A property purchase is a major investment so when it comes to financing that investment, being prepared is important. There are a number of finance factors to consider to make sure your purchase goes as smoothly as possible.
You will need to decide if you will be going to your bank directly or consulting a mortgage broker. The options available may differ between the two so an informed approach is important. It is ideal to try and take advantage of the current historically low interest rates. You may wish to apply for a pre-approval prior to making an offer on a property so you know where you are placed beforehand.
The amount you have available for your deposit and where it will come from can make a difference as to the type of mortgage you may be looking at. Will you be providing security in the form of equity in another property, using funds from your own savings or a gift from family as a cash deposit, or perhaps going with the help of a guarantor? The amount and form of deposit you are able to put down can affect the financing options you have, so knowing this early on will see you prepared when you make your offer.
Loan to Value Ratio
The loan to value ratio is the difference between the loan amount and the value of the property and is linked closely to the deposit and / or equity you contribute. If you have a low LVR it may mean you qualify for a lower interest rate. At the other end, at times there can be restrictions with higher loan to value ratios, so it is important to know where you are placed.
Understanding your credit history before you apply for a home loan will help you know what your options are. A clear credit history is ideal, however, if it is somewhat adverse there are lenders who may still be able to help you.
The costs involved in purchasing a property can vary. You need to factor in things such as stamp duty, conveyancing and, potentially, building and pest inspection fees depending on the type of property you are purchasing. Ongoing costs such as body corporate fees, rates and insurances should also be put into consideration.
For more information on how we can help you understand what is involved in financing your purchase, contact us.