Home Buying Essentials Guide

Transcription

Home Buying
Essentials Guide
What you need to
know when buying
and financing
your home
Contents
■ Welcome
2
■ Overview – Purchasing your home
3
■ Getting started
4
 Know your entitlements
4
 Borrowing essentials
5
 Costs
6
 Choosing the right loan
8
 Applying for a loan
10
■ Buying your property
11
 A step-by-step guide
11
 Tips for repaying your mortgage sooner
12
■ Our commitment to you
13
1
Welcome
Buying a home can be a daunting experience,
especially when there are so many things to consider.
As a free mortgage broking service exclusive to
QSuper members, QInvest LoanFinder is here
to guide you through this exciting opportunity
and ensure your needs are taken care of in a
professional and uncomplicated manner.
Our accredited brokers have access to hundreds of
home loan products, and take into account your
lifestyle and financial commitments to make sure
the loan suits your circumstances.
And because QInvest LoanFinder is from an
organisation you know and trust, you can be certain
your best interests will always be put first.
So if you’re thinking of buying your first home,
refinancing your current mortgage or purchasing
an investment property, talk to us and see how we
can make this process easier for you.
Thank you for taking the time to read about the steps
to buying a home and obtaining finance. We look
forward to working with you in the near future.
Kind regards,
The QInvest LoanFinder Team
2
Overview
Purchasing your home
■ Know where you stand financially
■ Consider options suited to your requirements
There’s so much to think about and consider. But first,
you need to work out how much you can borrow. This is
where we can really help.
There are hundreds of lending products available and
understanding how they affect your spending is key.
This is where our guidance can be invaluable. We’ll find
an option that is suited to your needs and recommend
ways you can reduce the loan faster to avoid the very
expensive costs associated with long-term debt.
If you prepare an accurate and detailed budget that lists
all your financial commitments, we can help you identify
any additional costs associated with home buying stamp duty, council rates, etc. This will help give you a
clear picture of your borrowing capacity and how a new
mortgage will affect your lifestyle.
■ Research your area
Go to as many open inspections as you can and research
properties online before purchasing. This will give you a
good indication on property prices in the area you want
to buy.
■ Help is always here
We understand that during the life of your loan,
circumstances outside your control can change. Be it
illness, losing your job, or anything that might affect your
ability to service your mortgage, we may be able to help
you negotiate a solution with your lender that ensures
your best interests are taken into consideration.
■ Understand the costs after purchase
A mortgage is a big commitment and you may have to
make significant changes to your spending habits in order
to meet your repayments. Many homeowners forget to
budget for things they haven’t paid for previously like
electricity, water, other utilities and insurance. We can
make sure you don’t stretch yourself to your limit, helping
you avoid the unnecessary stress of rates increases.
QInvest Limited ABN 35 063 511 580 AFSL
& Australian Credit Licence number 238274
3
Getting started
Know your entitlements
Government assistance
Family Support
■ First Home Owners’ Grant
■ Help from your parents
The First Home Owners’ Grant is a Commonwealth
Government initiative that was created to help people
get a foot in the property market. If you’re buying or
building your first home, you could be eligible for a
government funded grant of up to $15,000 towards the
cost of your home loan.
These days, it’s not uncommon for parents to help their
children buy their first home, and there are many ways
they can do so:
For further information on grants in your state visit
www.firsthome.gov.au and select the state that
applies to you.
■ Stamp duty concessions
– gifting at least part of the deposit to their children
– providing a supplementary loan in addition to the
bank loan, typically interest free
– acting as guarantor.
It’s important to note there are significant implications
relating to parental assistance. Please give us a call for
more information on any of these topics.
When you buy a home in Australia, the state government
imposes a stamp duty tax. The tax duty varies in amount
depending on the sale price of the property and which
state you’ve purchased in. Concessions differ from state
to state and we can assist you in calculating your stamp
duty, if applicable.
4
Getting started
Borrowing essentials
■ Credit reference
■ Should I buy with someone else?
The lender you choose is going to perform a credit check
on you. They’ll be looking to see if you’ve defaulted on
payments, how many credit applications you’ve made
and if you have had any previous infringements in your
name (or company if you are self employed).
When you purchase a property with a person you’re not
married to, or aren’t in a de-facto relationship with, the
rules on ownership can differ significantly. In this situation,
it’s crucial that you understand what you’re getting
into. Make sure there are strict ground rules in place,
everything is in writing and the contract is clearly defined.
Make sure you have a ‘clean slate’ by checking your credit
report. If something unusual appears, advise your credit
reporting agency immediately.
