Buying Real Estate Part 5 - Finding a Home For Your Budget
Refinancing Your Loan
Buying a new home means you will need to plan ahead for all the costs associated with the purchase.
It's crucial to plan ahead and think of factors such as stamp duty, legal fees and ongoing expenses so you know the true cost of your home. This will help you determine whether you can afford it and keep up with ongoing payments.
As you will likely have equity built up in your home loan, you might be able to access this to cover the deposit for your new home. This is done through a simple refinance with your mortgage lender.
However, before you choose to refinance, you might want to ask yourself whether you are happy with your current home lender or if there are better deals you could find elsewhere.
Perhaps you would like to tie down a more competitive interest rate to save you money in the long run. Alternatively, you might find you want to switch to a fixed rate loan rather than variable.
It's important to remember refinancing your loan can result in fees, so you will need to factor this into your budget.
Alternatively, you could look into bridging finance to fund the gap between your old home and your new one. This can be expensive and place pressure on you to find a home within the bridging period. This is usually a temporary loan that only lasts for a few months.
If you've got your eye on a home that is more expensive than your current one, it's likely you'll need to borrow more to fund the difference.
This means you'll need to reassess your borrowing capacity with a lender and discuss how changes in your financial circumstances may affect the amount you can borrow.
Searching for a Home
Once you have a figure in mind for how much you want to spend on a home, you can begin your search. Fortunately, there are many tools on the internet to help you do your due diligence before buying your second home.
Keep an eye on price reports from local Real Estate Institutes and other property researchers to find the best areas to buy.
It also pays to get in contact with a real estate agent who can stay on the lookout for properties that meet your taste and your budget.