Before you embark on your property search, you need to get your finances sorted.
Here are 7 basic things you need to know about finance:
- How much can I borrow?
Your capacity to borrow is determined by your current income, monthly living expense and other financial commitments. It will vary slightly from lender to lender. We can help you work this out.
- Maintain a good credit history
Pay your bills and commitments on time – Keeping a clean credit history is important in showing potential lenders that you are a responsible borrower. It’s a good idea to check your credit file and address any red flags before applying for a loan. Visit Equifax to get your free report.
- Will I need to pay lenders mortgage insurance (LMI)?
Lender’s mortgage insurance is usually required where your deposit is less than 20% of the purchase price of your property and it protects the lender in the event that you default on your repayments.
- How much do I need for a deposit?
Generally, you would need 10% of the purchase price as a deposit. Some may be eligible for a loan with a 6-7% deposit, however you would have to pay a much higher mortgage insurance premium and may not get a good rate. If you are a good saver and have a 20% deposit, you won’t have to pay lenders mortgage insurance and will be eligible for better rates.
If you don’t have much of a deposit, you may be eligible for the family guarantor loan. This option allows first home buyers to use the equity in their parent’s property to form their deposit. Speak to us for more information on guarantor loans.
- First Home Owner’s Grant and stamp duty exemptions
If you are buying a newly built home in Victoria, a grant of $20,000 is available for first home buyers buying in regional Victoria, and $10,000 for newly built homes in metro areas. The maximum purchase price of eligible new homes is $750,000. You may also be eligible for stamp duty exemptions or concessions. In Victoria, a one-off duty exemption is available for homes valued up to $600,000, and a concession is available for homes valued from $600,001 to $750,000.
Check with your local state revenue office for more information or visit http://www.firsthome.gov.au.
- Other costs
There are also some other costs to consider:
- Loan establishment and ongoing fees
- Conveyancing and legal costs (budget for about $1000
- Title search and registration fees (for a first home purchase of $550,000 in Victoria, budget for about $1500)
- Pest and building inspections (budget for about $500)
- Home building insurance prior to settlement, and contents insurance when you move in.
- Moving and removalist
- Utility bills and council rates
- The buying and finance process
Here is where you’ll see tremendous value with a good mortgage broker working on your side. We’ll guide you through the entire buying and loan application process, maintain regular contact with you to keep you up-to-date and in control. We’ll work closely with your accountant, financial adviser, solicitor and real-estate agent, to ensure that all relevant parties are kept informed at every stage of the finance process.
Best of all, our service is of no cost to you.
For further guidance with your first home purchase contact Your Future First on 03 9362 1458 or email andy@yourfuturefirst.com.au