This is a blog I have wanted to write for so long. I teamed up with my property agent Jayson Renouf who also manages my place in Australia now that I live in Singapore. He was so helpful when I was going through the process that I thought I should share some of his advice. I have added some of my own comments under Jayson’s tips in italics.
Now if you live in Perth and are looking for some property love in the Western suburbs, check out Renouf Real Estate.
1.Have a deposit!
Most lenders will require a deposit of at least 5- 10% of the property’s value. In basic terms it is close to impossible for most people to buy without the necessary deposit.
A substantial deposit ie. 20% or more should help you avoid paying Mortgage Guarantee Insurance which can be costly.
I was lucky that I had been a really intense saver in Dubai and when it came down to buying my apartment I was up against another couple and because I had a larger deposit and financing ready I was able to get the property over them. My advice to all single women is to save, save, save and save!
Obviously, the larger your deposit, the smaller your monthly payments. If you are looking to rent the property out, the larger the deposit will mean the greater chance of your tenant being able to cover your mortgage payments, so essentially they are paying off your mortgage and you don’t even feel it. However, if your deposit is small, you will need to service the gap on your loan.
2. Get your finance pre-approved and use this time to shop around on interest rates rather than leave this until the last minute.
Having your finance pre-approved can never go against you in a negotiation and will generally improve the attractiveness of your offer to the agent and sellers. In all reality this pre-approval documentation will give both the agent and seller greater confidence in your ability to complete the contract.
Going through this process will also enable to shop in the right price range as per your affordability which will assist you in focusing on the best options that exist for you in the market place.
When shopping around on interest rates you may well find that by utilising a competent mortgage broker that you will save time and most likely secure a better rate with the added bonus that in most instances the service to you is free.
I was put in touch with someone at my bank that had secured the lending for some of my family and was lucky enough to get a really good interest rate but I did meet with some mortgage brokers before hand.
3. Think about what you want and need.
A good idea is to write down a list of ‘wants’ in a prioritised order which should assist you in dealing with the balance of compromises that is typical in making a property purchase as it is rare for any buyer to get everything they want.
It was so odd for me when thinking what I wanted out of the apartment. I didn’t know at the time if I would stay in Australia or move to another country, so the place had to be beautiful enough that I would live in it. It couldn’t just be a really crummy rental property that I would use for investment only. Instead, it had to be something inbetween. In the end, the apartment was the only property of the ten I viewed that ticked both these boxes.
4. Study the Sales Evidence.
With all the data readily available from a multitude of sources and websites there is no reason why a buyer cannot educate themselves regarding values in the area they are looking at. In doing so this will eliminate the possibility in paying ‘over the odds’ and help to reduce any vulnerability in going through this process. Alternatively if you just don’t feel confident in your ability in this area you may choose to retain an agent to act on your behalf or to employ a buyer’s agent. It is important to realise that we have different skills and if you have studied the sales evidence and feel overwhelmed with the scale of the transaction and the process ahead the wise thing to do is to employ a professional to act on your behalf.
4. Study the Stock.
Once you have set your price range and area study the stock and look for what best fulfills your ‘job description’ and what offers the best value in doing so. A simple tip is to utilise the drop down menu on most websites to enable you to rank the available stock by price ie. lowest to highest which will really help you understand the price points within your market.
5. Conduct the necessary inspections
It is prudent to make your offer subject to the necessary conditions which will often include pest and building inspections. These inspections will help to give you greater insight as to the property you are proposing to purchase and hopefully highlight any significant issues that you should be aware of.
6. Appoint a competent Settlement Agent/Solicitor
If you do happen to encounter any problems on the path to settlement having a good settlement agent/solicitor by your side is a significant advantage so do shop around and seek referrals in this regard as you are not obligated to use the settlement agent recommended by the selling agent.
I was lucky that my sister and boyfriend at the time were both property lawyers and helped me greatly to secure the purchase. I was actually on air at my radio job in Perth at the time when I was told that the owner would make a decision on the Monday after viewing the property on the Saturday before. This meant, I literally sent “scans” (mobile phone images) of the contract with my signature on it to the law firm to be processed on the spot. It was crazy but very happy it went well.
PS. The image in this blog is from my home in Singapore, not in Perth 😉