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.
- 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
- 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.
- 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.
- 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. 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.