Buying your first home

Case study: Buying your first home

Sarah and Ben were on the cusp of turning 30 when they found a house they were keen to buy. It was late December 2011 and they were eligible for more than $8000 worth of government exemptions which were to be cut off at year’s end.

They received pre-approval from a bank and exchanged contracts, negotiating for a five-day period to organise finance, which they assumed would be sufficient. However, the bank had only granted conditional eligibility based on a computer credit scoring process rather than fully assessing the loan with all supporting documentation.

It was only after exchanging contracts that the bank went through their documentation. They then had to refer the deal to their mortgage insurer to go through their approval process as well. As this process could not be completed within five business days, Sarah and Ben had to return to the agent to request a finance extension. But meanwhile the vendor had secured another offer which was not conditional upon finance.

Their request for finance extension was refused and they missed out on the property. Because they weren’t able to find another property prior to the 31st December 2011, they missed out on the transfer stamp duty exemption which cut out for old properties at the end of 2011.

Mortgages made easy for first home buyers

StrategyOne Advice Network has partnered with 1st Street Mortgage Broker Natalie Copeland to help couples like Sarah and Ben secure their first home while avoiding these dilemmas. Natalie told them that their pre-approval situation was not uncommon.

Natalie determined what loans were appropriate to their circumstances and they were surprised to find that they could borrow up to $30,000 more than their previous best offer, which extended their purchase options.

Natalie’s knowledge of the different financial institutions processes was invaluable when Sarah and Ben finally found and made an offer on another house. Natalie helped them select a lender whose product met the couple’s expectations and whose assessment processes could meet the finance deadline specified on the

Managing cash flow while paying a mortgage

As expected, Sarah and Ben had many questions for Natalie about their various mortgage options and how best to manage mortgage repayments. As an independent adviser, Natalie provided information that wasn’t specific to any one institution but tailored to their specific circumstances.

Protecting yourself against mortgage defaults

Sarah and Ben assumed that the lender’s mortgage insurance charged as part of their finance covered them in the event that they couldn’t repay their mortgage. Natalie informed them that lender’s mortgage insurance covers the bank, not the homeowner. If the couple were to default on the loan, they would be still be liable for the repayments and, if there was a shortfall when their property was sold, the couple would still be liable to the lender’s mortgage insurer for any shortfall between the sale proceeds and the outstanding repayments, as well as any accumulated interest.

Natalie referred Sarah and Ben to insurance and estate planning specialists to discuss the possibility of income protection, life insurance, crisis cover or permanent disability insurance. Sarah and Ben decided to top up the cover they had with their superannuation on income protection and life insurance and wrote their first will.

Sarah and Ben found the amount of assumed knowledge in the buying process quite overwhelming and that processes and procedures weren’t always clear. Natalie gave them unbiased advice, guided them through the paperwork, and ensured that this joyful rite of passage was not a costly and stressful experience.

Call StrategyOne today to arrange your obligation-free meeting: 02 9419 5233.

StrategyOne Advice Network is an authorised representative of Fitpatricks Private Wealth Pty Ltd, AFSL No. 247429, ABN 33 093 667 595 (“Fitzpatricks”).

The information in the above Case Study is of a general nature only and is not intended as a personal advice. It does not take into account your particular investment objectives, financial situation and needs. Before making a financial decision you should assess whether the advice is appropriate to your individual financial situation, needs and objectives. We recommend you consult a professional financial planner who will assist you.

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