Most first home buyers struggle with saving for a deposit and you may even remember how difficult it was. But this time around, it may be a little easier.
As this is your second property, you may have either the proceeds of the sale of your last property, equity in another property or savings.
If you are in a good equity position, it may mean that you will be able to borrow 80% or less of the purchase price, meaning you will avoid paying extra on lenders mortgage insurance. However, when applying a home a loan, remember you need to show a combination of both equity and income to be able to meet repayments
If you require a home loan for your second property, the process is similar to taking out a loan for your first home. When you start shopping for a home loan, you will need to have the following details at your fingertips to enable lenders to assess your situation:
- Selling price of your existing home (if you are selling one).
- Selling costs not yet paid (agent’s commission & costs, legal fees, adjustments at settlement).
- Payout figure for your existing home loan (amount owing plus any exit fees).
- The annual incomes of the borrowers purchasing the home.
- Income from investment properties.
- Details of any regular commitments that are not included in standard living costs such as child maintenance, private school fees, childcare costs, contractual obligations to make regular payments like pay TV.
- Combined credit card limits. This is the total of the maximum debt that you could draw your credit cards, including any interest free accounts that haven’t been closed down.
- Details of any other debts – amounts owing and payments being made.
- The number of dependents that you have.
- The values of any other property or investments that you have, and whether or not those investments could be sold to help fund the purchase of your new home.
- Balance of savings that will go towards the purchase.