Buying your first home is an exciting journey! However, when you’re at the beginning of your home buyers journey you may be confused about where to start and worried about whether you can borrow the money you need to buy the home of your dreams. Here are a few things to remember when buying your first home.
Become a property expert in the local area you are looking to buy
It’s so important that you do your homework on the area as this will impact your future decisions. To become a confident first home buyer it is a great idea to arm yourself with as much information as possible.
At the end of doing your research you should be able to walk into a property and know how much you think it’s worth and how much you are willing to pay for it.
Financing your first home
To get your first home you will most likely need to get a Home Loan and the lender will be looking for some genuine savings history. They will be looking at your savings bank statements for the last six months to see that you are able to regularly save and have usually a minimum of 5% of the purchase price as genuine savings.
If you can’t prove to the bank that you are able to save money for an extended period of time they can’t be sure that you’ll be able to meet your monthly repayments, and therefore probably won’t give you a loan. Due to this it is a good idea to develop a budget and start saving some money each week.
Ideally you should be able to show that your savings plus any rent you are paying would match or be higher than the required loan payments for the property you wish to purchase.
If you need help budgeting we have a free budget planner on our website that can help.
First Home Owner Grant
Don’t forget about the First Home Owner Grant! This grant was established to assist eligible first homebuyers to buy a new home, or build a new home by offering a grant. The grant is $10,000 which can significantly help a first home buyer enter the new housing market.
However there are a few requirements to be eligible such as being over the age of 18, the home must be brand new, and both you and your partner must have never held a relevant interest in any residential property in Australia.
The full list of requirements and more information about the First Home Owner Grant can be found here.
Using Guarantors
Another option to look into is using your parents as guarantors. This involves the guarantor to use the equity in their home as added security for your loan.
This is a good idea if you don’t have enough deposit but are still able to meet the required repayments. Using a guarantor provides the lender with more security and confidence that they will get their money back meaning it can help you obtain additional funds to buy a home.
I’ve saved my best piece of advice for the end:
Don’t do this alone!
Buying your first home is a huge financial decision and you don’t want to choose the wrong loan type or the wrong lender and end up paying way more than you should be. Get the help of an expert.
As a mortgage broker, I’ve been helping first home buyers just like you get the finance they need to build or buy their dream home for over 14 years now. If you would like assistance with financing your first home give me, Barry Swain, a call on 0412 400 712, or email me at barry@smsloans.com.au. I would love to help you!