Breaking News …we await with great interest the Federal Governments implementation of the first home buyers incentives announced during the recent election. This could be a game changer for many young and not so young first home buyers. However if you are ready to move ahead without the new incentives …read on.
What do I need to get a first home buyer loan
Ideally, you need the following – but there are exceptions to every rule:
- stable employment history – same job for 6 months or 2 years in the same field
- sufficient income to meet the repayments
- equity made up of a deposit or guarantee:
- 5% genuine saving plus costs such as stamp duty and mortgage insurance, or
- sufficient funds to keep the loan below 95% of the purchase price, and evidence of 6 months rental payments paid to an agent, or
- sufficient deposit to keep the loan below 90% of the purchase price, funds can be any source including gifts, or
- a family member prepared to be a guarantor and offer another property as additional security for the loan
Buying your first home and arranging your first home loan can be an almost overwhelming experience. There are so many forms and documents and fees and charges and many things have to be done immediately while other things should wait….it can be very intimidating for the first home buyer so rather than ploughing through the maze why not save time and stress by calling us – we will assess your options and give you recommendations based on what is best for you – we deal with first home buyers every day – call us now to discuss your options – no obligation and no cost to you.
How much can I borrow?
Despite what some web calculators tell you this figure can vary by more than 50% from one lender to another. Some take overtime, some don’t your bonus or commission may not be counted – parenting allowance maybe… There is no single answer and that is why it is important to use a broker who has access to a range of lenders.
What will my home loan repayments be
We have a range of free home loan calculators that allow you to figure out loan repayments, compare loans, budget or check stamp duty etc. Keep in mind that with variable rate loans, interest rates can go up and that can add substantially to your repayments. You may consider protecting yourself with a full or partial fixed interest rate loan for the first few years.
For my first home loan, how much deposit do I need
You are going to need at least 5% and more is always better so aim for 10% if you can otherwise:
Use a family pledge or guarantor in place of deposit
This can be a very good outcome for some young first home buyers as it takes the mortgage insurers out of the equation and as a result removes the need for genuine savings – or in fact any deposit at all.
What other costs are involved on your first home
Apart from any home loan application fees and administrative costs which vary enormously depending on which lender and which package you select, you may be up for government stamp duty charges on your property transfer and your mortgage contract – these charges vary depending on which state you are buying in as many have dramatically reviewed their first home buyer incentives. Our stamp duty calculator is usually pretty reliable and shows most grants and concessions.
You will then be up for legal fees for conveyancing and settlement costs, home insurance is a condition of the mortgage and of course you have to move your furniture and pay to have utilities such as power, telephone and gas connected and possibly a share of the Council rates paid by the pervious owner.
LMI If your deposit is below 20% of the value of the property, you will be required to pay Lenders Mortgage Insurance – LMI. This insurance covers the lender if you should default – don’t think that this lets you off the hook because the insurance company then chases you for the money. Click here for more information on LMI. And remember it isn’t cheap ranging from 0.60% to +4% of the loan amount.
Filling out your home loan application forms
This can be the most daunting aspect for many people again a good reason to use mortgage broker as we assist you step by step – we are only a phone call away.