Good to Great: How to Scale With an Outsourced CFO

Since the beginning of the year, around 40 Australian lenders have dropped their fixed rates, causing many to wonder, “Is this the year to buy that dream home?”

Lower interest rates give buyers more purchasing power, and that’s why so many people are in high spirits over the recent news.

For buyers with cash on hand for deposits, lenders may be willing to negotiate for lower rates they’re not publicly advertising. They know it’s an excellent time to lock in buyers, and they may be willing to sacrifice a bit on the front end to secure trustworthy borrowers for the next 15 to 30 years.

But is 2019 really a good year for you to purchase your dream home? In this post, we’ll look at several factors you should take into consideration before purchasing a new home/investment.

 

Low Interest Rates: Should You Rush In?

Rates are low right now, and if you’re ready, it’s a perfect time to shop for your dream home. If you need a little time to prepare, however, it seems that you may have some breathing room.

Stagnant employment and wage figures will prevent the RBA from tinkering too much with interest rates for the near future. This is good news for home buyers, if not for job seekers and workers.

Because of the economic outlook, you don’t need to feel too much pressure to snatch up a fleeting interest rate. You can pursue a loan methodically and carefully, as you always should when making a long-term commitment that will have extensive influence on your future finances. And if you’re ready now, proceed with confidence that you couldn’t have picked a better time.

 

Planning Your Budget

Before you start shopping for your dream home, take a step back and consider your budget. Low interest rates don’t help much if you stretch yourself too thin for a fruitful financial future. You should be able to cover all of your daily expenses and still have extra for rainy days and investing.

If you don’t currently plan and track your income and expenses, start now. A realistic, thoughtful budget allows you to set and achieve both short- and long-term goals. Your budget will also help you to know how much you can afford before you start looking for a home.

 

Preparing for a New Mortgage

Once you’ve decided the time is right for purchasing your dream home, the work begins. Prepare your finances for the loan process for a smooth transaction and successful outcomes. Here’s how.

1. Check your credit score. Lenders offer lower interest rates to low-risk borrowers, and your credit score is a determining factor. If you find a mistake on your credit report, correct it as soon as possible.
2. Explore your mortgage options. Right now, fixed-rate mortgages are a steal, and they’re generally good loans for most people. But you’ll want to investigate interest-only and variable rate mortgages as well. Also, consider how long you want to take to pay off the loan. If you choose a 15-year mortgage, you won’t be able to buy as much, but you’ll save many thousands of dollars on interest over the life of the loan.
3. Save for your deposit. If you don’t have cash on hand for your deposit, save until you have enough to satisfy your loan requirements. If saving money is difficult for you, consider setting up an automatic bank transfer each month so you’re not tempted to spend the money.
4. Reduce your debt. A high debt-to-income ratio can affect how much a lender is willing to provide for you. If possible, pay down credit cards and car loans to improve your ratio.
5. Get pre-approved. Talk with your loan broker about what you need for pre-approval. Sellers like to see pre-approval letters when buyers make offers. You’ll strengthen your position and speed up your transaction by taking care of pre-approval early on.

 

Talk Your Plans Through with Your Adviser

How will the purchase of your dream home affect your financial life? Will you stay on track for retirement? Will your taxes be affected? Will you need to make any changes to your will or estate planning? By talking these issues through with your financial adviser, you can approach your purchase with confidence.

For the best rates, work with a broker who can use his or her contacts and volume discounts. Save time and money by having your broker shop around and assist you through your dream home purchase.

To get in touch with one of our wealth advisers here at Altus, set up a time for a consultation. We look forward to helping you make the most of these historically low interest rates.