With tougher lending standards now in place, borrowers need to be more prepared. Ensuring you have a good savings and employment history and the necessary documentation, can help smooth the path to home ownership.

The days of 100 per cent loans are all but gone so borrowers now need to ensure they have some savings at their fingertips.

Borrowing 100 per cent of the cost of a home was once a commonplace however home buyers today are facing substantial deposit requirements as lenders adjust their lending standards.

The majority of mortgage lenders now require a deposit of between 5 and 10 per cent, with many requesting evidence that the deposit was saved overtime, which is commonly referred to as ‘genuine savings’.

For many would-be home buyers these changes are disappointing as many have the income to service a mortgage, but just don’t have the cash to stump up the deposit.

While your new home may now be a little harder to secure, don’t despair. Here are some tips to help you enter the market sooner.

Beating tougher lending standards

• Start a regular savings pattern now – banks will look for a good savings history; it shows that you’re able to manage your money.

• Lenders are implementing tougher requirements when it comes to lending – this might include looking deeper into your employment history (i.e. how long you’ve held a position for); so if you have a good job, stick with it.

• Boost your borrowing power by eliminating other debts and liabilities – pay off any outstanding loans, reduce and eliminate credit card debts and reduce credit card and / or overdraft limits; even if you’re not using them, high limits will reduce your borrowing power.

• Documentation is also more important – be sure to have all supporting documents ready to fasten the process; this includes payslips and group certificates.

• Be realistic – don’t seek a loan size you know you cannot service.

• Be prepared for knockbacks – getting a home loan is no walk in the park.

• Give us a call – we’ll be able to assess your borrowing capacity as well as advice on the appropriate lender and product types to suit your needs.

 

It can be hard for first time buyers to get a foothold on the home ownership ladder, but take heart – there are various government grants and concessions that can help offset some of the expenses when getting started.

Before you start searching for your dream home, take some time to learn more about these benefits. If you’d like an explanation on any government incentives give your mortgage broker a call.

First Home Owner Grant

First home buyers across Australia may be eligible for the Federal Government’s First Home Owner Grant (FHOG) which is a one-off, tax-free $7,000 gift from the Government.

As long as you’re a first time buyer above 18 years of age, and an Australian citizen or permanent resident, you’ll most likely be eligible for the grant.

The grant is administered by each state and can differ depending on each state’s respective legislation. For example, in Victoria first time buyers can also benefit from the First Home Buyer Bonus of $2,000 for established homes and $11,000 for new properties. Both apply for properties below $600,000.

For more information on the FHOG in your state visit www.firsthome.gov.au or speak with your mortgage broker.

Stamp duty breaks and concessions

Australia’s State Governments have introduced breaks for the stamp duty associated with a property purchase.

Stamp duty is a tax applied to certain property transitions. When land is sold, transferred or leased, for example, stamp duty is generally payable.

It is usually the buyer, not the seller, who is liable to pay stamp duty. Payment must generally be made within three months of entering into the contract for purchasing the property.

The amount of stamp duty payable depends on the value of the property and the amount for which it is sold, transferred or leased. It is calculated on its market value or the price paid by the buyer.

Each State Government has its own rules surrounding stamp duty on property purchases. For this reason, the exemptions and concessions available differ from state to state.

Generally, however, first home buyers, vacant land holders, and farm buyers may be entitled to some exemption or discount on stamp duty. So it pays to check out whether any apply to you through contacting the revenue office in your state or territory.

Note: Details are current as at print date and should be confirmed with your local Office of State Revenue or equivalent body.

Need more information?

For further information on the First Home Owner Grant or details on stamp duty breaks contact your state’s relevant government office.

ACT – www.revenue.act.gov.au

NSW – www.osr.nsw.gov.au

NT – www.nt.gov.au/ntt/revenue

QLD – www.osr.qld.gov.au

SA – www.revenuesa.sa.gov.au

TAS – www.sro.tas.gov.au

VIC – www.sro.vic.gov.au

WA – www.osr.wa.gov.au

Real estate agents can be the gateway to snapping up a bargain.

In most property transactions you are likely to have to deal with a real estate agent, so it’s worth taking time to understand what makes them tick.

First up, it’s important to be clear on one important point – a real estate agent represents the seller, not the buyer. Agents are paid a commission on the sale of the property, so it’s not just their responsibility to make sure the vendor gets the highest possible price, it’s in their interest.

Safe in this knowledge, you’ll be far better positioned to negotiate effectively with the agent, and armed with a few tips and strategies you’ll maximise your chances of haggling the price down closer to a level that suits you:

• Cash on the hip: A pre-approved loan and a deposit at the ready will elevate you above bidders that still have finance to organise. Experienced agents have an eye for a serious buyer and you’ll be in a stronger bargaining position with all your finances in order.

• Shoot low: Make your first offer low but not ridiculous. The first offer is more symbolic t
han anything else, but it shows the vendor that you are serious about buying the property while allowing yourself some extra room to move in the negotiation process.

• Be critical: Keep a keen eye out for defects and compile a list. From cracked roofing tiles to stains on the carpets, every little blemish can be used to drive down the price – so don’t be afraid to speak out.

• Leverage: Use your financial position to gain leverage over the competition by offering to move quickly. Agents and vendors can get nervy when a property has been on the market a while; a buyer that is ready to act now and settle fast may see an extra five or ten per cent tumble off the price.

 

Call in the experts

Whether you’re new to the market or a property guru, an experienced buyer’s agent can boost your purchasing power.

Haggling with a professional estate agent can be a challenge for all but the most seasoned investors. Tens of thousands of dollars or more can be at stake when it comes to negotiating a price, so it’s worth considering enlisting a professional.

Just as the real estate agent represents the vendor, a buyer’s agent represents the buyer.

Backed with extensive local market knowledge, a buyer’s agent is well equipped to help you locate and purchase the right property and at the right price. At your discretion, a buyer’s agent can take control of the entire purchasing process or simply just bid on your behalf at auction.

However, much like all services, the professional help of a buyer’s agent comes at a cost.

Charges for their service can often vary from a flat fee to a percentage of the property purchase price, depending on the level of assistance provided.

Ask around prior to making a decision as a referral from a friend or family is far better than picking an unknown quantity from the yellow pages.