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Mistakes People Make when Applying for a Home Loan [in 2022] - YouTube
Channel: Mortgage Broker Australia - Hunter Galloway
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The bank knock people back because of Uber Eats?
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Well today, we're going to share with you
some common mistakes
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people make when applying for finance.
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Mistake #1, eating out. Jayden?
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It sound so stupid but yeah, at the moment,
the bank set a war on you -- eating out.
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The fact is that lately, there's this thing called
comprehensive credit reporting
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and a little thing called the Royal Commission.
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You add these two things together and the banks
have become crazy on all the little details.
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They need to be shown that they're doing their due
diligence and they're checking everything properly
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because at the end of the day, they're giving you
a home loan for 30 years and not for a couple of months.
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So what that means is they're looking at your Uber Eats,
they're looking at your Foodora,
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they're looking at your Deliveroo,
they're looking at everything that you're spending.
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Netflix, Afterpay.
The banks these days are actually asking for up to
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three to four months of your
day-to-day transaction statements.
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So we had one recently, Nathan
that they actually pulled up someone who was spending
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a little bit too much on Sportsbet and it was around
Melbourne Cup and there's some
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circumstances there but the fact is the banks
are going into that level of detail.
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It is crazy, so you need to look out for that.
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So what do you need to look for, Nathan?
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Top tip here on eating out
or your transaction statements, what should you do?
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Yeah, remember the banks are going to look at
the last four months.
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So the simplest thing here is trying to wind back
the amount of spend you're doing,
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particularly discretionary, so things that
don't need to be spent:
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Sportsbet, food, recreation --
Taco Tuesdays,
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Margarita Wednesdays --
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-- Going out.
-- Happy Hours on Thursdays.
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So just be aware of it. The banks are looking at it.
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Now, the other thing is not all banks
are looking at four-month history.
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So what that means is you can find lenders
that aren鈥檛 going through and scrutinizing
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every expenses being made, which will give you
a better chance of getting your loan approved.
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So knowing the lenders to go with and ensuring
that you're dealing with the lender
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that got to look more favorable on your situation,
rather than pull you apart, is important as well.
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Number 2, not viewing enough properties
before you make an offer.
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Jayden, why is this important?
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Yes, I think it's easy just to go out there one weekend,
you know what your budget is,
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find a property and fall completely
head over heels and in love with it.
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I've done that before.
- Shooting from the hip.
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Oh, man --
- Guns blazing.
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Oh, it's beautiful, I'm ready to buy but you might
not have an idea of what the market is like,
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you might not know what else is in the area.
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You could be buying the most overpriced,
expensive lemon that you've ever seen in your life.
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So, what should you do? What's your alternative, Nathan?
- So, I think you're right.
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If you can get out, sees many properties as you like,
get into an auction, just experience what it's like
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to see a property going under the hammer,
it's something that not many people do
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-- go out and check properties out,
just for the sake of checking it out.
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But the more properties you see,
the better you can understand the market.
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When you better understand the market,
you're going to know whether or not
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that property that you like is within a reasonable
expectation as to what you pay for it.
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It comes back to what we call market IQ.
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You would have seen some other videos in the past
where we took about research in the market,
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understanding what's out there, and what
you potentially should be paying for that property.
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So take the time, check out, at least five to 10
of our recommended properties before you actually
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putting an offer down, then you can know
what are you comparing it to, what you're paying,
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if you're overpaying or if you're
getting a complete bargain.
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Tip #3, not showing up to
the building and pest inspection.
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Jayden, why is this important?
What do I need do the other building and pest inspection?
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Don't I get a report?
- Man, those reports are expensive.
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You're paying $500 or $600 for something
that's really, if you've ever read
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a building and pest report before, of the 20 pages,
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there would be 10 pages of disclosures and warnings --
- Disclaimers, jargons.
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and generic stuff that are like,
I don't know what any of this means
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and even when I've read them before,
it'll have stuff on there like a generic disclaimer
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about termites or white ants and you're might like,
"Oh, does this mean I've got them in there?"
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I don't understand.
So you got to be there physically.
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The building and pest inspector, in Queensland anyway
is generally a licensed builder so they'll
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take you through and walk you through issues,
if there's a downpipe leaking,
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if there's termites in the building -- I hope not --
but anyway, they'll take you through it
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and they'll also tell you what to expect
to pay to fix some of those problems.
