How do you know where you want to buy if you don’t know what you can afford? Starting the process with a conversation with a mortgage broker like Mint Equity can help you get clarity of your property budget which will then give you the base line for your search parameters.
Property expectations vs property budget
Unlike other mortgage brokers, we can provide you with an indication of your borrowing capacity over the phone without you having to provide all the supporting documents required for a full loan application. We’ll run through some basic income and expense information with you and give you an approximate borrowing capacity. That way you’ll have a guide for your property budget before you start the search phase.
Whilst this step should only be used as a guide and isn’t a final confirmation of your exact borrowing capacity, it’s good to know early on in the process if your property expectations are close to what your finances can provide.
Know the difference between ‘wants’ and ‘needs’
It’s unrealistic to think that you’re going to find the perfect property that meets all your needs and wants. It would be nice, but we all know compromises need to be made somewhere. The question is, how do you know what you’re comfortable compromising on and what is a deal-breaker?
To start with, you’ll need list of all the elements you need in the property. If you’re working with Mint Equity Buyer Support Services, you’ll be provided with a Property Vision Summary (PVS) document. This is a summary of all the elements you want in the property – style, features and locations. It will also include your wish-list items.
Your Property Vision Summary is a reference tool for you to check each property against. It can help you identify the pros and cons of the properties you’re considering and apply logic over emotion.
You can find an example of completed property needs list, and a blank version for your own use on page 13 of our Property Buyers Guide.
Location, location, location
As a starting point, it’s a good idea to have a look at the property market to assess what locations and property style works with your proposed budget. When determining your preferred locations for a new home or investment property, you may wish to consider lifestyle factors such as:
Property type; house, apartment, duplex, townhouse
Size of the property and access to green space
School catchment zones
Infrastructure, public transport and travel times to school or work
Distance to amenities including shops, food markets, universities and medical facilities
Distance to recreational and sporting resources
Neighbourhood safety and crime rates
Rental demand and vacancy rates
Once you have a general idea of your property aspirations and the locations that suit your needs, you’ll need to firm up the finance component. That’s where working with an experienced mortgage broker like Mint Equity is recommended. There are some locations and types of properties that might reduce your choice of lenders, so now is the time to organise pre-approved finance.
Organise your finance pre-approval
You wouldn’t go to the shops without your wallet, so when it comes to buying property, you shouldn’t start shopping without having pre-approved finance in place.
Securing pre-approved finance before you start your property search not only gives you confidence that the bank will provide you with funds, it can also assist with the negotiation process in several ways:
Confidence to negotiate a purchase price that suits your budget
Be taken seriously by the real estate agent
Ability to influence the conditions of sale such as the settlement date and cooling-off period
Make strong offers faster and take the property off the market
As the real estate and finance markets change, it’s important to regularly assess your property expectations and your home loan borrowing capacity. The significant uplift in property values over the last 12 months have seen some buyers have to change their housing preferences and locations.
So, before you start the search, contact Mint Equity to find out how much you can borrow first. That way, you’ll have the confidence to face a challenging property market.
For more property guidance, download or request a hard copy of our Property Buyers Guide.