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Finspective

Finspective

Bringing you tips, ideas and inspiration on improving your financial outcome

September 7, 2021

Preparing to become a new home-owner

by Simon Barbaro

 

As someone on the hunt to purchase a new home, I must say, it’s been a learning curve. However, I feel I’ve gained a pretty good insight along the way.

At first, it was a little overwhelming. I soon learnt how much time and effort I needed to invest before buying a home. That’s when I discovered, preparation is key.

These are just some of the things I’ve done to prepare myself mentally and financially. This way, I won’t be caught off-guard when an opportunity arises.

The hunt for my home: Making good decisions

Before buying a home, I want to be confident I’m making the right decision. I need to be 100% sure the house I purchase is right for me. Both now and in the future.

But knowing which house is right for me and how much I should pay isn’t easy. So, I broke my process down into two things; have a clear understanding of what the home is worth to me, and doing my research.

Identifying opportunities & pitfalls for each property has helped me bid confidently and avoid making costly errors. Here are some things that I’ve learned:

  • Listing my needs vs. wants. Too many ‘must-haves’ significantly limited my buying opportunities. Keeping it to a few core things opened my search parameters.
  • Considering a smaller house with room to extend is a good alternative. If it can be a perfect future home, then maybe some short-term pain is worth it. 
  • Using a checklist during viewings, so I don’t overlook the small thingsHeating, cooling, storage, water pressure, lights, power outlets, outside noise, sun/shade etc.; all these can easily be overlooked.
  • Speaking to the local council helped me avoid properties that would be impacted by road changes, train lines and neighbouring developments.
  • Having a second set of eyes is always a good idea. Emotion can cloud my judgement; a friend can help me identify things I may have missed.
  • Consistent communication with real estate agents. They keep me informed with properties coming to market. It provides an excellent opportunity to make an offer early and avoid a bidding war.
  • Most importantly, be realistic.

TIP: You can get a snap view of your desired suburb’s supply & demand, rental yield, price trends and more at www.realestate.com.au/neighbourhoods

Find a great mortgage broker; let them do the work

I’m at a bit of an advantage here, as I’m surrounded by financial experts. Still, I learned that there are different levels of expertise when it comes to mortgage brokers – many have no professional qualifications or financial backgrounds other than a short training course.

Let me break down my experience with my mortgage broker, Brenton.

Brenton not only has access to multiple lenders, but he also has a lot of direct contacts in different banks. So, he was naturally able to get me the best possible loan to meet my needs and complete all the paperwork.

However, it was the other things he helped me with that made the difference:

  • Checking if I was eligible for concessions and grants.
  • Finding solutions to avoid Lenders Mortgage Insurance (LMI).
  • Teaching me about banking with an offset account to reduce loan costs.
  • Deciding on a fixed or variable loan structure.
  • Putting me in touch with a quality conveyancer.
  • Guiding me on how to bid.
  • Showing me the pros/cons of owning a home in my name directly instead of the alternatives.
  • Provided the opportunity to speak to other professionals in his network, such as a buyers advocate.

TIP: Professionals are a great source of information. If you’re looking for an investment property, speak to your accountant to help you understand the grey areas and tax implications. While a Financial Advisor can assist you in avoiding big mistakes and missed opportunities.

It’s time for buying a house

Once I had my loan approval and an eye on the target, it was time to get serious. My first attempts at buying a house were… educational.

Here are a few things that I wish I knew before jumping in headfirst:

  • Auctions are final. Building and termite inspections need to be completed prior. I’ve also spoken to my bank to transfer the deposit on the day when I’m successful.
  • A Private Treaty is a negotiation. Offers need to be made in writing to the agent. This can be done even if an auction date is set. Conditions can also be added to the bid (such as financing, inspections, repairs etc.). Speaking to a solicitor before putting an offer in writing is a smart move.
  • Understand the reason for selling. If the seller asks for a 30-day settlement or the property is vacant, they may need a quick sale. This is an opportunity to make an offer before auction. 
  • Building and termite inspections. Usually, these are done on my own accord. If I’m unsure of the condition, a professional inspection is a good idea. Plus, the knowledge that repairs are required is a great tool when negotiating.
  • Make sure I understand the Section 32 (Vendor’s Statement). For instance, I’ve heard of people being unable to extend later down the track because of building restrictions on the property. If I’m ever unsure about anything, I go straight to a professional.
  • Going over budget isn’t suggested. But if purchasing my dream home comes down to a few mere dollars, I’m prepared. My broker has told me about my options if the bidding goes slightly over.

Be Patient

The process of buying a house can take time, especially with covid restrictions. I’m using the opportunity to connect with agents, research suburbs and keep saving. That extra deposit might get me over the line.

While this isn’t a definitive guide to buying a house, I hope some of you have found it helpful. 

If you have any further tips for other prospective home buyers, I’d love to hear them. Just jump on our Facebook Page. You can share your thoughts on any of our posts in the comments section.

Good Luck!

ONE LAST TIP:  Buying a house and planning your future finances can be tricky. A good idea is to use tools & apps to gather your information in one spot. One such tool is Wealth Report. It will help you track your financial goals with the option to speak to a professional if you need it. You can sign up for a Free Wealth Report Access Code here.

 

 

The information (including taxation) is general in nature and may not be relevant to your individual circumstances. You should refrain from doing anything in reliance on this information without first obtaining suitable professional advice.

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