FIRST HOME BUYER?
First home buyer, fear not
How can we best help?
first home buyer faqs
Can I borrow 100% of the property price?
If you’re a first home buyer wondering this, then the short answer is yes, it is possible. The only way you’re eligible for this would be from the following method:
– You have parents or relatives who have equity in a property that they’re willing to give you access to.
This would allow you to effectively borrow money against your property and their property, and in some cases allowing you to borrow up to 107% of the purchase price to help cover stamp duty and other fees.
Drop us a line and we can discuss your options in more detail.
Why use a mortgage broker if I can go to a bank?
If you needed your car repaired you’d go to your local mechanic. Or the one mechanic you trust. You’d take the time to drive there, you’d hope he can find the problem, and then you’d hope it isn’t going to cost a fortune. If he can’t fix it then you have to find the next mechanic and drive there. But if he can fix it, how do you know you’re getting the best price?
But what if you could speak to an expert who knew exactly how to fix all your cars issues and could tell you exactly which mechanic would fix your car the best and at the lowest price? Would you not want to deal with that expert? (not a bad idea)
Banks are the mechanics, you have the broken car, and Financial Engineers are the experts. We bring all your options to your doorstep, saving you time, money, and a potential massive headache. You can be confident you’re getting the best deal on the market. How good is peace of mind huh? Don’t make the classic mistake of walking into your bank thinking they’re going to give you the best deal because you’re a “loyal customer”. Speak to an expert who can show you 40+ options instead of just one.
What if I only have a 5% deposit?
You can still get a loan even if you have only a 5% deposit. TBH, you don’t have many lending options, but it is still possible. You will have to pay mortgage insurance, which can be quite pricey when only doing a 5% deposit and more on that later, but you also want to make sure you have a strong income/expense position.
Banks and mortgage insurers need to assess the merits and strength of your application and sometimes it feels like they’re looking for reasons to not approve your loan. Having good credit, minimal credit cards and other loans, low household expenditure and stable employment is all essential.
You want to make sure you have a good broker putting together a very thorough and detailed application ensuring you have the best possible chance of an approval.
How do I get the best interest rate?
Great question. Difficult answer. The answer is more of a “rule of thumb” than a hard and fast rule. For starters, here are some basics:
- Loan amount at or below 80%LVR.
- Property is an owner occupied.
- The more you borrow from a lender the better. (In other words, have all your borrowing with one lender)
- Talk to an experienced mortgage broker who knows how to negotiate rates
How much do I need for a deposit on an investment property?
Well, the short answer is minimum 10% of the purchase price. Due to recent policy changes by most lending institutions, the maximum LVR for investment loans is 90%, although we know some lenders that in some circumstances will allow less than 10%. The primary downside of doing less than a 20% deposit is that you have to pay mortgage insurance. Some lenders waive the mortgage insurance cost entirely for certain professionals – making the idea of doing only a 10% deposit for investors even more attractive. Primarily the LMI waiver extends to medical professionals and lawyers, but some lenders extend it engineers and accountants. Check out our page for Professional Finance for more info and to see if your profession is on the list.
Why Choose US
AUCTION TIPS & TRICKS
By maximum, we mean your very last dollar that you are willing to pay for the property. That includes the loan your broker has organised, the cash savings you have….. whatever you can call on, but it must be a limit that you will not go a dollar over. After all, you don’t want to miss out on the property you love for the sake of $1,000.
After you register to bid, have a quiet word to the agent and say these words. This puts them on notice that you are a serious bidder and, in their mind, gives you the last right of refusal to bid. If they forget this in the rough and tumble of the auction process, you can always motion towards them to come and see you before the hammer falls. By the way, once you register, don’t go flaunting your bidding paddle, hide it for now.
No matter where the auction is being held, be sure to stand behind everyone else. That aim is to keep all the other bidders within your direct vision. This way you can observe the interaction between partners as they are bidding. For example, are they bidding without talking to each other? If so this would suggest they have a lot of money left to bid with. Whereas if they are talking between bids and making up their mind whether to make another bid, you know they are nearing the end of their maximum bid. By having all interested parties in front of you, you will also observe people entering and leaving the bidding process, so you know who might be left as a potential bidder.
