9 things to prepare before buying a home
If you want your property purchase to be as stress-free and successful as possible, it’s important to follow a methodical process that begins even before you start looking at online listings.
The first thing you should do is reduce your spending and increase your savings rate at least three months before you apply for a home loan pre-approval. That can help make you look more creditworthy in the eyes of lenders.
Second, be wary about changing your employment situation. If you reduce your hours, move to a new company or quit your job to start a business, that could raise doubts about the reliability of your income. That, in turn, will make lenders question your capacity to repay a loan, which might make it harder for you to qualify for finance.
Third, order a copy of your credit report – you’re entitled to a free copy every three months from the main credit bureaus, Equifax, Experian and Illion. If you discover your credit report contains incorrect negative listings – which does happen from time to time – you can apply to have them removed. (Correct negative listings can’t be removed.) Removing them could increase your credit score, which would improve your chances of qualifying for a loan, and on more favourable terms.
The fourth step in the process is to visit a mortgage broker. Your broker will calculate your borrowing capacity, compare loans and apply for a pre-approval on your behalf. Also, your broker will be able to advise you on how much of a deposit you need, whether you’re eligible for government incentives or if you have equity to help towards your deposit.
Fifth, find a conveyancer or solicitor. Their job will be to review the contract of sale and oversee the legal transfer of the property from the seller to you. While you won’t need their help until later in the process, it’s better to search for a conveyancer / solicitor well in advance, so you have time to compare. It is also helpful knowing you can send any potential contracts for checking as soon as you receive them for a fast turnaround.
Sixth, consider whether you would like a buyer’s agent to manage the entire buying process (research, due diligence and negotiating) for you.
The seventh step is to research suitable locations for your home or investment property purchase. This will be informed by your borrowing capacity, which you will know if you’ve already secured a pre-approval.
For the eighth step, attend open homes. This will not only give you the chance to identify positives and negatives in a particular property but will also give you a chance to better understand the local market and level of buyer competition.
Ninth, when you find a property you want to make an offer on, organise building and pest inspections, which should identify any hidden flaws. If you find any structural defects or pest infestations, you can either walk away from the property, ask the vendor to fix them or use them to negotiate a lower price.
Please get in touch if you’re thinking about buying a property in 2024. I’ll calculate your borrowing capacity, compare loans and apply for a pre-approval on your behalf. Also, I’ll advise you on how much of a deposit you need and whether you’re eligible for government housing incentives.
Licensing statement: Rayne Finance ABN [70 605 100 838] is authorised under LMG Broker Services Pty Ltd Australian Credit Licence 517192. Disclaimer: (1) As with any financial scenario there are risks involved. This information provides an overview or summary only and it should not be considered a comprehensive analysis. You should, before acting in reliance upon this information, seek independent professional lending or taxation advice as appropriate and specific to your objectives, financial circumstances or needs. This publication is provided on the terms and understanding that: (2) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication. (3) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to the maximum extent permitted by the law to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication.
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