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Is a lack of confidence stopping you from buying your first home?

Buying your first home or investment property is likely to be the most significant financial commitment you can make so it is little surprise that many find it overwhelming and hesitate to take the first steps towards property ownership.


One of the most nerve racking experiences about the home buying process is applying for a home loan. This can be a daunting process for anyone who hasn’t applied for credit before as lenders will want to know a wealth of information about you such as: your citizenship status; employment status; your income; your assets and liabilities; living expenses and more.

One of the most important things you can do to help relieve some of the pressure from the home buying experience is to educate yourself. Arming yourself with knowledge about the various steps involved, should give you confidence when the time comes to apply for a home loan.

In this article, we go over some of the key terms and steps you should know:

Borrowing power

Your borrowing power is an estimate of what you can afford to borrow based on your income and a range of other factors such as living expenses and debts. If you would like an idea of your borrowing power, access our home loan calculator here.

Deposits

You should aim to save 20% of the purchase price of the property you wish to buy and enough to cover costs associated with buying a dwelling. Some lenders will write you a loan with as little as a 5% deposit.

LMI

If your home loan deposit is less than 20%, you may have to pay Lender’s Mortgage Insurance which protects lenders in the event that you cannot make your home loan repayments. It is an added one off cost to borrowers which allows them to get onto the market sooner, rather than later.

Guarantor

Guarantors can help you secure a home loan if you have not saved enough of a deposit. Usually an immediate family member, they can use the equity in their own property as security against your loan. If you default on your loan, your guarantor is responsible for paying off your mortgage.

Fees

There are a number of fees associated with home loans. These include: one-off establishment or application fees; ongoing account keeping fees; early exit or termination fees; refinancing fees and more. Lenders outline most of their fees and charges in their

Stamp duty

An added cost on top of the home loan, stamp or transfer duty is a tax imposed by your state or territory government when you purchase a property. You may be eligible for a stamp duty concession in your state or territory so it’s best to check with your local mortgage broker or office of state revenue.

Grants

First home buyers may be eligible for a one off government grant under the First Home Owner Grant scheme. These grants vary across states and territories, click here for more information.

DIY vs professional help

There is nothing keeping you from arranging your home loan yourself however the home buying experience is complex and you’ll need to do a considerable amount of time-consuming research. Fortunately, there’s expert advice available to guide you through the home buying journey. A qualified mortgage broker is a home loan expert and can help explain the home buying process, including any jargon you do not understand and when the time comes, they can help you find a loan to suit your needs.

What we can do for you

At Mortgage Choice, we know that borrowers are all different. Our brokers live and breathe home loans and will support you through your home buying journey. Your local Mortgage Choice broker has access to a panel of over 20 lenders so we can compare dozens of loan products to find one to suit your unique needs and goals.

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