7 tips for organising your finances before you buy a home

There are many tips for buying a property, but there’s one essential element that no one can avoid – getting your finances in great shape before you start.

Knowing what you can afford is a critical element of finding your first home or the next one that takes you higher up the property ladder.

The most successful buyers begin their search with their finances in order and a pre-approval letter from their bank or lender. They know their budget and tailor their efforts accordingly. 

There’s no greater waste of time than visiting properties that are beyond your price range.

Using a mortgage broker can help you shortcut the hours of research through various banking products and good brokers have detailed market knowledge and can offer an array of products. 

We can suggest the loans most suitable to your circumstances and assist you with paperwork, and review your credit history. We can also help you understand any grants or tax exemptions from state and federal governments that you may be eligible for.

Below are a few tips for securing the finance that will help you find your dream home.

  1. Clarify your finances – If you’re a homeowner, you’ll need to obtain a valuation on your current property and provide proof of current earnings. A first-time buyer will ideally have 10% of the purchase price as a deposit to get the best interest rate and conditions for their first loan but the more the better. Money for legal fees, property inspections and taxes need to be set aside, too. Make sure your tax returns are up to date to prove your earnings. It will make life easier. 
  2. Low barrier to entry – You can obtain a conventional loan with as little as 5% of its total as your deposit. Some government-backed loans do not require a deposit. 
  3. It pays to save – The more you save, the less you borrow. And that means lower your monthly repayments for you over the term of the loan.
  4. Go for a grant – First-home buyers should research the current grants from various levels of government that are designed to encourage them into the market.
  5. Credit crunch – You’ll need a good credit history to be attractive to lenders. Check yours out by using companies such as Experian and Equifax. If your track record is not the best, we can discuss ways to address this. If errors appear in your credit history, dispute them immediately.
  6. Find the right loan – You can save thousands of dollars by choosing the right mortgage product for your situation. It pays to shop around and make a note of not just the interest rate but the fees that come with it and other services that may be offered. As your mortgage broker, we can guide you through this process.
  7. Be pre-approved – A written undertaking from your lender will help you focus on what you can afford, as well as signal to a prospective seller and their agent that you’re not kicking tyres. Watch out for lenders who will only “pre-qualify” you, as this represents only an estimate of what you can afford and does not offer any guarantees of intention to lend.

This article is provided for general information only and does not take into account the specific needs, objectives or circumstances of the reader. Before acting on any information, you should consider whether it is appropriate for your personal circumstances, carry out your own research and seek professional advice.