George Lucas
The property market is heating up. So even before you start looking for a property to buy, get your finances in order to determine how much you will be able to borrow, says George Lucas, Founder of ‘Wealth Know How’.
It’s important to get basics in order before investors make one of their biggest purchase of their lifetime, he adds.
“The ‘borrowing and credit’ video channel on Wealth Know How is attracting viewers of all ages who are keen to hear more about home loans and related topics.”
“The highly watchable video on mortgages gives tips to consider before taking on a home loan.”
“Like any other loan, you should put together a budget to show that you have the discipline to repay the mortgage. This is not just for appearances, you’ll need to have saved a deposit of at least 20% of the value of the home. If your deposit is not 20% a lender will generally charge you lenders’ mortgage insurance. This seems like a fundamental advice but is often neglected. ”
“When working out if you can afford the repayments on the mortgage you should calculate repayments on interest rates that are higher than the current rates. For a variable interest rate loan, as the interest rate goes up, you’ll have to make bigger repayments. Fixed rate mortgages don’t last forever and once you come off the fix rate interest rates may be higher.”
“By doing this use you will know if you can afford the loan if interest rates start to rise.”
“It’s important that investors don’t overlook all the extra costs of buying a house, like stamp duty, loan set-up fees, legal costs, and inspections. You should also plan for unexpected costs and minor maintenance once you move in.”
“Also, find out if you can ‘top up’ the loan, for example if you need extra cash to fund renovations. This will obviously increase the term and/or repayments. Find out by how much.”
Other tips in the video include appointing a mortgage broker.
“A mortgage broker will take time to understand your circumstances, guide you on how much you can borrow and attempt to source the best interest rate.”
“Always review the contract closely before you sign up. Find out up front exactly what you’re committing yourself to. Lots of financial institutions offer home loan calculators on their web sites, and it’s definitely worth doing the sums and researching before you sign on the dotted line.”
The channel can be viewed here.