Tips to get on the property ladder faster

Many feel this is the best time to enter the housing market, and following these simple guidelines can help you to get on the property ladder faster, says Resolve Finance general manager Don Crellin.

If 2012 is the year that you’re determined to get into your own home, then here are my top 12 tips to make the journey easier.

TIP 1
Timing:  Housing affordability has been improving for some time. In fact, today’s property market is arguably the best we’ve seen for more than five years. But with rental vacancy rates falling and rents increasing, it’s only a matter of time before we see a return to growth in house prices as more people enter the market.

While housing should always be considered a medium to longer-term proposition, purchasing now looks to be a good bet.

TIP 2
Use the services of an accredited mortgage broker: With so many lenders and products to consider, navigating the best deal for you can be difficult without expert advice. However, a qualified mortgage broker can help you choose which lender and product suits you best.

TIP 3
Save time, save money: Use a mortgage broker who specialises in construction finance.  A thorough understanding of the construction process is key to transitioning you to construction quickly. The quicker the process, the greater your savings – not just in time, but also in interest and rental costs.

TIP 4
Lending options: Be prepared to consider home loan options offered by second-tier lenders and mortgage managers. These lenders offer innovative solutions for many segments of the market, especially first homebuyers. Many people worry about taking out a loan with a second-tier lender or mortgage manager as they aren’t as prominent as the major lenders, but this shouldn’t be the case. In fact mortgage managers are often funded by major lending partners, such as Adelaide Bank or ING.

TIP 5
Your builder: Choose a builder with a credible reputation and a long history in assisting first homebuyers. That’s because there’s a lots to consider, such as home design, available grants, land releases etc. Advice from a builder specialising in working with the first homebuyers is invaluable.

TIP 6
Pay your bills on time: Remember that an adverse credit report, irrespective of the amounts involved, can make the difference between a home loan being approved or not. So paying your bills on time, every time, is crucial.

TIP 7
Savings: While there are several lenders who can provide the option of entering the market with a non-genuine savings deposit – for example, gifted or borrowed money, or proceeds from a taxation return – some level of savings does assist during the credit approval process. Even if it’s not the full 5 per cent deposit, some savings are better than none.

TIP 8
Reducing/consolidating your debts: Focus on reducing or consolidating existing debts.  For example, if you have multiple credit cards, consider reducing their limits or consolidating them.  Doing so can lower the monthly commitment that you need to pay, thereby increasing the amount that a lender will approve.

TIP 9
Manage your expectations: Remember that your very first home is often a stepping stone into a future property.  Be prepared to look at different designs, locations and prices. Sometimes just being in the market is better than waiting for your dream home, especially if it’s your first

TIP 10
Time to change jobs? Employment stability plays a big part in a lender’s assessment policy. Frequently changing employers, especially just prior to making an application for a home loan, can make things difficult.  Lenders generally look for a reasonable period of job stability. Their policies vary with regard to what they consider as “reasonable”. Again, the services of a qualified mortgage broker are important to ensure you have the best chance of approval and that the products recommended best suit your individual circumstances.

TIP 11
Mum and Dad may be an option! A number of lenders have home loan products that combine with parental assistance to get you into your first home. They’re worth checking out.

TIP 12
Investment as a first step? With vacancy rates falling and rents increasing, entering the market with a couple of friends or family members on the basis of an investment property may be an option as a stepping stone to future purchases. It helps spread expenditure and can get you on the property ladder earlier.

Source: Sunday Times Home Magazine, 8-14th January 2012