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How to Buy a House in Australia
194 Plays1 month ago
In this episode, discover the #1 mistake 30% of buyers make when applying for a mortgage—and how you can avoid it to save thousands. Learn the five crucial steps to securing the best home loan, including tips on maximizing government grants and choosing the right lender. Whether you're just starting the process or ready to apply, this episode will give you the tools to navigate the mortgage maze with confidence.
Stop guessing about your buying power! Get a FREE personalised home buying assessment with Hunter Galloway. Call 1300 088 065 or visit huntergalloway.com.au
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Transcript
Avoiding Costly Mistakes in Home Buying
00:00:00
Speaker
What if I told you that 30% of first-home buyers are making a mistake that is costing them thousands of dollars? Sounds pretty scary, but it's true. And in this video, I'll show you how to avoid that mistake as well as save you more than $50,000 on your home loan. Today, I'm going to walk you through the process of getting a home loan. And I'm going to show you the five things you absolutely have to get right to keep as much money in your pocket and out of the banks.
Introduction to the Podcast
00:00:20
Speaker
Welcome to the Buying Your First Home Podcast, your personal guide through the Australian housing market. Here we tackle the big questions and the small details that come up when buying your first home. From financial prep to finding the right neighbourhood, we're here to ensure that you've got all the knowledge at your fingertips. So let's take the first step towards unlocking the door to your new home.
Pitfalls of Direct Bank Applications
00:00:45
Speaker
So let's go to the chase, the number one mistake that can cost you thousands, applying for a home loan directly with your bank. Yeah, I know you're probably thinking, of course you'd say that you're a mortgage broker, but stick with me and I'll show you why this is costing so many people big time. So why is this such a huge mistake? To put things simply, getting a home loan is really complicated. There are dozens of banks and lenders in Australia, and each of these have dozens of different home loan options. And that's not to mention the policy. Some banks are okay with one pay slip, other banks want 12 months of industry experience, new job, genuine savings, don't get me started. Each bank and lender has different requirements, different fees, different interest rates, and when your addle is up over the lifetime of your loan, you're going to be looking at paying and tens of thousands of dollars more than you need to. In fact, home loans are so complicated that sometimes home loan specialists that work for the banks don't even get it right. And that's the kicker. If you apply for the bank, they have absolutely no obligation to tell you if you can get a cheaper, better loan somewhere else. I've seen that firsthand where first home buyers have gone to banks that don't have the home guarantee scheme. That bank hasn't even mentioned that they can go down the road, save tens of thousands of dollars on lenders mortgage insurance, get better rates and stitch them up with a loan and paid lenders
The Role of Mortgage Brokers
00:01:47
Speaker
mortgage insurance. This is where a mortgage broker comes in.
00:01:49
Speaker
We negotiate with the banks and lenders on your behalf to find a loan that fits with your needs. Think of us as kind of a matchmaker between you and the perfect loan. We don't charge any fees for you because the banks pay us for all the legwork. And we can find options across 20, 30 different lenders, including some deals that you wouldn't even get if you went directly to the bank.
00:02:06
Speaker
Unlike the banks, we're legally required to make sure the home loan you get is one that serves your needs in your best interest. In other words, we work pretty hard to find you the perfect loan. But how does that work? Well, next up, let's walk through the process of what happens when you apply for a loan with a mortgage broker. I'm going to take you through the five key things you need to nail to get the best outcome.
00:02:22
Speaker
the five stages of the mortgage breaking process. Each broker is going to have their own process, but I'm going to explain exactly how we do it. We've refined this process through hundreds of first home buyers just like you, so we know it definitely works. The five stages are firstly your free assessment, your information session, the finance meeting, application approval, and then settlement and beyond.
00:02:40
Speaker
So let's go these step by step. The first step in the process is a free no obligation assessment of your financial situation. Once you've asked us for a free assessment, either by clicking on our website or giving us a call, we'll send you a quick form. This allows us to get a high level view of your goals, your finances and your future plans. Once the forms done, one of our brokers will reach out and review everything and make a plan to help you achieve your goals. Which leads me to be the first thing you need to get right in this process. Be upfront and honest about your financial situation.
00:03:05
Speaker
Whether you're working with us here at Hunter Galloway or another broker, we need to know exactly what's happening with your finances so we can plan the best course of action. Things like credit card debt, hex, personal loans, plans to start a family, changes in employment, these things can make a big difference in how much you borrow and even which lenders could be the best option for you. I realize that it can be uncomfortable sharing financial information, but it's better for us to know about potential issues as soon as possible. There are often ways that we can get around it and find solutions to some of those problems. Stage two, your information section.
00:03:32
Speaker
The information session is a quick meeting with one of our brokers to go over the home loan requirements, your financial situation, we'll take a look at your purchase timeframes and where you're at in the home buying process. During the information session, we cover things like how to find a home, the searching process, tips to look out for in the current market and try and get as clear as possible on the exact type of home and what success looks like for you. We'll also talk about your eligibility for first home buyer grants and schemes. This is the second key thing you need to get right when you're buying a home.
