A home buyers guide
From the moment you turn the key in the lock and
take those first few steps through your new front
door, the feeling of owning your own home is second
to none. But the path to home ownership can be
stressful and if you’re not fully prepared, it can prove
to be a time of great confusion, indecision and hard
work – especially when it comes to finance.
Your Home, Your Mortgage aims to arm home buyers
Mortgage Managers 1
and investors with essential know-how and proven
Tips for saving your deposit 2 techniques to ensure you avoid the common pitfalls
Refinance 3 of financing a property.
Government incentives 4 With good buying opportunities across most markets
Borrowing within your means 5 – whether you’re buying a home to live in or for
Interest rates and your mortgage 6 investment – knowledge and insights into the home
Lenders mortgage insurance 7 buying process can give you a solid head start.
Loan types 8 Throughout this handy guide you’ll find practical
Co-ownership 9 advice and helpful worksheets to steer you through
the whole process – from researching the market and
Managing your mortgage 10
securing finance through to negotiating your property
Loan pre-approval 11 purchase and final settlement. We particularly focus
Purchase/moving checklist 12 on the benefits of securing your mortgage via a
Mortgage Manager rather than a mainstream lender.
Property So whether you’re looking for your dream home
Buying skills 13 or your first investment property Your Home, Your
Buying tips 14 Mortgage provides insight and support every step of
Pre-purchase inspection checks 14 the way.
Your property wishlist 15 I wish you every success in your hunt for your dream
Purchasing an investment property 16 property.
Buyer’s agents 18 Sincerely,
Moving your family 19
Protecting your biggest asset 20
Your move 21 Editor
Mortgage Managers are a key source of finance for Australians.
They provide mortgage finance services, repayments, receiving insurance renewals,
with some specialising in servicing particular interest rate adjustments and loan variations.
types of borrowers, such as self-employed, Whatever happens through the life of the
first home buyers or those with a tarnished loan, a Mortgage Manager is there to help. Mortgage Managers are
Are Mortgage Managers safe? with you for the life of your
Like banks, they offer a range of products
to meet borrower needs. However, because
Yes. Mortgage Managers do not lend their loan; they are responsible
they are smaller and have access to different
own money for home or investment loans for recommending a loan,
– they source their funds from elsewhere,
debt solutions they can provide you with helping with the application,
and this has significant benefits.
a stronger, more intimate service that is arranging the funds for your
personal and more specialised – a service to Importantly, Mortgage Managers do not
suit your needs. accept deposits or loan repayments –
loan and ongoing customer
they are not banks. services through each phase
Mortgage Managers offer loans for diverse
types of properties: residential, commercial, Mortgage Managers arrange and service of your loan’s life.
industrial, retail, from a variety of funding home and investment loans using
sources. funds from sources such as unit trusts,
superannuation funds, securitised funds and
They are responsible for recommending
even the banking sector itself.
a loan and assisting with the application
process, then arranging the funds for your Some banks use Mortgage Managers to
loan and the ongoing, prudent management provide loans. This reduces their need to
of customer service through each phase support costly branch networks, and they
of your loan’s life. This can include credit can allow Mortgage Managers to pass on
assessment to the monitoring of loan very competitive rates to home buyers.
Who is responsible for the How does a Mortgage Manager
mortgage? get paid? Why use a
The lender is not the Mortgage Manager; Mortgage Managers receive payments from
Mortgage Managers provide loans from two main sources: application fees, which mortgage
professional lenders which may be from
banks, investment trusts and some of
help offset the cost of establishing your loan,
and management fees paid by the providers
Australian’s biggest non-bank lenders. of the funds for the ongoing management • Designed for you – Mortgage
These may be provided by a professional of the loan. These may be reflected in the Managers grew out of borrower
trustee or custodian company, which gives interest rate that you pay on your loan. frustration about bank pricing and
you peace of mind that your mortgage What is the difference between a mortgage/ their customer service proposition.
provider is secure and that your mortgage is finance broker and a Mortgage Manager? Rather than charging huge margins
properly and professionally managed. on the money they lent, the first
A mortgage/finance broker introduces a
If your Mortgage Manager ceases trading, non-banks sought to share that
borrower to a lender but has no ongoing
the Mortgage Manager or lender could margin with the customer, which
involvement with the mortgage. All ongoing
simply appoint another Mortgage Manager meant lower interest rates and
customer service is left to the bank or lender
and your mortgage would carry on as therefore lower repayments –
who provides the loan.
before, but under new management. something that resonated with
The Mortgage Manager is responsible
Mortgage Managers are a key provider of borrowers. Non-banks are today still
for managing the loan and servicing all
non-bank funding and have brought strong competitive with the major banks.
your customer needs from the time it is
competition to the home loan market.
provided, until the borrower’s payment of • Service first – Non-banks are
They are subject to competition from other
the final repayment of the loan, ensuring that typically boutique businesses
sections of the finance industry, which
your needs are understood and providing compared to banks. They are usually
ensures they offer competitive interest rates
customer service for the life of your loan. mainly focused on mortgages and
are often more nimble than the
banks – allowing them to make
Tips for saving your deposit decisions quickly.
