance (LMI).
Normally when you borrow more than 80% of your property’s value, you need to pay LMI. You don’t have to with our Family Guarantee as it lets your family member use equity in their property as additional security for your loan.
How we can help you
One of our Home Loan Specialists can tell you more about our Family Guarantee option. A Home Loan Specialist
can come to your home, office or local café at a time that suits you. Easy, right?
Call 13 17 19 to speak to a Home Loan Specialist today
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The information contained in any report is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in the report without first obtaining specific professional advice. Also to the extent permitted by law, Bankwest, a division of Commonwealth Bank of Australia ABN 48 123 123 124 AFSL/Australian credit licence 234945, its related bodies corporate, employees and contractors accept no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in the report.