00:03:58
Speaker
The first homeowner grant, stamp duty concessions, home guarantee and other government guarantee schemes can save you thousands of dollars as well as fast-track your home buying process. If you don't apply from the right way or you miss out on one because you didn't think you're eligible, you could be leaving tens of thousands of dollars on the table. Like I said before, not all banks can access all these schemes. The home guarantee scheme is limited to only 25 lenders across Australia. So if you bank with Suncorp or ANZ, they actually don't have access to these government schemes.
00:04:24
Speaker
Now, it's not to say they're bad options, but everyone's different. And if you're working with us here at Hunter Galloway, you don't need to stress. Our process includes an assessment of your eligibility for all these government grants and schemes to see what's on the table. Not only do we let you know what you're eligible for, we'll also help you apply for it as part of the home loan process. So then what happens next?
Understanding Pre-Approvals
00:04:40
Speaker
Ultimately, it depends on where you're at in the home buying process. There are likely three different scenarios.
00:04:44
Speaker
Number one, if we do find any major issues that affect your eligibility for a homeland that can't be fixed in the short term or you're not quite ready to buy, then we'll work with you to help with some training and support to get to the point where you can be ready to buy a home. Number two, pre-approval. If you're ready to start searching for a home, usually in the next three to six months,
00:05:00
Speaker
Our team will get you ready to get pre-approved so you can start making an offer. Pre-approvals, in my opinion, are essential if you want to buy a home in today's competitive market. They can give you the confidence to put in an offer, subject to finance, or bid at auction. And just as important, they can show the real estate agents that you're serious about buying a home and that you have the financial capacity to do so.
00:05:17
Speaker
The third option is potentially going straight for a home loan application. If you've already signed a contract, you might have bought a house and land or something like that, we'll go straight to lodging a full assessment and approval for your final formal approval. The exact process from here can change depending on the individual circumstance. For example, Jenny first came to me over 12 months ago looking to buy a home, but she only had a few thousand dollars to deposit, some extra credit card debt and recently changed jobs.
00:05:39
Speaker
There are a few things going on for Jenny, which probably wasn't quite the right timing to buy her home then. But I helped her set a goal. We worked out how much deposit she needed, what her credit card limits need to be, and when she could buy. Fast forward to today, four months later, she's ready to get her pre-approval, has the right deposit, job's been stable, and is ready to get into the market.
00:05:57
Speaker
Now that she's got a clear idea on the budget, she can move forward and secure her dream home. It's all about having the right plan and the right guidance. Step three, your finance
Navigating the Finance Meeting
00:06:05
Speaker
meeting. This is where we dive deeper into the financial landscape and work out which banks can be eligible for and which aren't going to be as good a fit. I guess this is kind of the exciting part. This is about choosing the right home loan product that's going to suit your needs. During the finance meeting, we're going to do things like analyze your borrowing capacity. We'll review your income, expenses and financial information to determine how much you can borrow comfortably. We'll discuss the loan options that explain different things like fixed variables, split rates and work out what's going to work best in your situation. We also explain loan features. We'll look at things like offset, redraw, the ability to make extra payments and what your plan is with the property over the next one to five years. And lastly, we'll compare lenders across 30 different lenders. We'll find the best home loan that's going to suit your needs. So why is this step important? Well, because the loan you choose now can impact your finances for years to come. By tailoring the home loan to your needs, you can save money and reduce the financial stress down
The Application Process
00:06:50
Speaker
the line. Step four, application and approval. This stage can feel a little bit daunting, but don't worry, I'm here to guide you through every step of the way. It can feel pretty anxious at this stage, you've gone through the searching process, you're ready to go and you might be wondering, well, did I spend a little bit too much on Netflix last month? Is the bank going to knock me back? This is where it becomes important to be prompt and give accurate information when you're giving the docs over to us. But focusing on the application process it involves several key steps. Firstly, the documentation gathering. We're going to collect several documents to verify your income, identity, expenses, assets, liabilities, all that stuff. This involves things like your pay slips, bank statements, tax returns, and ID documents. The next stage is the application preparation. My team and I will prepare your loan application, put everything on the bank forms and ensure everything is accurate and ticks all the boxes as far as the criteria. The third step is putting the post. We'll submit the application, not on the post obviously, electronically to the banks. We have a CRM that goes directly into there. CRM basically, it goes straight into the application queue for an assessor to start looking at the application.
00:07:44
Speaker
The wider accurate documents matter. Well, what can happen is we'll submit an application to the bank if there's things missing, like a pay slip wasn't there, an ID documents missing. It can delay things because then the bank has just come back to us, ask for information, we've got to go back to you and it goes on and on. Let me show you a real life story about Mark, one of my clients. He was super keen to buy, but was slow on providing some of the necessary documentation.
