Choosing a home can be a daunting task. For most people, it’s the single biggest purchase of their life — a purchase that has massive financial and personal ramifications. Do it right, and you can set yourself up for a life of financial security. Do it wrong, and you could lose everything you worked so hard for.
This is why it’s imperative to have as much information as possible at your disposal before taking the plunge into homeownership. For some insider info on how to best go about it, and what pitfalls to look out for when buying a home, we caught up with Drew Haupt, the co-founder of competitive digital lending fintech provider, WLTH. The platform grants highly competitive home loans and is aiming to revolutionize flexible lending options.
BI: Hey Drew, can you tell me a little about what WLTH does?
Drew: WLTH is a digital lending and payments platform looking to change the financial industry. WLTH’s product breadth is expanding into the payments space, with the launch of WLTH Pay — a payments platform built to serve businesses, designed with solutions at the forefront of its creation. For each offering we have in the market, we ensure that every revenue line is linked back to purpose and impact with our partner Parley for the Oceans.
Saving the oceans, that’s a cause I can get behind. Can you tell me more about how you’re helping reduce the plastic pollution crisis?
Advancement to human technology in the past few decades has, unfortunately, come with a price as we have neglected our environment and the one planet we all live on. One of the most detrimental mistakes the human race made is our constant reliance on plastic. Instead of breaking down, plastic breaks apart — entering the marine food web and contaminating ecosystems as microplastic.
Thus, WLTH chooses to focus on the cleanup of marine plastic pollution floating in our waters. In collaboration with Parley for the Oceans, a global leader in ocean conservation, WLTH aims to change the financial industry and make a difference. For every home loan settled, WLTH will assist and empower Parley teams to clean up 50m² of a beach or coastline throughout Australia and around the world.
Speaking of home loans, what are your top tips when it comes to looking for a home?
First, know how much you can spend. Getting your home loan pre-approved gives you a realistic figure of how much you can borrow — and becomes the basis for how much money you can spend on your house. With this, you can now search online listings, attend auctions, and shop around for your home with a realistic budget in mind. Be careful though, there are many different costs on top of the sale price of the house, like stamp duty, that all need to be accounted for. It’s also important to be aware that the pre-approval only lasts three months and isn’t necessarily guaranteed by the lender. They are allowed to change their mind if your circumstances change.
Next, expand your search radius. You might be tempted to buy a home in the neighbourhood you grew up in or where all your friends are. While all these things are important, don’t be afraid to expand your search radius to other growing locations. Fringe suburbs that grow in population attract more businesses, infrastructure upgrades, and a thriving community. You might be able to secure a house more suited to your personal needs while being a ten-minute drive away from your friends and family.
And ultimately, do your own research and listen to the right people. No one has your best interests at heart more than yourself. So it is imperative that you diligently do your own research. Advice from friends and family may come with good intentions, but unless they are experts in the field, may be of little value to you. With that being said, you can’t always trust property professionals either. Some may just want to make the sale, or simply put their needs above yours. Of course, there is some element of trust that needs to be had so you need to strike the right balance and surround yourself with the right people.
That’s solid advice. What’s the biggest mistake you see people make?
The biggest mistake I see people make is waiting for the perfect home. This is incredibly subjective, but I’ve seen first-home buyers miss out on fantastic houses in a great location simply because they didn’t like the colors of the wall. Don’t get me wrong, buying a house is a life-changing decision that you shouldn’t feel pressured into doing if it’s not for you. But at the same time, you need to find out what’s important to you and assess if the house ticks all the right boxes so you don’t regret missed opportunities.
Here’s one I’ve been wondering about for a while, do potential home-buyers need a mortgage broker?
Absolutely. Mortgage brokers remove a ton of stress and worry from the home loan application process. They can find the right loan that saves you more money in the long run and fits your current situation. Additionally, they can even check how you would fare if and when interest rates eventually rise.
Do you have any advice when it comes to successfully getting a loan, for a home or otherwise?
From the lender’s point of view, all they want to do is reduce the risk of you defaulting on your loan. There are a few things in your application that they tend to look out for you should be aware of.
First off, the deposit. You need a large enough deposit to borrow the amount you need, this is how the bank determines your Loan to Value Ratio (LVR). To avoid paying Mortgage Insurance you would need to have a deposit equivalent to 20% of the property purchase price. This is not always possible, and there are definitely other options to proceed with a lower deposit where you can borrow more money from your lender with minimal savings required. This is when you need a professional to provide you with an accurate borrowing capacity to suit your deposit amount available and affordability options.
Next up to consider is income and poor spending habits. You might have a lot of cash saved up for your deposit, but if you don’t earn enough on a regular basis to keep up with monthly repayments, then it might be difficult to get approved. Plus — and this is all very relative — but if you spend more than you can afford, then it will be sure to raise some concern with your lender. Another thing to consider is a poor credit rating. Ensure you pay your credit card on time and don’t miss any repayments for other loans.
But ultimately, the lender might just not like the property you’re buying. This is one of the lesser-known reasons for being rejected, but the property acts as the security in case you default. If they don’t deem the property you are buying as worth the risk, then they might not approve your home loan.