■ How much deposit will I need?
Most lenders require a minimum 10% deposit. If you’re
borrowing more than 80% of the purchase price you’ll
be required to pay lenders mortgage insurance, which
means an additional cost. We can work with you to
determine your requirements and identify ways on how
to maximise your deposit.
The two most important points you need to cover are
what happens if one owner wants to sell, or if they can’t
meet the repayments.
Needless to say, your legal representative should always
be consulted if you’re considering a share arrangement.
Please feel free to contact us if you have any questions.
5
Getting started
Costs
■ Stamp duty
As previously mentioned, the amount of stamp duty
payable varies depending on the purchase price of the
home and which state you’ve purchased in.
The following websites contain duty scales, so you
can check how much you may be required to pay:
ACT
www.revenue.act.gov.au
NSW
www.osr.nsw.gov.au
NT
www.revenue.nt.gov.au
QLD
www.osr.qld.gov.au
SA
www.treasury.tas.gov.au
VIC
www.sro.vic.gov.au
WA
www.dtf.wa.gov.au
– arrange for the settlement process and attend on
your behalf
– deal with any difficulties that arise during the
settlement period.
It’s a good idea to shop around for someone experienced.
■ Inspections
Building and pest inspections are a must and are
organised by different organisations. Making your
purchase contract subject to a satisfactory building and
pest inspections will protect you from buying a property
with serious issues. The inspector will provide you with
a written report detailing any faults with the property,
whether they can be repaired and how much they’re
likely to cost. The document will also highlight any unsafe
or unauthorised renovations that can be identified.
■ Loan application fee
Pest inspections check for evidence of timber decay and
for termite damage. When buying at auction, you’ll need
to arrange inspections before the day of sale.
There’s generally a standard up-front loan establishment
fee that covers the creation of loan documents, legal
fees, mortgage preparation and one standard valuation
(if applicable).
In the case of a strata title property, your contract of sale
will provide the name of the strata manager so that you
can arrange for an inspection of the owners’ corporation
books and records.
■ Appointing your legal representative
You’ll need to appoint a conveyancer/legal
representative to ensure the contract is in your best
interest and does not contain any unsatisfactory terms.
Your legal representative should also check with the
local council and advise you of any future developments
which could affect your home.
Their role is to:
– give advice on the contract terms
– facilitate council, strata and company title searches
– order pest and building inspections
– arrange for the signing of contracts
– negotiate with the vendor’s solicitor on your behalf
6
Getting started
Costs (Cont’d)
■ Insurances
» Mortgage protection and lender’s
mortgage insurance
Mortgage protection is insurance that supports
you in the case of involuntary unemployment
or if you’re unable to work due to illness or
disability. However, lenders mortgage insurance
(LMI) protects the lender if you default on your
payments and is usually required where your
deposit is less than 20% of the purchase price.
» Home and contents
This is insurance that provides you with adequate
cover should you need to repair your home or
replace your contents if they’re damaged, destroyed
or stolen.
» Income protection
This insurance is designed to pay you a
predetermined percentage of your monthly
income (usually 75%) should illness or injury
prevent you from working.
» Life
Provides a lump sum payment to your
beneficiaries in the event of your death.
» Total and permanent disability – TPD
You can choose to cover yourself for either total and
permanent disability or death options, which will
provide a payout if you can no longer work, or in the
event that you die due to an illness or an accident.
7
Getting started
Choosing the right loan
Loan types
■ Standard variable rate
■ Interest only
This is the most common loan, where the interest rate
can vary with official interest rates, but are ultimately
determined by the lender. They typically have redraw
facilities and offset accounts that give them flexibility.
Many lenders will consider a discount or honeymoon rate
based upon the size or initial nature of the borrowing.
When you have an interest-only loan the principal isn’t
reduced by the minimum required payment, and will
remain unpaid for the interest-only period. After the
interest-only period, the loan will convert to a principal
and interest loan for the remainder of the term.
They can be refinanced with another lender, in some
cases without exit costs. The interest rates do vary and,
unlike a fixed rate loan, the borrower will also experience
different repayment rates over the life of the loan.
You might choose to continue on an interest-only
basis for another term and defer the conversion to
principal and interest. However at some point the lender
may force the repayment of principal to reduce their
risk. These loans are typically used by borrowers for
investment purposes and by borrowers wanting a lower
repayment amount than would otherwise apply under a
principal and interest loan.
■ Basic variable rate
This type of loan is similar to a standard variable but the
borrower sacrifices flexibility for a lower interest rate.