00:08:04
Speaker
He went away traveling, came back when he tried to apply then. His pay slip was all funky. We had to get a letter from HR. We solved it anyway, but the quicker you get the documents to us, the more accurate they are, the easier it's going to be when we go through the home loan approval process. As far as the approval process, here's what happens after we submit the application. The lender's going to assess things. I'll step you through it though. There's the initial assessment. The lender will review your information to ensure it meets their criteria. This is generally done just in their system, making sure you know your income meets the minimum criteria, your credit, it's okay. And this goes through a system that says yes or no. They'll also perform a credit check as a part of this. If everything looks good, they'll issue a conditional approval, which may be subject to certain conditions. If it's a pre-approval, it might be subject to you finding the right home. If it's a formal approval, it might just be subject to you getting housing insurance for the house. If you found a home, they'll also arrange a property e valuation of the property to make sure it's worth what you're paying for it. And the last step in this is the unconditional approval. It's also called the formal approval. It's where the bank says, yep, here's the money, no extra conditions attached. And you might be wondering, how long does this process take? Well, it can take usually one to two weeks depending on the bank. If you need to speed things up, if you've got like a formal approval or if you need to do seven days of fines, we're able to escalate and push and prod those banks to get things moving a lot quicker to help you secure your home.
Finalizing with Settlement
00:09:11
Speaker
The only tip I'd have here is it can feel like we might have to ask for a lot of information upfront, but it's really to prevent delays at the backend. We try and get all that information, your pay slips, notice of assessment, tax returns if it makes sense, so bank statements, to make sure we've got all the bank's questions answered before we even send it off. It just makes for a much smoother process. So it might seem like we're asking for a lot of information upfront, but there is rhyme to the reason. Stage five, settlement and beyond. Congratulations. So now you've received your unconditional formal approval. This is huge. It's a massive milestone, but we're not quite done yet.
00:09:40
Speaker
The final stage is settlement. This is where the property officially becomes yours. So as a part of this, the bank is going to show you loan contracts for you to sign. In a lot of cases now, these are done by docu-signs. You're not having to physically put pen to paper, but the lender will send out loan documents for you to sign. These can be lengthy. Don't worry though, as a broker, we'll help you work through those, answering questions you might have and make sure they go back.
00:09:58
Speaker
nice and easily. The other step here is coordinating with your solicitor conveyor. It's in this step preparing for settlement that your solicitor will book him at the bank and arrange a settlement with the sellers. You don't need to worry about that. They'll pretty much just ask you to either put money in their trust account or make sure you've got enough money on the day for settlement. On the day of settlement, the lenders will transfer the money from your bank to the sellers to complete the sale. Your solicitors handle that. Like I said, they'll usually tell you a couple of days before what needs to be where, but if you're unsure again, go back to your broker. We can help clarify anything there. And then you become officially the owner. On the day of settlement, you get the keys. It's amazing. The best part with a broker though is there's a lot of post settlement support. So our relationship doesn't end on settlement. In fact, it's just the beginning.
Five Key Steps Recap
00:10:34
Speaker
Here's how we help you with that. We'll do regular loan reviews. Interest rates and finance markets are regularly changing. We'll review your home loan at least every 12 months to make sure the rate's competitive. We'll negotiate or look at other options if it makes sense to do so. We also help with future planning. At the moment, I've got lots of existing customers coming back, looking at doing renovations to the home, debt consolidating, even thinking about buying an investment property. We can help you work out the numbers and put together a bit of a plan in place like we did when you bought your first home to work out how you buy the second and third property if that's what your goals are. And that's it.
00:11:01
Speaker
Let's take a quick moment to recap the five things you need to get right in the home buying journey. Firstly, be transparent about your finances. Honesty is going to be the best situation if you have issues in the past. Just let your broker know because a lot of times there are solutions to some of those tricky problems. Number two, maximize the government grants and schemes. Don't miss out on valuable incentives. Your broker is going to walk you through this. It can be huge.
00:11:22
Speaker
Number three, choosing the right loan product. Selecting the loan that fits you now and as the future can help you longer term. If you're thinking about turning the property on investment, if you're interested in the options, put it on the table with your broker to discuss and make sure it's all structured right today to have your future covered. For the accurate information, like I said, it's amazing how much just a little pace of anomaly can cause delays in the process. If your broker is doing a good job, they're going to check all that information up front and ask you. It might seem like a lot, it might seem onerous, but once it's done, it's all smooth sailing from there.
00:11:50
Speaker
And fifth, ongoing, don't forget to stay engaged with your broker. We love helping people ongoing. I love seeing someone that bought their first home five years ago, has had a family and upgrading. We'd love to help you with your future journey too. It's crazy buying your first home is way more than just a transaction. It's a massive lifestyle achievement. And it can be filled with a lot of excitement, but also a lot of anxiety. So remember, you're not alone to navigate this journey. If you haven't already reached out for a free assessment, we can let you know where you're at and where you need to be. If you haven't quite beat savings goals, download our free home buyer guide. I'll include a link below and stay subscribed to our channel. If you want more tips like this, hit the thumbs up and let us know. Let me know what you thought. What was your favorite tip? And then you'll keep buying the next 12 months at Hunter Galloway with a home for home buyers across Australia. I'd love to help you out. So hit us up at huntergalloway.com.au and until next time, I'll see you later. um