out of the city to the coast or the country is a dream for many people.
And the COVID crisis has made many of us think now might be the time to make the move and shown us that working from home is possible for many jobs.
But before you jump in and buy a property in your ideal location, there are a few things you should think about.
Rent before you buy
Living in regional Australia is very different from spending a weekend there, says Veronica Morgan, co-founder of Home Buyer Academy. You won’t know what’s important in an area and the pitfalls until you’ve lived there for a little while.
It will also give you a chance to start thinking about things you wouldn’t consider when buying a house in the city: Will heavy rain affect the road access? Is there a good broadband connection? Does the property get town services, such as garbage collection?
Consider capital growth
Renting provides a chance to reset your property expectations from a “city sensibility”, says Morgan. Many people from large expensive cities overpay because regional property looks so cheap in comparison to Sydney or Melbourne. But the more you pay, the lower your capital growth.
Another consideration for the long-term value of your seachange or treechange home is the local industries. A town that relies solely on tourism is very susceptible to a downturn in travel, just as a mining town is vulnerable to the mine shutting. Regions with universities or hospitals support the local population with good incomes and so should help underpin capital growth.
Sort out your employment
There’s another good reason to rent before you buy.
The number one thing a lender will look at when considering your mortgage application is your ability to make the mortgage payments. You will need to demonstrate that you have a stable income that can cover the repayments.
If you have a job which you can keep doing from the new location then lenders would be satisfied with a letter from your employer stating that, says uno mortgage advisor Akin Akinsanmi.
But if you’re moving to a new location and looking for a job, then you might have to rent first until you find a job and then buy a new home and take out a mortgage.
Most new jobs have a probation period of three to six months, in case the new position doesn’t work out, and this lack of job security can concern lenders. Many lenders will be comfortable if your new job is in the same industry, but if you’re switching careers they might be concerned. You should get advice from your mortgage advisor before you make any major decisions, says Akin.
Consider your financing options
If you’re selling your home in the city to buy in the country or on the coast, then your financing options are relatively straightforward.
But if you are in a position where you can hold onto your city house, perhaps because you have already paid off a large amount, then you have other options.
You could also consider refinancing to free up some capital. A quick and easy way to check if you could be saving is by checking your loanScore. It takes two minutes, and could save you thousands of dollars.
Akin says you could use the equity in your current home to help fund the new home purchase, so you wouldn’t need to find cash for a deposit. There are different ways you can do this, which will have different tax implications so it’s a good idea to get expert advice from a financial or tax expert and talk to your mortgage broker.
A seachange or a treechange is a great opportunity to create the sort of lifestyle you want and if you take your time and do your research you’ll be sure to get the most out of it.Photocredit: Waverlycity.com.au