FAQ

Deciding to become a homeowner is a big step in life and requires significant financial responsibility. Before buying a house, you should thoroughly evaluate your overall financial situation, including job security, expenses, and income sources. You should also review your credit history and score, as well as any outstanding debts. Additionally, it is essential to have a solid understanding of your long-term goals and vision for the future. Once you have assessed these factors, it’s time to consider the physical and emotional factors, including the readiness to manage maintenance, repairs, and monthly mortgage payments. Ultimately, buying a home should align with your current and future aspirations, lifestyle, and financial capabilities.

When it comes to deciding whether renting or buying is better, there is no one-size-fits-all answer. Renting offers flexibility, as tenants can move out easily without worrying about selling their property and can access amenities like a gym without the hassle of ownership. However, buying provides the stability of a long-term investment and the freedom to customize and renovate the property. Additionally, buyers may build equity and enjoy potential tax benefits. Ultimately, the decision comes down to individual circumstances, such as financial resources, long-term plans, and personal preferences. Prospective tenants and buyers should weigh the pros and cons carefully and consult with a financial advisor before making a decision.

The lender’s formula is a calculation used by lenders to determine whether a borrower is able to repay a loan. The formula usually takes into account a borrower’s credit score, debt-to-income ratio, employment status, and other financial factors. The lender’s formula is used to assess the borrower’s creditworthiness and to determine the amount of interest rate that will be charged. Lenders use the formula to ensure that they are lending money to individuals who are most likely to repay the loan on time and in full. Borrowers who meet the requirements of the lender’s formula are more likely to get approved for a loan and have more favorable terms and conditions. 

These are known as prime mortgages. 

However, lenders didn’t always do this diligently and in the 2000’s it led to the GFC (Global Financial Crisis). Basically, they lent money to anyone. Whether they could repay it or not. They did this so they could boast about how many new loans they were writing and on-sell them as a package to other unsuspecting lenders.  When these risky borrowers inevitably stopped paying back their loans, those loans became known as sub-prime mortgages – and  that’s what crashed the banks in 2008! 

When looking for a home, there are a lot of things to consider, and it depends what stage of life you are at. One of the most important things to look for is the location of the home. Some may want to make sure that it is in a safe and convenient area, close to amenities such as schools, shops, and public transport. Others may prefer wide open spaces, away from everything and everyone.

You should consider the size and layout of the home, as you want it to be functional and comfortable for your needs. Another key factor to look for is the condition of the home, which could affect how much money you may need to invest in repairs or upgrades. Other things to consider may include the age of the property, the neighborhood, and the potential resale value.

Overall, you should weigh each factor carefully to make the best decision for you and your family.

Lenders Mortgage Insurance (LMI) – and sometimes called PMI in some countries – is a type of insurance that protects lenders from potential financial losses if a borrower defaults on their home loan. It is usually required by lending institutions if a borrower is seeking to borrow more than 80% of the value of the property they are purchasing. In this scenario, the lender is taking on a higher risk due to the borrower’s smaller deposit or equity in the property. LMI can typically be added to the home loan as a one-time fee or added to the regular loan repayments. The cost of LMI is generally a percentage of the total loan amount and can vary depending on the loan amount, the value of the property, and the level of risk associated with the borrower. While it may add to the overall cost of the home loan, LMI allows borrowers to enter the property market with a smaller deposit or equity and can therefore be helpful for those who may not have a large sum of money saved up.

Settlement Day, also known as completion day, is the day when a property transaction is finalized and ownership of the property is transferred from the seller to the buyer.

As a property buyer or seller, you have the right to attend the settlement meeting with your solicitor or conveyancer. However, this is very uncommon these days. More likely, the conveyancers staff will attend the meeting and take care of keys handover and check that the correct monies have exchanged to effect the successful completion of the sale.  Your solicitor or conveyancer will take care of the legal paperwork for you, including finalizing any mortgage arrangements, paying any outstanding fees and taxes, and registering the transfer of ownership. Once everything is settled, it will be confirmed by your solicitor and you will be able to take possession of your new property or receive the proceeds from the sale of your former property. 

Whether you are a buyer or seller, Settlement Day is an exciting time!

Pre-approval is a process by which a lender evaluates a borrower’s creditworthiness and financial situation to determine the maximum amount of money they can borrow for a mortgage before they begin looking for a property. This process typically involves submitting financial documentation such as income verification, tax returns, credit scores, and debt obligations to the lender.

Pre-approval is important because it gives buyers confidence in knowing what they can afford and puts them in a strong position to make an offer on a property. It also provides leverage when negotiating with sellers and helps expedite the mortgage application process. However, pre-approval is not a guarantee of a mortgage and does not guarantee the interest rate or loan terms. Once pre-approved, buyers still need to find a property and go through the formal mortgage application process before final approval is granted.

There’s no straightforward answer to whether commercial or residential property is a better investment as it really depends on a variety of factors.

Residential property might appeal to investors seeking stable and secure investments that provide long-term income. Residential properties are typically easier to understand for new investors, who may be hesitant to jump into the more complex commercial property market. Residential properties are also generally more liquid and easier to sell when compared to commercial properties.

On the other hand, commercial property does have a few advantages over residential property. For a start, usually the outgoings (council rates, insurance, body corporate fees, water etc) are paid by the lessor (the person renting the property). And often higher yields and returns are possible due to longer lease terms and the potential for multiple tenants. With larger budgets, investors may have the opportunity to invest in commercial property with strong potential for capital growth. In addition, commercial properties are often managed by tenants, which can make them less hands-on for investors.

Ultimately, the best investment will depend on your specific goals, budget, and risk tolerance. It is important to do your research and consult with professionals before making any investment decisions.

Absolutely. We are here and ready to assist you in any way possible and can either assist you directly, or put you in touch with professionals in the location you are looking to buy or sell.