• Customer focused – Large lenders
Saving for that all important deposit can be tough, but here are three typically have rigid lending criteria
based on complex risk assessment
winning tips to help set you on your way to home ownership, fast!
models. Mortgage Managers on the
Put your goals in writing: credit card. If you can’t pay it off in one other hand may be more flexible and
lump sum, ensure that you pay more than willing to look at a client’s particular
Setting a financial goal will make it much
the minimum monthly repayment. You’ll circumstances rather than view them
easier to plan and save successfully.
Make a conscious effort to track your not only slash your debt, you’ll also have simply as another transaction.
expenses so you can see where your extra funds to channel into other debt This boutique approach means
money’s going and cut back where you commitments or even savings. they’ll work hard to win and keep
can. Small sacrifices, such as taking the Make your savings work your business, beyond just looking
bus instead of a taxi, cutting back on harder for you: at your ability to meet repayments to
buying coffee or bringing your lunch to determine your ability to borrow, and
Making cutbacks on your lifestyle is one
work can also go a long way towards providing a personalised service to
thing, but putting that money to use is
helping you save. you for the life of your loan.
another. Remove the temptation to spend
Beat the credit monster: your savings by arranging a set amount to
Credit card debt, unpaid bills and personal be taken out of your pay each month and
loan repayments can be major setbacks put directly into a savings account
to your saving efforts. As part of your Shop around, and seek a high interest rate
saving strategy get these debts paid off. savings account to get the best returns
Start by paying off your debts that have – many banks now offer an online high
the highest interest rate – typically your interest account.
for a better deal
Your life never stands still, and neither should your mortgage. If change is afoot, it might be
time to search for a more suitable product – and lender.
If your bank loan doesn’t suit your lifestyle Pay off your mortgage faster! as you are capable of meeting your loan
or personal situation you could be wasting If you’re striving to be mortgage free, repayments, refinancing your mortgage can
thousands of dollars a year on extra interest, there’s a good chance there may be a more help you tap into the value that you’ve built
fees and features you don’t need. appropriate product to meet your needs. up, using it for other purposes, such as
You may be able to find a loan with a Some mortgage products are designed to purchasing an investment property.
Mortgage Manager that’s more appropriate motivate borrowers to repay their mortgages Avoid monthly fees and charges
for your needs, with more suitable features quickly, so now is the perfect time to talk to
Some lenders charge a monthly service fee
and a competitive interest rate to match. a Mortgage Manager and consider whether
– further adding to your debt. Competition
a new loan will see you on the road to
Mortgage Managers offer a compelling between lenders has increased and some
financial freedom – fast!
alternative to the high street banks and you now waive administration fees, so refinancing
may well find that their products might better Better interest rates and lower your home loan with another provider can
suit your needs and situation. repayments be a smart move to help cut your
If you think that there may be a better Rates and mortgage deals are constantly on mortgage costs.
alternative to your present home loan give us the move. To make the most of a competitive
a call. Here are some key reasons to prompt mortgage market, you might want to
a review of your mortgage: evaluate the loan product you currently have.
Consolidate your debt
For example, you may want to go for a If you’re striving to be
lower variable-rate, or lock into a fixed-rate.
Consolidating debts, such as credit cards mortgage free, faster,
Break costs can be expensive though,
or personal loans, into your home loan can so you’ll need to check that you’ll come out there’s a good chance there
save you thousands of dollars in interest ahead when all costs are considered. may be a more appropriate
charges. Rolling your debts into one monthly
or fortnightly repayment can also help make Unlocking equity product to meet your needs.
juggling your finances a little easier, while As you pay off your mortgage you’ll
improving your cash flow to boot. accumulate equity in your home. As long
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 Note: Details are current as at print date and Some first home buyers, vacant land
home, take some time out to learn more should be confirmed with your local Office of holders and farm buyers may be entitled
about these benefits. If you’d like more State Revenue or equivalent body. to some exemption or discount on stamp
information about government incentives Stamp duty breaks and duty in some states. So it pays to check out
give your Mortgage Manager a call. whether any apply to you through contacting
the revenue office in your state or territory.
Some of Australia’s State Governments
have concession waivers of the stamp duty Note: Details are current as at print date and
should be confirmed with your local Office of
associated with a property purchase.
There are some financial State Revenue or equivalent body.
Stamp duty is a tax applied to certain
advantages to being
property transactions. For example, when
a first time buyer. land is sold, transferred or leased stamp
duty is generally payable. Need more
It is usually the buyer, not the seller, who
is liable to pay stamp duty. Payment must information?
