Buying a home is likely to be the biggest purchase you will ever make, how often do you go out and spend say half a million dollars. Let's make no mistake, it's stressful, and it's a big deal.  What we're talking about today is how to help manage some of that process by being prepared before you start shopping by obtaining a pre-approval from the lender.

A pre-approval will determine exactly how much you can borrow and how much your repayments will be. Pre-approvals are far more accurate than mortgage calculators and other estimators as they take into account your entire financial position, credit score, credit report and circumstances. An online calculator cannot do this.

So what are some of the main advantages of a pre-approved loan?

Save Time

What if you find the house of your dreams? Next you go through the entire process of presenting an offer, having it accepted only to find the bank wont provide enough finance to complete the purchase. This can be both embarrassing and frustrating. Agents will soon start to pile pressure on you to exchange and you'll be frantically trying to find someone to approve you last minute.

Aside from that, it takes a lot of time for you to find that property and go through the processes only to discover you can’t afford it. If you have pre-approval you'll know exactly how much you can spend on your home. This saves you time since you can narrow down your choices immediately. It also saves a stack more time, as you already know the finance will be available and you don’t have to wait weeks for the bank to confirm their support or be searching for that document your lender wants. All the hard work is done upfront.

Save Money

Figuring out the most ideal lender, loan product, loan combination of fixed and split loans, researching how you feel about the options, possibly asking your parents or friends for their opinion on rates, this can all take time. We suggest doing this well before you are locking in a property purchase, the pre-approval stage is a great time to weigh up the options in depth and not rush this process. You'll feel less overwhelmed about the decisions you have to make. Once you're buying, you'll have building, pest, settlement time frames, and removalists to organize, so this is one less thing to think about.

No last minute hunts for paperwork

A pre-approved applicant is an organized applicant. I'm not going to lie here, if you want a lot of money from the bank you're going to have to provide enough paperwork and ID to confirm that you can and will repay them! Sometimes it feels like you need to provide blood and DNA samples. This takes time and can be stressful for applicants who are under pressure from the agent to exchange. We expressly advise NEVER to exchange prior to obtaining full approval. Therefore if you get all of this paperwork out of the way prior to shopping on the market for a property, you will find the whole process about 80% less stressful then if you went shopping for a home without pre-approval. On this one you just have to trust an experienced mortgage brokers advice, our pre-approved clients can't believe how much easier the process is. It's a time and pressure thing. We can also identify any unknown obstacles the bank uncovers well before you have the dream home in your sight.

There’s No Cost

It is important when you are speaking to your mortgage broker to know all the possible costs associated with any pre approval mortgage application. Pre approved mortgage finance, with most banks and lenders is fee free, and the pre approval lasts on average for 3 to 6 months, and is easy to update if your circumstances haven't changed.

If you have a pre-approval with a lender, this often enables us as your brokers to order a valuation upfront the minute you have 'offer and acceptance' on a property.

Instant Credibility

The real estate agents you negotiate with are likely to take your offer more seriously, knowing that you have pre-approved finance in place.

Strength To Negotiate

The pre-approved finance may give you more negotiating power on the property you want to purchase. With your finance pre approved, the seller may have more confidence in your offer and the associated finance application. As your broker we are happy to discuss the strength of your approval with agents, because if we can cite the approval conditions (with your express permission), and if the approval is only subject to valuation, this can be a strong draw card.

A pre approved mortgage application doesn’t always mean that your home loan will be approved, once you have found a property to buy. The bank or lender will still (generally speaking) need to value the property you have brought, and meet any other conditions.  Generally speaking though, if your home loan has been pre approved subject to valuation, you can move forward to full approval very quickly.

 

One of the wonderful things about living in the Southern Highlands is that friends from Sydney and Canberra often get together and take a road trip down the freeway to visit for the weekend (rather than us having to head out of the area). They often rent out a spacious residence for an extended weekend that fits numerous boisterous families where we can all get together for a feast and general catch up.  
The Issue is -  Should I www.stayz.com.au or Should I go,  Now!!
Many people use booking websites such as www.stayz.com.auor other such sites for short term rentals. However, the owners of such houses and investors in these properties must now ensure that they check the relevant zoning restrictions to ensure they are not breaking the law by offering the property for short stays.

A recent decision in the Land and Environment Court found that short term letting in a residential zone was illegal. Of particular note, the Judge found that “a tenancy granted to persons who are residing in a group situation for periods of a week or less for the purpose of bucks and hens nights, parties or for the use of escorts or strippers…is not consistent with the use of the property as that of a dwelling-house”.

