Is Buying Your New Home Off the Plan a Good Idea?

Buying a Home? What Do You Need To Know….

What Loan Documents Do You Need To Submit With Your Loan Application?

Most lenders follow a similar process when it comes to approving loans, so they generally need the same loan documents to be supplied.

To keep the process moving forward, it helps to bring the documents listed below to the meeting with your mortgage broker. This can help fast-track your loan application.

This is a general loan document checklist and you may not need some of them. We can help show you which ones you need.

Got Some Questions About the Loan Process?

Sometimes the best way to get an understanding of home loans, the loan process, and how to choose the right one, is to speak to a mortgage broker in person.

When you sit down with us, it’s the perfect opportunity for us to get to know you so we can get a good understanding of what you need right now and what your financial goals may be for the future.

For you, it’s a chance to ask all the questions you have about finding and choosing a loan, applying, the approval process, and what happens after that.

The good bit is that we will come to you at a time and place that suits – home, office or café… day, night or weekend.

A new home or a new loan. Which is easier to find?

When you’re looking for a new home you probably have a good idea of what you’re looking for – what it looks like, what size it is, even where it’s located, maybe even right down to the street. But when it comes to choosing the right home loan product, where do you start? There are hundreds of loans from a huge choice of lenders. And there are new products coming into the market all the time.

As a broker, our job is to help you find one loan out of the hundreds available that suits your individual needs. What’s more, we’ll help manage the whole process for you. We’ll assist you with the paperwork, and manage the application process right through to approval.

Of course with all loan products there are pros and cons, so it’s a good idea to get familiar with the different loan types. Here’s a quick look at the main types of loans and some of their advantages and disadvantages.

One in two Australian home buyers¹ now borrow via a mortgage broker. A dip in sentiment towards traditional banks, tighter lending criteria for investors and better educated consumers have all helped boost mortgage brokers’ popularity over the past decade. There are, indeed, a raft of reasons to turn to a broker for your next home loan.

Here are seven to get you started:

1. Freedom of choice

Mortgage Brokers generally give you access to multiple loans from multiple lenders. Compare that with the loan options you might be presented with by a single lender. At the end of the day, competition and choice are the most powerful benefits a broker brings to the table and it’s the reason so many Australians have one onside.

2. Save time

Why spend your valuable time researching home loans when a mortgage broker can do it for you? It’s the broker’s job to do the hard yards when it comes to your homework. A mortgage broker will make the most of your appointment time to get the necessary information to narrow down and present you with easy-to-understand options, saving you hours of online research and hard-to-translate comparisons.

3. It’s all about you

4. More accessible finance

Stricter credit rules have prompted some traditional lenders to avoid borrowers with poor track records or less predictable incomes. While no magic wands are waved, and higher interest rates might apply, a mortgage broker may be able to suggest an alternative option that’s right for you.

5. Smooth sailing

Buying a home and taking out a loan is an exciting and momentous milestone, but also a stressful process. Brokers ease many of the pain points by dealing with the lender and managing your application process through to approval. Brokers can also arrange after-hours appointments to fit your schedule, rather than the schedule of just one bank or lender.

6. The latest legislation

It’s also a mortgage broker’s job to stay up to date with legislation so they can make the right recommendations for customers and ensure they meet lending requirements, which have tightened in recent years to reduce the risk of loan defaults and help maintain a stable economy. Brokers stay across industry, economic and regulatory shifts to avoid unexpected roadblocks for borrowers.

7. Home loan health checks

Just like you get a check-up with your GP, your mortgage broker can run a regular health check on your home loan to see if it’s still right for you. Competition remains high in the mortgage market so it’s always worth asking your broker to reconsider your options. You could be paying off your loan sooner and saving thousands on interest repayments with a product that is better suited to your needs.

