*This article first appeared in the August 2018 Midland Express.
Are you ready to own a little piece of the Great Australian Dream without getting stuck? This handy checklist should help.
- Contact a Broker or financial Institution.
A broker acts on your behalf to help determine how much you can borrow. A financial institution offers similar services but are unlikely to shop around for the best deal.
- Get pre-approval first
In short, pre-approval gets your loan sorted so you know how much you can spend.
- Savings history
‘Genuine savings’ defines the funds that a home loan applicant has saved themselves over time. Australian lenders require borrowers to save at least 5% – 20% of the purchase price in an account in their name.
- Loan repayments
A loan repayment isn’t just the same as rent. If you don’t factor changes to interest rates and your capacity to cover them over time then you might be in trouble.
- Mortgage Insurance
Lender’s Mortgage Insurance is a condition of home loan borrowing which you may have to pay to make to protect them (the lender) in the event where the borrower might fails to make repayments.
- Stamp duty
Stamp duty is a tax charged by the government on the sale of property and is designed to cover the cost of the legal documents for the transaction. The main document is the ownership title of the property and a search to ensure you are buying the property from the right person.
- 10% deposit on signing?
In a standard property sale, the home deposit has to be paid when you exchange the signed copies of the sale contract with the seller If you buy at auction, you will sign the contract and pay a deposit (usually 10%) on the spot.
Planning is paramount. Try to be aware of what is ahead of you and get advice from a respected agent.