Bulletin Bites:
Whilst each case must be reviewed in light of the specific facts and the relevant planning legislation and planning instruments
*If you are an investor looking to purchase a property for short term rental accommodation, it is imperative that you obtain planning advice to ensure that the zoning allows for such use;   
*If you are an agent marketing a property, ensure that you have obtained confirmation from the vendor’s solicitor if you intend to make  representations in relation to the ability of purchasers to use the property for short term rental accommodation; 
*Check  the local environmental plans very carefully if you intend to rent your home for short term rental accommodation;
and DO
Seek professional legal advice if the enjoyment of your property is
impinged by potentially illegal short term rentals in neighbouring
properties.
 John Kettle from STACKS / THE LAW FIRM can be contact at 
Springetts Arcade - 302 Bong Bong Street, Bowral or by phone 2 4861 6600 or fax 02 4861 4919
 

Here at Wilson Financial we have already told you about our FREE property profile reports available from the ANZ by following the instructions here. However Australia’s number one property website,  realestate.com.au is now offering free suburb reports and  assisting you to connect with local property professionals for a price estimate. This might come in handy where the ANZ reports cannot find statistically reliable evidence to support a profile. I am still to determine whether they are even using the same system, but it is always good to know about more resources so we wanted to put it out there regardless.

If you are thinking of selling your home or interested in current values, the reports can help you understand approximate value of your  property.


It’s as simple as providing a few essential  details such as the type of property, size of your property, the number of
bedrooms and bathrooms, property condition and basic property features. You will  instantly receive a free report containing the sold prices of properties similar  to yours, plus local median property prices and a snapshot of the area’s  property supply and demand.

The service will also put you in touch with a real estate agent who can provide a more detailed price estimate of your  property’s value. If a property professional isn’t available in your area, they  will provide a list of local agencies that can provide assistance.

Your free report will also provide a link to the  sites “Selling Guide” that can assist with information such as where to
advertise and how to make a good impression with tips for effectively presenting  your home. Additional resources include explanations of the selling process, when is the right time to sell and how much you should spend on selling your  property.

 Understanding the current value of your property can be useful if you are considering investing, renovating your current home or expanding your property profile. Knowledge of the available equity in your  property will likely assist you to make better borrowing and investment decisions.

Contact us today for further information or assistance with your financial requirements.

 You can obtain your free property report here.

The Financial Security Project at Boston University has published research showing that, for every 10% increase in the dollar amount of a person's debt, his or her depressive symptoms increase by 14% - but home loans may be an exception.
More severe psychological effects were shown to come from short-term debt, such as credit card or overdue bills.  Long-term debt or "good debt"- such as home loans - was not found to have a similar effect.

Be sure to lighten the financial and psychological load!  Re-structure your finances so this is NOT overwhelming!

What is equity? 

Equity is the difference between the value of  your home or investment, and the amount you still owe the bank. To put it simply... how much of the property you own - not the bank!

How do I use it to invest? 

You can access ‘some’ of your equity for investment purposes or even to buy a new car. However, you need to remember that the bank always wants  to have a margin between the loan and the value of your house. This margin protects them  against property price fluctuations in the event of foreclosure. As a result, you can only use the equity left available after the margin. The good news  is that if you have sufficient equity, you can fund the deposit and costs on an investment property. This is the most common method of investing; ‘access equity’. If you’re in a good financial position and have accrued some equity in your property, then investing can become quite accessible for you. 

How can I figure out how much equity I have to use?

A simple calculation on how much equity you could use without attracting big fat fees such as lenders mortgage insurance, is to take your estimated value of your property, multiply it by 80% (or 0.80 on a calculator), and then deduct how much you have left on your mortgage balance. If the figure is positive you could be using that equity without fees to perhaps leap-frog another property. Now remember, just because you have equity doesn't mean you should borrow it for other purposes - that would make you an equity eater and to build wealth we must genereally build equity, not eat it. You can leverage equity at more then 80%, but beware, as your investment strategy will attract lenders mortgage insurance fees, and expose you to more risk with property price fluctuations.

How does investing in  property work?

With the tax benefits of depreciation, and negative gearing, you can invest in property without a massive drain on your weekly finances. You can even claim the tax savings from property as you go through your pay. This is how regular people on regular wages buy and invest in property to grow wealth.