Let’s start at the very beginning…………
Whether you are buying your first home or you are buying your first or second investment property the very first step you need to complete is to organise your FINANCE.
What does this mean?
To purchase a property you need money for the transaction to occur. Most buyers need some sort of loan from a lending institution for the transaction to occur.
What lending institution should I use?
This is entirely up to you as to how you go about this as there are many options out there.
The main options are:
- You can go to your current banking institution and ask for a loan.
- You can also contact a Mortgage Broker.
A Mortgage Broker is a person who has access to a database of different lending institutions from around Australia that they can access to provide you with a loan that suits your needs. A good Mortgage Broker will identify at least two or three different lending institutions that would suit your needs.
What will they need from me to get a loan?
An application for a loan will need to be completed. To some people it feels very invasive the amount of questions and personal information that is required to be given and answered. These answers are needed so they can determine how much money the lending institution can lend you.
The main items you will be asked to supply are:
- 2 x current payslips
- Any term deposits
- Last year’s Tax Assessment Statement.
In some cases you will need to provide more supporting documentation.
What does a Mortgage Broker charge?
The answer should be nothing. The Mortgage Broker should not charge you anything for the service they are providing you with. The Mortgage Broker is paid by the lending institution that is chosen to provide the loan.
The important part of this section is to make sure that you are dealing with an ‘Independent Mortgage Broker’. What does this mean? This means that this is a Mortgage Broker that can offer impartial and unbiased home loan and mortgage advice and does not get special commissions or kickbacks for referring clients to certain lending institutions. An Independent Mortgage Broker is purely there to make the right decision for their client.
Some honest facts…
Sometimes your loan application will not be successful. The reason why it wasn’t should be explained to you and what you can do to get approval next time. Sometimes they will say you need to save a little bit more before we can lend you money.
Sometimes your loan will get approved but not for the desired amount and you may need to save a little more to get the amount you wanted to borrow.
It is frustrating but this is the process that the lending institutions have to follow to make sure they are acting responsibility and the guidelines that they have to adhere to.
What happens if you do get the green light?
If everything has gone to plan and the lending institution is happy to lend to you they give you what is called a pre-approval. This states that they are happy to lend you the money when you find the property that you wish to purchase. This pre-approval is in place for 3 months but sometimes they can go up to 6 months. If a property is not then purchased inside the pre-approval period the loan application will need to be redone with updated information and supporting documentation. Eg – new payslips etc. to keep it current until a property is purchased.
This is also the best time to contact a Buyer’s Agent who can help you find the ideal property to suit your requirements. A good Buyer’s Agent will help you make well informed decisions on your property purchase.
Happy property hunting!
All information contained in this article is intended for general information purposes only. The information is provided by Hunter Property Services Pty Ltd, and does not take into account your individual circumstances, as such the information should not be solely relied upon in making decisions. Hunter Property Services Pty Ltd has made every endeavour to ensure that the information was correct at the time of first publication, however we accept no responsibility for the accuracy of the information provided.
Readers should make their own enquiries to verify the information provided and its appropriateness to your individual objectives, financial situation or needs and speak to a financial planning professional regarding the appropriate investment strategy to suit your individual circumstances. We try to keep the information up-to-date and ensure that it is correct. However, we make no warranties of any kind concerning the accuracy, completeness, suitability, reliability, or availability of the information contained in this article.
Use this information at your own risk.