December 18, 2017

Five Reasons Why Having a Loan Approval in Place is Important

There’s no point wasting your time searching for or getting emotionally attached to a property if you can’t make an offer on it.

It’s a sunny Saturday, and you’re prepping for a spot of house shopping. You’ve got a shortlist of properties to see, an inspection checklist, your significant other, and a strong coffee. But, have you got your finance sorted out?

Before you start doing any inspections, you need to get a loan approval. Here’s why:

1. You know you can get a loan

There is no point doing open house inspections and getting excited about a property if you have no assurances that a bank will lend you money to buy it. Get approval before you waste any Saturdays.

2. You can be more choosy

You must compare home loans to get the best deal. While the interest rate is important, you need to consider the entire cost of having a loan, and any discounts you can get on your banking. Organising pre-approval gives you time to shop around for the best home loan for you.

3. Have realistic price expectations

It’s all well and good to use a home loan calculator at home, but until you have pre-approval, you have no idea how much you can actually borrow. Getting pre-approval means you don’t waste time on properties that you just cannot afford.

4. You are ready to buy

When you find the right property, you need to move fast for two reasons. It ensures no one else gets a chance to buy it before you, and gives you a bit of bargaining power. Being able to move ahead quickly will entice some buyers and can use this to negotiate the price lower. Loan approvals in Australia take time, so don’t leave it until you’re negotiating.

5. It makes the negotiations process less stressful

There will be a million things to think about and do when negotiating for a property. The last thing you want is to be chasing a payslip from five months ago to give to a bank. If you have a pre-approval, you just call the bank and provide them with the address and sale price. No stress.

So, before you spend hours poring over real estate listings or plodding around open houses get yourself a pre-approval. It will save you stress, time and money.

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Why some Young Australians are Buying an Investment Property as their First Home

According to the NAB Residential Property Survey released in 2016, there is an increasing number of young, first-time Australian buyers of investment property. It was found that for the third quarter of that year, first-home investors account for 12.2 percent of all new property sales which is higher compared to the 11.1 percent posted in the second quarter.

Why do some young Australians prefer investment property? The survey shows that first-time investors like flexibility. They can invest in property in other locations which offer lower rates, while at the same time, rent in the city.

It’s never too young to join the investment property bandwagon, but before entering the real estate market, there are various things to take into account so you can get the most out of your chosen investment and minimise risks.

Know the ins and outs of real estate and property investing

Buying an investment property is a major decision, that’s why it is important to educate yourself on how the market works. It costs a lot of money and if you’re not knowledgeable enough, you may end up paying more than you should. But don’t worry. There are a lot of resources online that cover what investors need to know.

Seek professional advice

Aside from educating yourself with online resources on real estate and investing, you can seek advice of qualified professionals. Obviously, they understand the market better, so they can give you helpful insights on home loan comparison, investment strategy, and borrowing capacity.

Save early

One common mistake of those who want to venture into property investing is that they fail to save as early as possible. Young Australians can take advantage of time. This is one great asset since savings have a lot more time to grow. Save early and make saving a habit. Eventually, you’ll have enough disposable income to buy investment property.

Compare home loans

In a competitive market such as investment loans, it pays to have a better understanding of mortgage products. To lower your repayments, you can look for features such as lower ongoing fees, offset account, and a redraw facility. It is likewise essential to compare mortgage rates and choose what suits your needs and financial situation.

Use a home loan calculator

This is a great tool to compare home loans and have a better idea of how much an investment property would cost. There is also a home loan repayment calculator that you can use to get the minimum monthly repayments and interest paid.

Got other tips on how to compare mortgage rates and home loans? You can share your ideas in the comments section.

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