This may mean that sometimes you do not get to bid at all which is fine because the property will have sold above your maximum limit anyway. The agent will always try to hassle someone to make the first bid but don’t let it be you. If you do bid first, that just signals to all the other bidders you are interested, and you don’t want that in the initial stages. So, when should you bid? The best time to bid is when the remaining bidders are going up in small increments and the bidding is down to a two-horse race. If there are more than two parties bidding, then the auction still has a way to go. Invariably the auctioneer will call ‘going once, going twice’ several times to try and elicit a bid from the floor. Once the bid amounts have gone from thousands at a time, down to hundreds at a time and the two-horse race is almost exhausted, that is when you make your first bid.
Your first bid MUST be in smaller increments than the previous bidder. For example, if the previous bidder went up by $1,000, you go up $500. If they went up $500, you go up, $200. If you bid $200 and then they bid $5,000 to try and blow you out of the water, if it is still within your maximum bid, only go up as much as your last bid – in this case $200. Even if they auctioneer says you need to make a higher bid, simply say “I withdraw my bid if $X is not sufficient”. But don’t worry, they will take your offer.
After your fIrst bid, the other bidder will probably turn around to see who this new party is. They will more than likely turn to each other to discuss if they should keep going. If you see them talking, you know they are wondering if they should start using their credit card to make up the shortfall. In other words, they thought they already had their dream home and now they must discuss where are they going to get more money from to bid a little bit more. One more thing that is critical to do at this point, if they do make another bid, you need to bid immediately but only by the amount of your last bid. Given we are at the pointy end of the process this should not be more than $1,000. The reason why you MUST bid immediately after their bid is because it sends the clear message “Oh no, they don’t even need to think about it…..they can pay much more than us”. At this point, if you can keep to this strategy and stay within Rule # 1, your maximum bid, you will win the auction.
Steps to buying a property
So you’ve researched properties until your brain explodes. Next, you need to work out your budget. On top of your deposit – 5%, 10%, 20% or whatever – you’ll need to take into account the other costs associated with buying a house like, loan set up costs, conveyancing/legal fees, LMI, & stamp duty. Our finance engineers can work out these costs for you if you want to drop us a line, or check out our finance workshop.
You’ll want to obtain a pre-approval so you know exactly what the bank is willing to lend you before you put an offer on a property. A pre-approval done in advance can also take the stress out when you’re in a hurry to jump on a property. We do this for you at no cost, click here to start our online application process. Once our Finance Engineers have your details we can assess your position, work out your borrowing capacity and advise on best rates and loan options.
Building & pest inspections are a must. They cover the condition of the building and identify any potential problems including structural issues, cracks, rising damp, plumbing, termite infestations, etc. Also, while we’re sorting out finances it’s a good idea to engage a solicitor or conveyancer. They will take care of the legalities and amongst many other things they will handle the bulk of the settlement process.
4. Make an offer
With the pre-approval in place and the inspections checked out you are now in a position to put an offer in on your dream home. Work with the agent to negotiate price and make a conditional offer on the property subject to finance. Make sure you have a good agent and solicitor to review everything. Contracts are signed and exchanged, and this is where a holding deposit is paid – usually 5-10% of the purchase price.
5. Finalise Loan
Once the valuation has been complete and you have paid your deposit it is time to finalise your loan documentation. Your finance engineer will let you know if any additional information is required. Once complete, you will receive unconditional loan approval. The bank will send you a ‘letter of offer’ which is your loan contract. We will meet with you to discuss and sign the loan documentation.
Once loan contracts are signed and returned, you’ll obtain formal approval and proceed to settlement. The date of settlement is the date you take legal ownership of the property. The balance of the purchase prices must be paid this day. Settlement is usually 6 weeks from the date of signing the contract of sale for the property (30 days in QLD) and can be negotiated at the time of putting in offers on the property. Your solicitor handles the bulk of the settlement process. Once settlement occurs, then we commence house party preparations.