It’s daunting knowing where to start when buying your first home, so here are a few tips on how to set yourself up for success when getting started on the property ladder.
1. Don’t just go to your bank
According to a 2019 report by the Australian Securities and Investment Commission (ASIC), 60% of people get a home loan with the bank they’re already with. Most concerning is that they don’t even shop around! This is a big investment but in Australia a lot of people pay way too much for their loan, simply because they think it’s more convenient to stay with the bank they already have an account with. In most cases, especially first home buyers, it’s not any harder at all to be with a different lender and the broker will save you heaps of work too!
2. Watch out for hidden fees, because we will.
If you go to a broker, you’ll pay a fee for service. That confirms they’re working for you to put YOUR best interest first, not the lenders. They’ll also make sure that when they look for the right loan for you they’ll think well beyond the interest rate, because it’s actually the hidden fees and charges that make a big difference to the lifetime cost of the loan.
Even if you don’t use a broker, it’s important not to be sucked into the lowest interest rate!
3. Do you know the debts that are affecting you?
All debts will have an impact on your first home loan application.
It’s common that most people have some sort of debt; HECS, credit cards, car loans, Afterpay etc. These are all taken into account when purchasing a first home (or any home for that matter). Obviously the less you have, the better options you have for lenders and loan types – so if you’re serious about buying your first home keep your debts low – this also includes keeping credit card limits low too – you’ll be assessed on the total limit, not how much is owing at the time.
Keep in mind, we’re here on your side to get you where you want to be – we’re not here to judge you so please don’t be afraid to tell us the things you’ve still got to pay off.
4. Do you have enough money for a deposit?
A % of the funds needed for a home deposit is dependent on the price of the house. To assess if the price is within your budget, here are a few things to consider:
When do you plan on buying a property? Is it in 4 months? 4 years? Immediately?
How much will you be able to save in that period of time? Remember to consider all areas of budgeting – it’s important to set a realistic goal.
Based on your calculated savings and income, what’s your realistic price range?
Have you considered all the other fees for settlement including stamp duty? You can read about these other fees here.
5. Am I eligible to apply for a home loan?
Firstly, if you’re feeling a bit antsy about borrowing money, remember that almost no one has ever purchased their first home, if not any home or property, without a loan. The ability to borrow money for your first home however will depend on many factors – plus we guess you want to be able to have your house and still live a little too!
The simplest way to get an answer to your questions is to get the best independent advice. That’s where we come in with no obligation assistance.
We’re 100% on your side and we’ll work together to get you to where you want to be.