Advice for a First Home Buyer - Getting a Loan etc

AliensStoleMyMoney on 03/09/2019 - 16:35
Last edited 03/09/2019 - 20:05

Looking to buy a house in SA late this year/early next year and just looking for some advice/tips and tricks

I have been pointed to Aussie home loans to get pre-approval just wondering what is the

DO's
DON'Ts

Edit

my bad guys for the horrible grammar/spelling mistakes …….. guess that is my first Don't

Edit

in hindsight, I should've added what I'm looking for in a house to see if I'm missing out on anything (thanks for the suggestions so far and I do appreciate the roastings as they have been warranted with the bad original post and have been quite funny)

3 bedrooms - One for me to sleep in | one to be converted into an office (i do a lot of working from home and having a pc in my bedroom isn't something I've liked) | last bedroom for friends/family visiting |

less than 10 years old - Ideally I'm looking for a newer house as older houses do tend to have problems and value.

Low maintenance back/front yard - I'm lazy and don't want to spend a lot of time/money on maintaining this.

Air conditioning - ducted air-conditioning is preferred but happy for a split system as long as it has it in the bedrooms ( I'm not a fan of these only in the living room ones (or the kitchen)

Solar Panels - an added bonus I don't use much power going off previous electricity bills and am quite frugal but won't say no to having a house come with these.

lockable Garage - shouldn't need to explain this

New appliances - this cant be confirmed till I go and inspect due to nature of appliances (rather not have to drop 5-10k on a new stove/oven, etc.

Close to public transport - while I do drive I prefer to use the train/bus to get to work in the CBD | I can always drive and park at the station.

Gas cooking - electric cooking can be expensive.

Financial

Comments

  • jjjaar on 03/09/2019 - 16:41
    +1

    Aussie are good but they only offer some lenders so to a few other banks to get an understanding of what they can offer too. That way when you’ve actually bought you’ve already ruled out a few banks and can select then finalise your application quicker.

    Get your mortgage documents back to the banks ASAP. If you have to post stuff, use registered post or a courier or deliver it yourself.

    Also make sure you actually want to buy the house you end up buying and didn’t just get caught up in “I haven’t found one yet, I’ll take anything”. I know a few people who said no to great houses because of the price, then spent the same amount on something worse because they were sick of looking and just wanted a anything.

    Leading from that - be firm on your price. Don’t get carried away. It’ll get hard if you spend more than you can (even if banks will loan you the amount).

    • dcep on 03/09/2019 - 16:46

      I know a few people who said no to great houses because of the price, then spent the same amount on something worse because they were sick of looking and just wanted a anything.
      Leading from that - be firm on your price. Don’t get carried away. It’ll get hard if you spend more than you can (even if banks will loan you the amount).

      Kinda oxymoron

      • jjjaar on 03/09/2019 - 16:50

        Not really - they shouldn’t have gone to that price at all as they are struggling. Their reason for not paying it on the better house was they couldn’t do it. Then after months of looking they made a stupid decision to go up to that price on a property they wouldn’t have considered at the start of their hunt.

        I guess I’m saying don’t go above your price AND don’t settle because you’re sick of looking. My friends did both.

        • AliensStoleMyMoney on 03/09/2019 - 17:08

          Thanks for the advice, I have been advised the same from Aussie as well (not sure if that is what they should be advising as I would think they would make the most money from getting the highest loan out of me).

    • AliensStoleMyMoney on 03/09/2019 - 17:08

      thanks for the link i will have a good read of this.

  • kahn on 03/09/2019 - 16:44
    +3

    WTF is "getting an load"? BTW, "advise" is a verb and "advice" is a noun.

  • Typical16-bitEnjoyer on 03/09/2019 - 17:00
    +3

    DO's

    Work on your spelling and grammar.

  • Zedsdeadbabyzedsdead on 03/09/2019 - 17:15
    +3

    AilensStoleMySpellingAndGrammar

  • bohn on 03/09/2019 - 17:57
    +3

    It should be 'a load'.
    And if you really want a fresh load and ask nicely, someone on ozbargain might give you one.

