ANZ economists are predicting a 15-20% drop by the end of next year before beginning to recover in 2024. And with Domain’s June 2022 Quarterly House Price report, it’s starting to begin.
While prices don’t seem to dip for too long, here are our top five tips to help you prepare and take advantage if you’re looking to buy your dream home.
1. Initiate your market research now.
When searching for a property, ask yourself;
- What are your ideal locations
- What you can you comfortably afford?
- What kind of home do you want to live in and
- What features are important to you?
It is crucial that you research market valuations on sites such as realestate.com.au or Domain so you can compare properties in your chosen locations. This way, you will have a goal to save for as you work towards your deposit. When the time comes, you will be able to tell if the home you want is a good deal or not.
2. Be prepared with all the information for your Mortgage Broker
This means having your latest tax return complete – especially if you are self-employed.
It is crucial to have your tax return ready before applying for a mortgage loan. Lenders need to know your income and whether you can make repayments before they will approve your application. Your financial picture helps them assess the risk of lending you money and what your borrowing capacity is. Some accountants have a four to six-week lead time on completing tax returns, so if your tax returns aren’t up to date, you should get them done now.
3. Reduce your expenses and start saving
Lenders take into consideration a variety of factors when determining whether or not to extend a loan. One of these factors is your spending habits. If you are deemed a “splashy spender,” lenders may be hesitant to provide you with a loan.
To make yourself look more attractive to lenders, go through your expenses and see where you can cut back. For example, you may be able to save money by cancelling streaming services or eating out less.
By reducing your expenses, you’ll not only look better to lenders, but you’ll also have more money to put towards a deposit.
4. Save your deposit
Now that you are familiar with market prices, you can calculate how much you will need for a deposit. Usually, a 20% deposit is considered a great savings goal, but there are ways to enter the market with as little as a 5% deposit, such as the federal government’s First Home Guarantee.
No matter what deposit amount you are aiming for, don’t forget to include additional funds to cover purchasing costs such as conveyancing fees, building inspections, and stamp duty.
Lenders will typically want to see that a portion of your deposit is composed of genuine savings – typically, at least 5% of the purchase price. Some examples of items that may be accepted as genuine savings are:
- Statement showing accumulated funds or regular deposits in a savings account in your name for at least 3 to 6 months.
- Term deposit savings account statements for at least three months.
- Share or managed fund statements for at least three months.
- Rental history for the past six months.
5. Determine how much you can borrow or get pre-approval.
Assessing your borrowing capacity or getting your mortgage loan pre-approved gives you a great insight into your borrowing limit.
Knowing this information is important because you likely won’t know what kind of home you can afford to buy if you don’t know how much you can borrow.
Our experienced team at Broad Finance can help you assess your borrowing capacity or obtain finance pre-approval. So if you plan on buying during the predicted dip, reach out to us today, and we can help you start planning ahead.
Disclaimer: The content of this article is general and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal, nor to imply any recommendation or opinion about a financial product. It does not consider your personal situation and may not be relevant to circumstances. Before taking action, consider your circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
