4 Helpful Tips When Buying Your Next Property
Have recent rate hikes made you nervous about taking the plunge into the property market? You are not alone! It is a buyer’s market for a reason. Here is how to stay cool and calm when buying your next property.
As you have probably seen, the Reserve Bank of Australia (RBA) has increased its official cash rate to 3.60%. It is now the highest it has been since September 2021, so it is only natural to feel a bit hesitant about buying property right now. But rest assured, with the right buying strategies in place, you can navigate rate hikes and mitigate potential financial stress.
1. Know Your Borrowing Capacity
Get to know your borrowing capacity and consider leaving yourself a bit of a buffer by purchasing under the maximum amount. That is because, over the many years it takes to pay off a home loan, your financial and personal circumstances may change, and interest rates could rise further.
By buying under your capacity, it will allow you to create a financial buffer to adjust and adapt to any unforeseen changes.
We can help you calculate your borrowing capacity before you start hunting for a property so you don’t fall in love with a place that could create more financial stress than what it is worth.
2. Take Advantage of It Being a Buyer’s Market
With rising interest rates and inflation, there has been a softening of the market, and this may reward those who are ready to buy now. According to CoreLogic, “it’s a buyers’ market!”
In the three months to December, the median time a property spent on the market increased to 31 days across the capital cities and 41 days in regional Australia. That is a big increase from a median of 20 days in November 2021.
This means that buyers are no longer facing a sense of urgency when making a purchase decision, and they can negotiate on price more aggressively. If they do not secure a price that they think reflects good value, they can move to the next property amid the declining prices.
By targeting properties that have been on the market for a while, there could potentially be more bargaining power (but make sure to do your due diligence).
3. Take Advantage of Government Schemes
There are several government schemes that may help reduce the size of the mortgage and other associated costs.
For instance, the federal government offers low deposit, no lenders mortgage insurance (LMI) schemes through the NHFIC. The schemes can save eligible first home buyers thousands of dollars and speed up home ownership by 4 to 4.5 years on average.
All state and territory governments (except the ACT) offer first-home buyer grants, while most (except South Australia) offer concessions to take the stamp duty sting out of house buying. On average, stamp duty can tack an extra 3-4% onto your property value depending on the state and property price, so keeping this hefty sum in your pocket is a good deal.
We have all the low-down on government schemes and can help you navigate eligibility criteria. We can also explore the possibility of bundling the schemes together for more savings.
Frequently Asked Questions
What is the current official cash rate set by the Reserve Bank of Australia (RBA)?
The RBA has increased its official cash rate to 3.60%, which is the highest it has been since September 2021.
How can knowing my borrowing capacity help me in the current market?
Knowing your borrowing capacity allows you to purchase under the maximum amount, creating a financial buffer for unforeseen changes in your financial and personal circumstances or interest rates.
What does it mean that it’s a “buyer’s market”?
A buyer’s market means that buyers have more negotiating power due to a softening of the market. Properties are staying on the market longer, allowing buyers to negotiate on price more aggressively.
Are there any government schemes that can help me buy a property?
Yes, there are several government schemes, such as low deposit, no lenders mortgage insurance (LMI) schemes through the NHFIC, and first-home buyer grants offered by state and territory governments.
What should I be cautious about when looking at home loan advertisements?
Be cautious of hidden fees in fine print and understand that sending in multiple loan applications can negatively impact your credit rating.
How can a mortgage professional assist me in buying property?
A mortgage professional can help you find the right lender, home loan rate, and terms that suit your individual needs. They can also help you organize your finances for your application and navigate all the red tape.
4. Let Us Help Guide You
That super-low interest rate loan you saw on a Facebook advert might have looked like an absolute steal, but did you notice the eye-watering fees in fine print? Did you know that shopping around for a home loan by sending in multiple loan applications can negatively impact your credit rating?
Speak to a mortgage professional like us, to help you avoid common pitfalls. We can help you find the right lender, home loan rate and terms that will suit your individual needs. Better still, we can help you organise your finances for your application and navigate all the red tape.
So, if you have been a bit nervy about purchasing in this current financial climate, give us a call. We love nothing more than helping people navigate the complexities of the finance and property markets.
Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.
About the Author:
Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.
Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).
Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. This article is not to be used in place of professional advice, whether business, health or financial.