You’ve outgrown your current home, and are looking for somewhere new. But where do you even start? And what do you do with your old home? That’s where a mortgage broker comes in.
For David and Sabeena, a Sydney couple who recently upgraded to a new home with more space so they could entertain and eventually foster children and dogs, their broker proved invaluable.
Reema Katrib from Aussie was with David and Sabeena throughout their upgrading journey and helped make the process as easy for them as she could.
“This is a big life moment – moving on from a first home and upgrading to the ‘dream home’,” says Reema.
“There are lots of elements to consider when upgrading because you are not just buying, but selling too. Not only is it a considerable financial commitment, but for most people it can be confusing to know where to start.”
Reema shares her four top tips for those also looking to upgrade.
First off, research. “Ask questions. Always. About everything,” Reema stresses.
Know the market you are buying and selling in, and how it could help or hinder your goals.
David and Sabeena were closely watching market conditions and took advantage when they saw opportunity.
“We noticed interest rates were coming down, there was limited stock available – so felt it was a good time to list our house for sale and take advantage of this time to upgrade,” David says.
Next is finding a broker you trust – one you know is going to get you across the line.
Sabeena says, “Reema became like a part of our family and we became part of her family – she was always contactable, and we couldn’t have achieved what we did without her.”
“If you don’t have that trust, you might end up going straight to a lender, and then you could just become another number,” says Reema.
Reema says there can be a big difference when working with a broker as opposed to going straight to a lender.
“With a broker you deal with the same person throughout the process. When you deal directly with a lender you can walk in and speak to someone and then come back the next week, and that person is gone. It can cause confusion,” she says.
“When I start working with my clients, I’m with them from the beginning to end. I’m consistently that one person whom they can go to.”
Having someone who is there from the start and understands your individual situation can be beneficial, especially with the twists and turns that come from buying and selling property.
Next is setting a financial limit. Reema says she always asks her clients, ‘have you thought about a loan amount?’
“It might seem surprising, but in my experience, a lot of people have not even thought about their loan amount or what their repayments might be, especially if rates rise. Once they have this information, it allows them to then understand and make an informed decision.” Reema adds.
“You’ve got to work out what’s comfortable. This is a long-term loan. This could be the next 25-30 years of your life. How much debt can you manage long term? You should also consider future lifestyle changes which could impact your financial capacity, such as taking time out of the workforce to raise a family.”
From her perspective, the answer to this question gives her the information she needs to help her customers determine their borrowing power and assess if now is the time to shop or if further savings need to be made first.
And finally, be realistic and prepared for things sometimes not going the way you thought they would, says Reema.
“You’ve got to be able to be agile. It’s ok to have plan a, b and c – as long as you reach your goal, it doesn’t matter how you get there” Reema says.
For David and Sabeena, bridging finance was one of their plan b’s.
Sabeena says, “We had to contemplate bridging finance because there were some setbacks with the sale of our original house, and we were about to settle on our new home”.
“We just had to go with it and be realistic about our position, luckily the timing all worked out and we didn’t need it, but we knew we had options.”
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While it is no secret cracking into the property market is tough right now, this report can help buyers identify regions that have the most affordable homes in each city and region across the country. Click here to read more.
So how can you get into your own place as quickly as possible while still paying the rent? We asked a financial adviser for his tips on what renters can do to increase their chances of buying. Click here to read more.