First Home Owner Grant generally be made within three months of For further information on the First Home
First home buyers across Australia may the purchase, otherwise penalty interest Owner Grant or details on stamp duty
be eligible for the Federal Government’s may apply. breaks contact your state’s relevant
First Home Owner Grant (FHOG) – which The amount of stamp duty payable depends government office.
is a one-off, tax-free $7,000 gift from the on which state the property is in, the value ACT – www.revenue.act.gov.au
Government. of the property and the amount for which it
NSW – www.osr.nsw.gov.au
As long as you’re a first time buyer above is sold, transferred or leased. If payable, it is
18 years of age, and an Australian citizen calculated on its market value and the price NT – www.nt.gov.au/ntt/revenue
or permanent resident, you’ll most likely be paid by the buyer. QLD – www.osr.qld.gov.au
eligible for the grant. Each State Government has its own SA – www.revenuesa.sa.gov.au
The grant is administered by each state rules surrounding stamp duty on property TAS – www.sro.tas.gov.au
and can differ depending on each state’s purchases. For this reason, the exemptions
and concessions available differ from state VIC – www.sro.vic.gov.au
respective legislation. For more information
on the FHOG in your state visit to state. WA – www.osr.wa.gov.au
www.firsthome.gov.au or speak with your
within your means
Your lender will assess your loan and affordability to estimate a maximum borrowing
amount. However it’s essential that you work out what you can afford and what
repayments you feel comfortable with.
The choices you make when taking out a Lenders will also need to assess your Am I being realistic?
mortgage have long lasting implications – circumstances to work out how much Houses are like stepping stones – it’s
so you need to approach borrowing with a to lend you. As a general rule, the bigger probably best to start with something
healthy attitude. deposit you have and the higher your affordable and move towards your dream
When determining your borrowing income, the more they should be willing to home as your personal earning capacity and
capability, start by measuring your lend; however they will still need to assess equity grows.
income against expenses, including your your circumstances.
What are my plans?
mortgage repayments. While everyone’s All lenders will need to determine a
Think about what the future holds – both
circumstances and expenses are different, loan suitable to your circumstances but
personally and financially. Are you a one or
a good starting point is that no more than Mortgage Managers can get to know your
two income household and is this likely to
35 per cent of your gross monthly income circumstances personally – and may have
change in the future?
should go towards servicing your mortgage. a little more flexibility than the banks to
consider applicants on a case-by-case What about interest rates?
basis. Consider how any rate rise will impact on
Here are some factors to take into account your ability to make repayments and factor
when determining how much you should that in when setting your borrowing limits.
Ultimately the choice borrow: And don’t forget, there are added extras
is yours – so be careful How much debt can I handle?
when purchasing a house, like in some
not to over commit Don’t over commit. Borrowing too much
states stamp duty and mortgage duty,
solicitors and application fees, as well as
yourself. can be a big strain on your personal life and ongoing commitments including council
lifestyle. Think about what aspects of your rates, possible strata fees and utility bills –
lifestyle you may be willing to give up, and so consider these costs when determining
those that you can’t. how much you think you should borrow.
Interest rates and how
they affect your mortgage
While rates move up and down you should always consider the impact they will
have on your mortgage.
The rate of interest you’ll pay on your The type of rate
mortgage depends on a combination of Rates move up and down in line with the Lessen the impact
factors. This can include the Reserve Bank
of Australia’s (RBA) cash rate, your lender
economic current cycle. When rates look like
going up some borrowers choose to fix their
of a rate rise
and the type of loan you have. home loan rate – or ‘lock in’ a rate for a set Should rates rise, there are a number of
When working through your loan options period of time. effective ways to lessen the impact on
with your Mortgage Manager there are your finances:
If you’re considering this option, it’s
a number of issues to keep in mind to important to remember that a fixed interest Factor in possible hikes – Leave room
ensure you’re getting the most appropriate rate is usually higher than the current for a number of interest rate rises when
mortgage for your needs. variable rate. However, if rates are on the you assess how much you can afford
The type of loan rise and you’re concerned they’ll keep going to borrow – this is essential, particularly
up, fixing your rate will ensure consistency in as rates are likely to rise at some stage
Different loan types tend to come with
repayments each month. However, if rates during the life of your loan. You may have
different interest rates. So if your loan has a
go down you will still be required to make to reduce your mortgage amount slightly
range of features, such as re-draw, offsets
loan repayments at the fixed interest rate or purchase property that’s at the lower
or early repayment facilities, you’ll usually
until the expiry of the fixed rate period. end of your price range as a result.
pay a little more in interest.
Alternatively a split loan can give you the Interest only – If you have a loan and
Alternatively, while a basic loan doesn’t have
best of both worlds: a part fixed-rate and you are really struggling to keep up with
all the bells and whistles of other products
part variable-rate loan. This means that if rate hikes, you can consider changing
the interest rate is typically lower.
rates rise, a proportion of your loan will be to an interest-only loan for a while. While
When assessing which loan best suits protected – minimising the impact of higher not an effective long-term strategy for
your needs, ask your Mortgage Manager monthly repayments. If on the other hand owner-occupiers, it might be an option
to explain how the different features work rates fall your fixed-rate will remain higher while you deal with the here and now.
to assess whether they are worth paying a and the variable part of the loan will fall. Refinance – Your situation may have
higher rate for.
changed from when you first took out
For example, if you’re looking to drive your mortgage – for example you’ve now
your mortgage down quickly or would like only got one person in the household
flexibility in your repayments, it may be worth earning a salary. Rates between lenders
paying for the features needed to do this are also changing dramatically as
most effectively. competition amongst lenders increases.
