Four things you might forget when buying a house

Four things you might forget when buying a house

With housing affordability becoming more favourable to buyers, you could well be thinking about home loans yourself soon. Recently, Real Estate Institute of Australia President, Peter Bushby, said, that affordability is on the up.

“Compared to a year earlier, housing affordability improved in all states and territories,” he said.

This gives many buyers the opportunity to start looking now – anywhere in the country.

Getting a home loan and buying a house is a complex process no matter what, but first home buyers – who are inexperienced in the market by definition – are more likely to miss out on a few key things in all the excitement of purchasing their first property.

Raise your credit score

Like many Australians, you are likely to have several different types of debt – your student loan, car loan, credit cards and others. Your credit history and current level of debt will be used to determine how much you can borrow, so you’ll want to have it looking good before you even think of applying for a home loan. Try to pay down your smaller debts, such as credit cards. You should also make a habit of obtaining a credit report to check there aren’t any errors unfairly hurting your chances of getting a home loan approval.

Get your home loan pre-approved

Once your credit score is looking healthy, you can take the next step and apply for pre-approval on your home loan. This should be done before you start shopping around for a house. Let the bank specialists be your personal home loan calculator, as they determine what amount you’re able to borrow based on your current circumstances and history. Then, you can start house-hunting, feeling secure that you know what your boundaries are and what your repayments could be at different price ranges.

Sort out your budget

If you’re not a number-cruncher, this may not sound appealing, but just because it may bring back bad memories of math class doesn’t make it any less important. If you’ve had your home loan pre-approved, you should have an idea of what your mortgage repayments might be. Now you can investigate your regular costs of living and household expenses, compared to your income, to make sure you can comfortably meet your home loan repayments.

Take care of the practicalities

Once you’ve bought your new home and settlement has passed, you can finally move in. But imagine getting the keys and walking through the front door only to find complete darkness. Switching the power and gas over can be the last thing on your mind during the thrilling home buying process, but it’s an essential one. To compound that, you don’t want important mail going to your old address long after you’ve moved out. Get onto it early and have your mail redirected and utility connections ready and waiting at your new place.

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Learn more about home loans

What is a specialist lender?

Specialist lenders, also known as non-conforming lenders, are lenders that offer mortgages to ‘non-vanilla’ borrowers who struggle to get finance at mainstream banks.

That includes people with bad credit, as well as borrowers who are self-employed, in casual employment or are new to Australia.

Specialist lenders take a much more flexible approach to assessing mortgage applications than mainstream banks.

Mortgage Calculator, Interest Rate

The percentage of the loan amount you will be charged by your lender to borrow. 

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Mortgage Calculator, Loan Results

These are the loans that may be suitable, based on your pre-selected criteria. 

How is the flexibility score calculated?

Points are awarded for different features. More important features get more points. The points are then added up and indexed into a score from 0 to 5.

Why should you trust Real Time Ratings?

Real Time Ratings™ was conceived by a team of data experts who have been analysing trends and behaviour in the home loan market for more than a decade. It was designed purely to meet the evolving needs of home loan customers who wish to merge low cost with flexible features quickly. We believe it fills a glaring gap in the market by frequently re-rating loan products based on the changes lenders make daily.

Real Time Ratings™ is a new idea and will change over time to match the frequently-evolving demands of the market. Some things won’t change though – it will always rate all relevent products in our database and will not be influenced by advertising.

If you have any feedback about Real Time Ratings™, please get in touch.

Mortgage Calculator, Repayment Frequency

How often you wish to pay back your lender. 

What is bridging finance?

A loan of shorter duration taken to buy a new property before a borrower sells an existing property, usually taken to cover the financial gap that occurs while buying a new property without first selling an older one.

Usually, these loans have higher interest rates and a shorter repayment duration.

What is a construction loan?

A construction loan is loan taken out for the purpose of building or substantially renovating a residential property. Under this type of loan, the funds are released in stages when certain milestones in the construction process are reached. Once the building is complete, the loan will revert to a standard principal and interest mortgage.

What happens to your mortgage when you die?

There is no hard and fast answer to what will happen to your mortgage when you die as it is largely dependent on what you have set out in your mortgage agreement, your will (if you have one), other assets you may have and if you have insurance. If you have co-signed the mortgage with another person that person will become responsible for the remaining debt when you die.

If the mortgage is in your name only the house will be sold by the bank to cover the remaining debt and your nominated air will receive the remaining sum if there is a difference. If there is a turn in the market and the sale of your house won’t cover the remaining debt the case may go to court and the difference may have to be covered by the sale of other assets.  

If you have a life insurance policy your family may be able to use some of the lump sum payment from this to pay down the remaining mortgage debt. Alternatively, your lender may provide some form of mortgage protection that could assist your family in making repayments following your passing.

How much information is required to get a rating?

You don’t need to input any information to see the default ratings. But the more you tell us, the more relevant the ratings will become to you. We take your personal privacy seriously. If you are concerned about inputting your information, please read our privacy policy.

How common are low-deposit home loans?

Low-deposit home loans aren’t as common as they once were, because they’re regarded as relatively risky and the banking regulator (APRA) is trying to reduce risk from the mortgage market.

However, if you do your research, you’ll find there is still a fairly wide selection of banks, credit unions and non-bank lenders that offers low-deposit home loans.

Savings over

Select a number of years to see how much money you can save with different home loans over time.

e.g. To see how much you could save in two years by switching mortgages,  set the slider to 2.

What is the average annual percentage rate?

Also known as the comparison rate, or sometimes the ‘true rate’ of a loan, the average annual percentage rate (AAPR) is used to indicate the overall cost of a loan after considering all the fees, charges and other factors, such as introductory offers and honeymoon rates.

The AAPR is calculated based on a standardised loan amount and loan term, and doesn’t include any extra non-standard charges.