Updated: Apr 16
Are you looking to buy your first home? We asked our mortgage brokers to answer some frequently asked questions around home buying in 2022. This is the first instalment of our ‘Home Buying in 2022’ Q and A series with our Mortgage Broker Ashleigh! Scroll along to read her responses and financial advice!
Q: What's better to buy, an apartment or a house?
A: Both have pros and cons. Houses have the benefit of land ownership, while apartments can be more affordable. Houses generally see larger value growth over time, but apartments can perform better in a rental market. Houses have upkeep and maintenance, while apartments have body corporate and strata fees. One is not better than the other, rather, it is about your goals and the property that works best for you.
Q: Is the deposit I pay to the agent counted in the total deposit?
A: Yes! Any deposit paid to the vendor, agent or builder is counted towards your total deposit. This is generally held in a trust until settlement day and distributed accordingly.
Q: Will Gen Z ever buy a house?
A: Absolutely! You just need the right strategy and a game plan, ask your broker!
Q: How do I save for a house and enjoy recreational spending?
A: Budget, budget, budget! Saving for a house does not mean throwing your life away. You will have to be strict with yourself, but you can set realistic savings goals around a budget that allows for some fun money. Consider reviewing your fixed expenses and subscriptions to see if you can free up any extra savings on services you are not utilising.
Q: Do I need a financial planner to help me buy a house?
A: While financial planners can be incredibly helpful in future planning, they are not necessary for buying a home. A great time to tag in a financial planner would be if you are looking at building an investment portfolio or making significant financial changes.
Q: Why would you want to be in debt for 30 years at 21 years old if you were to buy a property?
A: 30 years is commonly the maximum loan term, but it does not mean you need to hold the loan for 30 years. We can help you employ lots of different strategies to pay off your loan as fast as possible. We can also help you calculate the cost difference of renting vs owning.
Q: Is it more difficult to buy a property in 2022 compared to 50 years ago?
A: This is a complicated question with a lot of moving parts but essentially, yes. While interest rates were higher in 1972 with an average variable rate around the 7% mark, the property price to income ratio was also lower and it generally took less time to save for a deposit. With an expensive rental market and slow wage growth over the past few years, coupled with unprecedented property price growth, the biggest hurdle to home ownership in 2022 is saving for a deposit.
Q: How much does it cost to use a mortgage broker?
A: We are free! We won’t charge a fee for our services; we are remunerated directly by the lender we introduce you to.
Q: Is it easier to go through my current bank for a home loan?
A: While your current bank may be able to make the process a little easier as they hold all your account history, you are losing the benefit of shopping around. Additionally, your bank may not be able to facilitate your specific financial scenario or the property you want to buy. A broker will be able to identify these areas and point you in the direction of lenders that will fit all your requirements.
Q: Can I buy a house without a deposit?
A: Without a deposit, you may be able to buy a home under a guarantor structure. Ask a broker if this is an option for you and what it may entail.
Q: Is it possible to purchase a house without a loan?
A: Yes, if you have the savings to cover the cost of the home as well as stamp duty and all associated fees, you can buy a property debt free.
Q: Is it better to pay off your loan before it expires, or are you better paying your mortgage off for the full duration?
A: The time it takes to pay off your loan is a personal preference, it is important to consider your budget, income & retirement plans. A broker can help you map out a strategy to pay down your loan as fast as possible.
Q: What are the benefits of using a mortgage broker? How do I know I can trust them?
A: Brokers have lots of benefits, from providing multiple options to helping you structure your loan. When engaging a broker, it is important to ensure they provide you with their credit guide and licensing details as well as a disclosure of any fees they may charge. When it comes to trusting a broker, check out their google reviews and have a chat to them either over the phone or in person. Brokers must comply to something called ‘Best Interest Duty’, this means we have a moral and legal obligation to act in your best interest 100% of the time.
Q: Can I buy a house in a city I don’t live in?
A: As an investment property, absolutely. If you are buying as an owner-occupied property and planning to move, you will generally need to have a new job lined up and at least 1 payslip or be in a role where you are able to work remotely.
Q: Can my first home be an investment property?
A: Of course. It is important to understand the implications this has on stamp duty and your eligibility for first home buyer perks. Chat to a broker about the pros and cons.
Q: Why does every property title say “rights and interests reserved to the crown”?
A: This is an old school deed of grant. Essentially it means the ‘Crown’ or the British Monarchy reserves the right to any resources on the property, oil, gas, minerals etc. If you are not buying a property with the intention to start mining this is not one you need to be concerned about.
Q: Can I change brokers, or am I stuck once I meet with one?
A: You can change brokers at any point, however there are a few things to note. Firstly, once an application is submitted another broker will unlikely be able to access your application as it is linked to individual broker licences. Secondly, if you are thinking of changing brokers during the preparation and assessment process, remember your broker only gets paid if you complete settlement. If you are uncomfortable or have any concerns, just give your broker a call and chat through it with them. We spend many hours working on your files with no guarantee of any remuneration, we need you to trust us as much as we trust you.
Q: Can I apply through multiple banks for a home loan and see which one comes back to me first?
A: This is a question we are asked all the time! Every time you apply for a loan it will impact your credit file, each lender can see your applications from the other banks, and it can cause all sorts of issues. Choosing one lender is the way to go!
Q: Can you ‘flip’ houses?
A: Flipping houses can be a great side hustle. For short-term flipping it is important to get financial and legal advice around break fees, tax & the implications of frequent loan enquiries, not to mention the stamp duty costs.
Q: What is the average home loan deposit required when purchasing a house?
A: 20%, 12%, 8% & 5% (in specific circumstances), are the main entry points. Your broker will help you identify the right entry point for you.
Q: What is the FHLDS? How helpful is it when buying my first home?
A: The First Home Loan Deposit Scheme is a government scheme that allows you to get into the property market with as little as a 5% deposit while avoiding Lenders Mortgage Insurance. The biggest benefit of this scheme is getting you into the market faster and avoiding expensive LMI premiums. It’s best to discuss this with your broker as there are limited spaces available.
Q: What should you look out for when buying your first home?
A: There’s a lot to this question and I could go on for hours about this. In fact, I did! Check out our podcast episode targeted specifically to first home buyers:
Phew, what a list! If you have any further questions, book in a free consultation to speak with one of our brokers today:
If you want to learn more about Ashleigh, check out her article here: