Buying Your First Home
Buying your first home is one of the most exciting stages of your life. It can also be one of the most overwhelming. Making sure you are informed and prepared can go a long way to reducing the stress involved in the process.
Here are some things to consider when buying your first home and financing the purchase.
To purchase a home, it is ideal that you will have saved enough to cover 20% deposit plus any fees. However, this is not always possible so it is important to know there are other alternatives. You can put in a smaller deposit and pay a lenders mortgage insurance premium (more about that below). Sometimes parents can help their children purchase their first home either by gifting funds or acting as a guarantor. Your mortgage broker can help you work out what is going to be the best option for you.
Lenders Mortgage Insurance
Lenders mortgage insurance allows you to borrow above 80% of the property value. It takes away some of the risk for the lender when it comes to higher loan to value ratio (LVR) lending. The premium can vary according to the LVR as well as the loan amount, and this cost is worn by the borrower. The premium can sometimes be added onto the loan if required but in other cases the borrower will have to factor this expense into the total purchase costs.
First Home Buyers Grant
The first home buyer grants vary from state to state and will also depend on the type of property you purchase, i.e. established or new construction. Sometimes it might come in the form of a cash grant, it may be a reduction on stamp duty, or perhaps a combination of both. It is a good idea to confirm eligibility in your state before you start looking at properties.
Making sure you know your credit history is useful. Ideally you will have a positive credit report, meaning you generally have more borrowing options. Unpaid or late payments can affect your credit history, as can making multiple loan or credit card enquiries, so knowing where you stand from the beginning is important. If you do have issues with your credit history, your mortgage broker has access lenders who will consider adverse credit history so there are still potential options available.
Loan and Repayment Type
You will need to consider the type of loan you want. Do you want a variable rate, a fixed rate, or a combination of both? You may want a loan with features such as an offset account or redraw. Your mortgage broker can help you make sense of the options and choose the ones that suit your needs.
Contact us to find out more about options for first home buyers.