August 23, 2013
Some good advice for first home buyers in Newcastle. Buying a first home is often one of the largest financial decisions most Australians will make. Needless to say, saving a deposit for such an investment is a top priority when looking to enter the property market. I can help you explore options. Contact me today on 0413 245 556 or complete our online form to discuss.
As a first homebuyer, you may be eligible to apply for government assistance, such as the First Home Owner Grant. In NSW, the $15,000 grant gives first homebuyers building or buying a new home, valued up to $650,000 a leg up. First time buyers may also be eligible for exemptions or concession on stamp duty.
While a grant and/or stamp duty concession would no doubt be welcomed, it is important to remember that you will still need to save a minimum deposit of at least 5% of the property purchase price.
In most cases lenders require a certain percentage of your deposit to be made up of genuine savings, accumulated over a period of time. Some lenders may also consider rental payments as savings evidence, but there may be conditions attached so it is important to do your research.
Ultimately, the more money that you have to contribute towards your deposit, the less money you will have to borrow and repay with interest. So be sure you stick to your budget and make savings wherever possible.
If you have insufficient deposit funds but have the ability to make the required loan repayments you may even consider asking for help from your family, who may be able to guarantee the loan by using the equity in their own property as security. The guarantor will help you bridge the deposit gap and may help you avoid paying costly lenders’ mortgage insurance, which applies if your deposit is less than 20% of the purchase price. Keep in mind it’s a good idea to seek legal advice to ensure all parties are aware of their rights and responsibilities.
When it comes to assessing your ability to borrow funds to buy your dream home, lenders will take into account your deposit and a range of information about your financial history and current financial situation. This will likely include an assessment of your current income, living expenses, assets and liabilities such as credit card debt and other loans.
If and when you are ready to buy, I encourage you to be proactive in preparing for home loan approval by checking your credit history for anything that might get in the way of loan approval. If there are blemishes in your credit history, try your best to resolve any problems with the relevant credit provider before applying for your loan.
It might also be a good idea to go through your past bank statements to make sure that they are free from suspicious withdrawals or transfers such as movements of large sums of money to or from your account. If you find this is the case for you, make sure you have on hand evidence of the reason behind the transactions to support your application.
My top tip before signing up to a loan though, is to shop around for one that meets your needs, whether that is low costs such as set up expenses, monthly fees, etc. or extra flexibility such as a redraw facility or offset account. There is a wide range of loans and lenders available and a mortgage broker, like myself, can help you compare your options to find one that’s suited to you.