As it gets harder and harder to achieve the ‘Australian Dream’ of buying and owning your first home, it is crucial to understand the key how to’s of the property world. This has become important especially over the last couple of years where each and every person has experienced very different circumstances, there has been a shift in the way in which the younger generations are approaching their finances. With the price of houses more than tripling over the last 30-40 years, the once price of a house has now turned into merely a deposit. So how do you purchase a house as a first home buyer?
Here is what you need to know...
Deposits (buy a property)
Generally speaking, a 20% deposit is what a bank will be asking for when lending a first home buyer money. However, if you do not have the money for a 20% deposit (which on average is currently a lot!), there are multiple other options to move toward buying your first home.
Lenders Mortgage Insurance (LMI)
First Home Super Saver Scheme (FHSSS)
First Home Owners Grant and Stamp Duty
First Home Loan Deposit Scheme (FHLDS)
Family Guarantee
Although there are multiple ways to obtain a loan, especially if you don’t have the funds for the initial 20% deposit, there are no guarantees that you will be approved for any of these. It is important to do everything in your power to be approved for a home loan.
Home Loans
Here are some tips to help you be in the right position to be approved for a home loan when you go for it:
Interest rates are currently the lowest they have ever been, however, that may change so it is important to ensure that you would be comfortable with a higher payment. Finding that perfect payment amount can be done using one of our loan calculators.
Have a strong budget in mind for a while, and work towards that budget before applying for the loan. Be consistent in your savings with deposits and minimal withdrawals by showing good financial management.
Being stable in your job is important for saving for anything, but it is crucial for saving for a house. Banks and lenders will see a stable income from the one job and be encouraged by this.
Here’s an interesting one, for every $100 of credit card limit, your borrowing capacity drops by $500. Keep your card limits low and keep the amount of credit cards you have to one.
Make sure your bank statements are in order. Lenders will likely ask to see up to 6 months of prior bank statements to check on your spending and any financial decisions you’ve made. Adding to this, ensuring your taxes are up to date and you don’t owe anything before applying is key.
The final tip is to know your credit score and credit activity both current and past. Generally lenders will check this before they approve any loan so it is important to know to avoid any surprises.
From this, you will be able to apply and obtain a pre-approval which will tell you what the bank is prepared to lend you whilst also giving you the flexibility of purchasing a house if one becomes available that suits. This pre-approval lasts for 90 days from date of approval with the potential for an extra 90 days if no decision is made and your financial situation has not changed.
House Hunting
The next stage is to start looking for properties, keeping in mind your budget and financial situation as well as finding the right place for you. Keeping up to date on realestate.com, forming a relationship with real estate agents and going to property inspections will give you ideas of what you are looking for within your budget. When you consult with a real estate agent, they have you at the front of their mind when a property comes up that they believe suits your need.
Found a property?
If you have been searching and think you have found the property that you are best suited to, then there are a few things that are necessary before you finalize it:
First of all, negotiating the price is something that is a must as it easily could bring your borrowing amount down dramatically.
Find a solicitor that is able to read over the contract to make sure legalities are all correct and nothing is missed.
Make sure you conduct proficient building checks to ensure there are no hidden issues that potentially could be a financial burden on you.
Although these steps are tedious and potentially expensive, they will save you any troubles in the future and will make your process smoother.
Is that all? No!
After all this is completed, you are ready to finalize the purchase of the house and gain ownership. The final loan agreement will be made and approved with documents for you to sign. After this you will look toward settlement, which is the final process of buying your first home. This is a legal process which will be executed by your solicitor used earlier in the process. They will get you to the point in which you will have a final inspection of the property as well as the finalization of the settlement.
Anything else?
Check your interest rates annually and ensure you are getting on the best rate.
Keep a budget to ensure that you can consistently make the extra payments of owning a home (rates, water, insurance, repairs, etc).
As your home loan tends to have a higher interest rate that your savings account, so you may like to put your savings into an offset account, this will allow you to save on interest.
If you need any help with purchasing your first home or additional properties contact our professional team today!
ความคิดเห็น