Home buying is typically best when home loan interest rates and property prices are low. At present, Australian interest rates are the lowest they have been since 1956, and property prices are relatively low. In fact, many real estate professionals predict that the housing market has reached its bottom and will now steadily start to climb in value over the next 5 to 10-years. However, if you’re looking to buy a new property there may be a few other considerations that you need to take into account so that you can determine when the best time to buy is, based on your own circumstances. The most common considerations you need to make are as follows:
In order to buy a home you need to be in a good financial position. Firstly, you should have saved a deposit of at least 20 percent of the property’s value. Why? Well, if you borrow more than 80 percent of a property’s value it will be highly likely that you will be asked to pay Lender’s Mortgage Insurance (LMI), which covers your lender for loan default. LMI can be expensive, and this is typically an additional cost that you want to try and avoid.
You also want to be in a financial position where you can afford to repay a mortgage. This means you should have long-standing and secure employment, and a sound financial future. If you’re not in this situation, then now may not be the best time to buy a home.
Before you starting looking to buy, you should consider your credit rating. If you have no idea of what your credit rating is, then obtain your credit report. Your credit report is a record of your credit history and allows lenders to know if you are a low or high risk client. If you have a poor credit rating, then find out how you can change this to one that is good. If you’ve declared bankruptcy, then you’ll need to wait 5-years before applying for a mortgage as most lenders will consider you as a high risk.
Season and Timing
Spring is notoriously the busiest season for selling homes. So there will typically be more homes for sale around this time, which means that there is a greater selection for you to choose from. The downfall about searching for a home at this time of the year however, is that there is more competition for homes. This can push home prices up and make it harder for you to buy the home you want, especially if another buyer has their eye on it. In addition, you will often find that moving costs will be more expensive as removalists put up their rates because they too are busier. So, if you want no competition when looking for a home and wish to pay cheaper moving costs, then consider buying in Autumn or even Winter.
Want to know more home buying and finance? Then contact eChoice today and we’ll let you know how you can get into a home sooner.
Written by eChoice