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We all get a little excited when we finally find ‘the one’. After months of dragging yourself around to open houses, finally it looks like you might be in with a chance, on a property that you really like.

Of course, you have probably been instructed by your mortgage broker to add a condition in your offer that makes it ‘subject to finance’. This protects you just in case there are problems getting your loan over the line, so that you don’t lose your deposit.

But one thing that a surprising number of borrowers fail to do is arrange a building and pest inspection report. It might seem like a waste of time – you’ve probably heard from friends that they paid for a report and nothing came of it. That’s your ideal scenario. What you don’t want is what happened to Matt and Sarah.

Matt and Sarah had been trying for over a year to purchase their first home. They had enough saved to cover their bases. Finance was pre-approved, and they were making good offers with no luck. Finally they found a great potential home, and they decided to give it a go.

The agent advised the couple that there were a few other offers on the table, so they would need to put in a strong ‘unconditional’ offer to have a chance of success. Unconditional meant no ‘subject to finance’ clause, and no ‘subject to building and pest inspection’ condition. The decision was a tough one – do what the agent was suggesting, or probably go back to the drawing board again.

Matt and Sarah decided to go for it – they had their finance pre-approved anyway, and the house seemed fine – Matt had already looked under the porch and couldn’t see any sign of trouble. They were thrilled when they received a call back from the agent almost immediately asking them to come and sign up their offer.

Although they hadn’t protected themselves in case of problems with obtaining finance, everything went smoothly with the settlement and before long the couple were living in their new home together.

After a couple of months in the home, Matt decided it was time to repaint the exterior. They didn’t have a lot of money left over but it was only going to be a few hundred dollars for all of the paint and equipment.

That was until he discovered the wood damage around all of the windows and doors. Then he found it underneath the floorboards as well. He came to the horrible realisation that they had bought a house with a termite infestation.

Termite damage can cost an absolute fortune to fix, depending on the extent of the damage and the location of the termites. In this case, Matt and Sarah still have not been able to afford the necessary repairs and they are considering selling their home. It’s not uncommon for this sort of repair work to run into the tens of thousands – if not more.

All of this trouble can be avoided, if you arrange a building and pest inspection report. If the vendor refuses this inspection – you have to ask yourself what they are trying to hide.

Your home is likely to be the biggest purchase you make, so it’s something you want to get right.

Mistakes can be stressful and costly.

Here are the biggest ones buyers make and some tips to help you avoid them.

1) Letting your heart rule your head.

It’s often easy to be dispassionate about an investment property but when it comes to your own home, emotions can run high.

Buyers often make the mistake of falling for features in a home or loving a certain location, only to find, once they move in, they have compromised on what they really need.

Arm yourself with a list of non-negotiables – the features you simply must have now or soon down the track, such as extra bedrooms for a growing family, office space for a home business or proximity to public transport. If a property doesn’t tick all of your must-haves, keep hunting.

You should also decide whether or not you want to renovate or have a lot of time for maintenance. Heritage properties can win over hearts but often require deep pockets and lots of upkeep. Similarly, a fixer-upper in your price range and preferred location may end up being a money pit you can’t really afford.

Look beyond fancy fit-outs and styling – the furnishings will go with the vendors.

Stick to the buying basics – location, price, layout and condition – to decide if the property is right for you.

2) Believing the selling agent is working for you.

Real estate agents are paid by the vendor with commission from the sale. The higher the sale price, the more they put in their pocket.

Don’t fall for sales spiels that tempt you to spend more than you can afford or settle for a property that doesn’t meet your needs.

Some buyers are levelling the playing field by hiring their own agents to find a property and negotiate the sale. Fees for buying agents vary, but generally they charge for their time, plus take a commission from the sale. If you have no time to house hunt, it may be worth the extra cost.

3) No homework.

There is no such thing as too much research when it comes to property. You should set aside several weeks to get around to as many properties as possible, narrowing your search to three target suburbs when you are ready to buy.

Check out recent sales of comparable properties in the area and build on this research as you go, keeping in mind property prices can move fast in a boom.

You should also find out if there are any amenities and infrastructure planned for the area, such as new roads, public transport, hospitals or schools, which can boost real estate prices.

Another key question is how long the property has been on the market.

If looking for an investment, research rents and what the area has to offer tenants, such as a lively restaurant or cafe scene and reliable public transport.

