Buying a home takes significant research and will likely be the most expensive and imperative purchase you will ever make. Most people need to borrow to purchase their home. Hence, being aware of and budgeting for the ongoing expenses is essential. Especially when purchasing your first home, this can be a very daunting process! We’re helping you by giving you our top tips to consider before you purchase:
· Ask your broker (us!) about which lending bodies (i.e. banks, building societies, credit unions, cooperative housing societies, mortgage originators/managers and insurance companies) how much you can borrow, and when:
o As a broker we figure out based on your income and expenses, how much you’re able to borrow. We do the research for you when it comes to finding the right lender, which will provide you with an affordable borrowing capacity. For that reason, having a broker is essential, helping you through your repayment information and loan calculations.
· Allow for fees such as duty, LMI, legal and moving costs:
o Remember to factor in the extra costs of purchasing a property to your budget! Depending on the property price, location and type of home loan you have, you will incur a one-off payment of stamp duty (state tax). Then there’s lenders mortgage insurance. Before you do anything else, talk to Legal Home Loans about minimising LMI as a lawyer (or getting rid of it completely in some cases). As for the legal aspect, you may be able to complete this yourself as a lawyer! If not, receiving the advice you may need and having documents prepared can cost up to $2000 or more depending on the ownership structure. Other add on costs are moving costs. The biggest expense of your move is hiring removalists, these costs can easily add up with hourly rates for the removalists as well as other additions depending on your removalist. Consequently, budgeting to consider these extra costs is extremely important, as well as researching to find the best option!
· Calculate what you can afford to spend by adding the amount you have saved with the amount you can borrow:
o As mentioned above, understanding what you can afford verses your borrowing capacity is vital. This allows you to work out if you can afford the ongoing costs of the loan repayments. It’s important to understand what you can afford to you borrow. As an example; being able to borrow $1million isn’t helpful when your spending habits can’t afford that! Often you will realise the ideal amount you can securely pay back is lower than your borrowing capacity. You want to have a loan you can comfortably pay back when you’re looking at long term debt!
Overall, our advice is to start with tip number one, and get in touch with our brokers. Feel free to contact us on (02) 9030 4020, +61 423 347 562 or email email@example.com.
We look forward to arranging an obligation free meeting or having a chat on the phone!
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