Improving the value of your property.
When applying for a Home Loan to use the equity in your property, one thing that is a certain is that the bank is going to want to do is value your property. There are a few tips and tricks to ensure that you get the best property valuation completed. Here we explore a few of them.
Exterior
The exterior of your property is crucial in gaining the property valuation you require. But don’t think you have to spend big bucks to getting it looking like the best house in the street. You don’t! Focus on what you can control within your budget, and start with the simple things such as making sure your lawn is neatly mowed with edges done, and you have no weeds in your front garden. Stand back and take a look at your home, is there rubbish or clutter around that can be moved? Do you have rubbish bins visible in at the front of your house? Is your house number clearly displayed? Clean windows and remove cobwebs. A general tidy up like this will work wonders as it will let the remaining houses in the street compliment your exterior. Of course if your budget permits consider a lick of paint or some building works to enhance the front of your property.
Interior
Similar to the exterior of the home, there are many things you can do to the interior of your home that will add value without having to spend a lot of money. Start with decluttering, buyers or valuers like to see the space they are working with. Ensure all rubbish is removed and the floor spaces and bench spaces are clear. Make up all the beds in the house and ensure all throw rugs and couch blankets are folded neatly, cushions are sat up and all surfaces are dust free. Give the walls a wash and ensure bathrooms are clean and mould free. If you have hallways or stair cases give the walls a wash especially where hand marks are visible. Of course if your budget permits consider giving the inside a paint job, repair any holes in the walls and update window furnishings etc. The key is if your home is older or requires work to focus on the things that are within your control by making the place neat, tidy and have the appearance of being spacial.
Of course there are more hints and tips that you can employ to make your property more appealing. You only have to head the Lifestyle channel to watch a mountain of DIY home improvement shows to get some ideas. We would always advise to employ professionals to do the jobs that require a licence, such as electrical work, plumbing work or building work. And remember to engage your local council for anything structural that you want to update.
To explore using the equity in your home, contact Jackie today 0409 563 892 or Jackie@fimafinance.com
Getting into Home Loan shape!
Financial fitness is something that is rising in importance within the financial industry.
So what does this mean? Well just as you would get fit for a marathon, the same applies in the lead up to applying for a home loan.
You can start by checking your credit rating. A credit rating/ score/ history is a system that determines your creditworthiness to a lender. More specifically it is a representation of how you have conducted yourself from a credit perspective in the past. Lenders love a good credit rating, and so the more you can do to build a healthy credit rating will hold you in good stead. Ensure you pay your bills, credit cards and loans on time and this will get you well on your way. Of course you can check your credit rating at any time for free via systems such as Canstar and Equifax.
Next up we tackle credit cards and personal loans. Outstanding credit card balances can deter lenders from lending to you. So if you don’t need your credit cards consider closing them off or at least reducing the limit to as much as possible. The same applies to car loans and personal loans. The more unsecured debt you have the more it will impact your borrowing capacity.
And my final tip is to save save SAVE. Most internet banking sites have loan calculators, so work out what your new home loan repayments might be and start saving this amount per week. This will demonstrate to a lender that you are able to meet the repayments before even applying for the loan.
To hear more tips on how to get home loan ready, then contact Jackie today on 0409 563 892 or Jackie@fimafinance.com
*This information is general in nature only and does not take into consideration your personal needs, goals or objectives.
How much deposit do first home buyers need?
Want to buy your first home but worried about the size of your deposit? We explore exactly what you’ll need to get a home loan and why it might not be quite as much as you think.
The starting point: the value of the property.
As a starting point, the amount of any deposit you need will depend on the value of the home you intend to buy. That’s because banks are usually only prepared to lend a certain percentage of a property’s value – known as the loan-to-value ratio (LVR). In other words, the more the home is worth, the bigger the deposit you’ll need to purchase it.
Do you really need to save 20% as a first home buyer’s deposit?
A lot of first home buyers are under the misapprehension that they’ll need to save 20 per cent of the purchase price of their home before they’ll be able to get a loan. But that’s simply not true. Many lenders will allow you to buy a home with as little as five per cent deposit, meaning they’ll lend you up to 95 per cent of the property’s value.
In return for this, however, they’ll generally ask you to take out lenders mortgage insurance or LMI. So, if you choose to go down this path, you should factor in the cost of LMI when calculating your monthly repayments.
Using a guarantor as a first home buyer.
If you don’t want to pay LMI but don’t have a 20% deposit, there is another alternative: using a close family member to act as guarantor.
A guarantor is someone who puts up the equity in their own home as security against your loan. This gives the bank extra assurance they’ll be able to recoup their money if you can’t meet your mortgage repayments. That said, if you default the bank will also have the ability to sell the guarantor’s property, so it’s not something anyone should undertake lightly.
A guarantor doesn’t necessarily have to guarantee the full amount of your loan. They can put up equity to cover just part of it – say to the 20% threshold so that the bank doesn’t require you to take out LMI.
Accessing the First Home Owner Grant (FHOG).
Most state and territory governments operate a First Home Owner Grant (FHOG) scheme that provides a one-off payment to first home buyers purchasing a home, as long as it’s new or off the plan and below a certain threshold.
Lenders usually allow you to count this money – which ranges from $7,000 in the Australian Capital Territory to a massive $20,000 in regional Victoria – towards your deposit. Effectively that means you need to save less.
And, if you live in the Northern Territory and purchase newly built home or build one yourself, you may even be entitled to receive an additional $20,000 – although this incentive is limited to the first 600 applications.
