1. Get into a ‘mortgage payment’ pattern ASAP

You may have already been saving for a house, or paying rent towards a property, but the psychology of these payments can be very different to servicing a mortgage. It is easy to get complacent with a savings plan and say to yourself “Not this month, its Christmas/my birthday/holidays etc.” But you will not have this option once you own a home – banks do not take holidays!

By doing the groundwork and estimating the value of your mortgage payments in advance, and working to a savings plan for this amount, you will start off in a good payment habit.

2. Don’t underestimate the costs of buying

Many first home buyers erroneously assume that if they have a $50,000 deposit and a $500,000 mortgage they can afford a $550,000 home. These home buyers are in for a huge shock.

There are many costs required to settle the purchase, and additional transactions in the vicinity of $50,000 are not unheard of for a property of $550,000.

Keep these in mind when budgeting for your purchase:

• Inspection report
• Transfer fee/Mortgage Registration fee
• Valuation fee
• Loan application fee
• Service fee
• Solicitor/Conveyancer costs
• Stamp Duty (subject to first home buyer rules)
• Lenders Mortgage Insurance

 3. Negotiate!

It seems to be a sellers’ market in most cities in Australia. Many properties do go up for auction (particularly in Melbourne and Sydney), and this means that your ability to negotiate is moot. You can however, negotiate on a Private Sale property.

You have the option of negotiating for yourself, using a buyers advocate, appointing a local Solicitor or engaging with the agent themselves.

Negotiating for yourself really depends on how confident and skilled you are, whilst utilising a representative for you comes down to pricing (i.e. is the cost worthwhile for the potentially limited benefit).

You can use an agent to do the negotiating for you, but you can’t be sure how hard they will push for you as they are working for the seller to achieve the highest price. Agents also work on commission basis, so the higher the price, the higher the reward for the agent personally and also their company.

4. Select a representative cautiously

Appointing a representative can be a very good thing for home buyers. It may reduce the price you pay, and it certainly should reduce the stress and time out of your day.

In order to select a suitable advocate, prepare questions before meeting with them.  Question the agent on the type of experience they have, how many buyers they are representing and if they can share any previous buyers who will provide a reference. Speak to a few different agents before deciding on one; price is not necessarily the most pertinent factor (although it is also important).

5. Don’t bow to the pressure

Real estate agents are some of the best salespeople in the world. Frequently, we hear stories of clients who are rushed to view properties “Before they come off the market” or “Before another offer is accepted”. We have even been told of offers that won’t accepted if they are made subject to building inspection.

If an agent is putting pressure on you and you feel like you are being hurried, think about whether this is the ONLY suitable property you will EVER see. There are new listings every single day, and we would all prefer to miss out on a home that may not be suitable, rather than be rushed into buying a lemon.

 6. You don’t have to own your home

You should always consider whether buying a home is actually the right step for you. Especially in Australia, buying a home of your own is the great dream. However, owning a home may not actually makes sense for your particular circumstances.

Many people will say that paying rent is throwing money away or paying someone else’s way, but there are many benefits to renting, particularly if you move around a lot or if your circumstances are not secure or likely to change.

7. Get good Advice from an expert mortgage broker

Using the services of an expert mortgage broker will put you in the box seat in terms of product, pricing and interest rates. Most non-aligned mortgage brokers are able to recommend a variety of products across many different providers, so you will end up with a product tailored to you and your own needs.

If you would like to discuss your options with our mortgage broker today, please call on (03)9999 7200 or contact us here

All information provided in this newsletter is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.