Property Education - New Home Buyer Property Group
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Step 1: Financing your venture

When buying any property, the biggest hurdle is pretty much always your ability to secure loan finance. For those who are earlier on in their property journey, saving a hefty deposit for that first home, is a challenging experience for most and something that needs to be seriously committed to in order to be successful.

Key things to consider:

  • Moderating short and long term outgoings and commitments such as car loans, credit cards, personal loans and flexi-loans (afterpay etc).
  • Everyday spending habits on activities such as dining, shopping, gambling and drinking
  • The ability to demonstrate reliable and consistent savings habits to the bank.
  • A well-positioned credit rating file that shows reliability with lending. Let’s discuss if you can improve this.
  • An ability to submit a strong overall case to lenders that supports your ability to service a mortgage for the long term.

Step 2: Have a plan

Buying property can have incredible benefits. But going in blind and aimlessly is very risky. Very rarely is your first home going to be your dream home. And rarely is your first investment going to be your best investment. What you ideally want to achieve long term can be the difference between buying good or bad right now. Those who know where they want to get to, are more likely to decide faster and with more confidence. Property is a long term play, so the broader the vision, the easier the decision.

Key things to consider:

  • What are your financial ambitions with property?
  • What your dream home looks like
  • What needs to happen to make that dream home a reality?
  • Whether to buy an investment property or a home to occupy as your first property
  • What is a realistic starting option?
  • What outcome you want from your next purchase? Growth for equity? High rental yield or income? Tax and depreciation relief? Housing your family?

Step 3: Work with an expert

Everyone likes to think they are an expert when it comes to giving advice, especially when it comes to buying property or sourcing loan finance. Our favorite one is friends or family who almost need to be deciding for someone to make them satisfied with their purchase.

We also see a lot of people ‘giving property a shot’ because it seems to be cool and interesting. Because people see some property professionals driving nice cars and selling beautiful homes, they think they will give it a shot. These operators are NOT experts. We advise politely asking them for detail around their experience and why you should take their advice before acting on their instructions.

Good advice is not easy to come across. That is why the best advisors are so hard to come by as everybody wants to use them. It’s a supply, credibility and demand factor that creates this challenge for most people wanting quality information and support with a big decision that can be daunting and overwhelming.

Step 4: Being prepared

Buying a property is not just about the figures and action plan. It’s about having everything in order, so that when you find something you’re happy to buy, you can actually buy it (before somebody else does). So you need to have documents for:

Proof of ID:

Your lender is going to want to know that you are who you say you are. This means providing legible proof of identity such as a valid drivers license, passport or birth certificate and up to date Medicare card or utility bills. Often these will need to be certified also for the bank to consider them satisfactory.

Confirmation of employment:

Your income is going to be very important should a bank willingly provide you with a substantial amount of money to buy your next property. This will mean likely having to provide up to date pay slips, proof of employment, notice of assessment and annual income summaries.

Proof of assets/liabilities:

This is critical to your case. Things like bank statements, ownership deeds, loan contracts and rental ledgers will likely be required before the bank can satisfy their decision to lend or not lend on your file.

Proof of Savings:

Most lenders will require savings for a deposit to be genuine. This means that they will want to see where the savings have been going and how much they fluctuate up and down.

The more consistently savings increase the more reliable the bank will consider those savings to be. This could also be approached by way of equity in current properties. One of the best reasons why property can help you get ahead, is that banks will generally approach equity in a home as a very reliable source of security to lend against.

Step 5: Be brave – but be calculated

Simply put, your bravery should vary depending on what stage of life you are at. If you’re approaching retirement and don’t have a lot to show for yourself, it’s probably not wise to go hard on a risky property development and investment.

However, if you are young and well positioned, then it is more likely that a higher risk/reward approach is worth your consideration. Every person is different, but ultimately you will need some bravery when buying property.

The last comment on bravery is that without facing a fear you are never going to remove it. Most people buying property face considerable fear when purchasing a home (especially first home buyers). This usually presents itself as fear of the unknown. What we would like you to ask yourself is this, if you don’t buy anything, then how is that going to affect you?