Stamp duty and other upfront costs.
On top of this, most state and territory governments also offer stamp duty concessions or even waive it altogether for first home buyers purchasing homes below certain thresholds.
Stamp duty is usually the most significant upfront cost you’ll face when buying a home other than the deposit. And it’s something you need to pay for out of your own funds – you can’t usually ask a bank to lend you the money.
So, having this expense taken off your hands can make it much easier to save the deposit you need to purchase your new home.
Adding it all together…
All of this means you may be able to purchase a home for a much smaller deposit than you think. Say, for instance, you’re looking to buy your first home in New South Wales and it’s a newly built home that costs $550,000. The amount you need to save for a deposit could be:
5% x $550,000 = $27,500
First Home Owner Grant – $10,000
= $17,500 deposit required or around 3.2% of the purchase price.
Alternatively, if you look to purchase a new build property for the same amount in regional Victoria your deposit could be even less:
5% x $550,000 = $27,500
First Home Owner Grant – $20,000
= $7,500 deposit required or less than 1.4% of the purchase price.
In short, this means that far from needing to save a 20 per cent deposit, you could potentially get into your first home with very little deposit at all.
*Realestate.com
How much can I borrow?
One of the most common questions we get asked is “how much can I borrow”? To avoid sounding cliche with a response, the answer to this question really does depend on a few key things.
To begin with a lender will take into consideration your personal circumstances. For example how much you earn, how much secured and unsecured debt you currently have, what your living expenses are and whether you have a partner or dependent children. All of these things will factor into your overall borrowing capacity.
Starting with income a lender will look at what you earning capacity is. This sounds basic and makes sense given that the lender will want some proof that you will be able to meet your new loan commitments. Income to be used for debt servicing purposes can vary whether you are a PAYG employee or self employed. It’s best to speak to your Broker more regarding this. Once income is determined the lender will then look at what existing commitments you have, such as personal loans, home loans or credit cards to name a few. Another thing the lenders take into consideration when determining borrowing capacity is what your living expenses are. Most lenders use a term called HEM which stands for Household Expenditure Measure. This is basically all of your living expenses, or a budget.
The only way to truly know how much you can borrow is to complete a pre-approval application with a lender. This will give you a good idea. These pre-approval’s are generally only subject to verification’s of all existing income, assets and liabilities and also a valuation to be completed on any new or existing properties.
My tips for getting fit to borrow - try to pay down or close as much unsecured debt as possible (credit cards, personal loans, personal debts) and save as much as you can over a 3 month period. By doing this it will show the lender that you are a reliable borrower.
This information is general in nature only and does not take into consideration your personal situation. It should not be used as a metric for potential borrowing capacity.
What does a Mortgage Broker do?
A Mortgage Broker acts as an intermediary between you (the client) and the banks (lenders).
Mortgage Brokers in Australia are bound by certain educational standards and requirements. They must hold a minimum of a Diploma equivalent qualification in Finance or Mortgage Broking, they must be a member of an affiliated association and they must be a member of a Australian dispute resolution scheme.
This said, Mortgage Brokers are valuable and trusted professionals. When you (the client) need finance or a loan to purchase something, whether that’s a house, car, holiday, caravan or asset for your business, when you go to the bank you only have access to the range of the products that the bank offers. A Mortgage Broker has access to a wide range of banks and lenders on their panel. Mortgage Brokers can have up to fifty different institutions in which they can select a product for you from.
Finding the “best” deal for you doesn’t always mean finding the lowest interest rate. There is much more to consider than just the interest rate. For example not all banks lend to all client scenarios. Some banks are more favorable towards self employed people, where as some banks only lend to customers who have a 20% deposit. This is where a Mortgage Broker is invaluable, because they have the knowledge and insights of all of the lenders that they hold on their panel and thus are able to source the best deal that meets your needs for your.
To find out more about how a Mortgage Broker can help you, contact Jackie today on 0409 563 892 or Jackie@fimafinance.com
This information is general in nature only and does not take into consideration your personal circumstances.
How much deposit do I need?
One of the most common questions I get asked from first home buyers, is how much deposit do I need to have?
Well, the answer is as follows. Banks do vary with their minimum expectations, however most lenders require the customer to have a minimum of a 5% deposit plus enough money to cover their costs. More on costs later. This means in simple terms if you were to purchase a property for $100,000 you would need to have $5,000 plus costs.
Now lets explore costs. When you purchase a property, you will have associated costs that you will need to pay. These costs include, but are not limited to:
Government stamp duty (dependent on which state you buy in)
Transfer of Land fees
Solicitors/ Conveyancers costs
Mortgage Registration Fees
Bank fees
Lenders Mortgage Insurance
These fees are calculated by your lender in conjunction with your Solicitor/ Conveyancer and government requirements. Your trusted professionals will be able to help you with these costs.
Lenders Mortgage Insurance is payable when you lend more than 80% of the purchase price of your property. Lenders Mortgage Insurance is an insurance policy that you pay, but covers the bank in the event that you default. The reason it is payable when you borrow more than 80% of the market value of your property, is because the lenders deem you a higher risk and therefore require Lenders Mortgage Insurance to protect their interests.
There is more to know about purchasing your first home, but this will act as a general guide on how much deposit you will need to get you started. For more information contact Jackie today on 0409 563 892 or Jackie@fimafinance.com
Please note this information is general in nature only, and does not take into consideration your personal situation.