Essential considerations for anyone making
a move on the property ladder in 2019
If you’ve watched the news or picked up a newspaper recently, you might have noticed that the outlook for the property market is grim, especially for those living in our capital cities.
According to Core Logic, house prices could fall by nine per cent or more; eclipsing the losses seen in the 1991 recession.
While cheaper houses may sound like good news for those looking to join the property ladder, the downturn is expected to be accompanied by a ‘credit crunch’ that could impact the ability of some borrowers to secure finance.
Tips for first homebuyers through to long-term investors
1. Seek professional guidance.
The first place to start is to understand your own personal financial situation to determine how much you can borrow and whether or not you are likely to be impacted by any lending restrictions.
Chatting to a financial planner is a great way to understand your options and to discuss what products will suit your situation.
With this information, you can set a budget and start looking at properties in your price range.
2. Understand your home loan options
When the times comes to consider a loan, make sure you shop around. Remember to look beyond initial interest rates to ensure that the terms, conditions and features of the loan are what you actually need.
Honeymoon rates, interest only loans and low-deposit loans should all be considered carefully.
Be aware of all the costs associated with a loan. This includes if you will need to pay Lenders Mortgage Insurance, settlement costs, any relevant grants that you may be able to access (First Homebuyer), if you will have the ability to make extra lump sum payments and also the payment frequency. It is very important to completely understand every facet of your loan as subtle differences can lead to financial implications in the future.
3. Plan for delays
In a tough property and financial market, it’s important to plan for bumps in the road and delays. It may take you longer to secure finance than expected, or the property you’d like to purchase may take longer to settle than desired.
This means being patient, not rushing contracts that might not be right and making sure you have enough cash in reserve if you have to rent for longer than planned.
4. Understand your renovation options
A renovation can completely change the value of a house, but it is best to understand the costs of this prior to undertaking renovations, or purchasing a property that requires extensive renovations. While it may look like you’re getting a bargain, the financial costs could negate any savings you get at sale.
You should also consider who is likely to want to rent or purchase the property that you are renovating. While you may have like a particular style, it is always a good decision to go with relatively neutral colours in order to maximise your returns. Seasoned investors will know the benefit of styling a property for sale as a small outlay of costs can bring a nice boost to a sale price.