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BEFORE YOU GO PROPERTY SHOPPING, READ THIS

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Written by Melanie Toye, July 6, 2014

When buying property, it is always good to speak with a mortgage professional first. This ensures you have a very real idea on how much you can borrow before you go shopping. The reason behind this, is if you feel you can borrow a certain amount and then when it comes down to buying a property and signing a contract pending securing of finances. You could be knocked back by the financial institution. Avoid disappointment and gain pre-approval first. It saves everybody time and you can shop in a price range bracket that you have approval for. 

Pre-approval is a similar process to gaining approval for a mortgage. You will speak with a mortgage manager, answer questions about your employment, work history, current financial status and so forth. This is also an opportune time to shop for the perfect mortgage for you. 

Knowing how much you can afford

A very important factor in the borrowing process is understanding how much you can afford to pay on a regular basis. For instance, the mortgage calculator may estimate you can borrow $500,000 for a mortgage. Paying $3,000 a month at 5% interest rate. However after you have calculated your own budget, you discover that you only want to pay $2,500 a month. Which in turn lowers the total loan amount. 

After expenses from your income are taken out, and a monthly mortgage fee of $2,500. Leaves you with an extra $300 a month you can comfortably put aside each month. Either to put into an offset account, put aside for emergencies or use when the interest rate rises, if on a variable rate.

It is very important you do not borrow to your maximum capacity and worst, borrowing more than you can afford to pay back. The financial institution, does not know your budget, they can calculate repayments based on how much you earn and any major debts you have such as a car loan, personal loan and/or credit cards. It is up to you to know how much you can comfortably afford to pay.

Leave your emotions at home

It can be easy to get swept up in the excitement of owning a property. Always be careful when buying a property that you don't let your emotions sweep you up in the moment. This can be costly. Negotiations need to be done and a poker face with how far you are willing to pay for the property needs to be worked on. Also be sure to view every part of the property inside and out (easier if it's a vacant property). Turn on taps, turn on switches on the ceiling fans, flush the toilets (you will want to know if the plumbing works - trust me on this) and check to see if there is any potential risk of termites outside or inside. A beautifully designed room can hide elements of what will be left behind when the furniture is removed and you are left with the shell. Look under rugs for stains on carpets for example.

It is about being savvy when looking at property. And knowing what to look for rather than just seeing what they want you to see. Look closer. Once you find the property you are after, you can use the flaws as part as your negotiation power.

When you are looking to buy, first contact AMM

Looking to purchase a property? Be sure to contact Australian Mortgage Managers to find out your borrowing power first. Call today on 1300 799 366 or email: This email address is being protected from spambots. You need JavaScript enabled to view it. .