Reconnect with Your New Year Property Resolutions

With the year ahead of you, it’s exciting to think this could be your chance to purchase your first home, upgrade or become a property investor. When you can tick off these checkboxes below, you’ll know whether 2020 is the year you achieve your property resolutions.

Do you know what goes in and out of your bank account each week? Before you decide how much you can comfortably borrow for a mortgage, it’s vital to have a clear idea of your spending and savings habits. You can do this with a budget that records your income and expenses and provides guidance as to where to reduce spending and increase savings.

 

As much as you might want to own a property, over-committing yourself is never a good idea. Although interest rates are at record lows, there should be a buffer in your budget to guard against a future increase in repayments. 

 

If you realise you’re unlikely to afford your dream home anytime soon, consider the art of compromise. Rentvesting is an excellent example of this because it allows you to get on the property ladder and start building equity in a property. You continue living in the area you prefer but purchase a property in a more affordable area and rent it out. The equity from this investment property can then help fund an owner-occupied purchase later on.

 

Your Yellow Brick Road mortgage broker can help you narrow down how much money you can afford to spend on a property, and assist with home loan pre-approval.

Approaching a lender about a home loan could be counterproductive if you don’t know what’s in your credit file. Each year you’re entitled to order a free copy from a credit reporting body like Equifax, illion and Experian. Looking at your file will give you an idea of how receptive a lender might be towards your request for a mortgage. 

 

Your credit file and credit score are significant factors lenders consider when assessing your home loan application. It helps them determine whether you’re approved and how much you can borrow. If you pay your bills on time, this helps create a good impression with lenders and may give you more bargaining power. 

 

Be sure to check your file for errors that could damage your credit score. Mistakes might be as simple as a misspelt name or as severe as identity fraud. 

 

If your credit history isn’t so rosy, look at what you can do to turn this around before you apply for a home loan. 

 

Being debt-free isn’t a prerequisite for taking out a home loan or investment loan, but there’s a difference between good and bad debt. Your credit file will give you an insight into the type of debt you’re dealing with. You’ll be able to see how often you make debt repayments by the due date and whether there are many overdue credit accounts and default listings.

 

Any efforts you make to pay off these debts will be recorded on your file and can go towards boosting your credit rating.

Research will improve your chances of buying the property you want at a fair price. As a minimum, you should attend open homes religiously. Meeting the local agents and seeing the property and suburb will help you decide if it suits your needs. Being there in person can narrow down what you want and don’t want in a property within your price range.

 

Supplement these open house visits with online research. Look at comparable sale prices for properties that have sold in the previous few months. For an investment property, focus on the average rental income of the street and suburb you want to buy. Rental return and capital growth are dependent on location so be generous with the time you spend researching the local area.

 

There are many professionals you’ll need to turn to at various stages of the property buying process, from real estate agents to pest inspectors. Choose wisely. You want people around you that can make your life easier by helping you make informed choices. 

 

Simplify the loan comparison process, for example, by using a Yellow Brick Road mortgage broker. We save you time, money and effort by matching you with a competitive loan that suits your needs, and we take care of the paperwork.