Ask your Mortgage Manager what
products and rates are available that
could better suit your situation.
Lenders Mortgage Insurance can help you enter the market sooner.
Lenders Mortgage Insurance (LMI) helps The bigger the percentage of the property’s
Australian homeowners enter the market purchase price you have to borrow, the
earlier through allowing you to borrow a greater the amount you’re likely to pay on
higher percentage of a property’s value. insurance. So if your deposit is less than LMI covers the lender
20 per cent, and especially if you have no if you default, it doesn’t
For first home buyers, particularly those
deposit at all, you will need to factor LMI
struggling to save a deposit but more than
into your home loan.
comfortable to meet their mortgage repay-
ments, it can be a key tool to break free of Remember that in some cases lenders
the rental trap. may require LMI even if you have a lower
deposit, depending on the type and style of
Through financing a higher proportion of a
property you’re purchasing – for example
property’s purchase price lenders take on
some inner-city apartments or rural land
a higher level of risk should you fail to meet
mortgage repayments, and the property LMI is usually paid as a one-off lump sum
needs to be repossessed and resold. at the time of settlement but in many cases
it can also be added into the loan amount
LMI is therefore paid by you to insure your
and paid off as part of your repayments
lender against loss should this happen. It is
over the life of the loan – a term known
important to be aware that LMI only covers
as capitalising the LMI. Speak with your
the lender if you default, not you.
Mortgage Manager to assess whether this
option is right for you.
of the bunch
There’s a huge choice of home loans available, but to find the one that best suits your
situation you’ll need to do a bit of homework.
Making yourself familiar with the most loans allow you to borrow money for a set Split-rate home loans
popular loan products available will give you period of time, during which you make Want the best of both worlds? A split-rate
a good head start when discussing your regular repayments. The interest rate can home loan offers both flexibility and security.
loan options with your Mortgage Manager. vary depending on fluctuations in the official
A good product for both first time and
Here are just a few of the product types cash rate so it is likely to go up or down
existing borrowers, split loans allow you to
you’re sure to come across: depending on the market cycle.
customise your loan’s interest rate as you see
Basic home loans Fixed-rate home loans fit: fixing a portion of your interest rate to give
Worried about rising interest rates? certainty to part of your monthly repayments
Basic home loans or ‘no frills’ loans offer
A fixed-rate home loan will allow you to should rates increase, but also flexibility
borrowers a loan with a low interest rate.
fix your interest rate for a specific period, through taking out a variable-rate portion.
This interest and principal repayment loan is
usually from one to five years. It’s a sound
a popular choice among first home buyers. Interest-only home loans
A basic home loan’s interest rate can be half option when interest rates are on the rise,
Interest-only loans offer borrowers lower
to one per cent below the standard variable or in times of economic uncertainty.
repayment options, while maintaining many
rate, which is sometimes combined with Should interest rates plummet, however, of a traditional loan’s features.
minimal ongoing fees. Potential drawbacks you’ll still have to pay off your mortgage at
This type of loan allows you to pay only the
can include limited features, less flexibility, the fixed-rate until the end of the agreed
interest component on a mortgage; it does
and additional charges if you decide to fixed-rate period. Additionally, keep in mind
not reduce the principal component.
switch loans or pay the loan off sooner. that you may be charged a fee should you
They are a popular choice for investors who
decide to break your fixed term or switch to
Standard variable-rate may wish to maximise negative gearing
home loans benefits of good capital appreciation on
A popular mainstream choice, standard their investments.
variable-rate interest and principal home
Products at a glance
MORTGAGE Boost your
Basic home loans Split-rate home loans buying power
Interest rates are often half to one per cent
Fix a portion of your interest rate to give through
below the standard variable rate.
certainty to monthly repayments while also
benefit from a variable-rate portion should co-ownership
Limited features, less flexibility and possible rates drop.
penalty fees for early loan repayment. Cons Buying through co-ownership is quickly
If interest rates do drop you’ll be left becoming a popular strategy for budding
Standard variable-rate paying a higher rate for your fixed-rate investors hoping to enter the property
home loans portion. market but without the capacity to do
Pros Interest-only home loans Through pooling resources with a friend
Make regular repayments based on the
current interest rate. Effective if rates do Pros or family member you can increase your
Pay only the interest component on your buying power. There are a number of
mortgage. other benefits as well.
Should interest rates increase, your regular Cons A joint purchase, for example, can help
Repayments do not reduce the principal ease the deposit burden as you’ll only
mortgage repayments will rise.
component of your mortgage. need to pay a portion of the deposit.
Fixed-rate home loans There are also other costs that can be
Low-doc home loans split, such as stamp duty, legal fees
Pros and maintenance.
