PREPARING FOR YOUR FIRST HOME LOAN

Looking for your first home in North Brisbane? Buying for the first time can be a very daunting process! So many things to consider when applying for your first home loan.

We have compiled a list of some things to consider w

hen you are thinking about getting into the property market and purchasing your a home for the first time.

Finding out that you can borrow $1million is no good to you if your spending habits show that you simply cannot afford that! Once you have met with your Broker and you know what you can borrow based on your income/expenses you should then look at what you can afford to repay. You may work out you can “afford” more than you can borrow- in this case the borrowing cap set by your broker should remain your top dollar.

Should you complete your sums and realise that the amount you could comfortably pay back is lower than the borrowing capacity then needs to be your maximum loan amount. Your Broker will be able to help you through this with repayment information and loan calculations. Borrowing within your means is very important when you are looking at a long term debt!

SAVE SAVE SAVE 

It goes without saying! If you are looking to purchase your first property you need to have cash in the bank. In an ideal world everyone would buy a house with a 20% deposit. Having a 20% deposit means you do not have to pay mortgage insurance. Mortgage insurance is a premium which insures the Bank/Lender (not you!) in the event that you stop paying your home loan. It is dead money and something you would never get back. Of course sometimes saving a 20% deposit will take longer than you wish to or can wait. In those cases mortgage insurance may be a necessary evil.

Speak with your Broker about what options pay be available. The bottom line is always aim to save as close to 20% as you possibly can. Every dollar you save in mortgage insurance is a dollar in your pocket.

Clear the debt

If you have personal loans, credit cards, store cards- any type of personal debt when you purchase a property it is suddenly going to become a lot harder to clear these off quickly. Any debt which you have outstanding when you purchase your house is going to take money away from your mortgage and restrict your cash flow. Do you best to clear these debts off before you buy, go into the purchase with a clean slate.

Obtain Pre approval

Once you have worked out how much you can afford to borrow and have your deposit ready to go arrange your pre approval with your Mortgage broker. This gives you piece of mind to know that based on the information submitted the lender would provide you with the loan you have requested. Then you can shop with confidence! There is nothing fun about going out and finding a property only to find after you have signed a contract that you had a default on your credit file which you were not aware of and now finding a lender will be more difficult. Cover all bases and protect yourself.

Create a Buying Budget

Once you have met with your Broker and completed your pre approval you will know based on your financial situation what your price range is. Now stick to it! There is no good setting a budget if you then go out looking at properties outside your price range. Shop within your means- avoid looking at properties which you cannot afford and avoid disappointment!

Check Grant Eligibility

Each state has different grants and offers available for First Home Buyers. Your Broker should be able to discuss what may be available in your state/territory. It would also be a good idea to do your own research and know what you are entitled to. In some cases Grants can form a part of your deposit- speak with you Broker to get more information.

Don’t Rush

Once you have saved your deposit and your broker has given you the go ahead to “Go Shopping” it is easy to rush out and want to buy the first house you set your eyes on. Take your time to find a property which suits your needs now, or ticks a few boxes at least. It’s unlikely that you will buy “the one” as your first home however you also do not want to get stuck in a house you hate for 10-15 years while you pay your loan down enough so you can upgrade properties!

If you have any questions about buying your first home and want to talk about where you are heading on your purchase journey please call us today!