First Home Buyers

Top 5 first home buyer tips

If you are just starting your first home buyers journey these are the top 5 things I feel you should know.

  1. Start Saving. Unless you have a guarantor you are going to need between 6% and 10% of the purchase price (in most cases) to cover the deposit, legal fees and closing costs. The amount of savings you need depends on which grants/ schemes you qualify for. Saving is a great place to start
  2. Set up a completely separate savings account for your home deposit. The lending assessor will need to see that you have saved at least 5% of the purchase price yourself through regular savings without touching the savings. The easiest way to prove this is to set up a “home savings” account and add to that every single time you are paid and NEVER touch it until you are ready to buy.
  3. Get rid of your zip, afterpay, easypay and any credit cards you are not using. These impact your borrowing capacity a LOT! It works on the limit of the facility NOT the balance so if you don’t need them shut them down and get proof in writing that they are closed. Don’t use these facilities at all from now on. If you can’t afford it don’t buy it.
  4. Pay everything on time all the time. People worry about their credit score and how to improve it – the answer is really quite simple – pay everything on time all the time and don’t apply for loans you don’t need.
  5. 5. Keep your spending as it would be once you are living in your own home. The banks are going to analyse how much you spend on going out, clothes, shoes, bags etc. There is no point in saying “once you get into your own home you will spend less” – you need to prove it for at least 3 months prior to the application.
First Home Buyers

Frequently Asked Questions

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WHAT ARE THE STEPS INVOLVED FROM APPLYING FOR A HOME LOAN TO GETTING AN ANSWER?
Once you contact us, we will arrange a suitable time to chat about your current situation in person or over the phone. You will need to allow approximately 1 hour for this first meeting. We find out what you are looking for in a home loan and discuss the choices available to you. We explore ;
  • your maximum borrowing capacity with a variety of lenders
  • loan structures available
  • the features and benefits that the lenders offer
  • approximate loan repayments.
HOW MUCH WORK WILL BE INVOLVED IN BUYING A HOME? HOW MUCH TIME WILL I NEED TO COMMIT TO THE PROCESS?
For the finance side of things most clients need 4 appointments with us as follows:
  • initial consultation to check if you qualify, work out your borrowing capacity, what the repayments would be and work out if you want to go ahead, come up with a plan etc
  • pre-approval takes around an hour
  • loan appointment to sign the loan documents (about 45 mins)
  • once the loan settles we help you set up your payments, budget etc – that is usually another hour roughly.
CAN I FIND OUT HOW MUCH MY REPAYMENTS WOULD BE SO I CAN DECIDE IF I WILL GO FOR A LOAN OR NOT?
We offer an obligation free consultation where we work out your borrowing capacity, what the repayments would be etc. If you would prefer to work this out you urself we have a handy loan repayment calculator on our website which gives you a rough idea
HOW MUCH WILL IT COST ME TO APPLY FOR A HOME LOAN?
Nothing
WHAT SORT OF ONGOING COSTS WILL I NEED TO COVER ONCE I OWN A HOME?
The home loan payments, council rates on the home, water rates on the home, insurance and general maintenance of the property.
ARE THERE ANY HIDDEN COSTS I SHOULD KNOW ABOUT IN THE HOME LOAN PROCESS?
There are often unexpected expenses when you are purchasing a property so we always suggest to our clients to allow up to $1500 in unexpected expenses. This more than covers everything.
WHAT IF I BUY THE WRONG PROPERTY?
This can happen so what we suggest is:-
  • you do plenty of r research into the area you want to buy
  • do plenty of research into the price of homes in that area so you can recognise a good buy
  • get a pest and building inspection done once you find the property you want to buy
WHAT SORT OF DWELLINGS ARE THE BANKS WILLING TO LOAN MONEY FOR?
Most residential properties are acceptable for the lenders including
  • houses
  • duplex
  • townhouses
  • units
If you are buying a unit in a holiday complex where you cannot live they may restrict the % they will lend against the property. You must have land attached to the home so for example a house in a mobile caravan village is not usually acceptable security for the bank
WHAT IF I LOST MY JOB OR GOT SICK FOR AN EXTENDED PERIOD AFTER I PURCHASED A PROPERTY? WILL I LOSE MY HOME?
It’s really important to keep the bank informed if unforeseen difficult conditions arise as all of the lenders have “hardship” policies that allow for lower repayments to be made in difficult times. It could also be a good time to review your existing income protection and life insurances.
WHAT IF I BUY A HOME WITH MY PARTNER AND THEN WE SPLIT UP/GET DIVORCED?
There are a few options available as follows
  • one of you can buy the other party out of the home and get the loan in your name only
  • the home can be sold to pay out the debt and divide the remaining funds between you (at the advice of your solicitor)
  • some couples choose to have one of the parties remaining in the home and the home is kept in joint names
  • one party lives in the property and the other keeps their name on the title for investment purposes. Once again this needs to be done with the advice of your solicitor.
WHAT HAPPENS IF I GO FOR A HOME LOAN AND I GET REJECTED?
Unfortunately these things happen from time to time. We make sure we are confident the loan would get approved before we submit an application however from time to time they are declined for unforeseen reasons. In these situations the lender will tell us what you need to do to get into a position to be approved in the future so that you can put a plan into place.
IS THERE A FIRST HOME OWNERS GRANT STILL AVAILABLE WHEN PURCHASING YOUR FIRST HOME AND HOW MUCH IS IT?
In NSW there are grants available for brand new properties (never lived in) or for when you are buying land and building. In both of those cases you get an exemption from stamp duty and $10k towards the purchase so it’s a great saving. When you are buying brand new the banks only require you to have 5% saving instead of 10% because of the reduced fees to get into the property ( or no deposit if you have a guarantor).
WHAT DO I NEED TO SHOW A BANK THAT I CAN PAY A LOAN BACK? EG.. STABLE CONSISTENT SAVINGS? AND FOR HOW LONG? 3 MONTHS, 6 MONTHS LONGER?
The banks like to see
  • 3 months savings without tapping into the savings for spending
  • good rental history in your existing property. If you have a rental ledger for 6 months that’s a valuable asset to provide the bank when applying g for the loan
WHAT ABOUT MY CREDIT HISTORY? WHAT IF I DEFAULTED IN THE PAST?
Its a good idea to get a copy of your credit rating to check. Most defaults remain on your credit rating for 5 years and they can affect your application especially if it was a large amount. It is best to get a copy of the credit report so we can consider this when working out which lender might best suit you as some lenders look more favourable on a poor credit history than others.

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