Purchasing a home is an exciting time for any home buyer regardless of whether it’s their first or second time going down that road. But even with experience, what home loan tips could you as a repeat buyer make note of for the second time around?
Property trends reveal that repeat buyers are just as active in the property market as first-time buyers. These buyers are often the ones looking to upsize to accommodate their growing family, or those looking to downsize now that the kids have left home! In some cases, repeat buyers could simply be retirees, looking for a change in scenery to spend the remainder of their days winding down in.
No matter which category you find yourself falling into as a repeat buyer, you will be familiar with the purchasing and moving process and will need less guidance than your first-time counterparts. That said, and even with experience under your belt, you might need to re-familiarise yourself with any new laws as well as get up-to-date with any changes that may have occurred since you purchased your last home. Similarly, you might need to apply for a new home loan which brings with it challenges of its own. With this in mind, we’ve put together a few simple things to consider if you are preparing to, or are even just thinking about, taking the next plunge:
Reconsider your needs and home loan requirements
As with most things in life, time can cause many changes and with it a change in priorities and needs. It’s important to bear in mind that the needs you had when you applied for a home loan to purchase your last home are most likely not the same as the needs you have now. Chances are this time around you have a better idea of what you want and are rather on the lookout for a sweet deal and a quicker home loan application process if you can get it!
That said, it’s important that you take the time to evaluate your needs and long-term goals to ensure that the home you are wanting to purchase best suits your current lifestyle, and budget, as it stands. For example, if you’re looking to purchase a new home now that will someday serve as your retirement home, be sure to thoroughly assess the home’s overall practicalities for the future as well as functional aspects such as its proximity to healthcare services – ideally take the time to do this before starting the home loan process.
Prepare for a greater degree of scrutiny when applying
Just because you were successful the first time you applied for a home loan, doesn’t mean you are guaranteed to get it a second time! Repeat buyers are often subject to much greater levels of scrutiny when it comes to their overall debt situation, income and expenditure thanks to a tightening up by the National Credit Act. Although banks and other financial institutions are always eager to lend potential buyers money, new legislation states that they are required to ensure that all successful home loan applications do not end with the buyer becoming over-indebted and unable to pay each month.
Stick with the experts
While you may be inclined to think that one experience of buying a home was enough to make you an expert, think again! Experts are there for a reason and bond originators are essential for streamlining the process and ensuring that you get the best available interest rate possible – something you alone could not achieve!
As a reminder, a bond originator acts as the intermediary between you as the home loan applicant and the relevant banks and/or home finance provider. They assist by helping you compile all the documentation required before submitting this to the banks and home loan institutions on your behalf. And in case you forgot the best bit, their services are free for you as a buyer as they are paid a commission to do so by the relevant institutions.
As a repeat buyer, the following information is required and should be prepared and given over to your bond originator when applying for a home loan:
All your personal details with supporting hard copies such as your ID book, marriage certificate, school and university qualifications, proof of residence etc.
Details of your current and past employment, up to five years. This information should also be supported with any relevant documentation such as a letter of appointment or your employment contract.
Your financials i.e. details of all your income and earnings such as your gross and net household income including hard copies of three months’ worth of payslips and bank statements.
A breakdown of your monthly expenditure, including all installments on existing debts, monthly expenses such as school fees or medical aid, as well as an average of your monthly grocery, transport, and entertainment spend.
Additional documents that could be required include a copy of the new offer to purchase, a copy of the property title deed if available, and/or a copy of the building contract if you are intending to buy a plot of land to build a home on. If your existing home has already been sold, be sure to include copies of any documentation relating to this sale, including when those funds will become available to you.
Be sure to check out our article on how to better your chances of being approved for a home loan if you are looking for some additional help on a smooth home loan application process.
Regardless of the reason why some choose to buy a second home, the majority of us will need to apply for a new home loan in order to get things going. Before starting the process it’s good to remember that this time around, you are looking for the right home and not just a home, as you were as a first-time buyer. This time, there’s a chance to make the process a little easier, and right now, we could all use a bit of easy.