Looking at properties might be the fun part of buying a home, but the nuts and bolts of property ownership is all about obtaining a home loan.
The loan you seek not only enables you to purchase a property but will be a financial responsibility you’ll shoulder for a number of years. So here are some quick tips when it comes to sorting out a loan.
Savings and equity
The first thing any lending institution is looking for is what you bring to the table, as no lender will allow you to borrow the full amount.
Most banks seek a solid savings history that shows you have the ability to take your income and put some aside consistently, and they’re looking for that trend to have occurred over a lengthy period.
So, long before you go to the bank, start building up some serious savings as the basis of your deposit.
There are a host of different loan options, rates and terms, so shop around for the lending institution that will offer you the best deal. Mortgage brokers can be particularly helpful when it comes to seeking out the best home loan, but your bank is also a good place to start.
You need to have your finance in place before you get serious about house hunting. It will determine your budget, whether or not you can buy at auction, and a host of other steps. Having your finance teed up allows you flexibility to put in offers, and get serious about the buying process, so get pre-approval before you start the hunt in earnest.
What you’ll need
Most lenders will need you to meet a series of criteria including a solid savings history, long-term employment, little financial liability, and possibly equity in other assets.
You’ll also be required to provide a standard set of information for any loan application including your full financial position, identification, and pay slips.
Background checks will be conducted to ensure you are not a lending risk.
Your finance future
Although you may meet all the criteria required by a bank to be offered a loan, consider your own financial future. If you’re mortgage is based on two wages, what happens if that reduces to one because of your employment or financial situation?
Will you be able to handle rising interest rates, or changed financial fortune?
Things to consider
• It pays to line up finance first
• Hunt around for the best option for you
• Consider whether fixed or variable interest rates suit you best
• Bear in mind interest rates and personal circumstances change so have a plan for how you’ll pay the mortgage no matter the situation.
About United Strata
Specialising in the Macarthur region, United Strata offers professional yet personalised service for buyers, sellers, landlords and tenants alike.