This means that offset accounts and redraw features are
usually not available.
■ Fixed rate
These are loans where an agreed interest rate is fixed for
a specified period. It suits a borrower seeking a constant
loan repayment who wants to avoid the ups and downs
related to variable rate contracts. When interest rates
are dropping you can be paying more interest than a
variable rate borrower; however, it can also work in your
favour when interest rates climb. Some fixed rate loans
do not allow additional repayments.
■ Line of credit loans
Where a borrower has established equity in their home,
they may request a pre-approved credit limit that can be
drawn upon at any time. They are often used by those who
invest and move funds between investments, giving them
the capability to invest borrowed funds with flexibility.
The repayments are drawn against the line of credit and
the borrowers are required to maintain the credit at an
acceptable level.
■ Split rate
You can have one portion of the loan at a variable
rate and the other at a fixed rate. This is attractive to
borrowers who want to limit their risk of increasing
interest rates by fixing a portion at an acceptable rate.
8
Getting started
Choosing the right loan
Loan features
■ Professional package
■ Top-up
These packages combine lines of credit and split loans
to service the needs of borrowers with a typically greater
ability to invest. They carry discounted interest rates and
low account fees.
Many lenders allow you to increase the home
loan limit on existing loans for renovations or car
purchases. The process is relatively simple because
security already exists.
■ Offset account
Our accredited team can help find the right loan for
you, please call us to find out more about buying or
refinancing a home.
This is a deposit account where the credit balance or the
interest earned is used to offset the interest charged on
your loan.
■ Redraw facility
This allows borrowers to withdraw payments made
in advance on the minimum repayment amount. The
payments in advance are reducing your overall interest
charges, so redrawing has the effect of increasing your
loan balance.
9
Getting started
Applying for a loan
When approaching a lender for the first time, you’ll need
to be ‘identified’. All lenders are likely to ask for the same
information, which is 100 points of identification.
Examples of 100 points
Drivers Licence
40 points (preferred)
Also needed are:
– savings details
– bank statements including transaction,
saving or passbook accounts
– investment papers including managed funds
or term deposits
Passport or birth certificate
70 points
Rates notice
35 points
– details of personal loans, credit cards
or charge cards
Credit card
25 points
– tax liability if self-employed.
Medicare card
25 points
■ Additional Requirements
Apart from a thorough ID check, the lender will also
want to establish your:
– capacity to repay
– financial risk
– collateral
– existing assets.
You’ll also be asked:
– if you have dependent children
Details of life insurance policies and superannuation,
as well as approximate value of other assets like furniture
and jewellery should be included.
■ Loan approval
It’s best to have your loan pre-approved before you
make any offers. Knowing your borrowing limit and that
your finance is pre-approved will mean you’re able to
concentrate on a price range and give your full attention
to the purchase.
Once your loan is formally approved, your lender will
send your mortgage documents to sign. Your solicitor
can then assist you with any questions you may have in
relation to your mortgage documents.
– how long you’ve lived at your current address
– what your owe and own
– your personal insurances
– your credit card details.
We advise you have:
– your two most recent pay slips
– group certificates for the past two years
– documentation from your employer detailing
income and length of employment.
If you’re self-employed, you should provide your tax
returns and financial statements for the past two years,
and your accountant’s details.
10
Buying your property
A step-by-step guide
■ Step 1 – Have your loan pre-approval in place
Knowing how much deposit you have and how much
you can borrow will give you the confidence to make
a calculated offer on your property.
■ Step 2 – Choose the right home in the
right location
Research your chosen suburb thoroughly, talk to
local real estate agents, neighbours and search the
Internet. Make sure you know the price of recently
sold, comparable houses, visit open houses and attend
auctions. The more knowledge you have about the area,
the more chance you have of landing a great deal.
A conditional approval can also be given if you’re looking
to purchase, but want to know how much you can
borrow before committing to the contract.
■ Step 6 – Final loan approval
Once your loan has been formally/unconditionally
approved, you will receive your mortgage documents.
These need to be signed and witnessed and returned to
your lender.
■ Step 7 – Insurance
Your lender will require you to organise building
insurance, which will be required prior to settlement.
■ Step 3 – Make an offer
■ Step 8 – Final inspection
For properties sold by private treaty, you’ll need to make
an offer to the listed agent. Properties being auctioned
are frequently open to offers before the auction date.
However, if sold at auction, you’ll usually be required
to pay a deposit of 10% immediately. Remember that
the contract for an auctioned property is unconditional
and no cooling off period applies. Make sure that your
conveyancer/legal representative has checked the
contract and organised pest and building inspections
before you bid.
