Thinking of Buying A House? Here's What You Should Know

People would come up with resolutions every year – these are normally things that they vow to do or change about themselves. I would always hear people talk about doing something more for their careers and somehow, they would end up considering investing. There are different kinds of investments. Some people want to invest in something like a house or a car. If you’re one of those people who plan to buy residential property and simultaneously look for a new job, you might want to hold off on one of these plans for a while.

Recent reports say that a decade of savings is not enough for most first home buyers. Currently, deposits are soaring and so many are finding it difficult to keep up. It takes about almost 11 years for someone to save a 20 percent deposit for an average-priced home and in March 2022, the national media dwelling value was estimated to jump to 8 1/2 times the median annual household income level on a national scale.

Housing Affordability

While house prices are expected to experience price decreases as interest rates continue to rise, the affordability of houses is not seen to improve.

A higher interest rate environment would most likely mean that mortgage serviceability will become more challenging. This could push Australians into mortgage stress. As for first home buyers, it might be hard for them to get a loan they can service.

Rental Increases

Rents are rising as well which could hurt the chances of so many young people purchasing a property. Big purchases like this would need them to save up for a deposit but due to various factors, saving has become a challenge. Rental market conditions across Sydney and Melbourne are relatively weak, especially through the first year of the pandemic.
The income required to service rent on a new lease has fallen in these major cities since 2020.
It’s important to consider interest rates and home values before buying property. But what’s the other thing that buyers must know?

Income

Uncertainty when it comes to your financial future is one of the things that most banks worry about when we talk about giving out mortgages. According to experts, buyers with uncertain financial standing are going to have a hard time applying for mortgages if they are planning to buy a house – especially with the situation concerning the royal commission. The rules surrounding a buyer’s employment can be quite a problem for those who are planning to find a new one. Lenders nowadays are concerned about the length of one’s tenure or how long they have been in the job. This is something that proves security – they can be sure that an applicant will be able to repay their loan. Nowadays, there’s much more scrutiny among borrowers unlike before.

It’s not to say that those who just switched jobs won’t be allowed to borrow funds for their house, but banks will have to make sure that the buyer has finished the probation period that normally takes a few months. According to experts, the probation period will be taken into account. This was not the case in the past but under new rules and regulations, stricter rules are applied.

The thing is, lenders would want buyers to see that they have held a job for more than six months because this establishes a great financial standing. Other experts say that certain professions could be given some special considerations such as jobs in medicine where this industry is in demand. It’s an industry where getting a new job is much easier compared to others. Those who are buying a new house because of a new job can also be given some consideration so it definitely depends on the situation of the buyer.

Although it could hinder a buyer’s chances, there are still banks out there that are lenient on their conditions when it comes to mortgages, and it’s up to you to find the one.