Media reports supported the rhetoric this week, that banks are tightening their lending criteria, with the CBA announcing it will suspend its new lending to housing investor customers who were looking to refinance and coming from a different bank. It’s possible the other banks will make similar statements in the coming weeks.
This is nothing to be alarmed about – regulatory commitments mean that banks change their lending policies from time to time. But the key message for anyone looking for a loan is to seek expert advice before diving into the process.
When you engage the services of a mortgage broker, we can do the leg work for you and not just find you a loan, but find you the best loan that fits with your personal financial strategy.
“Ummm… What financial strategy,” did I hear you ask?
It’s a good idea to have a basic financial plan, especially if you’re considering purchasing property. When you apply for a loan you’ll be asked about your current financial commitments and your budget, so when you’re putting all this down on paper you should spend some time thinking about the longer-term aspects of owning property.
Buying property: Emotion vs Practicality
The fact of the matter is that buying a property tends to be an emotional decision, especially if you plan to live in it. But – although this might seem blatantly obvious –the financial side needs to be looked at logically and practically. Ask yourself – where will this property put me in 5 years? 10 years? Do I need to renovate? Will renovations increase the property’s value? Do I understand the tax implications of buying and then eventually selling? What about insurance for all eventualities, such as renting to others?
A broker can help you answer these questions and put you on the right track.
Buying a home is one of the biggest financial decisions you’ll ever make, and there are different check-lists when you’re buying a home versus buying an investment property – the lenders offer different products for these scenarios too, so it’s important to get it right.
And, although the market is powering right now and property is always a pretty solid investment, if your circumstances change and you’re heavily in debt, then you can stand to lose money. No one wants that to happen. The best advice is to make your move into the market carefully and deliberately. Don’t rush. And in this aspect, it’s wise to sort out the financials before you get caught up in the buying process.
Isn’t my bank the best?
Many clients looking for a loan simply go to their own bank thinking that securing finance will be straight forward and they’ll get a ‘good deal’ but, as with everything in life, it pays to shop around. Apathy or an unwillingness to explore new options and to perhaps change providers, can be costly.
This is where a broker will really add value. By understanding your financial position and securing you the right loan, a broker can help you to make sure that you’re able to leverage your property purchase appropriately, in such a way that the value of your property continues to work for you throughout your life – strengthening your personal financial position even as your life circumstances change, all the way into retirement.