Fix your interest rate for a specific period, Pros
Can help you enter the property market However, there are a number of pitfalls
giving certainty to regular repayment
if you’re a self-employed, contract or that you need to be aware of when
seasonal worker without regular income or purchasing via co-ownership.
Cons proof of income. Importantly, you need to pick your
Should interest rates fall you’ll still need to partner carefully and ensure you have
repay your mortgage at the agreed fixed Cons
the same overall goals.
rate. There are potentially also high break Typically have higher interest rates.
You may also have to pay LMI. Key to this is a firm legal document
costs payable of you wish to end the fixed
outlining the partnership and the
rate term early.
conditions for selling the property,
plus other associated issues. There are
also a number of different options for
financing the investment – give your
Mortgage Manager a call to discuss
Low-doc home loans
what strategies are available
If you’re a self-employed, contract or Low-doc home loans are not as readily to you.
seasonal worker and do not have a regular available – and tend to have more
income, a low-doc loan may be a solution. restrictions – following the global financial
While making home ownership a possibility crisis as lenders have sought to minimise
for a cross section of Australian workers their risk exposure to these types of loans.
that previously found it difficult to secure a Call your Mortgage Manager to find out their
mainstream bank loan, most low-doc home policy on this type of product if you think
loans typically have higher interest rates. that it might suit your situation.
Get a head start
with a pre-approved loan
Competition for property can be fierce. Put yourself ahead of the pack with a
What’s pre-approval? These should include proof of your income
Sometimes referred to as an approval-in- – such as a letter from your employer or Why secure a
principle, pre-approval is a general indication copies of your pay slips – proof of identity
of how much you’re able to borrow based and details of any assets you own. pre-approval?
on the information you provide to your Other paperwork might include details of • Peace of mind – A pre-approval
Mortgage Manager. any existing loan commitments and limits gives you the confidence of knowing
Although subject to terms and conditions, on credit cards. Once your financial status how much you can borrow when
a pre-approval basically gives you the green has been given the tick of approval by buying a property.
light on your home loan even if you’ve not your Mortgage Manager, you’ll receive a
• Jump the queue – Having your
yet decided on a particular property. pre-approval notification that will see you
home loan pre-approved enables
on your way to home ownership in little or
The amount of the pre-approval is usually you to seize the opportunity and act
no time at all.
determined by your ability to meet the loan quickly when you find the property
repayments. Most pre-approvals are valid for you want.
up to three months.
• Stronger bargaining power –
Just remember that even with your A pre-approval basically A pre-approval can sometimes help
pre-approval, your purchase must still meet
gives you the green light you negotiate a better price with the
all of your Mortgage Manager’s requirements seller, especially if there are fewer
prior to obtaining final approval (including on your home loan even if
stringent conditions upon the sale.
valuations, if applicable). you’ve not yet decided
• Ability to bid at auctions –
How do you get pre-approval? on a property. Under the conditions of most sale
To kick start the pre-approval process you’ll contracts, a pre-approval can
need to give your Mortgage Manager some allow you to bid at auction for the
key documents. property of your choice. However
you will be responsible to meet the
rest of your obligations under the
contract including if unconditional
approval is not obtained. You should
seek advice on the contract before
bidding at an auction.
How to manage your
mortgage more effectively
While there’s no getting out of your mortgage repayments (unless you strike a financial
windfall and can pay it off!) there are ways to make paying off your loan easier.
Here are five proven tips to better manage of your loan. When extra funds come your Direct debit
your mortgage. way, like tax refunds, put them straight into Arrange for your mortgage repayments to be
your home loan as well – it can really make a direct debited from your pay, so you always
Set a budget
difference in the long term. Just keep in mind make them on time.
Work out your expenses (fortnightly or
that you may be charged a fee for making
monthly) and factor in your mortgage
additional payments on your mortgage Don’t be late
repayments. You might need to cut back on If you’re struggling to meet your repayments,
depending on the type of loan you have.
spending in certain areas to make sure your speak to your Mortgage Manager. It may be
mortgage is a priority. Keep a diary of your possible to restructure your repayments or
spending and stick to your budget. consolidate other debts into your home loan
Cut your debt under certain circumstances.
Reduce the number of credit cards you
have (ideally down to one), reduce credit
limits and use your cards sparingly.
Having a mortgage means taking control A small change can really
of your spending.
make a difference to
Pay more than the minimum your loan over the
Making fortnightly repayments can have
a big impact, minimising on interest over
the long term. Through this strategy you
essentially make 13 monthly repayments
over the course of a year, rather than 12.
This extra month’s repayment helps reduce
your principal, which can potentially save
thousands in interest repayments over the life
Are you ready
to move in?
Your step-by-step checklist for being
home owner ready!
Arranging your finances
Contact your Mortgage Manager to explore financing options
Arrange supporting documents (i.e. pay slips, group
certificates, credit card statements and other relevant
If using a mortgage broker ensure to ask them about the
products offered by Mortgage Managers and how they may
better suit your needs
Submit loan application with all supporting documents
Note: Finance can be secured before or after you find a property. However Moving in
borrowers should consider a pre-approval so that they have a true
measure of their borrowing capacity before they commit to a purchase. If currently renting, advise landlord that you’re moving
Pre-approvals are usually always subject to further conditions.
