A guide to help you buy with confidence this Spring
Spring is often referred to as the selling season when it comes to property. Traditionally the warmer weather brings out more buyers and sellers to market, making it an ideal time to buy and/or sell your property.
For some people buying a property is like a maze. After all buying a property is likely to be the biggest financial purchase you’ll ever make. Your priority should be to buy with minimal risk and with certainty. To achieve this you need a purchasing strategy.
To assist, I have put together this simple guide which should help you if you’re in the market to buy a home or investment property this Spring season.
Here’s the Borg Guide to buying Property with minimal risk:
- Affordability: Put together a cash flow analysis of your inflows and outflows and work out what you can comfortably afford. When working out home loan repayments, use our online calculator to help you plan. I suggest using an interest rate of 5% (as a minimum) to ensure you factor in possible future rate rises (given that a home loan has a long repayment term).
- Borrowing Capacity: Contact us or talk to your trusted Mortgage Advisor to run your numbers across different lenders and work out how much you can borrow. Your borrowing power will vary from lender to lender, therefore a reputable Mortgage Broker is the best person to assist with this. As part of this exercise make sure you’re across any government entitlements (e.g. First Home Owners pay no stamp duty for a Victorian property purchase up to $600k)
- The Property: Once you know what you can afford, and how much the bank is willing to lend you, think about your lifestyle preferences and where you can get the most bang for your buck. Is it a house on land you want? Or an inner city apartment to enjoy the lifestyle you desire? Is it capital growth you want? Or a higher yield? The best person to assist here is a reputable Buyers Agent. Don’t leave it to chance and don’t take advice from a novice, as the wrong property is likely to cost you thousands if you follow the wrong advice. If you need a contact, just ask us.
- Pre-Approval: Now that you know the property type, the suburb and location, and you know your absolute walk away price that you’ll bid up to, talk to your trusted Mortgage Advisor to find out if a pre-approval is recommended. Usually a pre-approval is smart if you are buying on a short settlement timeframe, or if your financial situation is unique and you need certainty that you can achieve the loan you want.
- The Numbers: If it’s an investment property you are buying, contact us (or your trusted Advisor) to work out your projected out of pocket cash flow commitment. There are many variables to consider so be sure to seek professional advice to avoid surprises down the track. The numbers don’t lie. Work out your walk away price and stick to it.
- Contacts: Have you ever noticed that some Real Estate Agents are easy to reach whilst others it can take days and several attempts? It’s all about relationships. If you show an Agent that you’re serious and not just kicking the tyres, you’ll get more opportunities than the next guy. If you engage a professional to help with the purchase (e.g. a Buyers Agent) you will also have access to the hidden market (i.e. properties that aren’t advertised and are being sold off market), giving you an advantage over your competition.
- Contract Review: Obtain a copy of the Sale Contract and Vendor Statement (Section 32) and ask your Conveyancer or Solicitor to run their trained eye over it. You want to ensure that the property is safe to purchase so that you won’t have legal issues pop up if you decide to buy it. The Section 32 discloses many facts about the property including title details, zoning, conditions of the sale, and so on.
- Inspection: Finally, if you are fully committed to buying the property and you want to move ahead and buy it, get a pre-purchase inspection done (if the property type requires it) to ensure you’re not buying a lemon. Of course you only want to commit the cost for a building inspection if you’re confident you’ll buy it and/or you have the budget to give you the best chance to win at auction. Auctions can be hit and miss as we’ve seen of late with many properties selling way above reserve, so do your homework and be real with your budget or property of choice.
When it’s all said and done, those with a strategy will be the ones that will buy their desired property with minimal (or zero) risk.
Nowadays, having a purchase strategy is more important than ever before given the continual strength of the property market, where auction clearance rates have been consistently high, hovering around 80% in major capital cities like Melbourne and Sydney.
If you plan to buy or sell a property this Spring, talk to us in the first instance and let us guide you on the right path to make a successful purchase with little or no risk.
Good luck and happy Spring..!!