Seven secrets to buying property
Home ownership can be a complicated process for the uninitiated, but here are seven steps you can take to feel more confident about making a leap of faith, and to ensure your decision is best suited to your needs.
1. Decide whether to buy privately or at an auction
Both options carry pros and cons. If you’re an emotional basket case at the best of times and at risk of flailing your arms at an auction when an unreasonable price is bid, you could be in trouble! Auctions don’t carry a cooling off period like many private sales can. When that hammer goes down, the place is yours! But an auction can be a good idea if the expected vendor price is way too high, and there’s a good chance you could grab a great deal. If you do decide to buy at auction, make sure you have the deposit ready because this needs to be paid straight up, and that you’ve also made the necessary inspections well in advance to the gavel landing. And lastly, run the contract for sale past a solicitor or conveyancer to make sure you know exactly what you’re buying.
2. Factor in all costs
Unfortunately, working out what you can afford to borrow isn’t as simple as typing your income into a home loan calculator and expecting it to spit out a magic number. You’ll need to factor in many additional costs, such as pest and building inspections, stamp duty, moving costs, insurance, and even some repairs or renovations, etc. All these things need to be factored into your budget, so you’ll need to look into which ones apply to you.
3. Make sure your credit rating is squeaky clean
Before you go home loan shopping, get that credit rating into tip-top shape, because lenders will weigh up your “borrower’s risk profile.” Obviously, the better your credit rating, the more likely a lender will accept you, and the less likely you’ll be charged a higher interest rate. You can make your credit rating healthier by paying all your bills on time and paying off credit debts completely.
4. Shop around for a loan
You need to feel comfortable with the loan you lock in and this means bombarding your potential lender with questions, and testing their capabilities. If they offer you great advice, take your needs into consideration, and have features that can help you repay your loan as quick as possible, this is a good start. Of course, the rate matters too. Look into the fine print and always ask a lender what their comparison rate is — this includes all their fees and charges — and they must tell you what these are.
5. Negotiate the purchase price
Have a clear set of demands as a buyer because you need to be strong enough to negotiate the asking price. After researching plenty of properties you’ll have a list of things you’ve decided are “needs” and “wants,” and how many you can realistically tick off this list with your budget. Self-doubt is often a characteristic of buyers who are worried about losing opportunities but this doesn’t mean you should sacrifice affordability. Most sellers are willing to negotiate, and the worst that can happen is that you make an offer and the buyers says “no,” or replies with a counter offer.
6. Pick the right location
Don’t just buy a property because you’re in love with it – think about the area surrounding it and whether the property is likely to go up in value over time. Buying in the middle of nowhere could be risky because price growth and proximity go hand in hand, but if it is in a developing area which will be near to schools and shops in time, it might be OK. Similarly, if you can spot a place that’s really on the up, or one that is likely to, you might eventually see a value increase.
7. Get a home inspection
Just like getting a safety check on a car before you register it, home inspections mirror a roadworthy test and can identify existing problems before you get behind the property wheel. Some people like getting an independent inspection company to the one your real estate agent suggests, and that’s not a bad idea. Remember when you decide to buy a property, you agree to buy it as a whole, and without a thorough inspection, it also could include unwanted household critters (hopefully those unlike the 1980s science fiction flick). Of course, building and pest inspections don’t come cheap so make sure you’re a serious buyer before outlaying these sums of money.