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Home Estimating Software
Make sure you reap the financial rewards of your new home or
renovation. Owning your own home has always been a great American
dream. So how do you go about financing a new home or extension
? Budgeting for a new home is a serious business and there are
many things you need to take into account. Firstly, you need to work out your
budget. Consider your combined family income, existing liabilities, assets and
savings. Examine your current lifestyle and work out how much of your
income you spend on things like eating out, shopping, holidays and gifts. If you
decide to take out a mortgage you may have to make sacrifices. It is vitally important to assess yourself honestly. Make
sure you stay realistic while you're in the exciting stage of
planning. Your 'borrowing power' is the amount a financial institution
is prepared to lend you. Many lenders provide online calculators that estimate
this figure for you. Simply provide information on your sources of income and
your liabilities, including current credit cards. You will still need to be
assessed by your lender, but can get a ball park figure for what you can
borrow. The next step is to get a lender to approve your loan in
principle. This means you have been pre-approved for a loan up to a certain
amount. Getting pre-approval can be more important for buyers who
are looking for existing property than those who are buying a new home. Some
developers have an association with a particular lender and are therefore able
to assess your financial situation onsite. However, by getting pre-approved you at least have an idea
of what your spending range is. You also have a benchmark which you can compare
with other assessments of your financial situation. To get your loan approved in principle, you will have to
provide your lender with a number of documents. These include: Once you have your pre-approval, you're ready to start
looking for your home - provided that you've saved for your starting
costs. Work out what it will cost If you intend building, the next step is to get an idea of
what you can do within your budget. You can: The design of the house will affect building costs. For
example, it will cost more to build a house with a complicated roof and exterior
wall design than a simpler house. Interior design involving higher ceilings, or
lots of walls, windows and doors will add to costs. The type of design detail will also make a difference to how
much you pay your architect or designer. However, a good designer should be able to work within your
budget to produce something that suits your needs, within reason. Some design
aspects will actually save you money in the long-term. Passive energy design
features like orientation of the house and large south-facing windows will save
you money in heating costs. Spending a little more on good insulation will also
save on heating costs. Whether you are building or buying, once you have a good
idea of what you can do within your budget, you need to start talking seriously
to a bank, mortgage broker or other lenders. It is becoming more common for people to borrow money from
organisations other than banks. If you have been turned down by the banks, this
may be an option, but if you are a risky proposition for the lender, you are
likely to pay higher interest rates and fees. They may lend a smaller percentage
of the property’s value than banks usually provide, so you may have to top up
the difference some other way. However, non-Bank lenders can be a good option for people
who want to pay off their mortgage more quickly. Some of these organisations
encourage fast repayment. They may provide budgeting packages and consultants to
keep an eye on you. And they may have schemes to help your debt reduce, for
example, having your salary direct-credited to your mortgage account.
Many banks will require you to have some sort of mortgage
repayment insurance. Mortgage protection insurance cuts the risk that a
sudden loss of income-earning ability will force you to give up your house. When
you buy a new home, you usually take on extra financial commitments that eat up
most of your income. You assume that your family's key income-earners will stay
in work. And if you are paying off a mortgage when you lose your income-earning
ability, your current house will probably be one of the first things that
disappears from your life. A loan option to be wary of is a scheme whereby a
middleman - for example, a real estate investor -
buys a property and then offers you credit to buy the property. These schemes
are known by a variety of names including wrap-around mortgages, rent-to-buy,
lease options, vendor finance, or installment sales contracts. The problem with these schemes is that you don’t own the
property until you finish paying, so you can’t sell and move somewhere else, or
refinance, and if the middleman goes broke you will lose all the money you’ve
invested Cash Flow Any Contractor or DIY Owner Self Builder
should know the importance of cash flow - it is the lifeblood for
your Project. If the cash flow slows it can throw the whole project off
schedule. In the worst case scenario, materials could not be delivered so work
cannot start resulting in the contractors being forced to begin projects
elsewhere. * The information supplied here is of a general
nature only. It does not purport to provide financial advice. You should not act
on the basis of information contained on this site without obtaining qualified
professional advice which can be tailored to your specific circumstances and
needs.
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