What you need to know when buying a second home

Last updated on November 25th, 2021 at 10:19 am by Bill Tsouvalas

It may have been eons since you were a fresh-faced first-time home buyer, but now the years have passed and you are looking to secure your second home. You may need to brush up on your property buying skills in this ever-changing property landscape to secure a sweet deal for yourself. Here are five things to consider.

1. Checking your home’s equity

What can give you more leverage into buying your next place than using your home equity? This is the opportune time to re-evaluate how much equity you have built up in your current home which can make purchasing a new home easier. Home equity is basically the value your home has accumulated over the years. The more of your mortgage you have paid off the more equity your current house will have in place. Not sure how to calculate how much equity you have built up? You could consider using the services of an evaluator who will give you an accurate figure.

2. Doing a market research

When you are trying to nail the process of getting the best value for your home, you will have to put in the market research. It is important that you assess the current area you are in and look for buildings that are similar to your own to get an estimate of what your house could sell for. Although property prices have slumped by 6.1% in capital cities such as Sydney, this does not mean that the property market that you are in has experienced the same effect.

3. Compare the housing growth for your area

Brushing up on your property skills also means knowing how the property in your area has been doing in terms of home values. For example, property values have increased in areas such as Brisbane by 0.31% while Hobart has experienced a booming growth in property values which rose by 9.67%. This can be good news if you own property in such areas, but this could be watered down by costs such as stamp duty that you will have to pay on your new property. You will also have to consider the ongoing costs that come with your new house that could impact your budget.

4. Your credit report matters now than ever

Purchasing a new home means that you could be taking out a new home loan, which also means that your credit report will be under scrutiny. Therefore, before you apply for a home loan it is important that you check your lender’s requirement along with your credit score to see if you are eligible to be approved. Remember to check your credit report which is a file that contains the history of all your loans and debt that you have. It will also prove your credit worthiness as to whether you were able to pay them off. Check for any errors or arrears that are on your file that could potentially cause your application from becoming rejected.

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