¹www.canstar.com.au/home-loans/should-you-use-a-mortgage-broker

Economic conditions remain reasonably stable, housing market growth continues to slow, household debt is at record highs, and inflation remains around the lower end of the Reserve Bank of Australia’s (RBA) target range. With this scenario as a backdrop, the decision to hold the cash rate today from the RBA was widely anticipated.  It is looking increasingly as if the cash rate will hold at record lows throughout 2019; this is the view of financial markets where the ASX cash rate yield curve indicates the cash rate will remain on hold until at least November 2019.

However, focus is now moving to mortgage interest rates, where we are increasingly seeing upwards pressure from overseas funding costs. Smaller banks, non-banks and even the larger banks may be looking at pushing interest rates higher for select mortgage products due to these upward pressures. However, average variable interest rates remain almost 120 basis points below their decade average of 6.4%. Borrowers, particularly owner occupiers with principal and interest loans, should continue to expect low mortgage interest rates over the medium term.

Saving can be simple when you know how. Yes, sacrifice is needed to get ahead but you can also be frugal without being a total scrooge. Follow our 50 tips to sneak more savings into your life.

1. Talk to me to see if you can save on one of your biggest outlays – your home loan.
2. Switch all your household lights to energy-efficient globes.
3. Sell old smart phones on eBay or Gumtree – families with tweens often want second-hand tech vs expensive new. An old iPhone could get you $200 on eBay.
4. Bag your fruit and vegies at fresh food markets instead of supermarkets.
5. Review your broadband and mobile plans – do you really need all that data?
6. Book holidays for off-peak or shoulder periods. Even better, save on accommodation costs by using a holiday housesitting website such as mindahome.com.au or housesitters.com.au
7. MYO breakfast and lunch on work days.
8. Freeze your credit card. Stick it in a glass of water in the freezer – you’ll need to thaw it to use it, by which time the impulse buy will have passed.
9. Shop around for better deals on your car, home and health insurances. Time-consuming maybe, but there are big savings to be made.
10. Love gigs and shows? Sign up to ticket agency and music venue email alerts to keep informed of two-for-one and ticket discount deals.
11. Try replacing expensive dishwasher tablets with a mix of two tablespoons of Borax combined with two tablespoons of bicarb soda. It’ll clean your dishes and the machine.
12. Split bulk-buy meat with buddies.
13. Make sure your dentist, optometrist and physio are among your health fund’s preferred providers.
14. If flying domestically, save with early morning or late evening flights on weekends or midday flights Monday to Friday.
15. Take advantage of free community events such as festivals, outdoor fitness classes and open-air movies.
16. Cancel your cable TV and subscribe to a more affordable streaming service.
17. Run your dishwasher and pool filter during off-peak energy periods, e.g. after 10pm or before 6am.
18. Make an agreement that you and your partner won’t spend more than $100 without checking with the other first.
19. Book your beauty appointments (waxing, pedicure etc) at a training college.
20. Make a grocery list and stick to it to save on impulse buying (and don’t shop hungry!).
21. Eat in, but head outside with a picnic blanket to make it a bit special.
22. Check you’re not paying extra for monthly car and home insurance payments.
23. Organise a fashion or book swap with friends and co-workers.
24. Flush less – we use 6 to 18 litres of water every time.
25. Cook bigger batches of discounted meat and seasonal produce and freeze meals.
26. Unplug unused appliances and save on standby energy.
27. Pay your mortgage fortnightly instead of monthly.
28. The ‘op’ in op shop stands for opportunity – you never know what you might find.
29. Enjoy a movie night at home with friends.
30. Grow salad greens and herbs – easy to grow and manage in pots.
31. Pay your bills on time to avoid penalties.
32. Give homemade gifts: biscuits, granola, pasta sauce, chutney, jam, cards.
33. Don’t discount the savings from shopper dockets.
34. Book quality, three-star hotels for overnight stays – you just need a comfy bed.
35. Wash and groom your own dog.
36. Turn your next dinner party into a pot luck.
37. Say yes to freebies and rewards and create a free email account just to receive deals.
38. Join the refill revolution with your own water bottle – save money and the environment.
39. Find a GP that bulk bills.
40. Dissolve four teaspoons of bicarb soda in one litre of water to clean kitchen and bathroom surfaces.
41. Buy loose fruit and vegies – snow peas, green beans, spuds – instead of pre-packed.
42. Never buy a new car.
43. Give favours instead of gifts – babysitting, mowing, cleaning, painting, car detailing, gardening etc.
44. Check out your local library for free activities, especially for kids.
45. Take advantage of sales on staples – laundry powder, shampoo, toilet paper etc. – and buy in bulk.
46. Tap into any workplace perks e.g. discounts on health insurance, gym memberships, entertainment, accommodation.
47. Consolidate your credit cards into one low-interest card.
48. Snuggle under a blanket instead of jacking up the heater.
49. Plan your meals around supermarket specials.
50. Exercise without a gym – there are loads of online workouts to help you cancel that membership. Or better still, go for a walk. The dog will love you for it!

