Rising Tide Blog

Shopping for the best mortgage

Posted by Matt Hale

read ( words)

News this week (August) in the Eureka Report caused some surprise around the office. Among all the doom and gloom of election campaign news, it appears that home loan approvals are on the rise, and the report suggests this is due to investors buying more property.

How does that affect you? If you are a first home buyer who has been saving like crazy to get in to the market, it’s not good news. If you are thinking of an investment property as a way of setting up your future, it is good news.

Let’s start with the first home buyers. How can you maximise your opportunity to enter the property market when properties you are interested in are being snapped up by investors?

A first home savers account is the best way to start. These accounts offer a tax-effective way of saving for your first home through a combination of government contributions and concessional tax rates

Shop around for your mortgage broker and think outside of the big four banks. Look for a lender that can get you in to a home for a slightly smaller deposit – perhaps 5% over the standard 10%.

Look outside of the area you had chosen. If it is your first home, check a little further than the suburbs you have your heart set on. Five minutes up the road, the suburb name might be different and property values in that suburb may be slightly more affordable for you.

Look for something that is entry level to get you in to the market. While you have your heart set on a three bedroom, two bathroom near the water, you can make little sacrifices to start with. Remember it is your first home and this is about building some equity. Your first home is not forever.

Look at suburbs that are predicted to be in the next boom area. This may be on the other side of town but once you are in the market, you are in it. Have a list of criteria that the area must have, whether that is great cafes or public transport, a park or schools nearby. It might be that you need to be close to shopping or good medical facilities. Know what you want and be prepared to be flexible about where those needs can be met.

If you are considering maximising tax benefits and entering the investment market, look at properties in areas that have shown constant growth. Find some clues and do your research. Where are your friends and work colleagues buying? Where are the artists and hipsters moving to?

Purchase the property where you know there is a high demand for rental. The higher demand there is for rental properties, the better the return for you. Long term benefits are more important than short term gains.

Think about a co investor. There are agreements to put in place to protect you. But discuss all the options with them – like co-owners agreements, cost sharing, your exit strategy, tenants in common agreements so you are both protected, and insurance against loss.

The housing market is a great way to secure your future and is money well spent.