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 8 step guide which should help you if you’re in the market to buy a home or investment property this Spring season.
A guide to buying Property with minimal risk:
1) 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. At present most lenders are using a servicing floor rate between 5% and 5.5% to stress test your borrowing capacity – perhaps this is a reasonable guide given that a home loan has a long term associated with it (…please refer to the disclaimer at the footer of this blog post*)
2) Borrowing Capacity: This is most important before you even start your search. Contact us to run your numbers across different lenders and work out how much you can potentially borrow. Your borrowing power will vary from lender to lender, therefore a reputable Mortgage Broker is the right person to assist with this. As part of this exercise make sure you’re across any government entitlements (e.g. At present First Home Owners pay zero stamp duty for a Victorian property purchase up to $600k, or they receive concessional stamp duty for properties in the range of $600k and $750k)
3) The Property: Once you know what you can potentially 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? A reputable Buyers Agent is a suitably qualified professional to assist you here to ensure you buy with minimal risk . Don’t leave it to chance and don’t take advice from a novice, as the wrong property is likely to cost you tens of thousands if you follow the wrong advice. If you need a contact, just ask as we are connected with some of the best Buyers Agents on offer
4) 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, contact us to find out if a pre-approval is required or 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 amount you want
5) The Numbers: If it’s an investment property you are buying, contact us 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
6) Contacts: Have you ever noticed that some Real Estate Agents are easy to reach while others 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 may 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
7) 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
8) 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, do your homework and be real with your budget or property of choice
When it’s all said and done, those with a purchase strategy are more likely to buy their desired property while minimising potential risks.
If you plan to buy or sell this Spring, talk to us in the first instance and let us guide you on the right path to make sure you are successful with minimal risk.
Good luck and happy Spring..!!
Disclaimer: The Information is general in nature and does not take into account your particular investment objectives or financial situation. It does not constitute, and should not be relied on as, financial or investment advice or recommendations (expressed or implied) and is not an invitation to take up securities or other financial products or services. No decision should be made on the basis of the information without first seeking expert financial advice. Your full financial needs and requirements would need to be assessed prior to any offer or acceptance of a loan product. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.
* The information provided by the calculator is intended to provide illustrative examples based on the stated assumptions of your input. Results are a guide and do not constitute financial advice or a guarantee of an outcome. You should always discuss your individual circumstances with a representative of Mario Borg Strategic Finance