- Get pre-approved: The major banks in particular are taking anywhere from a day up to a month to get pre-approvals organised. Almost every 2nd loan is "urgent" so just be aware that they may not let you jump the queue when you find a property. Be prepared and get approved well before you start looking. It is a bit like a feeding frenzy at the moment and will probably get worse closer to June. Buyers that aren't pre-approved either miss out because they can't get their loan in time or have to choose a lender that can get the job done quickly, which may be more expensive.
- Is your income stable?: More people default on their home loan because of income loss than for any other reason. If you are in an industry that may be hit hard if our economy gets into worse trouble then get income protection insurance or don't buy until you are sure that your job is safe. Furthermore if your income is stable (government jobs etc) then this may be one of the best times to buy depending on which state you are in.
- 100% loans are effectively gone: If you have no deposit then by the end of this month is it highly unlikely that you'll be able to get a 100% loan. The only way you can still borrow 100% is if a friend or family member guarantees your loan using their property.
- 95% loans are becoming harder to get: The majority of lenders are in the process of reducing their maximum loan amount to 90% of the property value. If you have a small deposit then I would strongly suggest that you try to get pre-approval in the next two to three weeks before any more lenders remove or restrict their 95% loans. Once your loan is pre-approved then lenders tend to honour the approval even if they change their policy between when you apply for the loan and when you find a property.
- Genuine savings is becoming important: In 2008 it didn't matter too much if you hadn't saved a deposit however this year many lenders are requiring that if you are borrowing more than 80% or 85% of the property value that you must prove that you have "genuine savings" of at least 5% of the purchase price. Genuine savings is generally defined as money held in your account for at least 3 months or shares although there are many variations. If you are getting a gift from your parents then put the funds into your savings account now and keep them there for 3 months and that is accepted as genuine savings with many lenders.
- Do you want to fix in the next year?: Many of our customers say that they want to fix their loan in the next year when rates are at the bottom. Some lenders tend to have better fixed rates than others, so if you plan to fix your rate then try to go with a lender that historically has always offered good fixed rates. That way you don't have to refinance to get a good deal. Mortgage brokers can help to advise you which lenders tend to have competitive fixed rates.
- Consider a smaller lender: The major banks and their subsidiaries generally have pretty bad service at the moment and don't necessarily have loans that are any better. Think about using a smaller lender like AMP, Suncorp, ING, Heritage, The Rock or one of the many others.
That's all from me. Hope that helps! Good luck everyone!