Very quickly, it’s become a confusing time for first-time buyers who’ve set their hearts on owning a property and have been saving diligently, possibly for years, to make their dream come true.
Changing interest rates have made the mortgage and refinancing landscape a moveable feast. If you’ve never had to figure out how the impact of the financial markets might directly affect your situation, all this recent activity can be a little unnerving.
Significantly, lenders are taking more time to assess applications as they weigh up the dynamics of mortgage rate increases and their impact on property values. So, it’s not easy even for the experts.
However, this is a scenario that has played out before, so first-home buyers should not panic or become disheartened. While mortgages may become more expensive, you will also see some great properties come onto the market.
Talking to a mortgage broker, or a loan officer at a bank, is a great way to understand your own position amid the current market mood swing and the spate of rate rises.
More than half of Australia’s mortgages are now issued by brokers, who offer an array of products from multiple lenders. If you tie yourself to a specific bank, you’ll be offered only those loans in their portfolio.
These tips may help you assess where you stand in terms of being ready to make your first purchase.
Loan options
There are an array of loans available. The most common for residential properties are variable rate, fixed rate, split-rate (a mix of fixed and variable), bridging loan, land loan, construction loan and line of credit. Don’t just look at the interest rate, though. Loans come with conditions. Read the small print so you don’t sign a deal you may regret later.
Grant opportunities
Ask about all the first-time buyer grants the state and federal governments offer. They include the “First-Home Owner Grant”, “First Home Guarantee”, “Family Home Guarantee”, “Regional Home Guarantee”, and “First Home Super Saver Scheme”.
The ‘Albo’ Package
The new Labor Government has a new “Help to Buy Scheme”. It’s designed to assist individuals earning up to $90,000 (or $120,000 for couples) in buying a property. The Commonwealth covers up to 30% of the price (40% for new builds). There’s a bucketload of conditions, so ask your broker or bank for all the details.
Redouble your research
Your research should never be a one-hit-wonder. Consistent diligence is the key. It will give you line-of-sight to discounts, price drops and distressed sales.
Focus your attention
Study only those properties that are comparable to your target property. Any other data is misleading and irrelevant, and it can lead you into the trap of false assumptions.
Make notes, take names
Keep track of your work by using a spreadsheet to record relevant properties, capturing the details of their location, size, features, selling agent, price guide, and auction date.