Collect bond from rental agency
Arrange disconnection of utilities and cleaning of old
Buying your house premises (if required)
Engage a solicitor or conveyancer to check sale contract Arrange quotes from removalist companies/schedule
Place offer for home/win at auction
Connect the gas, electricity and other utilities
Complete building and pest inspections, strata and title
searches Connect pay TV and internet
Sign contracts and submit agreed deposit Connect new phone line
Arrange insurance (contents, building and/or income Redirect mail (can be arranged through your local post office)
protection) Redirect newspaper delivery
If applicable, process first home owner grant (FHOG) Advise family and friends of new address/phone details
Complete settlement Clean up home before you move in
Pick up keys Move the family in!
Arm yourself with some essential buying skills for purchasing property via
auction or private sale.
Both private sale and auction have Cons doesn’t always give you the scope to do.
positive and negative points from a buying On the flipside, one of the downsides of a Moreover, there’s the advantage of knowing
perspective. Once you’ve found your dream private sale is the possibility that multiple the property is yours there and then, rather
home, keep these points in mind when offers may be made to the vendor without than having to spend weeks or months in
purchasing under either situation. your knowledge. This can work against you negotiation.
if another party makes a higher offer that is Cons
Buying via private treaty
accepted by the vendor, when you might One of the disadvantages of buying at
A private sale is popular from a buyer’s
have been willing to make a similar offer auction is the limited scope to negotiate the
perspective for several reasons, but top of
eventually. terms and conditions of the sale contract.
the list would have to be the control and
flexibility it can offer. Buying at auction After a final bid is accepted, there is no
Purchasing a property at auction involves cooling-off period – you must put the
Note: Terms and conditions of this buying
method may vary according to state. bidding against other parties, and the deposit down immediately. The other
competition can get fierce! For this reason, possible downfall is the tendency for
Pros competition to drive up the purchase price.
In a private sale, as a buyer you may be in a purchasing at auction is often preferred by
experienced or confident buyers. Be careful that you don’t get tempted in
strong position to negotiate the terms and the heat of the moment into making a bid
conditions of the purchase to suit you. Less experienced or first time buyers
can purchase at auction too with the that’s beyond what you can afford, or have
You may be able to make several offers over budgeted, to spend.
a period of time, without rushing or being right approach.
locked into a binding contract. Pros
There is often a cooling-off period after your Buying a home at auction allows you to
offer has been accepted, which also gives see your competition face-to-face, and
you the chance to pull out of the purchase get an idea of how many other parties are
should you change your mind. interested in the property. It also gives you
the chance to make a higher offer than a
competing buyer, something a private sale
Buying tips for private sale and auction
Private purchase Auction for example longer settlement terms or
• Get a mortgage pre-approval – it will • Attend a few auctions to familiarise less deposit down.
establish your credentials as a serious yourself with the process before you • Thoroughly examine the property
buyer and may give you leverage to take the plunge. before bidding at auction, including
negotiate. • Obtain a copy of the auction rules pest and building inspections.
• Do not sign any contracts without the and conditions and make sure you • Most importantly, set your maximum
approval of your solicitor. understand them well. Also have your bidding limit and stick to it.
• Insert an acceptance date into solicitor review the contract before
your offer by which time it will lapse if it you attend the auction, and ask them
is not officially accepted. to negotiate conditions on your behalf –
Before you buy – inspections
and pre-purchase checks
Use this checklist to make sure your new home doesn’t contain any hidden surprises.
Check required Completed
Have a qualified builder inspect your property and provide
a professional condition report and highlight any structural
problems or issues, such as rising damp or old wiring.
Obtain quotes for repair.
Organise pest inspection.
Check the local council’s building regulations should you
plan to renovate and determine any restrictions that may
apply before you buy.
Have all legal aspects relating to the land and title
checked by your solicitor or conveyancer.
Check with the council on zoning or any upcoming
developments nearby – particularly those in your
immediate neighbourhood, such as new roads and
highways or high-rise, high-density unit developments.
Ensure all appliances work (i.e. dishwashers, stoves,
hot water systems).
What are you looking for?
Searching for your ideal property is so much easier, when you have clear picture of
what you need and what you want.
Finding a property can be a challenge, especially when you have Give yourself a head start through determining your ‘must have’
so many different considerations to take into account. features compared to those you could possibly live without.
Features Essential Preferable Handy Essential Preferable Handy
Close to work Off-street car parking
Close to schools North facing
Close to parks Swimming pool
Close to shops Security system
Close to amenities (i.e. hospitals) Fully renovated/landscaped
– no work required
Close to sports grounds/
local clubs Requires renovation/landscaping
– work required
Close to train station/bus routes/
public transport No steps
Close to family and friends Low maintenance
Close to leisure and Street lighting
entertainment (i.e. cinemas)
Separate dining room
Separate children’s rumpus
Open plan layout
Built-in heating/cooling system
Double/lock-up garage or
How to use the equity in
your home to finance an
Realise your property investment goals through capitalising on the equity
built up in your home.