  • Ughhh on 03/09/2019 - 18:06
    +2

    A loan

  • BertieBrown on 03/09/2019 - 18:18
    +3

    Screw down, and close down, all of your existing liabilities before you apply. Get rid of any credit card accounts, personal loans, car loans etc. If/when you close any accounts, get a letter from your financial institution to declare the account is closed with $0 balance owing.

    Develop a frugal, strict budget now and stick to it as much as possible, and use non-credit card accounts to service your budget expenditure, ensure that you can back up any claims that you can save $X each month with an account history that indicates your saving etc.

    Save as much as you can for your deposit as possible.

    Banks are getting really strict on ensuring that people can service their loans. So anything like a CC, or a personal loan will weigh down your borrowing potential, even small amounts. It makes sense to close these accounts, if you have any now, to prove that you’re able to easily afford your loan without needing additional lines of credit.

    If you have savings, don’t touch them unless you absolutely have to, and keep your savings portfolio or a savings account balance increasing every month by depositing as much as possible into it directly, for as long as possible, the longer the better. I’d suggest, link your budget accounts back to a savings account so that they can follow a paper trail demonstrating plainly that you can service as much as possible into savings every month.

    Basically, what I’d do, is look at an estimator for how much you want to borrow, figure out what your monthly repayment would be, dump that directly into a savings account every week, plus as much extra savings as possible with a realistic but frugal budget, and do that for as long as you can before applying for your loan.

    Banks, I think, are pissed off that they got caught not being stringent on all lending, and now they’ve absolutely gone the other way around. Plus, repossessing houses is a major pain in the arse, so they want to make sure that they’re getting as much interest out of you, as a reliable borrower, for as long as possible. By showing them that you can service a loan, and that you’re financial responsible should help.

    • 87percent on 03/09/2019 - 18:23

      Great advice… Banks look at everything you spend money on nowadays. Those $4 coffee everyday? Drink instant. Those $50 eating out on Friday and Saturday? Eat at home

      • BertieBrown on 03/09/2019 - 18:38
        +2

        Thanks Supasaiyan :) That’s well said, I couldn’t articulate it as well you, but the example of the coffee and going out is exactly what I was thinking, thank you :)

        I’d also add to my previous post (I can’t edit it directly now) when you’re looking at a home, and a borrowing limit, try to limit your borrowing so that one salary is able to service the loan. People were getting loans based on a two person salaried income, and were mortgaged to the gunwales with loans that were really, really top heavy. One partner loses their job, and half the mortgage can’t be serviced, which puts a huge strain on any savings, and your sanity.

        That might mean buying established, or buying a property that needs some TLC. I’d look at properties now, and determine whether you’re able to afford what you’re wanting, with a realistic budget in mind.

        People were in the habit of buying enormous trophy homes. You know the ones I mean. I think in future, the way that things are going, properties with a small house-land ratio will become more valuable as people lose more and more green space. So many tiny shoe box blocks with no backyard, but lots of basically wasted empty space inside are becoming the norm. The exception will be blocks with big yards, at least that’s my theory anyway.

        • AliensStoleMyMoney on 03/09/2019 - 18:48
          +1

          thanks for the advice really appreciate it (although I am enjoying the roasts for my terrible original posting ).

          already ahead of you on the coffees, our work has a great free coffee machine and I barely eat out as I like cooking.

          I did just finish my computer build/monitor setup so I really won't be spending anything else, my only expenses now are just necessities including rent, gas electricity, and car insurance.

          Looking around at houses I decided to move away from the CBD to get better value as I want to have a proper home (not a townhouse or unit) as I wanna have the extra privacy.

          I do want to borrow a little extra if possible to go solar because my last electricity bills have been so low in usage that solar would be fantastic for me.

          • BertieBrown on 03/09/2019 - 19:12
            +1

            @AliensStoleMyMoney: Fair enough, and good work getting a head start on making sure your finances are up to snuff. Meh, don’t worry about it. I think everyone knew what you were talking about.