Feeling overwhelmed at the thought of buying your first home? That’s ok! There’s so much information out there to digest, you may not know which industry expert to believe or how to even start the process. The key is ensuring you are prepared with all the relevant information, but also ensuring that the information provided to you is correct. To help you along the way we’ve busted the top 5 first home buyer myths when it comes to buying your first home.

Myth 1: You need a 20% deposit

One of the biggest challenges that first home buyers face is getting together the deposit and saving 20% can be a huge ask for some. The more you’re able to contribute towards the purchase the less you have to borrow, so having a 20% deposit is a great position to be in but it’s not your only option.

Majority of lenders in the market place will be able to offer you a loan up to 95% of the purchase price which means you only need to contribute a deposit as little as 5% (plus have additional funds to cover costs like stamp duties and solicitors fees etc).

The only catch with having a smaller deposit is that you will be required to pay lender’s mortgage insurance which is usually required when you are borrowing more than 80% of the property’s value. This fee can be quite significant. The lender may also impose stricter credit criteria and tighter serviceability requirements as a result of lending you a higher portion of the property value.

Myth 2: You have to live in the house you are buying

Whilst the majority of first home buyers will live in the home they buy straight away, it’s not a mandatory requirement. Buying an investment property as a first home buyer is perfectly ok and a viable option that can have long term benefits.

If you decide to live at home, you could save on living costs plus you can use the rental income you receive from your investment to help reduce your loan repayments. However, a first home buyer buying an investment property will not be eligible for the first home buyer’s grant or receive other concessions such as stamp duty.

Myth 3: You can’t get a loan if you have bad credit

Many lenders have home loan options for borrowers with blemishes on their credit file. If you’re unsure if your credit file is up to scratch, you can always order a copy from Veda before you put through a home loan application. Don’t be afraid to discuss it with your mortgage broker, they will be able to point you in the right direction and offer you a solution that suits your needs.

Myth 4: You only need a deposit

Whilst having a deposit is a start, there are many costs involved with purchasing a property and being aware of these will ensure you are not short of funds when it comes to settlement. You need to be aware of:

• Stamp Duty (the state where you are buying your property may offer some
  concessions on this, check your local office of state revenue for more details)
• Pest and Building inspections
• Fees for establishing your loan (application fees, valuation fees)
• Lender’s Mortgage Insurance (if you borrow more than 80% of the purchase price)
• Solicitor’s Fees
• Moving Costs

Myth 5: You won’t be able to afford the mortgage repayments

If you’re used to paying rent each month and you are paying it on time, you are already used to sticking to a budget and can adjust this outgoing amount easily to suit a mortgage repayment.

If you’re unsure if you can afford the repayments, there are many free calculators available that can help you determine how much you can afford to borrow and
what the monthly loan repayments would be based on the loan amount.

You also have to remember that the mortgage repayments you are making will directly benefit you. You are investing in an asset that is yours and that you can use in the future for financial gain (e.g using equity to buy more property). Whereas if you continue to rent, the money you are paying each month is benefiting someone else and their mortgage repayments.