5 Smart Strategies for Buying Property

Has the time come to move up to a bigger or a better home? If so, you may need more funds, more income and even better credit than when you bought your current home.

In order to get everything you want, it's best to be as prepared as you can be. Now is the time to take stock of your situation and start the planning for your next home upgrade.

1. Check Your Credit History

How is your credit rating? You know it would have been perfect when you bought your current home, or you wouldn't have got the loan, but what about now? If you've had new loans, credit cards, etcetera since you bought your home, are there any late or missed payments that might be on a credit database somewhere? Late or missed payments are usually listed on these “credit rating” computers, even if you have caught up on all payments.

It's important to know your situation before you apply for new loans or refinancing - a rejection of your loan application is a black mark against you. You might not even be aware that there have been black marks against you.

Even with a black mark or two on your Credit History, your application may not be rejected. You may find however, that the full amount you applied for is not approved - meaning that you need to reapply and ask for a smaller loan amount. Because of this, it can affect the style, size or location of the house you buy.

To determine your credit history and rating from a Credit Agency, look up the Yellow Pages under the heading of Credit Reporting Services. You can pay a small fee to obtain your own Credit Report which means that you can then clean up your rating if you need to, before you apply for any new loan or refinancing. This may mean paying things off, catching up on late payments or even just correcting your credit history with the rating agencies! For more information on improving your Credit Rating, call me for your FREE Report Budgeting and the First Home Buyer .

2. Shop for the Loan

Comparing loan options and interest rates has been made fairly simple these days by the Internet. It's very convenient to go online, find a site that has an online mortgage calculator (many of the banks have this service) and input your figures to find out loan repayments.

Also, there are many finance / mortgage brokers who can sift through the endless options to find and shortlist the best loan for your financial situation. If you use a Broker, remember to check their accreditation, experience and how they are paid. If they claim to be independent, that means they can organise a loan with any lender, not just one!

3 . Analyse Your Current Situation

How long has it been since you reviewed your current mortgage? Is there anything that you'd like to change? Now might be the time to gain benefits that weren't available when you first organised your loan. Options like variable rate, part-variable / part fixed are relatively new to the market place and may be worth considering.

If you are really interested in buying your first home, or selling your home prior to going into another one, then now is not the time to take on any other large expenditures, such as buying a car, or a boat, or borrowing money for a costly overseas trip. It makes sense to delay these purchases to keep your funds clear for your home.

4. Grow Your Deposit

The more cash you have, the more negotiating power you have when it comes to loan amounts, flexibility, interest rates and loan terms. If you have a smaller deposit, you may end up with a higher interest rate or pay high fees for mortgage insurance, either of which could reduce your buying power.

Chances are that the equity you have in your current home will be the largest source of cash for your next home. ‘Equity' is the difference between the market value of the home and the amount of debt you have paid off, on any mortgages secured by the home. The more you have paid off against the mortgage or loan, the more equity you will have available.

I would be happy to conduct a Comparative Sales Analysis of your home to determine the right sales price - at no obligation to you, of course. By determining the value of your home and subtracting the selling costs (paying off the old mortgage, marketing fees and settlement expenses), you'll have the basis for a down payment on your next home.

5. Make the Right Move at the Right Time

After taking stock of your financial situation, you may find it better to delay the sale of your current home and purchase of your next property, until everything is perfect for the upgraded home you'd really love to own. You may need to save more cash for the deposit and settlement costs. Or, you may need to carry out minor maintenance jobs, garden improvements or even more major projects, such as a makeover for the kitchen or the bathroom.

Reducing your outstanding debts will improve your credit rating and have the added advantage of allowing you to qualify for a larger mortgage and/or a lower interest rate on your loan. Remember, it's likely your home's value and your equity in it will continue to grow as you get yourself in a position to move up successfully.

This Report is aimed at helping you learn more about managing your finances in the Property Market and how to get the best result for you. Thank you for calling on me for help. If there is anything further that you require, do call.