Buying a house is seen by many as one of the most important purchases you can make in your life. This means that the decision to go through the time consuming and costly process of getting the property you want can be intimidating, leaving first-time buyers feeling trapped with their decision. Luckily, you are allowed to cancel your home loan before settlement, and in this post, we’ll give you a brief rundown of how the process will play out.
First things first – Read your contract
Even if you are within your rights to cancel your home loan agreement, your contract may have stipulated certain penalties, breach of contract clauses, or amounts mentioned to recoup administrative fees in the case of cancellation. Be sure to read through your contract to make sure you understand what can be expected of you going forward.
How cancelling a home loan works
Not many people know, but before you go into settlement you are fully within your rights to cancel a home loan agreement. That being said, you should make absolutely sure that you cover all your bases, and that starts with your first step, phoning your lender.
While speaking to the lender, you might have to supply a reason for cancelling, which will give the lender the necessary information to let you know if you have incurred any penalties for cancelling.
Once that is done, make sure that you take down the time and date of the phone call, after which you should cancel your home loan in writing. Yes, you just had the discussion with your lender, but by ensuring that they receive a signed declaration of your decision to cancel, this can only help you in the long run, if you run into any problems.
As we said above, be sure to sign your declaration, and make some copies, just to make sure you have documentation on file. Keep in mind that with your physical copy, you can also send one as an email attachment just to cover all your bases.
If you need any help with cancelling your home loan contract, or want to know exactly what your rights are, you are welcome to contact us as soon as possible.
In the past, buying a home was viewed as a marker of adulthood, often preceding marriage and having children. Times have changed, and currently housing affordability is at an all-time low in Australia. As a parent, it’s normal to want to give your children a hand with property ownership, which makes sense, seeing as it’s estimated that a third of all first-time home owners will receive financial assistance from their parents. Perhaps they’ve had a baby and need a bigger home, or are ready to stop renting and put down roots. Whichever situation applies, here’s what you need to consider before offering them assistance:
- It might be more than you think – it’s estimated that the average parental property loan exceeds $60, 000. It’s a good idea to have a realistic expectation of what you can afford to lend, and to make sure your child understands this. Communication is essential, as it might impact whether or not they can pay you back, as well as on your own future wellbeing.
- Don’t do it if it impacts your plans – delaying a kitchen renovation or holiday so that you can lend it to your children is fine. What isn’t fine is if your loan will impact your ability to save for retirement, or look after yourself in old age.
- Paying for a deposit is better than an ongoing loan – if your children would need financial assistance meeting their monthly loan repayments, this is a sign that they can’t afford to own the property. However, if they just need assistance with getting over the hurdle of the deposit, it’s likely they’ll be able to take care of themselves.
- Plan for the worst – it’s a reality that many marriages end in a contentious battle of who get what. If you’re planning on helping a child finance a property, the last thing you want to have happen is for a divorcing spouse to walk away, having benefitted unduly. To avoid this, it’s best to formalise your loan and have a plan in place should several worst-case scenarios happen.
Provided you enter into the situation with both eyes open, you could be able to use your wealth wisely, to help your children secure a future for themselves and for their future generations. To get started you can contact one of our financial planners for advice.
You’ve saved up, despite the low interest rates making it more than a challenge, and now you are ready to take the next step in getting your dream house. Many first time buyers don’t realise that the next step in the process, your home loan application, can be just as important to your property goals as saving is.
Although the process is an important one, we feel that it doesn’t have to be like pulling teeth. So with that in mind, here are some tips to make the most out of your first home loan application.
First off, before you even begin looking at places to buy, you need to make sure you have settled on a budget that gives you a clear indication on what you can spend per month on your loan. Contacting a mortgage broker is a great way to get an independent assessment that will show what you can reasonably be expected to borrow, and even get you pre-approved before you’ve even begun your property hunt.
To make sure your assessment goes smoothly, you have to make sure that you include all your income statements, wage slips and any other information about assets or liabilities you have, like credit cards or personal loans, and even your PAYG and tax returns. Don’t skimp on anything, even if it’s a gift saving’s account set up by your parents. If you provide a complete picture of your financial security, the easier it will be for your broker to do their job, and get you the loan you want.
The loan provider will take all this information, and perform a detailed check on your credit history to see how punctual you are when it comes to paying your bills, or if you have any credit black marks in your credit history.
Some people might be embarrassed, or think that they can hide credit faux pas, but ensuring that your broker or bank gets all the info they need, helps them to give you a realistic figure, and they might even be able to help guide you in the right direction if you have a credit issue that needs solving.
When and if you get home loan offers, it’s equally important to make sure that you can afford the payments, seeing as there is a possibility that a loan offer might require payment that falls outside your initial budget.
In the end, getting your home loan approved doesn’t have to be the excruciating process most make it out to be. If you want any more information regarding a home loan application, or just need some info, don’t hesitate to contact us.