So you're thinking of buying your first home… Now what? Entering the property market for the first time can be incredibly scary, especially if you're not really sure where to start or what to expect along the way. Sound like you? Here are a few things to consider about your personal circumstances as a first home buyer as well as some tips to get you moving in the right direction:
Getting started - know your position
The very first thing you'll want to do when thinking about acquiring a home loan is to assess your current position in terms of in- and out-going funds. The most important things to consider are listed below:
- Your income (monthly)
- Your credit score
- Your total debt repayments (monthly)
- Your current savings amount
- How much you can afford to pay back (this can be calculated by our simple online calculator found here https://www.mortgagechoice.com.au/home-loans/calculators/how-much-can-i-borrow.aspx)
What expenses will you need to prepare for?
The second step is to start considering the expenses associated with getting a home loan and ensure you factor these into your total affordability. Some of these include:
- Stamp duty (a tax applied to certain transactions such as mortgages and car registrations)
- Legal fees
- Lenders Mortgagee Insurance (usually required for home loans where the deposit is 20% or less of the total property value)
- Land and water rates
- Home and contents insurance
Your affordability (according to lenders)
Although interest rates are at approximately 3-4%, lenders will generally assess how much you can afford to borrow with an inflated figure (%) to ensure you will still be able to meet repayments should rates increase. Although this will effectively decrease your borrowing capacity, it could be the foresight needed to stop you from acquiring a loan you can't afford in the future. If you need a little help figuring out affordability, your local Mortgage Choice broker can assist with this.
The thing about credit cards…
Even if your credit cards are paid in full, lenders will generally factor in your credit limit as potential future debt as well as any outstanding debt you may have. How does this work? The lender will look at the total limit of your credit card and assess the minimum repayment as being around 2-3% of this amount. So if you have a credit card with a limit of $5k, the lender will usually factor in an extra $100-150 of expenses per month, regardless of how much you actually owe. If your affordability is high, this may not be much of an issue. If, however, things are a bit tight, your credit card could mean the difference between obtaining the loan and being denied.
Applying for your loan - Mortgage Choice brokers over banks
When looking at home loans, people often go straight to their bank without really assessing whether they can offer the best deal. As a home is probably the biggest purchase you will ever make, it's important to have an expert on your side who is there purely to serve your best interests. So how is a Mortgage Choice broker better? Here are 5 undeniable reasons to go for a broker over a bank:
Approaching a mortgage broker gives you access to hundreds of loan products from a range of banks (20+) rather than just the options one bank has on offer. If you're set on going with a particular bank, a Mortgage Choice broker is still a great option as they can provide you with expert advice on which loan to choose as well as assisting in liaising with the lender to ensure you get the best deal.
Being a first home buyer, the process of entering into a mortgage agreement can be quite daunting so it's always beneficial to have someone who knows the industry inside and out to help you through the process. More than this, Mortgage Choice brokers deal with lenders on a daily basis and will have the inside information on how to get your application processed smoothly.
The process of being approved for a home loan is generally quite time consuming and can evoke many headaches when you're constantly following things up. By approaching a Mortgage Choice broker, you'll be updated on your application every step of the way without having the frustration of dealing with the lender directly.
With so many options to choose from, going with a Mortgage Choice broker means there is a far greater chance that you will find and secure a loan with the specific features you need. With more choices and a better chance of securing the loan you want, a Mortgage Choice broker can save you big dollars in the long run.
No cost to you!
As the lender you choose will foot the bill once the loan has settled, the services provided by a Mortgage Choice broker are generally at no cost to you! This means that you're getting better advice on your home loan without paying a cent.
For further information, and to put yourself in the best position with valuable information and guidance, contact a trusted consultant from Mortgage Choice on 07 3286 7711.