Protecting your purchase

When it comes to buying your new home, the insurance is just as important as the home itself.

There are a number of types of insurance you’ll need to consider: building or home insurance, contents insurance and mortgage protection insurance to name a few.

Building or home insurance 

Depending on the type of loan you’ve taken out, it may be compulsory for you to take out building or home insurance to safeguard the lender’s interest in the property. Even if this is not mandatory, it is strongly advisable.

Building or home insurance covers you for damages to your property or its fixtures. Depending on your level of cover, you may be able to protect yourself for anything from fire and storm damage to burglary. Essentially, home insurance covers the cost of restoring your property to its present condition if it is damaged. Make sure you read and understand the policy as insurance cover can vary from issuer to issuer. Also, don’t underestimate insurance costs, as you may end up out of pocket should disaster strike.

Contents insurance

Contents insurance protects you in the case of loss or damage to your personal belongings and items in your home, such as whitegoods, clothing and furniture. While you may already have contents insurance, it’s a good idea to update it after a move into a new property – especially if you’ve decked out your new house with brand new furniture and appliances.

You’ll usually have a choice between two types of contents insurance: a policy that replaces the old goods with new ones or you can opt for an indemnity policy, under which you’ll receive the depreciated value of what was damaged.

Mortgage protection insurance

Mortgage protection, while not mandatory for borrowers, can be an effective tool to help cover your mortgage should you find yourself unemployed, unable to work through injury or are diagnosed with a serious illness. Typically mortgage protection insurance covers the cost of your mortgage for the period of the claim, providing you time to re-enter the workforce or focus on regaining your health. Speak with you broker if you’d like more information on any of these types of insurance – in many cases they can help arrange a policy for you.

Tips to finding the right insurance

Take time to shop around: Compare the price of each policy with the cover offered – don’t go for a cheap deal with very little cover or pay top money for cover you don’t really need.

Engage specialists: Speak with your broker for options on the insurances related to your new property purchase – they’ll be able to arrange the policies for you or alternatively refer you to a specialist.

Keep documents secure: Remember to keep copies of your insurance policies, receipts and photographs away from the house, as they won’t be much help to you if they are damaged. Leave a set at your parents or a friend’s house, for example.

Contact us on 02 9679 8835 to speak to one of our friendly Finance Specialists today.

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Boosting your borrowing power

With tougher lending standards now in place, borrowers need to be more prepared. Ensuring you have a good savings and employment history and the necessary documentation, can help smooth the path to home ownership.

The days of 100 per cent loans are all but gone so borrowers now need to ensure they have some savings at their fingertips. Borrowing 100 per cent of the cost of a home was once a commonplace however home buyers today are facing substantial deposit requirements as lenders adjust their
lending standards. The majority of mortgage lenders now require a deposit of between 5 and 10 per cent, with many requesting evidence that the deposit was saved overtime, which is commonly referred to as ‘genuine savings’. For many would-be home buyers these changes are disappointing as many have the income to service a mortgage, but just don’t have the cash to stump up the deposit. While your new home may now be a little harder to secure, don’t despair. Here are
some tips to help you enter the market sooner.

Beating tougher lending standards

1. Start a regular savings pattern now – banks will look for a good savings history; it shows that you’re able to manage your money.
2. Lenders are implementing tougher requirements when it comes to lending – this might include looking deeper into your employment history (i.e. how long you’ve held a position for); so if you have a good job, stick with it.
3. Boost your borrowing power by eliminating other debts and liabilities – pay off any outstanding loans, reduce and eliminate credit card debts and reduce credit card and / or overdraft limits; even if you’re not using them, high limits will reduce your borrowing power.
4. Documentation is also more important – be sure to have all supporting documents ready to fasten the process; this includes payslips and group certificates.
5. Be realistic – don’t seek a loan size you know you cannot service.
6. Be prepared for knockbacks – getting a home loan is no walk in the park.
7. Give us a call on 02 9679 8835 – we’ll be able to assess your borrowing capacity as well as advice on the appropriate lender and product types to suit your needs.

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