            As for solar, I appreciate that you weren’t asking for my advice but I like to talk, so here goes, do as much research as you can.. the return tariffs are stupidly low so it’s really more so what you’re actually using in terms of electricity. If you’re not using much electricity anyway, you may be better off putting that money towards something that will increase property value more so than solar (obviously for a family of four solar would likely bring tangibly higher return), where appropriate. It’s hard to know exactly. I’ve heard recently about a lot of dodgy solar installations, and installations that fail prematurely. Anyway, just make sure you do your homework. But yeah, it would make sense to buy the solar with the mortgage.

            • AliensStoleMyMoney on 03/09/2019 - 19:47
              +1

              @BertieBrown: thanks for the advice.

              totally agree if im going to spend money on solar then I could use it otherways

              the biggest issue im finding when looking are these shitty houses with a wall-mounted aircon only in the living room. I'm also prioritizing a newer house over older houses.

              I might update with the requirements on the OP

  • [Deactivated] on 03/09/2019 - 19:22

    Lol as if a few coffees is going to make a difference.

    • mortgagebroker on 03/09/2019 - 19:40
      +2

      You would be surprised.
      Couple on 45k and 50k, both have 2 coffees a day as $4 each (2 x $4 coffees per day by 6 days a week by 2 people = $96 per week = $4992 per year)
      5% of income gone and now cant borrow enough to afford the house they wanted :(

      • AliensStoleMyMoney on 03/09/2019 - 19:44

        name checks out :D.

        work spent a lot of money on this fancy coffee machine that does a good job so I just go with it.

      • [Deactivated] on 03/09/2019 - 19:59
        -4

        Lol as if, get a new job.

  • mortgagebroker on 03/09/2019 - 19:44

    Don't get a pre-approval until you are ready to purchase (within 3 months).
    A broker will let you know your borrowing capacity so you can start looking.
    Clean up your spending.
    Listen to @Jawanzar above :)

    • AliensStoleMyMoney on 03/09/2019 - 19:46

      thanks for the advise,

      at the moment the broker is just getting me a borrowing capacity.

      I am looking now the biggest issue with me moving is im on a rental lease but apparently, if I ask and give good notice I can get out of it (otherwise ill just wait it out and save more towards my deposit).

  • Gelato on 03/09/2019 - 20:34

    deposit

    prove your can borrow the amount you want

    have cash for legal and other govt fees (few thousands)

    create a budget for once you get your house, you seem to have factored in a lot of expenses

    • AliensStoleMyMoney on 03/09/2019 - 20:38

      thanks for going to the point.

      ive got 60k set aside for the deposit (looking to borrow 350k)

      • Ughhh on 03/09/2019 - 20:48

        Where abouts in SA are you looking at?

  • Ashbargin on 04/09/2019 - 09:31
    1. Check you current credit score. Plenty of free sites that allow you to do this in a matter of moments. If it isn't high seek a record to see if there are any issues with your credit history.
    2. If there is a chance you may wish in the future to move out of the home and keep it as a rental look to obtain a loan with 100% offset and build this up rather than making additional loan repayments. A lot people that I see pay down their loan and then wish to move and keep the older home as an investment property. However, as you have paid down the loan the interest is no longer tax deductible. You then end up with a bigger loan on the new home and a small one on the old loan.
    3. Make sure you budget is ok, so you know what you can afford with some margin.
    4. Ensure you appropriate insurances for you income etc in the event of illness, Injury.
    5. If you loan app is likely to be applied for in approx 4-5 months. Consider withdrawing some cash now (or pre pay some expenses) and use this to supplement some of your living expenses over the next few months. When the bank then asks for your statements your outgoing will be less, showing a higher savings level, making it easier to get a loan. However note point 3 with affordability. However doing this can make the application process easier and potentially open up more lenders with lower rates.
    • AncientWisdom on 04/09/2019 - 13:17

      Regarding credit score - check out the recently published deal on the finder.com.au one.

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