4) Starting the hunt without loan approval.

Knowing how much you can afford will take a lot of stress out of your search.

A pre-approved loan sets a boundary so you can focus on properties in your price range and gives you peace of mind that you will be able to move fast when you find the right one.

Your broker is the person to speak with to make sure you have this all in place.

5) Buying beyond your means.

It can be tempting to stretch your budget for what seems like the right property, especially if interest rates are as low as they are now.

But rates are cyclical and what goes down, eventually goes up. If you are extending to afford a property while interest rates are low, you are going to struggle to make your mortgage payments when they start to climb.

It’s wise to calculate your repayments should rates rise by two to three per cent and build that reserve into your budget. That way, you have some comfort when the cycle eventually turns.

6) Not getting the property inspected.

According to NSW building advisory service Archicentre, only one in 10 buyers gets a professional building and pest report on a property before they buy it.

Most inspections cost a few hundred dollars, a small price to pay for peace of mind on a purchase as significant as a home.

A licensed inspector can check for pests, such as termites, and building flaws or issues, such as wood rot or rising damp, all of which have the potential to cause costly dramas if unchecked.

Always ensure the sale contract is subject to getting the all-clear on the building inspection. If something surfaces, you can either back out of the purchase or negotiate a lower price to compensate for the required repairs.

7) Not getting the sale contract checked.

The contract you sign when you hand over a deposit is legally binding, so have it scrutinised by a lawyer or conveyancer.

They will check it for any sale or zoning conditions that could disadvantage you, such as restrictions, or covenants that may be imposed.

A lawyer or conveyancer can also check property documentation, such as sewer diagrams, to make sure there are no issues with any renovation or extension plans.

Your legal expert can also help adjust the contract terms for your benefit, such as negotiating a longer settlement period if required.

One in five Australians taking out a home loan is now opting to fix their interest rate, according to a recent AFG Mortgage Index.

Not only are fixed rates proving popular in the midst of global economic uncertainty, many borrowers are cashing in on unprecedented, increased competition around fixed rate loans.

Traditionally, lenders have set fixed rates a smidge above the average variable rate. At the moment, however, many institutions are offering fixed rates below others’ variable rates, prompting savvy borrowers to shop around.

The main benefit of a fixed rate is certainty. Regardless of shifts in the economic sands, your mortgage repayments stay the same, allowing you to budget with more confidence. If official interest rates rise, your mortgage repayments are unaffected. On the flip side, of course, if interest rates drop, you won’t benefit.

With experts wavering on whether local interest rates will go up, down or nowhere over the next 12 months, now could be an opportune time to take advantage of special offers around fixed rates.

Some lenders, for example, are offering fixed rates at 0.8 per cent lower than the standard variable rate of other institutions. On a $300,000 loan, that equates to a $200 saving in interest each month.

Fixed rates are generally based on what the economy may do over the next three to four years, while variable rates are more aligned to the current cash rate, set by the Reserve Bank of Australia. At the moment, this is overlaid with the fact lenders are looking to drive movement in the market through competition.

Although Australia’s economy is deemed very stable against the backdrop of the European debt crises and slow economic recovery in the United States, home owners have been happy to sit on the sidelines to see how it all plays out before making any decisions about buying and selling.

As a result, many financial institutions have been trying to entice us back in the game with competitive fixed rates.

As with all borrowing situations, your decisions should be based on your circumstances and financial goals. However, there are some basic pros and cons that apply to fixed rates that you should consider.

The biggest benefit of a fixed rate, is knowing exactly what your repayments will be for a set period – usually one to five years. This can be a real advantage if you are considering a career change, starting or expanding a family or have kids moving into private education, because it can ease the stress of budgeting.

On the downside, fixed rate loans tend to be more restrictive than variable ones. You usually can’t make additional payments, plus lenders generally charge high break fees if you want to exit the loan during the fixed period.

If you want to tap into the benefits of both a fixed and a variable rate, consider splitting your loan so a portion of your debt is exposed to shifts in official rates – up or down – and the rest is locked into a set rate.

With official interest rates sitting at affordable levels and question marks hanging over which way they will head over the next 12 months, it’s worth chatting with your local Mortgage Broker about fixed rates and what the market has to offer. It may be just the move to help you face the future with some certainty.

