AFTER AN INVESTMENT PROPERTY OR THINKING OF UPGRADING
INTERESTED IN BUYING AN INVESTMENT PROPERTY?
or maybe you just want to upgrade to a better suburb or more stylish home for the family?
Either way Aussie Mortgage Masters can help.
It's possible you could use the equity in your existing home to help you fund your new property, but there are some questions that will need answering before we can confirm that.
Your borrowing power is determined by looking at your income and financial commitments, as well as your current savings and your credit history. You also need to take into consideration your living expenses, so you can repay your loan and maintain the lifestyle you are used to.
Some lenders will lend you up to 95% of the value of your new home plus they will allow you to capitalise the Mortgage Insurance Premium up to 97%.
Our How Much Can I Borrow Calculator will give you an indication of the amount you can borrow. Use of this calculator is obligation-free and totally anonymous tool that will help you determine how much you can afford to spend on your home.
Using our Basic home repayments Calculator will help you to calculate your loan repayments, how long it could take you to pay off the loan, as well as the loan amount based on a repayment amount entered.
What are the costs?
Once you have arrived at a ball-park figure for your potential purchase, you will need to take into account the other charges that will apply.
If you are using your current home as equity you may not need to find any funds to cover the deposit and fees as the value of both properties will be taken into consideration by the lender and depending on the valuation, the equity may be sufficient to complete the transaction.
If however you would prefer not to use your current home as security, the biggest initial outlay will be the deposit, which can be between 5% and 10% of the purchase price depending on the lender. Add to this around 5% to cover Bank fees and charges, stamp duty, settlement costs and insurance associated with buying a property.
Your Aussie Mortgage Masters consultant can help you to determine the costs you will need to allow for prior to applying for your loan.
Which loan is right for me?
There are many different loan features and fees to be considered, such as interest rates, offset account, the ability to redraw and ongoing fees you will be charged, and there are different loans to suit individual needs.
Aussie Mortgage Masters can make choosing the right lender and home loan easier by providing key information that will help you make an informed decision.
Pre-Approval means you have finance approval provided you have fulfilled the lenders lending criteria.
This means you have satisfied the lender that you have the income, employment stability, your assets and liabilities have been checked by the lender, and your credit rating is acceptable to them.
A Pre-Approval is generally active for 60 days so you have 2 months to look around a choose your new home.
Normally once you have a Pre-Approval, it just means that once you find the right property, you will only need to provide the lender the Offer and Acceptance and possibly a recent pay slip to prove you are still employed.
This means that you can be treated as a serious buyer by Real Estate Agents. Contact us now to arrange your Pre Approval
Use a local Real Estate Agent to help you find your property. Ask your Aussie Mortgage Masters consultant if they can give you a list of Real Estate Agents in your area.
Once you have found your DREAM HOME:
Make an offer
When making an Offer you should always include a “Subject to Finance” clause on the contract, even if you already have your finance Pre Approved. The final approval will depend on the property being suitable to the lender.
If you make the Offer a “Cash Offer” Once the vendor has accepted your offer, you are legally obliged to go through with the sale – so unless you actually have the CASH in your bank account stay away from making a CASH OFFER .
You should also include on the contract any conditions that you require to be fulfilled prior to taking ownership of the property.
A conditional offer is also a binding contract, (ie Subject to finance, Subject to a Pest Inspection acceptable to the purchaser) provided that all your conditions are satisfied.
You can only back out now if one or more of your written conditions are not met.
If buying at an auction, you are required to pay a deposit (usually 10% of the purchase price) immediately but you must make sure your finance is approved prior to bidding at auction.
If you are buying privately, you would normally pay a deposit of $1,000 7 days after the Offer has been Accepted by the Vendor.
You should pay your deposit to the Real Estate Agent or the vendors Settlement Agent, not directly to the Vendor. The Real Estate or Settlement Agent will place your deposit into a Trust Account where it will be held in trust until the contract is completely satisfied.
Should you not be able to procure finance or if any of the conditions you have stipulated on your contract are not met the Agent will return the deposit to you.
Completing your loan
If you have Pre-Approval, you can complete your loan by contacting your Aussie Mortgage Masters consultant and providing them with the Offer and Acceptance and any other documentation the lender may require for the loan to go Unconditional.
I want to buy a new home but I haven’t sold my house yet.
Here are two scenarios that may help in this situation:
- Arrange a PRE~APPROVAL right away, for the loan amount you will need to complete the purchase once your house is sold. This way you already know how exactly how much you can borrow and will avoid the problem of looking at houses that are not in your price range. It also means all of the work is done, and we have provided the lender with all of the documentation they need. With most lenders the PRE APPROVAL is good for 60 days so once your house is sold, and provided nothing has changed substantially since you applied for the PRE APPROVAL, you will only need to provide the Offer and Acceptance on your house, the Offer and Acceptance on the house you are buying and possibly your most recent payslips to the lender and an Unconditional Approval should be forthcoming relatively fast.
- Arrange BRIDGING FINANCE.
This means you can find the house you want and apply for finance across both properties. The lender takes security over both properties and the amount they will advance you will depend on the valuations.
- Once your loan is approved and finally settled, you are then able to move into your new property and sell your old home within 6-12 months depending on the lender. A Bridging loan is more complicated than a standard home loan, so it is important that you explore your options carefully and work out your ability to make the payments in accordance with the individual lenders terms and conditions. Lenders conditions vary greatly with these loans, so you should contact your Aussie Mortgage Masters Broker to discuss these scenarios and help you make an informed choice.
I want to keep my current home, rent it out and buy another one for my family?
In doing this your original family home will become an Investment property. Provided you have the income that will service the loan required and you satisfy all of the lenders requirements, there is no reason why you would not be able to do this.
If you have a cash deposit and enough funds to cover stamp duty and fees and charges to complete the purchase of your second home then a straight forward investment loan can be arranged for you.
If you are relying on the equity in your current home in order to finance the second property, the lender will arrange a valuation across both properties to ensure there is enough equity to cover deposit, stamp duty and fees to complete the purchase.
Contact an Aussie Mortgage Masters Consultant to discuss what you would prefer to do. Your consultant will discuss loan options and let you know what you need to provide in order to apply for a loan with our lenders.
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