The idea of property investment is one that Example Their Mortgage Manager suggested that
appeals to many Australians but is sadly Dan and Jessica bought their four bedroom they get a valuation of their home, and they
often overlooked because of the family home in Rockhampton in 2003 for discovered that it was now estimated at
misconception that it is only within the $247,000 putting down a $49,400 deposit $480,000.
reach of the wealthy. and taking out a loan for $197,600. Over the years Dan and Jessica had paid
The reality is that with the right finance, The couple recently decided that they’d look $48,000 off their original loan leaving
planning and strategy, owning an investment at breaking into the investment market so $149,600 owing on the property.
property may be easier to achieve than they contacted their Mortgage Manager to Today’s valuation of the property, less the
you think. discuss potential finance. outstanding loan, left them with $330,400
Ease the deposit burden worth of equity.
One of the key challenges to breaking into Their Mortgage Manager suggested that
property investment is raising a deposit, they consider refinancing their own home to
but there are solutions. Property buyers are the loan ratio of 50 per cent to free up some
typically required to contribute 20 per cent equity for an investment. Based on the
of the property’s value, and for some this current property value that would give them
can be a stumbling block. But existing home a loan of $240,000 – making an additional
owners may be able to unlock equity – or $90,400 available for investment purposes.
the increased value – that’s built up in their This strategy appealed to Dan and Jessica
own home to cover some or even all of the because otherwise they would have needed
down payment on an investment property. to liquidate their managed funds to raise
The following scenario illustrates how the deposit for the investment property
borrowers can capitalise on the equity and this was not a viable option as these
in their homes to purchase an fund balances were low due to recent poor
investment property. performance.
They decided to put down a 20 per cent
deposit on a $350,000 two bedroom First time
apartment and take out an 80 per cent loan.
You may be able to investors
The deposit came to $70,000 leaving a realise your investment
further $20,400 to cover stamp duty and First time buyers can also crack the
other expenses while a $280,000 loan goals by putting your investment market without having to
covered the rest of the purchase price. current property to work scrape together a huge deposit.
Now that Dan and Jessica had a bigger loan for you. Traditionally lenders would look for a
on their home their repayments had gone 20 per cent deposit from property buyers
up, but they were pleased to discover that but today it’s possible for certain types of
the repayment on their investment property applicants to borrow up to 95 per cent of
was almost completely covered by the a property’s value with the help of lenders
$385 weekly rental the investment property mortgage insurance (LMI).
LMI essentially protects the lender
And because the couple managed their against the risk associated with providing
investment themselves they reduced the borrowers with a higher percentage loan
overheads against the gross rent. By taking in the event that they default.
out an interest-only loan they also minimised
The cost of LMI can often be added to
their monthly outgoings and improved their
the overall loan amount, reducing the
overall initial outlay.
Ready, set, buy –
the role of buyer’s agents
It’s well known that real estate agents act on behalf of the vendor, but did you know that
there are also professionals that provide a service to buyers?
Buyer’s agents are gaining popularity with understanding of the market as well as the
time poor buyers and those with less sales process – which can certainly be an
experience or confidence in the market. advantage for those who lack confidence. Buyer’s agents can
They can be engaged to identify suitable
properties and even take on the negotiations
For investors it’s worth noting that the provide services such
cost of engaging a buyer’s agent may be
with real estate agents or vendors. as assistance with finding
tax deductible, as with many of the other
They are particularly handy in markets where associated costs involved with a property suitable properties,
there’s a certain amount of uncertainty, such purchase; however owner-occupiers will negotiating the purchase
as the current climate where prices are probably have to absorb the full cost. terms – ideal if you
climbing rapidly in some areas and stagnant Charges can vary from a flat fee to a are pressed for time
in others. percentage of the property purchase or lacking experience.
Some buyers seek the services of an agent depending on the services provided. You
to avoid trawling through property listings, may be able to pay a smaller amount if you
pounding the pavement visiting open are only after representation at an auction.
houses and haggling with estate agents. If engaging a buyer’s agent appeals to you,
But for others, engaging a buyer’s agent can look for a recommendation from friends
take much of the emotion out of negotiating, or your broker and make sure you check
which some buyer’s agents claim can result their credentials, fees and charges carefully
in a better purchase price. before engaging them.
Buyer’s agents are experienced in dealing
with real estate agents and have an in-depth
Preparing the family
for the big move
While moving into a new home can be very exciting, it can be a bit challenging
for some families.