Competition among lenders for home loans remains steep but borrowers may still be missing out on great deals and important information that could save them thousands of dollars.

1. YOU CAN SET UP A LINE OF CREDIT TO HELP FUND YOUR INVESTMENT PROPERTY

If you are negative gearing an investment property, you will have a shortfall between your costs and rental earnings. You can fund this gap with a line of credit (LOC) product using equity in your home or another property.

Say you have a gap of about $500 each month for your investment property, including interest and other costs, such as repairs and rates. You could set up a LOC for $20,000 to fund these expenses for a period of time, which may give you a little more financial breathing room. How long the LOC holds up will depend on interest rate fluctuations and your rental costs.

Like interest on your primary investment loan, the interest on this LOC is tax deductible, providing its sole use is to cover your investment expenses.

One caveat: this strategy works providing there is capital growth in your investment property over the same period, otherwise you are eating into your capital gain.

You also need to have some fiscal discipline and not dip into the LOC for non-investment related expenses, such as holidays.

While lenders will be able to set this structure up quite easily, they are not likely to offer it up front as part of your investment loan. Talk to your broker and financial advisor about whether this strategy is a smart option for you.

2. PEOPLE WITH POOR CREDIT RATINGS CAN STILL GET HOME LOANS

While it’s true a poor financial record will probably make it harder for you to land a loan, the doors may not be closed. Lending criteria has tightened in the wake of the global financial crisis but there are still plenty of loans up for grabs for those with a blemished track record or little financial backing.

Be prepared, however, to pay a higher interest rate than the standard offering. A Mortgage Broker will be able to help you find loans with less stringent criteria, often labelled non-conforming loans, and will help negotiate with the lender on your behalf.

You should also do a budget to ensure you are able to make any repayments, lest you end up adding to your woes.

3. THERE ARE WAYS TO AVOID LENDER’S MORTGAGE INSURANCE IF YOU DON’T HAVE A 20 PER CENT DEPOSIT

Lender’s Mortgage Insurance (LMI) is a one-off payment by the borrower when a loan exceeds 80 per cent of the property’s value. It covers the lender’s risk if the borrower defaults, but does not cover any loss by the borrower.

LMI can be a painful hit to the hip pocket, often running to several thousands of dollars, especially after a home buyer has scraped together the minimum deposit.

One alternative to paying LMI if you have less than a 20 per cent deposit is to secure a guarantor to cover the extra stretch.

A guarantor is usually a family member who is willing to put forward their property as security. One of the common myths that can scare family off is that the guarantor is then responsible for the entire loan. Not true. They only need to guarantee any amount beyond the 80 per cent loan-to-value ratio (LVR). Although it’s a good idea for a guarantor to seek both financial and legal advice before committing.

The advantage of securing additional funding through a guarantor is that it simply gets tacked onto your loan so you can repay it over time, rather than forking out up front for LMI.

The key before you make any big decisions about home finance is to have all the facts at your fingertips. Your broker will be able to compare the products and options that are out there and size up which arrangement will work for you and your circumstances.

4. YOU HAVE FREEDOM OF CHOICE

Most lenders will pitch one or two loan products to customers. But that’s a tiny fraction of the number of loans available in Australia. If you want to get a grasp of the wide variety of products out there, consider a mortgage broker.

A mortgage broker works for you, not the lender, and can help you tap this vast vein and find the loan that is best suited to your needs.

Talk to your broker about your financial circumstances and goals so they have as much information as possible to determine the best product solution for you.

Just like our health, our finances can do with a little check-up from time to time. Circumstances change – new job, new home, a partner or children – or we get caught up in the hurly-burly of life and lose touch with our finances.

Thankfully, the Federal Government’s MoneySmart program has created a handy online tool for all of us in need of a fiscal pulse check.

The Money Health Check helps you get back to basics by looking at your circumstances and financial goals and helping you with strategies to reach them. The questions are straight forward and will prompt you to consider some of the financial red flags you may not be aware of, or perhaps prefer to ignore!

The Money Health Check will help you take a global view of your finances – from regular budgeting to debt reduction, retirement and estate planning. It also highlights the value of protecting your assets once you have them.

Consider this your money GP, where you can get an overall check-up, identify any issues and get the information you need for further action, if required. The aim is to help Australians be more financially resilient for the long haul.