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So Nathan, you've had situations in the past
where people of that problems,
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is that a good or a bad thing
if you find a problem in the property?
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Well, as you said, when you go there
and you're with the building and pest inspection
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and you see firsthand and they point out problems
with the property and you can go,
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"Okay, well I see it, I understand it,"
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you can ask some question to get an understanding,
to get more comfortable.
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So I had a personal situation where I went to buy
a property, had the finance course,
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and a building and pest course,
so when I went to the building and pest course,
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the building and pest inspector said,
"Hey, Nathan, do you see that crack in the building?"
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I just said, "That looks cosmetic."
We went around the building,
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he looked at a stump
and he said, "See this stump? It's a cut down tree.
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Those roots were under the property,
under the foundation and now, the roots are shrinking
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and this slab is sinking as well."
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He said, "Do not buy this property, whatever you do,"
and I called out as a result.
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So these are the sort of conversations
you get when you're there --
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I've had other situations where you can actually use
that building and pest report to negotiate a big discount.
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So there might be a bit of wood rut,
there might be some leaky pipes, it could just be a tap
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that's a bit faulty but you can still take that back
to the vendor and say, "Hey, Mr Vendor or Mrs Vendor,
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it's going to cost me $5000 to fix this leaky taps.
I want you to take $10,000 off the price,"
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and you can use it to negotiate, even after you signed up
the contract for sale to get a better deal.
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Tip #4, misunderstanding the real estate agent's role
in a transaction.
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So Jayden, what do you mean?
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Doesn't the real estate agent need to know everything
about my situation and it's all good?
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I've got friends that are agents, like I feel like
they get a bit of a bad rep
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but it's because it's what the industry is, unfortunately.
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Well also, they work for the vendor.
They don't work for you,
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so they go at the end of the day,
is to increase the purchase price or to get better terms
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for the vendor for whom they working for
and also, they're paying the bills.
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So Nathan was right.
So I've seen a heaps of cases where people have go up.
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As a buyer, you feel like you need to be
a bit overly friendly
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and get a good rapport with the real estate agent.
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They'll tell them how much they pre-approve for,
how much deposit they have, how desperate they are
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to buy a place because their lease is running out
and the real estate agent,
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at the back of his mind has going, "Oh, my God.
This is great.
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This guy has got a big deposit,
can pay way more than what the vendor --
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actually, the seller wants the property
and that's they're desperate,
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so we can negotiate than play hardball with them."
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So you got to remember how the real estate agent thinks
and you got to be selective in what you tell them.
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There's nothing wrong with telling them
you're pre-approved.
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There's nothing wrong with telling them
that you've got a reasonable deposit
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but there's everything wrong with telling them
how much your deposit is.
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If you got a small deposit, they might actually just go,
"Oh, you're a waste of time."
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There's all that stuff that you really got to think about.
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So remember the agent works for the vendor,
less is more, keep your cards closer to your chest here
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and that will hopefully help you in securing
that property you're after.
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Common mistake #5, understanding all costs
associated with purchasing a property.
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So, if I'm purchasing over 550 as a first home,
I'll pay stamp duty, Jayden?
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Yes, I'm guilty of this.
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So when I bought my first home,
I went in there guns blazing, found a place,
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I made every mistake based if it was in a book
and I got to settlement thinking that,
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"The bank approved me for the loan,
I had my 5% deposit, I'm good to go, aren't I?"
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and it turned out that I missed
the transfer duty amount of about $1500.
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So I鈥檝e got to settlement, the solicitor said,
"Did you just take that money in your account?
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We need it," and that was the money
that actually I didn't have.
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It's the money that I didn't have in my account
so I ended up scrambling,
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putting my credit card, had to get cash advance.
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It was horrible but the fact is
buying a house can be expensive.
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Even if you're a first home buyer,
there's other phase like the solicitors,
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like the building and pest.
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You might have pay for a flood report,
electricity connections, gas, internet, moving.
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There's heaps of stuff there that you really need to
take time to factor in it up front
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so you don't get caught up like me
because let me be honest, that sucked.
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So wrapping up, buying a place can be pretty hard
and there's lots of mistakes you can make,
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so to not make mistakes, learn from us.
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It's that simple.
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Now, definitely, if you got any question, let us know.
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We'd love to help. Please learn from our mistakes.
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If you needed more information,
check us out or hit us up at HunterGalloway.com.au.
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