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Get ready to buy a home with these 8 helpful tips

Getting ready to buy a home is exciting, but it can also be overwhelming. There are many steps to take before you can start planning your home decor, DIY projects and future renovations.

In this article, we’ll take you through some of our top tips to help you prepare to buy a home.

1. Understand the home loan and property-buying process

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It’s no secret that home loans and home buying is a convoluted process, and it’s not something you should go into blind. It’s a good idea to spend time understanding how the process works so that you end up with the best deal possible.

Here are some articles to read through to get you started:

Understanding the costs involved in buying a home and securing a mortgage is very important. There’s much more to property buying than just a deposit - you’ve also got to think about stamp duty, legal fees, Lenders Mortgage Insurance (LMI), home loan fees and more.

You’ll also want to think about questions like:

  • Do you want a fixed or variable interest rate?
  • What features do you want with your loan (e.g. an offset account or redraw facility)?
  • What loan repayment term would get you a monthly repayment amount that you can handle?

Remember that it’s ok if you don’t understand everything - that’s what experts are for! If you need a hand understanding the home loan process, get in touch with a Lendi Home Loan Specialist who can help you understand your options.

2. Compare home loans and interest rates before approaching lenders

Once you have familiarised yourself with the home loan and property-buying process, it’s smart to get an idea of what loans are out there. You can use comparison websites to get an overview of the loans and interest rates on offer from various lenders.

This helps you avoid limiting yourself to the loans offered by one lender. There are dozens of banks and lenders out there that could be offering the right loan for you.

What to know about online comparison websites:

  • These sites aren’t always transparent about lenders sometimes paying to appear in results
  • Bear in mind that the loans listed on comparison websites might not be suitable for you. These websites typically do not consider your unique needs or circumstances

If you’d like a more personalised shortlist of home loans to consider, you might want to try Lendi’s platform. Using our home loan search tool, we’ll ask a few questions about your financial situation and what you’re looking for before providing you with a shortlist of potential home loans to consider.

And, if you end up finding the right loan, you can apply directly on our platform with the assistance of one of our Home Loan Specialists.

3. How to choose the right lender

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If you’ve done some research, you’ve likely come across a number of different lenders. It’s worth sifting through some reviews to get an idea of what being a customer with this lender would be like.

If you’re considering a lesser known lender, be sure to check their credibility through their website. Their website should look professional and have their Australian Business Number (ABN) and Australian Credit License number (ACL) visible if they handle consumer loans.

One benefit of going with a traditional ‘brick and mortar’ lender is that you are probably already aware of their reputation. Plus, you’ll be able to experience face-to-face customer service if that’s a priority for you.

Here are some other things to consider when choosing a lender:

  • What their customer support looks like - is it easy to call them up on the phone?
  • If you’re considering a fixed rate mortgage, check the lender’s break fee policies
  • How can repayments be made - e.g. is there a mobile app you can use?
  • Some lenders offer cashback deals and honeymoon rates, but you shouldn’t let these cloud your judgement. Check whether these will actually save you money in the long term
  • Getting the lowest possible interest rate shouldn’t necessarily be your objective. Some lenders will lure you in with a low rate only to charge higher fees, for example.

Should you use your usual bank for your home loan?

It depends. Can the bank you use for your everyday banking and/or credit card provide a competitive rate? Or do you just like the idea of having all of your financial services in one place?

There can be advantages to sticking to your usual bank - you might be more familiar with their processes and trust their customer service expertise. But a home loan will be one of your biggest ever financial commitments, so it’s important to find a product that is a good deal and truly works for you.

Try not to get caught up in any feelings of loyalty towards a lender and be strategic and thoughtful about your home loan decisions.

4. Boost your borrowing power by paying down debt

ig-graphic-what-affects-your-credit-score Your borrowing power is the loan size a lender is likely to approve you for. It is based on your financial situation, including your income, debt, credit score, living expenses and assets.

If you have a higher borrowing power, the lender trusts in your ability to repay a larger loan.

You can increase your borrowing power by focusing on reducing your debt in the months leading up to your home loan application. Think about reducing your credit card limits and seeing where you can make changes in your budget to pay off debt.

You can also boost your borrowing power by:

  • Having a good credit score: reviewing your credit score to check for any inaccuracies in reporting or personal details is important. If your credit score isn’t looking good, focus on making regular, on-time debt and bill repayments
  • Choosing a longer loan term: opting for a longer loan repayment term can improve your borrowing power. Regardless of your financial circumstances, a $500,000 mortgage over 30 years will seem less risky than a 25 year loan term. Remember that the longer you take to repay your mortgage, the more you’ll pay in interest
  • Saving up a larger deposit: a larger deposit lowers your Loan to Value Ratio (LVR) and indicates healthy saving habits

5. Apply for home loan pre-approval

Getting home loan pre-approval means you have a formal indication from a lender that they will likely approve you for a specific home loan amount. Getting pre-approved means that you can go into your property hunt prepared and knowing what your budget is.

It means you can set a firm budget that’ll help prevent you from making too-high offers and bids at auctions. Plus, vendors might be more willing to consider your offer given that pre-approval usually indicates faster financing and therefore a faster settlement process.

For more information on the process of applying for home loan pre-approval, read our step-by-step guide.

6. Organise building and pest inspections

On your property hunt, you’re likely to do plenty of home inspections, but you should also organise a building and pest inspection for the property you’re interested in buying.

This will help you identify any existing problems and issues that may arise in the future. If the inspector does find problems, you may be able to negotiate a lower purchase price. Alternatively, it could help you dodge a bullet. Not everyone wants to deal with a property with lots of issues!

7. Check whether you’re eligible for buyer assistance schemes

Did you know that there are a number of government initiatives to help buyers purchase a home?

From grants, to stamp duty concessions, and a way you can save up a deposit through your super fund - there’s a lot of helpful programs.

Most of these schemes are targeted at first home buyers, but there are some that apply to those who have purchased property before. Taking advantage of these schemes could save you money and help you get ahead on your property-buying journey.

8. Get help from the experts

Mortgage brokers and property experts exist for a reason - buying a home is not always straightforward. Even if you consider yourself to be pretty knowledgeable about the process, a broker can alleviate stress and help you understand your options.

If you’d like to chat more about your home loan options, get in touch with a Home Loan Specialist today.

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Tags: home loan, first home, first home buyer, first property, new purchase, victoria, low deposit

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Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 35% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors.
*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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