Ready to buy your first home? 7 tips on where to start

We speak with a lot of first home buyers. People who are keen to buy their first property somewhere in Australia are our favs! Our philosophy is to empower through education, so walking you step by step through the property buying journey is our jam. The first place we start, is to work out how much you can borrow, ideally a few months before you actually want to buy so we can make sure you are good to go. We like to help you to make sure all your finances are in order before we submit an application and that you are ready to go when the right property comes along.

The world of home loans is also full of jargon which we want to assist you to navigate through. Therefore, in addition to us working out your ‘borrowing capacity’, there are several other important finance and non-finance related things to consider which we have summarise for you:

• LMI (Lender Mortgage Insurance) may be payable when you do not have 20% towards the purchase price of your property. This is a one-off insurance premium, paid at time of settlement, which protects the lender in the event the borrower defaults and is unable to meet their loan payments.
• There are many additional expenses to consider when buying a property including, but not limited to, government stamp duty, conveyancing/legal fees, pest & building inspection costs, government mortgage registration and transfer fees, loan establishment fee, as well as paying council and water rates from the day you move in (which may involve repaying the vendor if they have already paid this cost in advance).
• Auction purchases are slightly different to a private treaty purchase (having an offer accepted on a ‘for sale’ property) and require an extra layer of understanding. Whilst you may get a bargain at auction, it is never a “change of mind” purchase. There is no “cooling off” period on an auction buy and you also need to be able to pay your deposit, (usually 10%) at the fall of the hammer, so it will require access to tens of thousands of dollars on that day.
• There are several state and federal government first home buyer incentives and schemes currently available. It is really important to do your research and understand what you may be entitled to which is dependent on the state you buy your property in. Some of the current schemes allow for no stamp duty or a one off $10,000 grant to build a new home but it varies in each state.
• If buying a new home is a marathon, ‘settlement’ is considered the finish line. It is when you get legal possession of the property via a process which includes: conducting a pre-settlement (or final) inspection, checking and signing the transfer documents, registering the transfer of ownership with the relevant government agency and making a final payment to the seller. Most importantly, it involves getting the keys to your new home.
• Home Loan customers have a several decisions to make when finding the right home loan, which we love to help with. One of those big decisions is determining how they will use their extra cash savings to pay less interest on their home loan. The first options is the have an offset account which is a transaction account linked to the home loan account. This usually means adding the lender’s ‘package’ which has an ongoing fee, for the privilege. The benefit of this structure is that the account’s balance is “offset” daily against the home loan balance, and as a result, you are only charged interest on your loan amount less your savings balance. The other way people pay less interest on their home loan is by using ‘redraw’ within their home loan account. This involves paying above and beyond the minimum repayment amount or paying a lump sum into your home loan account, thus reducing your home loan balance (and thus interest) with the ability to ‘redraw’ that money out to use, at any time. The easiest thing to relate it to, is that it’s like having a credit card with a higher credit limit compared to what you actually have as your outstanding balance and only paying interest on the outstanding balance.
• As your mortgage broker, our job is to help you identify a lender and product suitable to your needs and objectives. We then negotiate and submit the home loan application on your behalf and support you through to settlement. In addition to this, our service includes checking in with you annually, to make sure you are happy with your lender and it still meets your needs and objectives.

*This information is general in nature and does not take into consideration your individual circumstances. Please contact us for further information.