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Home loans are available from several types of lenders, and these include commercial banks, mortgage companies, credit unions, and even mortgage broker. Discuss with all the financial institution and finance brokers to understand their assessment of “the best” loan structure for your personal situation, and ask them to explain their recommendation to you to ensure that you have sufficient clarity on what you may get yourself into. Generally the maximum term for any home loan is 30 years with the option of paying the loan on a weekly, fortnightly or monthly basis. Just note that the more often you can make repayments, the lower the interest cost and the sooner your loan will be repaid. Talking about repayment, do remember to ask about the penalty for lump sum payment early repayment (if any) as you may want to have the flexibility of changing where your loan comes when the competition for your loan mortgage business heats up.

Right from the start, do remember that many charges associated with a loan from the financial institution and brokers are negotiable and may vary enormously, thus you will have to do your homework. With all the information collated, you will then have to assess which of the plan that you are comfortable with and can best afford for the duration of the loan repayment term, and not just by taking the lowest interest rate. Also do take note that home mortgage for the property that you are living in is a non-tax-deductible expense; and due to the income tax structure in Australia it will mean that every one dollar saved on your mortgage is almost two dollars earned before tax paid.

Once you are comfortable with how much you can borrow along with the periodic loan repayment amount and tenure along with the entity that the loan will be coming from, it will be prudent for you to get the in-principle approval for the loan requirement (regardless if the loan is off-shore or on-shore). If you do not have the pre-approved loan before you go to inspect the home of your choice, you may lose out to other potential buyers who have the pre-approved loan. This is even more critical if you intend to get a home loan from your country of origin as such loan may take longer to be approved when you submit the application. Thus, the saying of “early bird catches the worm” is very true in this situation.

The topic next week will be on “research the home property market”, unless there are feedbacks from readers via this website and/or friends directly on other points highlighted above. Have a great week ahead.

After you have confirmed that you are eligible to buy a property in Australia as your house, the next thing is for you and your spouse or your loved ones to determine the budget that you can afford as a household unit. If you are the lucky few that do not require any loan, the budget will be as simple as what you want to spend for your new home. However, if you need to borrow from a financial institution (be in off-shore or on shore) is inevitable, you will need to consider your budget carefully as the repayment amount may differ vastly depending on the financial institution that loan is taken from and along with type of loan that you have taken up.

You will need to consider your budget affordability for the entire duration of the loan term, and what this means is that you will need to take into consideration of what may happen in the next 12 months (e.g. new baby on the way – congrats to you and your spouse if that is the case) or do a crystal ball gazing exercise to foresee what may happened after 12 months (e.g. spouse becoming a homemaker or perhaps the potential of interest rate moving up). As you may already know by now, every point of interest rate going up can probably effect you financial position adversely.

Thus, when considering your budget affordability, following are some of the cost that must be taken into account as it may impact you immediately one you sign on the purchase document:

01. stamp duty and GST

02. inspection fee

03. home building insurance

04. loan establishment fee

05. legal or conveyencing fee

06. council and water rates

07. moving cost

The savings grace from all the cost above is the First Home Owner Grant Scheme (“FHOG”) which is a national scheme to introduce by the government to offset the GST introduced. I will dive deeper into the subject of FHOG in the future.

The topic next week will be on “research for loan and arrange for pre-approval”, unless there are feedbacks from readers via this website and/or friends directly on other points highlighted above. Have a great week ahead.

Before you decide to buy a property as your house in Australia, you will need to know about the existing restriction on who is allow to buy a house in Australia, especially when you and/or your spouse may belong to any of the following categories: (a) Australian citizen, (b) Australian PR, (c) waiting for your Australian PR, (d) expatriates, or (e) students.

If you intent to buy a house in Australia and you are not an Australian citizens or PR (regardless whether you have submitted your Australian PR application) you will need prior approval from the Australian government, unless you fall under one of the following category:

1) you have an Australian spouse who is buying the house with you as joint tenants; or

2) you and your spouse hold a “special category visa”, e.g. a New Zealand citizen; or

3) you are a student from a recognised tertiary institution with a student visa valid for at least the next 12 months.

If you do not fall under any of the category above, you will need to submit your application in writing to Foreign Investment Review Board (“FIRB”), and the form can be downloaded from http://www.firb.gov.au/content/application_form.asp?NavID=46. The form may take about 40 to 90 days to be processed, but FIRB is also known to have expedited the approval process to about 5 days if you inform them about your need/situation. Thus, if you are entering into a contract prior receiving the approval from FIRB, it will be paramount for you to ensure that the contract you are signing is conditional upon you obtaining foreign investment approval to avoid a breach of the Australian statute. On the same note, you should not engage yourself in any auction sales as auction bid are not conditional by nature; therefore breaking the law (and risk imprisonment) and be subjected to legal action from the vendor.

The topic next week will be on “determine your budget for the home”, unless there are feedbacks from readers via this website and/or friends directly on other points highlighted above. Have a great week ahead.

Note: As all my writing on this topic of buying property in Australia was written based on my own experience when looking for my home in Australia. Thus, you should consider its appropriateness to your own circumstances (including your family and/or loved ones), and if you are not familiar or not comfortable with certain topic you should obtain professional counsel from people trained on the topic; e.g. legal, financial and taxation.

Following were the fundamental steps that you can take when looking for a property that you can call home:

01. Determine your (and your spouse’s) eligibility

02. Determine your budget for the home

03. Research for loan and arrange for pre-approval

04. Research the home property market

05. Organise for property inspection

06. Negotiate and make the offer

07. Negotiate and make the deposit

08. Arrange for conveyancing

09. Arrange for insurance

10. Settlement

The topic next week will be on “determine your (and your spouse’s) eligibility”, unless there are feedbacks from readers via this website and/or friends directly on other points highlighted above. Have a great week ahead.