This guide will give you step by step approach, tricks and tools to simplify the home buying experience. If you follow this guide, you can be assured that you are not missing any key aspects of the key decision and major step in life
You need to understand that it can be a long process, for some people it can be an year long process from the time they first start to think about buying a house and till the time they enter their dream home. And there are lot of variables that can change both internally like financial situation, job status, income and expense calculations etc. and external factors like bank interest rates, property market, regulatory requirements etc. All these factors need to be kept in mind till the time you get into your home and you need to have sound plan to manage these moving parts so that it doesn’t impact your buying decision and get into a wrong deal in any way.
Worst thing you can do is to get into a deal and later realise that that was not a right buy for you, it can be troublesome, financially exhilarating and legally challenging to reverse the decision.
Here is the step by step guide for you to make this a little easier to manage –
Step 1 – Initial estimate of your budget
First step is to understand your current financial situation and potential changes in next 3-6 months. You can consider following factors –
- • Annual increments due
- • Potential job threat or redundancy
- • Possible role or job change having an impact on income
- • Any possibility of starting an additional income or reduction in current additional income.
Review your past 6 months average income and expenditure. Look at your bank statement and credit card statement to evaluate major categories where you are spending money. You can do it yourself or you can contact any good broker in your area, I would recommend to go with a hand picked brokers by a company like www.vlend.com.au who only specialises in residential loans and have strong market connect to get you honest and most competitive advice.
Some of the main categories you need to focus on –
- • Monthly insurance premiums
- • Home and or content insurance
- • Car insurance
- • Private health insurance
- • Pet insurance
- • Home related expenses
- • Water, electricity and Gas expenses
- • Body corporate fees (if applicable) – this will be removed from calculation if you are planning to buy an independent house
- • Regular gardening expenses
- • House internet and telephone
- • Personal phone bills
- • General living expenses – grocery etc
- • Entertainment expenses – eating out, movies, travel etc
- • Child related expenses (if applicable)
- • School fees
- • Extra training and coaching expenses
Step 2 – Estimate your borrowing power and set a maximum limit for your purchase
Based on your income and expenses and cash in hand, you can get an estimate of your borrowing power. Your mortgage broker can assist you find the most suitable product and most appropriate borrowing limit for you. Be extra careful not to stretch your limit as it can have a negative impact in long run on your financial situation and standard of living. Unfortunately, there are few brokers in the market who will try to get you higher loans but its extremely important for you to assess what is the maximum instalment you want to pay. There will be few trade-offs which you need to be aware of and ready to accept if you want to go for bigger loans.
Again it’s really important to choose the right broker who provides the neutral advice without being influenced by commissions or lenders.
Step 3 – Start the house search
Biggest challenge which I have seen people come across is to shortlist the suburb, if you are new to a city. If you are already living in an area and just upgrading/downgrading, this should be pretty straightforward for you. However, for the new to city buyers it’s a big decision. They need to work on few trade-offs and prioritise what is most important for them. You can use suburb selection tools to help you with this step –
Factors to consider to shortlist a suburb –
- • Distance from your work place – how much are you ready to travel everyday
- • Suburb ranking based on parameters like family friendly, public transport etc. you can use Domain or homely websites to get suburb rankings.
- • Schools availability – public vs private, what do you want for your kids. If its private then this can become a very important factor as in cities like Melbourne and Sydney, most of the private schools can go upto 5 years also
- • Your lifestyle – bayside/inner suburbs
- • Cultural mix – this can be another important factor to consider if you have preference for specific demographics. Some people like it to be more a mix of demographics with cultural diversity and others may prefer to go to suburbs with one dominant culture
Factors to consider shortlisting a house or area within suburb –
There can be significant price difference between various pockets with a suburb. Factors like
- • Distance to school
- • Distance to shops
- • Access freeway
- • Distance to beach (if applicable)
- • Distance to public transport
Start viewing shortlisted houses
Step 4 – Get Pre-approval
This is a good time to get a preapproval so that you have confidence in your purchasing power. Vlend can get this organized very quickly for you. Don’t consider this as final approval, you’ll have resubmit all the documents again to lender when you are ready with your house. This is because lender would like to assess if there is no change in the financial situation.
Step 5 – Get to an auction or put an offer
You can buy a house either through a public auction or private sale. You need to understand the difference between both these as there will be different conditions that will put different liabilities on your as buyer.
Auctions are governed by state rules and regulations and can be an exhilarating experience for some. No. of bidders, reserve price and how badly you need that property can leave you in a position where you end up going beyond what you were prepared for. It’s always a good idea to go in auctions with a very firm price range in your mind and try not to go beyond that. Vlend can help you prepare for these situations if this is your first time and ensure you are not alone in this.
On the other hand, private sales can be less stressful and less imposing for buyers.
Depending on the property, suburb and your personal preference you can try and use this as a selection criteria but most often you end up not having a choice on this one. You should be prepared for both.
Step 6 – Arrange your Financials before the Settlement
If you have already gone through the pre-approval process, this should be quite straight forward. You’ll still have to re-submit all the paperwork but it should be relatively easier for you. However if you haven’t yet gone through the pre-approval process, you should quickly contact companies like Vlend, who specializes in understanding your unique situation and accordingly refer you to a broker who can then work with you to get you the most appropriate deal for you. Vlend will continue to work as partner with you throughout the process and best thing is that it won’t cost you a single additional cent for their service. They get paid by the lender directly.
Most of the lenders have moved to online settlement using companies like PEXA etc. and it takes the entire stress and manual interventions out of the process, making it really easier and accurate for you.
GET THE KEYS AND GET IN YOUR NEW HOME!!
At VLEND We are committed to use all the knowledge of regulatory requirements, lending processes to understand your situation and identifying the right broker for you who can make the entire borrowing process a breeze for you. We will only recommend a broker that is best suited for you and your circumstances, in no case ever our Broker’s recommendations will be influenced by incentives we receive from Lenders or aggregators. You can expect to deal with Human…. yes, we are human. In today’s world of artificial intelligence, long IVR menus, complex processes, bots, we are proud to say we are still all about personal touch, listening to your story, understanding your requirements, being available at the dial of a number when you have a question and genuine care is at the heart of everything we do and we are just a phone call away – 1300220807