Expert tips for home buyers taking advantage of the market

Whether you’re an investor or an owner occupier looking to take out a home loan and purchase your first or next property, the skies are finally clearing up. 

The Aussie housing market is forecasted to see positive growth over the coming months, in light of game-changers like the Reserve Bank’s (RBA) interest rate cuts to a record-low 1% as well as the Australian Prudential Regulation Authority’s (APRA) decision to remove the minimum 7% interest rate floor and the 30% limit on interest-only loans.

According to predictions by Mozo’s property expert Steve Jovcevski, dwelling values in Sydney will rise by around 3% over the next six months from July to December 2019, while Melbourne’s housing market will gain its footing and recover a little as well. 

“The market has now reached close to the bottom since house prices started dropping in January 2019, and so, from now until the end of the year, we’ll see modest growth and possibly a modest increase in house prices in Sydney and Melbourne,” Jovcevski said. 

“There’s more confidence in the market,” he added. “Clearance rates - the percentage of properties sold at auctions per week or month - have already gone up, which may encourage vendors to get back into the market and start selling their properties.” 

RELATED ARTICLE: Find the right home loan for your investment property

For home buyers, things are also looking up. “If they’re buying a home, they’re buying an asset that’s appreciating at the moment - or going up in value rather than going down,” Jovcevski said.

This isn’t to say negatives for the market are completely off the table. Home lenders continue to scrutinise living expenses closely before lending homebuyers any mortgage money. 

But Jovcevski noted there has been moves to look into those negatives and redress them. Just this month, Westpac made a submission to the Australian Securities and Investment Commission (ASIC) calling for more flexibility when evaluating a borrower’s living expenses. 

And down the track, two more RBA cuts - one expected in November 2019 and another in February 2020 - could take place and further boost the housing market. 

However, Jovcevski warned people not to jump onto the homebuying bandwagon “for the sake of it”. 

“You still have to look at the fundamentals,” Jovcevski said. “Make sure the location is a good location. Make sure you’re comfortable with the repayments, even if the rates do increase.” 

But for those who are steadfast on buying that new house or property, here are Jovcevski’s top tips to prepare yourself before you go for a home loan

Property expert Steve Jovcevski’s top tips for first home buyers

1. Cut down on spending

With lenders now putting your living expenses under magnifying lenses, it’s a good idea to curb your spending at least 3 to 6 months before taking out a home loan, especially if you’re looking to refinance and get your hands on a better deal. 

Related: How much can I borrow on a $100,000 salary?

2. Save up as much as you can

Saving up more for your deposit could land you better home loan deals. If you have a 20% deposit, you will usually find it easier to negotiate down your interest rates with your lender. 

For first home buyers, the NSW government offers a First Home Owner Grant for those who qualify. From 1 January 2020, the federal government will also roll out a First Home Loan Deposit Scheme to help 10,000 people with a 5% deposit have a guarantee on the rest of the 15% so they can avoid mortgage insurance.

3. Pay off existing debt

Drowning in credit card debt that you’ve swept to one side? It’s time to revisit them before applying for a home loan.

If you’ve got multiple credit cards to handle, a debt consolidation loan will help combine all your debts into one easy-to-manage debt. But if you’ve just got one credit card to pay off and want sweet relief from high interest rates, a balance transfer could give you the breathing space you need, as most balance transfer offers have a 0% interest period. 

4. Limit your credit

Since 1 July, all banks can see the credit enquiries you have on your report. These enquiries can negatively affect your credit score and make taking out a home loan a hassle and a half, so limiting your credit and minimising your credit cards or personal loans can go a long way to helping you purchase the home of your dreams. 

You might not necessarily have debt on these cards, but just having a credit limit available to you can hurt your chances when borrowing. So if you’ve got credit cards you aren’t using, make sure to close them off. 

5. Do your research

Rather than approaching 10 different lenders and asking for their rates, it’s a smarter move to do your research first and stick to one or two lenders when applying. That way, you won’t wind up with multiple marks on your credit report, and you’ll look less like you’re fishing for credit wherever it’s available. 

Home loans - rates updated daily

Search promoted home loans below or do a full Mozo database search. Advertiser disclosure.
  • placeholder
    Mozo Experts Choice 2021
    Smart Booster Home Loan

    2 Year Discounted Variable Rate, Owner Occupier, Principal & Interest, <80% LVR

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.variable for 24 months and then 2.25% p.a. variable
    2.21% p.a.

    New super low introductory rate home loan for two years. Min 20% deposit. No monthly or ongoing fees. Fast settlement times. Mozo award-winning online lender. Friendly, local Australian based team.

    Go to site
    Details
  • placeholder
    Mozo Experts Choice 2021
    UHomeLoan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.85% p.a.
    fixed 3 years
    2.24% p.a.

    $0 fees and easy application. Choose between weekly, fortnightly or monthly repayments. 3 year fixed rates are for new Owner Occupier Principal & Interest loans.

    Go to site
    Details
  • Hot DealFor a chance to win $100K towards your home loan, apply with Athena before Oct 31 & approved by Dec 15 (Please read the full T&C's)
    placeholder
    Mozo Experts Choice 2021
    Celebrate Variable Home Loan

    <60% LVR, Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.

    Fast and efficient online application. Automatic discounts as loan is paid down. Free extra repayments and redraw facility. Zero fees. Min 40% deposit required. Winner of three Mozo Expert's Choice Awards for 2021.

    Go to site
    Details
  • placeholder
    Variable Home Loan

    Owner Occupier, Principal & Interest

    interest rate
    comparison rate
    Initial monthly repayment
    1.99% p.a. variable
    1.99% p.a.

    Refinance only. Super-fast digital application process. Zero upfront fees. No on-going service fees. Free 100% offset sub account. Apply Online & Refinance before 29 October 2021 for the chance to WIN your home loan interest free - Save up to $1.1 million. T&Cs apply.

    Go to site
    Details
  • placeholder
    Basic Home Loan

    Fixed, Owner Occupier, Principal & Interest, LVR<70%

    interest rate
    comparison rate
    Initial monthly repayment
    2.09% p.a.
    fixed 3 years
    2.32% p.a.

    No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.

    Go to site
    Details

Start with research to find out what mortgage offers are out there, then narrow your choices down to the ones with great rates, the kind of features you’ll actually use and which you have the correct deposit saved up for.

Unsure how to get started? Check out our home loans comparison table to find the best deals for you today, and the house of your dreams could in your hands sooner than you think.

* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.

While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.