I’m a first home buyer – Help!
First, don’t panic. Although it may feel that way, you are not the first person to buy a house and you won’t be the last. Almost a quarter of people buying houses are first home buyers.
When buying a home, particularly your first, it is important to be organised. Your credit rating needs to be good, your existing debts should seem manageable and you must look as though you have a stable lifestyle. There are several things you can do to prepare for the application and you might want to start a year in advance:
- Clear as much as possible of your credit card debt and loans
- Make sure you pay your bills promptly – and have been doing so for some time
- Start building a savings buffer – any extra money will help
- If you’re planning on changing job, do it a year before you apply for your mortgage or wait until afterwards, so that you have stable employment.
Ideally you need at least a 20% deposit to avoid paying the Lender’s Mortgage Insurance (that covers them, not you, if you default). Or you look at the option of family equity.
Only a rare first home buyer can afford to buy a property like their parents’ as a first home. In fact, many first home buyers can’t afford a property as nice as the one they are renting. So try to be realistic about what you can afford and be open-minded about property types and locations.
Talk to me about the pre-approval of your loan: that’s an in-principle agreement from the bank about how much you can borrow, assuming that all the paperwork is in order. Armed with a pre-approval you can bid confidently at auction or negotiate hard in a sales campaign, knowing exactly what you can afford.
Above all, talk to me – I apply for mortgages and deal with new buyers all the time and I can guide you through the process.