As property loans are usually a long term commitment, you need to ensure you have a strategy in mind that places you in a good position to repay that loan. Let’s look at a few key topics to consider in your home buying strategy.
Factors affecting the property market
Education about the property market is key. There are trends where house prices rise and fall, thus having a sellers versus a buyers' market. If you're in a position to monitor house prices over a period of time this will help you buy at an advantageous time.
Factors such as interest rates, economic growth, mortgage availability (or credit growth), supply and demand are all relevant to the Australian housing market. For example, lower interest rates encourages borrowing while a high supply of housing will see a fall in prices.
How do you find the right property?
Follow the process of questions to ask yourself to help you find the right property.
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What's your purpose for buying property? E.g. are you after a home to live in or an investment property?
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Where do I want to buy? Your purpose for buying property will help you answer this question. If you are looking for a family home for example, a property close to shops, schools and transport could be beneficial.
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When do I want to buy? If you want to buy a home in the next 6-12 months, now is a good time to set up a savings plan and start growing your deposit.
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How much can I borrow? Using our borrowing power calculator will give you an idea of your borrowing capacity.
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What will my repayments be? After looking at the prices of a few properties you’re interested in, use our home loan repayment calculator to work out what your repayments will be.
Researching location and price is important, but there are other things you should consider such as the cost of land rates in the area, any major scheduled works on infrastructure and local council plans for the area.
How do you find and apply for a Home Loan?
The home loan and lending market is highly competitive, with many features that make repaying and managing your loan easy. For an easy home buying process, you can apply for home loan pre-approval. Pre-approval gives you two months to go property hunting.
It's important to find the right loan based on your needs. Again, answering the first question above will tell you whether you need a home loan or investment loan. From here, you can choose a fixed or variable rate loan with principle and interest or interest only repayments. (Interest only repayments can only be used for investment loans or for short-term bridging loans). Speaking to an experienced lender is the best way to find the right home loan for you.
How do you manage a Home Loan once you buy your home?
Managing your loan via Online Banking is an easy way to stay in control of your repayments. We can setup automatic loan repayments, so you'll avoid being in arrears.
Regular weekly or fortnightly repayments could give you extra savings in your home loan that you can redraw on later (if your home loan has a redraw facility) these savings will also minimise the interest you incur. View our range of home loans to get started.
Alternatively, you may choose to have an Offset account. You can deposit your pay and savings into the account and the balance is then offset against the amount owing on your loan. For example if you have a property loan of $200,000 and $25,000 in your offset account; in this situation, you’ll only be charged interest on a loan balance of $175,000 ($200,000 - $25,000).
No matter whether you're planning on buying your first home, new home or investment property, we're here to help. Get in touch with the friendly team at Horizon Bank today and let us assist you.
Horizon Bank has a branch network spanning the NSW South Coast and Illawarra. Horizon Bank branch locations: Albion Park, Bega, Bermagui, Berry, Merimbula, Moruya, Nowra, Thirroul, Ulladulla & Wollongong.
The content in this article has been prepared by Horizon Bank for general information only and it is not intended to be professional advice. It does not take into account your objectives, financial situation or needs. You should seek your own legal, accounting, financial or other professional advice where appropriate, and consider the relevant Product Disclosure Statement and Terms and Conditions before deciding whether to acquire any products or services offered by Horizon Bank and/or its affiliated partners. We do not recommend any third party products or services referred to in this article unless otherwise stated and we are not liable in relation to them. Any links to third party websites are for your information and we do not endorse any content on those sites. Horizon Credit Union Ltd ABN 66 087 650 173 AFSL and Australian Credit Licence Number 240573 trading as Horizon Bank.