One of the most daunting parts of moving Be positive Keep them involved
can be sharing the news with the kids. Your attitude will influence your family, so be Younger children may be frightened if they
Communication is the key to a smooth enthusiastic. Be realistic – adjusting could have not experienced a move before. Giving
transition, so keep some of these tips in take time and not every family member will them the opportunity to help pack a special
mind when the time comes! be as excited about the move as you are. “moving kit” of their own, with prized toys
Share from the start and activities for the road or to keep them
busy while you unpack, gives them a sense
If you have children, it’s best to break the Make a list of the positives about the new
of control and security, as well as being a
news early on. They will feel involved and house or neighbourhood, so you can
lot of fun.
it will also give them time to get used to mention these when you break the news.
the whole idea. Chat about their fears and Think about the possible negatives as well Older children could enjoy the opportunity to
uncertainties and try to be understanding. so you can be prepared to tackle those be involved in decoration of their new living
head on. space – which room, where their furniture
would look best or selecting a new colour
Inform them for the walls!
Give your children Provide your kids with lots of information
plenty of opportunities about the new house and area, and what
they can expect. If they will be attending a
to ask questions and local school, find out as much information
share their thoughts. about it beforehand and pay a visit before
the move. This should help them feel more
secure and make the adjustment easier.
When it comes to buying your new home, the insurance is just as important as
the home itself.
When it comes to buying your new home, You’ll usually have a choice between two repayments, providing you time to re-enter
insurance is just as important as the home types of contents insurance: a policy that the workforce or focus on regaining
itself. There are a number of types of replaces the old goods with new ones or you your health.
insurance you’ll need to consider: building or can opt for an indemnity policy, under which Speak with your Mortgage Manager if you’d
home insurance, contents insurance and you’ll receive the depreciated value of what like more information on any of these types
mortgage protection insurance to name a few. was damaged. The choice is up to you! of insurance – in many cases they may be
Building or home insurance Mortgage protection insurance able to recommend a qualified adviser that
Depending on the type of loan you’ve taken Mortgage protection, while not mandatory can assist you with your insurance needs.
out, it may be compulsory for you to take for borrowers, can be an effective tool to
out building or home insurance to safeguard help cover your mortgage should you find
the lender’s interest in the property. Even if yourself unable to work through injury or
this is not mandatory, it is strongly advisable. are diagnosed with a serious illness. Tips to finding the
Building or home insurance covers you for Typically mortgage protection insurance goes
towards the cost of your mortgage
damages to your property or its fixtures.
Take time to shop around: Compare
Depending on your level of cover, you may
the price of each policy with the cover
be able to protect yourself for anything from
offered – don’t go for a cheap deal with
fire and storm damage to burglary.
very little cover or pay top money for
Essentially, home insurance covers the cost cover you don’t really need.
of restoring your property to its present
Engage specialists: Speak with your
condition if it is damaged. Make sure you
Mortgage Manager for options on the
don’t underestimate these costs, as you
insurances related to your new property
may end up seriously out of pocket in the
purchase – they may well be able to
long run should disaster strike.
recommend a professional who can
Contents insurance arrange the policies for you.
Contents insurance protects you in the Keep documents secure: Remember
case of loss or damage to your personal to keep copies of your insurance
belongings and items in your home, such policies, receipts and photographs away
as whitegoods, clothing and furniture. While from the house, as they won’t be much
you may already have contents insurance, help to you if they are damaged. Leave
it’s a good idea to update it after a move into a set at your parents or a friend’s house,
a new property – especially if you’ve decked for example.
out your new house with brand new furniture
Moving house can be one of life’s more exciting experiences, it can also be one of the
most stressful. To help ease the transition into a new home, it pays to think ahead.
Moving house can be one of life’s more • Utilities: Find out about utilities (water, • Neighbours: Pop over and say hello to
exciting experiences, it can also be one of gas, electricity and phone) and what your new neighbours. It’s always handy
the most stressful. you need to connect (including costs) to have a good relationship with the
• Mail: Keeping on top of bills is a must, before the big move to ensure your life people in your neighbourhood, and they
so make sure your post is redirected to continues to run smoothly once you’re in might have some tips to help you settle
your new address as soon as possible. your new home. in quickly to the area.
Make sure you remember to notify your • Schools: If your move involves a change • Budget: Moving into a new home is as
bank and any other service providers or in school for your children make sure good a time as any to take a look at the
regular billers about the move. The last this is sorted out well before the move. family budget and reassess your spending
thing you want is to be late in paying an Include them in the decision process to priorities, as well as factor in any changes
account or to miss out on any help them get excited about the move, that might have occurred now that you’ve
important news. rather than being upset and anxious. moved. Keep in mind that rates are likely
• Amenities: To help your family settle to rise in the future – so make sure you
in, find out as much as you can about factor this into your budget.
your new community so you can explore The best advice when making a move into a
A smooth transition new home is to be organised and not to take
and discover it together. Establish the
will leave you and your locations of any facilities that would the move too seriously. Enjoy discovering
family free to enjoy appeal, such as sporting clubs, gyms, your new neighbourhood and make the
your new home. parks and even video shops. most of that new home feeling!
Phone 1300 230 240
Dreamstreet Home Loans Pty. Ltd. 326a High Street, Northcote VIC 3070
Fax: 03 9445 1730 Email: email@example.com
All details are current as at October 2011.