It’s a good idea to arrange an inspection with the real
estate agent just prior to settlement date. Check all
inclusions in the contract for sale and see if they’re
in working order – light switches, power points, air
conditioners, exhaust fans, hot water, swimming pool
equipment, security, etc.
■ Step 4 – Conveyancer/legal representative
The real estate agent will provide a copy of the
contract for sale, which should then be given to your
conveyancer/legal representative who’ll check it and
advise you of your rights during the cooling off period.
Once both parties have signed the contract, it becomes
legally binding.
■ Step 5 – Conditional approval
When the lender has assessed your loan application,
approval might be subject to meeting a number of
conditions. In order to obtain final (unconditional)
approval, these stipulations need to be met and may
include an acceptable valuation of the security property,
mortgage insurance approval, along with any other
conditions the lender requires.
■ Step 9 – Settlement
Your conveyancer/legal representative will attend to
settlement. This is the day when the balance of the
purchase price is paid to the vendor and stamp duty as
well as lenders mortgage insurance will also be due.
If something goes wrong
If you’ve signed a contract to buy a house, it may be
a costly exercise to withdraw. If you wish to break
the contract you may be liable to pay compensation
to the vendor. The amount will depend on the loss
suffered by the vendor and is usually based on how
much it would take to re-sell the house, including any
subsequent loss on sale. We can’t stress how important
it is to read your contract carefully and to be aware of
the consequences of defaulting on the contract.
You should always consider legal advice before
committing to any purchase agreement.
11
Buying your property
Tips for repaying your
mortgage sooner
■ Make extra repayments
■ Redraw facility
The most common mortgages for home buyers require
you to pay principal and interest. On a typical 25 year
mortgage, anything extra you pay in the first five to
eight years are key to reducing the life of your loan.
Make extra repayments as early as you can, no matter
how small they are.
A redraw facility allows you to make extra payments and
then withdraw them if required. It means you can put
all your ‘rainy day’ money into the account where it will
reduce your interest, while knowing you can take it out
if needed.
■ Make more frequent repayments
When you make fortnightly repayments you make
more repayments each year (26 fortnights compared
to 12 months). As long as you meet the minimum
repayment amount each month and your loan contract
allows them, more frequent repayments will make a
difference to the term of your loan and your interest
cost. Make your repayments as often and as regularly
as your income allows.
■ Make an annual lump sum payment
Use your tax return or a windfall, such as an inheritance
or work bonus, and apply it directly to your principal.
Check your mortgage documents to find out how often
you can prepay and in what amount.
This type of option might attract a fee for each
withdrawal, and may be set to only a few redraws each
year. Consider how often you’re likely to redraw before
deciding whether this feature is for you.
■ If interest rates drop
If you have a variable home loan and the interest rate
drops, continuing to pay the loan at the higher rate
will save you interest and reduce the effective term of
the loan.
■ Stay informed
Keeping up to date with interest rates and being
proactive about your home loan could help save
thousands in the long term. Because of the
competitiveness in the lending sector, chances are
there’s a better deal elsewhere. We can help you get the
best deal possible, and even review your mortgage
annually so you’re always getting the best deal possible.
12
Our commitment to you
We understand that your first home loan will not
necessarily be your last. We are your ‘ally’ through
the maze of borrowing options and the buying
process. By using our services, you will have a
specialist dedicated to looking after your interests.
Mortgage brokers also give you exposure to
lenders that you might not be aware of, and our
experience saves you time and money.
When we help you with your first home loan,
we consider you to be a client for life. We will look
after your initial needs and also consider your
future needs. We want you to be confident that
you are working with someone who has your best
interests in mind now and in the long term.
Why use QInvest LoanFinder?
QInvest LoanFinder will help you pay
off your loan sooner
Free service, exclusive to
QSuper members
Accredited brokers from
QInvest working for you
Access to hundreds of home
loan products
A reliable service from an
organisation you know and trust.
13
QInvest Limited PO Box 15318 City East Q 4002
Toll free 1800 643 893 T 07 3008 8100 F 07 3008 8111
E info@qinvest.com.au W qinvest.com.au
QSP0125
QInvest Limited (ABN 35 063 511 580, AFSL and Australian Credit Licence number 238274)
(QInvest) is ultimately owned by the QSuper Board (ABN 32 125 059 006) as trustee for the
QSuper Fund (ABN 60 905 115 063), and is a separate legal entity which is responsible for
the financial services and credit services it provides.

Home Buying Essentials Guide

Transcription

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