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Getting your coastal kitchen floor plan right
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Getting your coastal kitchen floor plan right

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In Partnership With Century 21
  1. Home
  2. Open Homes

5 savvy finance tips for homebuyers and property owners

Because your mortgage may be the biggest fiscal commitment you ever make - by Kathryn Madden
  • 12 Apr 2019
5 savvy finance tips for homebuyers and property owners
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First-time homebuyer; seasoned renovator; keen investor… whatever your property prowess, chances are you’re looking for the best deal when it comes to financing your home. Here’s how to get more bang for your buck while progressing your real estate dreams towards reality.

1. Learn your loan lingo

Before you borrow from a bank or lender, brush up on your vocab: a fixed rate home loan locks in your interest rate for about five years, promising consistent repayments (ideal for those on a strict budget). A variable loan – the most popular option in Australia – will vary in line with movements in market interest rates, while a split loan combines the best of both worlds and wins a vote from Charles Tarbey, CEO of Century 21 in Australia. “In the current market, it’s often best to take a loan that has a part fixed component to protect yourself against interest rate rises,” he explains.

2. Deal with debt

To maximise your chances of securing a home loan, get your finances in order first. If you already have a large debt or bad credit rating to your name, you may find it harder to obtain approval. The key here is to project towards the future – if you’re looking to purchase a property next year, now’s the time to work out a payment strategy (and contact your credit provider for assistance if you’re struggling).

3. Enlist the experts

We call on real estate agents to show us the hottest properties, and interior designers to deck them out, so why wouldn’t we engage an expert to help us find the right home loan? A mortgage broker will research the market, compare bank rates and do the heavy lifting (read: negotiating with lenders) for you. “With so many options on offer, a broker – representing a number of institutions – can give you unbiased choice,” says Charles. But do your research and choose a professional you can trust: brokers earn a commission from signing you up to a home loan, and may be swayed towards certain lenders.

5 savvy finance tips for homebuyers and property owners
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4. Reassess and refinance

So you’ve nailed steps one to three and have been living the great Australian dream of home ownership – but don’t get stuck in a rut. If you’re unhappy with your current lender, looking to fund a renovation or hoping to reduce mortgage repayments, it may be time to refinance your loan. You can go one of two ways, either negotiating a new home loan with your current financial institution, or switching to a new one altogether (often smaller lenders serve up competitive deals). That said, there may be substantial exit costs involved in changing providers (especially on a fixed rate loan), so be sure to crunch all the numbers before making any decisions.

5. Read the climate

The property market always ebbs and flows, but every once in a while an event has a radical impact. Case in point: the recent Royal Banking Commission. The inquiry into Australia’s major banks revealed the institutions had been lending to customers who couldn’t afford repayments; as such, we’re now seeing a serious tightening in lending criteria. Explains Charles, “Homebuyers have been greatly impacted as the banks look more closely than ever into the lifestyle of the potential borrower.” It’s not all doom and gloom though – while securing a loan will take due diligence in the current climate, declining house prices are providing new opportunities to purchase.

You might also like:

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Kathryn Madden
Kathryn Madden
With a weakness for words and an eye for style, Kathryn spends her days writing about everything from furnishings to fashion and feminism. Currently the Features Editor of Marie Claire magazine, her work can also be found in Home Beautiful, InStyle, Grazia and Qantas.

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Getting your coastal kitchen floor plan right
Watch 2:03

Getting your coastal kitchen floor plan right

{headline}

{headline}

This is what the Australian dream home looks like in 2018

This is what the Australian dream home looks like in 2018

4 things most people forget to check when they buy property

4 things most people forget to check when they buy property

These are Australia’s up-and-coming suburbs

These are Australia’s up-and-coming suburbs

Practical advice on when to buy and when to sell property

Practical advice on when to buy and when to sell property

{headline}

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3 ways to pay off your home loan faster

3 ways to pay off your home loan faster

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The golden rules of marketing your property for sale

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Australia's most expensive suburb is not in Sydney or Melbourne

Australia's most expensive suburb is not in Sydney or Melbourne

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Survey reveals nice lawns improve property values by up to $100K

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Are duplexes the new Granny flat?

Are duplexes the new Granny flat?

Aussie house values are plummeting

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