First advice you need to receive is: save, save, save. If you have a healthy, bigger deposit, the smaller your loan will be, which translates in less interest you’ll pay. Sounds great right? Whether you are first time buyer, refinancing your home loan or purchasing an investment property, some steps have to be taken.
1. Consider a mortgage broker – a broker will help you find the right home loan for your situation.
2. Plan your budget and know your limitations – whatever you do, or whatever you wish, do not buy a house that you cannot afford. Think overall, and also on the monthly costs of your house in accordance with the interest loan and your monthly budget.
3. Apply for the first home owner grand early - The most appropriate time to apply for the First Home Owner Grant is at the same time you apply for your home loan. The payment will depend on whether you’re buying or building.
4. Other loans and debts – is highly recommended to pay all your debts before applying for a new loan. Make your home loan your top priority
5. Do your research – plan exactly what you wish to buy. A house or land to build. A construction loan is a specific type of mortgage designed for people wanting to build a new home. Depending on the way a construction loan is set up, you may be able to purchase your vacant block of land first and then arrange to build on the land within a specified timeframe. Construction loans aren't set up in quite the same way as a regular mortgage in the beginning. Instead, the lender considers the total amount you need to borrow in order to pay your builder, and then breaks down the full amount into separate payments called progress draws. These are percentages of the total building contract amount paid out of your mortgage funds to the builder throughout the construction process.
6. If you opt for construction loans, some clauses can appear - In some states of Australia you are able to include a finance clause when you sign your contract for your vacant block of land. This type of clause is quite common when purchasing vacant land or even an established home via private treaty sale (not at auction), where you're able to insert a clause that says "Subject to Finance". The ability to include a finance clause like this gives you several benefits: It gives you time to obtain your finance, it removes your block of land from the market while the agent waits to hear about your finance approval; and many mores.
7. Make sure you receive all you are eligible to receive - The various state and territory governments also offer their own incentives to first home buyers in the way of grants. Most states also give generous concessions off the costs of stamp duty imposts. Make sure you know what is available in the locality you are buying your first home.
8. What to consider before applying for a home loan
- Repayments: As a rule of thumb your loan repayments should be no more than 30 percent of your income.
- Flexibility: When calculating how much you can afford to make in repayments, ensure that you allow for at least a 2 percent buffer for rate increases and changes to your financial circumstances.
- Deposit: You have saved a deposit and can show a proven savings history of at least three-six months by either depositing money into a linked savings account on a regular basis (at least once a month) or increasing your balance in your transaction account. Most loans require a deposit of at least 5 percent and you will also need to save for establishment fees and other upfront charges.
- Documentation: You have copies of all documentation required, such as pay slips to prove your income, bank statements to show your savings, bills or rental receipts to prove your credit history and identification.
- Fees and Charges: Do your homework so there are no expensive surprises. Be aware of all the fees, charges and ongoing costs.
- Extra Costs: You’ve accounted for other costs incurred in purchasing a home, such as lenders mortgage insurance (LMI) and stamp duty. Be prepared, start calculating your extras with our stamp duty calculator.
- Fine Print: You have read and understand the product disclosure statement.
This guide will ensure you're more confident when buying your first property. We are gladly at your service if any questions arise. With our experience and with a little bit of effort from your side, your first time home is more close to reality than you’ve ever imagined.
Contact the friendly team here at Blissful Real Estate Agency today.