Don’t put it off – get your Money Health Check today at www.moneysmart.gov.au/tools-and-resources/calculators-and-tools/money-health-check

The biggest question on most people’s minds (in the age group 50 to 65) is… “Will we outlive our savings?”

There are plenty of options available to properly fund your retirement, as long as you start early enough.

For more details, read our “Is 50 quickly approaching” guide: https://www.mortgageaustralia.com.au/email/files/is50quicklyapproaching.pdf

If you are a property investor you probably know about Landlord’s Insurance, but there’s another way to protect your investment, and make sure that you continue to get a good rental return. The trick is to find a great property manager.

There a few characteristics that will help you to tell the difference between a fabulous property manager who will care for your investment, and a nightmare property manager who will cost you a fortune.

Professional and Committed

A really good property manager is not the disgruntled young buck who was recently rejected as a junior sales agent, and now has to see his days out processing rental applications. The best property managers are people who wouldn’t have it any other way. They have made a career out of managing property and they have a network of satisfied clients.

Good processes in place for screening tenants

A good property manager has excellent processes in place for making sure that potential tenants are carefully screened. They keep detailed records and they check references.

Conducts regular inspections

A good property manager can tell you how often they will be inspecting your property. They will personally inspect the property at the agreed time and report back to you with any issues. They don’t send the receptionist.

Has a maintenance team ready to handle any issues

A good property manager has a team of workers on call in the event that there are emergency repairs or maintenance needed at your property. They believe that it’s vital to stay on top of any small issues before they become bigger ones.

Answers your phone calls

A good property manager is approachable and it shouldn’t take a week for you to get them on the phone. They care about maintaining a relationship with you because they want to keep your business.

Treats tenants with respect

A good property manager treats tenants with fairness and respect, and understands that happy tenants are more likely to keep the property in good repair, and pay the rent on time. They also know when to do something if a tenant is not keeping up their end of the bargain.

Cares about your property

Most of all, a good property manager cares about you and your property and they will ensure that your investment is protected. By maintaining good rapport with all parties, they will help you to retain good tenants to keep your rental return coming in.

Do you like to dream about a time when your mortgage will be a distant memory? It could be sooner than you think. Provided you’re willing to put in the hard yards, there are a few simple ways to save money and pay off your loan ahead of time.

– Create a really good budget

There are budgeting tools available that can help you to plan your household expenses and look for ways to save more. The most important thing is to remember all of your expenses. If you forget about your car registration because it only comes in once a year, your budget might be thrown into disarray.

When you first put together your budget, try using bank statements or online banking records, as well as any paper receipts in order to account for every household expense.

Don’t forget to leave some room in the budget in case you need something unexpected – like medicine, a new work outfit, or maybe an anniversary present for your partner. (Although, if this one is unexpected you should give yourself a slap on the hand!)

– Consider an offset account for your savings

If you’re trying to save as much as possible and get your mortgage down sooner, you can’t go past an offset account. The idea here is that you can deposit your money into the account, it’s linked with your mortgage but you can access it whenever you want.

When your lender calculates the interest on your loan, they will only charge you for what you owe minus your savings. This can save you a lot of money over the life of your loan and allow you to pay it off sooner.

– Manage your expenses on a credit card – but be very careful.

If you’re fantastic with money, and I mean, really really responsible, it can be helpful to manage your household expenses on a credit card. By leaving your money in savings for longer, you could be earning interest, and with an offset account you could be saving interest on your loan.

This theory only works if you pay your credit card off in full at the end of each month.

The danger here is obvious, but if you have a lot of self-control it can be very helpful in managing your budget to run everything through a credit card. If you have a credit card with a good rewards program, you could even start to rack up quite a points balance.

– Align your mortgage repayments with your salary.

If you get paid fortnightly, it can make life a lot easier if you set up fortnightly repayments on your loan. This will help you to create a budget that makes sense to you – and is easier to stick to.

But try to give yourself a day or two between salary and mortgage payments, in case something goes wrong from your employer’s end.

Make the most of interest rate reductions by saving the extra money in an offset account, or making voluntary repayments against your loan.

It’s tempting to spend that extra money on fun stuff, but if you don’t mind being a bit boring then you will reap the rewards in the long term, and get your loan paid off sooner than planned.