7 Things to know about your first home loan...
These 7 tips are intended as a beginners guide to investing in a property and should give you the confidence to give me a call to help you organise the home loan.
1. Find a well priced property, don't skimp on the loan
Buying a property is the most expensive investment you will make in your lifetime. It’s important to get it right. When hunting for your first home consider properties that you can afford; this will help pay off your home loan quicker & ensure you are not living above your means.
2. Borrow what you can afford
When applying for your first home loan it’s important to do your research and weigh up the costs of how much you can really borrow. It's overwhelming on your first loan, so it is important to stay on track and within your budget.
As your mortgage broker I will research these options for you and present them in a way you'll understand.
3. Learn to budget & save hard for your deposit
It’s important to have a good savings pool for a deposit on your first home. It may be difficult knowing where to start. Speak to your mortgage broker early to understand what deposit you will need. Did you know there is a first home guarantee scheme that allows you to put down a 5% deposit and pay no LMI?
What is your combined income?
Both you and your partner need to contribute to your household budget & provide clarity on how much money you can save each month. Things to consider:
What are your household expenses?
These include rent, bills, payments, recreational and any other relevant activities. It is recommended when choosing a home loan that your repayments do not exceed more than 25% of your monthly net income. This will ensure you don't enter mortgage stress as a first home buyer.
Do you track your spending?
There's heaps of apps such as Pocket Book and Spendee,?which consolidate all your expenses for the month in one location. This gives you greater visibility on where you can save and look for areas to cut back on.
Did you know that you don’t actually need a 20% deposit?
This is a common myth for first home buyers. The first home guarantee scheme means first home buyers can put down a 5% deposit and pay no Lenders Mortgage Insuarnce. This is used to protect the lender against any loss it may incur if the borrower is not able to pay their home loan.
LMI gives you the option to purchase sooner and buy a better home that would take longer to save for. LMI can either be paid upfront, as a lump sum or added to your mortgage.
It's not all about the interest rate. You must consider the loan features.
As your mortgage broker, I will make sure you consider a few factors that can impact how much you pay back overtime.
Will you choose a Variable or Fixed Rate?
A variable interest rate can change at any time and will often move in line with RBA decisions. A fixed interest rate means it will not change for the duration of the fixed rate period.
What loan term is best for you?
The shorter the loan term the higher the repayments will be, and the longer the term the cheaper the repayments will be for each scheduled payment. Borrowers typically look to borrow for a 15-20 year period giving them plenty of breathing room to pay off their mortgage.
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Will you make extra repayments?
Pay off your loan quicker with extra repayments. But you need a loan that doesn't penalise extra repayments. Speak to your mortgage broker about your loan.
Are your repayments monthly or weekly?
It's better to choose a schedule you are most comfortable with. Repayments can be made on a weekly, fortnightly or monthly basis.
What costs are associated with buying your first home?
When buying a new home there are a range of costs associated that often go overlooked. These costs include:
Stamp duty
Stamp duty is a tax on a property transaction charged by each state and territory. It is important to note that the amount of stamp duty can vary by state and depends on several factors. As your mortgage broker I will calculate this for you - although it's not all that hard.
Transfer fee
Transfer fees are paid when transferring ownership of the property to the buyer. Depending on the property, this can range from a flat fee of a few hundred dollars to a few thousand.
Mortgage Registration fee
A mortgage registration fee is when the buyer pays for registering the mortgage under their name.
Legal/Conveyancing fees
This step is generally best handled by a conveyancer or solicitor. They usually cost around $1,800 for the full service; I can put you in touch with one in your area.
Mortgage Application fees
Set up fees for your mortgage can be waived in the mortgage negotiations in some cases. Speak to your mortgage broker to help you with this.
Inspection fees
Inspection fees are one of the most important and costly steps when buying a home especially when buying an older property. It is vital that this step is not skipped and that you choose a trusted provider.
Pre-approval doesn't mean the deal is done!
Pre-approval does increase the chances of getting your home loan approved, it does not guarantee that you will be able to purchase your home. There are several factors that can impact this decision including:
Matthew Stack mortgage broker will help get your first home loan and guide you step-by-step through the first home guarantee scheme.
Free service for Canterbury Bankstown locals including Revesby, Padstow, Panania, East Hills, Lakemba, Bankstown
Matthew Stack - 0423 237 242
Buyers Agent ? I help people make smart property decisions by cutting through the real estate Bullsh*t! ? Civil Engineer ? JP ?
1 年Great content, Matthew! ?While home loans can seem a little complicated, they don't have to be with these great tips :)