Have recent rate hikes made you nervous about taking the plunge into the property market? You’re not alone; it’s a buyer’s market for a reason. Here’s how to stay cool and calm when buying your next property.
As you’ve probably seen in the news, the official cash rate has risen from 0.10% to 3.35% in just nine months. It’s now the highest it’s been since September 2012 – so it’s only natural to feel a bit hesitant about buying property right now. But rest assured with the right buying strategies in place, you can navigate rate hike and mitigate potential financial stress.
- Know your borrowing capacity
Get to know your borrowing capacity and consider leaving yourself a bit of a buffer by purchasing under the maximum amount. That’s because over the many years it takes to pay off a home loan, your financial or personal circumstances may change, and interest rates could rise further. We can help you calculate your borrowing capacity before you start house hunting – so you don’t fall in love with a place that could create more financial stress than it’s worth.
- Take advantage of it being a buyer’s market
With rising interest rates and inflation, there’s been a softening of the market and this may reward those who are ready to buy now. According to CoreLogic, “it’s a buyer’s market!” In the three months to December, the median time a property spent on the market increased to 31 days across the capital cities and 41 days in regional Australia.
That’s a big increase from median of 20 days in November 2021. And by targeting properties that have been on the market for a while, you could potentially have more bargaining power (just be sure to do your due diligence!)
- Take advantage of government schemes
There are various government schemes that may help reduce the size of your new mortgage and other associated costs. For instance, the federal government offer low deposit, no lenders mortgage insurance (LMI) schemes through the NHFIC. The schemes can save eligible first-home buyer thousands of dollars and speed up home ownership by 4 to 4.5 years on average.
Meanwhile, all state and territory governments (except the ACT) offer first-home buyers grants, while most (except South Australia) offer concessions to take the stamp duty sting out of house buying.
On average, stamp duty can tack an extra 3-4% onto your property value, depending on the state and property price, so keeping this hefty sum in your pocket is a good deal.
- Let us help guide you
That super low-interest rate loan you saw on a Facebook ad might have looked like an absolute steal, but did you notice the eye-watering fees in the fine print? And did you know that shopping around for a home loan by sending in multiple loan applications can negatively impact your credit rating?
Speaking to a mortgage professional like us can help you avoid these common pitfalls and others. We can help you find the right lender, home loan rate and terms that’ll suit your individual needs. Better still, we can help you organise your finances for your application and navigate all the red tape.
So if you’ve been a bit nervy about purchasing in this current financial climate, give us a call today. We love nothing more than helping people navigate the complexities of the finance and property markets.