Buying your first home is both exciting and one of the largest purchases you may ever make. Our vision for our first humble abode is often far greater than what our savings accounts can cater for.
With ill-advised 40-year mortgage loans available, this decision can have serious long-term implications of hundreds of thousands of hard-earned dollars. Before signing the dotted line on your dream home, ensure you’re educated and aware of the following things.
Can You Afford It?
Don’t fall in love with a property without knowing it’s within your budget. As mortgage approvals continue to tighten, inquiring about finance options is not only recommended, but could save you a denied loan.
Mortgage pre-approvals is a process that assesses your finances and the likelihood that you can repay your loan successfully. This occurs before you formally submit a mortgage application and can allow you to go to open house inspections, auctions and browse contently online, confident of your budget allowance knowing your fully approved for that amount.
Can You Short-Cut The Time It Takes To Save?
With the average house price now eleven times the average annual income, saving a 20% home deposit can feel like an uphill battle. Perhaps you’ve considered applying for a loan with less than that in savings? Know you will likely be hit with the fees of lender’s mortage insurance.
To mitigate additional charges and still get into the property market before you’re 50 years old, there is an alternative. If you have a strong relationship with your parents who own their own home and are willing to assist, guarantor loans are available. These loans allow a parent (or in some cases, a close relative), who has equity in their home, to guarantee your home loan deposit. While you still need to repay the money to the lender, the guarantor provides the security that the deposit will be met if you are unable to repay. Once you have repaid the nominated deposit amount, the guarantor is no longer liable. This means you can get into a new house with little or no deposit.
If using this strategy, be mindful that this puts your guarantor’s home at risk and evaluate any strain it may place on the relationship before finalising any approval.
Can You Mitigate Any Hidden Costs?
If you plan well enough ahead of time, there are a few mortgage associated costs you may be able to dodge. Lender’s mortgage insurance is a significant fee that covers the lender in case of a default on the loan. To avoid it, aim to save up a deposit of at least 20% of the full home value.
Additional fees that can vary between lenders include land fees, stamp duty, loan establishment fees and registration fees. Factor in these costs when examining your loan terms.
Are You Equipped With The Best Team For This Purchase?
When buying a home, you are likely to engage with multiple professionals beyond the real estate agent and seller. One valuable person to consider having on your team is a mortgage broker. Mortgage brokers are home loan specialists with expertise in saving you money and time, by finding you the most cost-effective and best suited loan that you’re eligible for. They can also investigate any subsidies you may qualify for, including the First Home Owner Grant.
In addition, they have a network of reliable professionals they can stand behind and liaise with, to help streamline the process of your first home purchase.
The entry into purchasing property can be a learning curve but we are here to guide you through it. Being aware that there are fees and mistakes you can avoid is the first step in preparing yourself for the loan approval process.
If you’re planning on purchasing your first home and would like expert assistance, our experts can guide you through the process from start to finish. The end goal: you turning the key in the front door of your dream home.
Speak to our team today on us today 1300 70 70 79