If you’re a first-time home buyer, you might have questions about the process and how to secure a loan.
To help you get your foot onto the property ladder, here are eight tips for buying your first home.
Are you eligible for a home loan?
The first step towards home ownership involves a little self-examination. You will need to assess your finances and determine how much you can afford to repay.
PropCalc is the essential property cash flow calculator to assist anyone looking to buy property. Available to use online or download as an app, PropCalc helps you:
- Discover your maximum borrowing power using PropCalc’s home loan calculator. The calculator will show you your borrowing capacity and future loan repayments
- Estimate a property’s cost on a weekly, monthly or yearly basis
- View key suburb data and compare multiple properties at a glance and evaluate which property best meets your needs
Buying your first home should be an exciting experience, not one that leaves you racked with doubts and panic. Some first home buyers find themselves in uncomfortable situations because they didn’t create a realistic budget for their needs.
The best way to avoid overextending is to have an honest understanding of your current incomings and outgoings. If you know exactly where all your money goes each month, before you buy, you’ll be much better able to plan an affordable repayment strategy.
Understanding your home loan options
The home loan market is complex and competitive. It’s important to compare as many loans as possible to make sure you’re getting the right rate and features. You also need to know what types of home loans are available – variable, fixed rate loans, interest-only and investment loans, there are many different types of mortgages.
Finding the type of home loan that matches your needs is crucial. Discover your maximum borrowing power and monthly repayments with iConnect’s free home loan report.
Clear your debts
If you have debt you might find it harder to get a home loan approved or you may not be able to borrow quite as much. Focus on paying off any large debts before you apply for a home loan, especially high-interest debts.
Consider combining several debts into one if you can. Note: some debts, such as a university HECS debt, are far less troubling than a credit card debt.
A healthy deposit can make all the difference
In theory, the bigger your deposit the more you can borrow and you can apply for loans with lower interest rates. While it’s possible to take out a loan with a 5 or 10 per cent deposit, you will likely have to pay lenders mortgage insurance if you have less than a 20 per cent deposit.
Make sure you know what you’re entitled to in terms of first home owner grants, as these can boost your deposit significantly.
You should also find out if the First Home Super Saver Scheme (FHSS) can help you save for a home. The FHSS was introduced by the Australian Government in the Federal Budget 2017–18 to reduce pressure on housing affordability. First home buyers can save for a deposit by making voluntary contributions to their super fund.
Be one step ahead of the game
Having all your paperwork and deposit together, plus pre-approval puts you in a much better position to snap up your dream home when you find it.
Additional costs to consider:
- Home loan costs – loan application fee
- Stamp duty
- Valuation fee
- Legal fees – title search and inspection reports
- Registration and transfer fees
- Pest and building inspections
- Removalist costs
- Post purchase – council rates, utilities and insurances
Plan your home buying strategy
Would you prefer to move into an established home or build your first home?
An existing property has the advantage of being located in an area where schools, shops and transport are already close by. However, building a first home allows you to put your own stamp on things.
Get expert help from the professionals
There are many industry professionals who can help and support you with every step of the home buying process.
Your team should include:
- A licensed Real Estate Agent or Buyers Agent to help you find your dream home
- A Mortgage Broker to help you navigate the loan market
- A Licensed Conveyancer or Solicitor to do the legal legwork for you
- A trusted Building Inspector to provide you with an honest evaluation of the physical condition of your future home
Surround yourself with a good team of people you trust and everything about the process will become easier. Best of all, this network can help you with your next property move – whether it’s buying an investment property, renting the home you’ve just purchased or just undertaking renovations.