Australia’s real estate market continues to grow thanks to a range of culminating factors. Nonetheless, there is no doubt that Australian first home buyers face an uphill battle when it comes to getting their foot in the property market.
In this blog, we provide actionable tips for first home buyers so you can get one step closer to securing your dream home!
How to Secure a Home Loan – Tips For First Home Buyers
#1: Start Saving for a Down Payment Early
This is one of the essential steps when buying property. Purchasing a home in Australia generally requires at least a down payment of 20% of the property’s total value. For example if you’re looking to buy a house in Sydney, you could be looking at paying a $252,000 deposit (based on the median house price).
If you cannot put down a 20% deposit, some lenders may offer 5% to 10% down payments, but you will have to take out Lenders Mortgage Insurance (which can end up costing even more). Luckily, there are various Government grants and concessions available that can help you cover the cost of your home deposit. For more information, Joust provides a great list of all the Government grants available to first home buyers in NSW.
#2: Check Your Credit Rating
Credit card debt can affect your credit rating. Besides a down payment, you’ll need a decent credit rating. Lenders usually check your credit profile to determine if you can comfortably make monthly mortgage repayments. The credit rating also determines the interest rate you’ll get your mortgage for.
A poor credit rating lowers your chances of getting a mortgage or means your mortgage will attract a high-interest rate. Therefore, it’s essential to ensure you pay off your credit card debts and other high-interest loans before applying for a mortgage.
#3: Get a Mortgage Pre-approval
This is another crucial step for any property buyer. Getting a mortgage preapproval involves meeting a loan officer (from a mortgage firm) who will scrutinise your finances, including your assets and debt-to-income ratio. The loan officer will use this information to determine your eligibility for a mortgage.
Getting preapproved will help you identify the best mortgage so that monthly payments don’t strain your finances. Before applying for a mortgage preapproval, you can use an online monthly mortgage calculator to determine how much you can pay in monthly payments.
Check out our guide on how to navigate the confusing world of home loans to help ensure you’re fully up to date with all the latest information.
#4: Get a Reputable Real Estate Agent
Many professional real estate agents can guide you on buying property. If you’re a first-time buyer, you’ll need an agent to help you identify the right property, negotiate a great deal, and expound on the nuances of property buying along the way.
Most real estate agents offer free services to first-time property buyers since the sellers pay the sales commission. You can find a reputable real estate agent through referrals from friends and family, looking through listings, or asking a relocation specialist.
#5: Go Property Shopping and Make an Offer
This is the fun part of property buying since you can peruse listings on different sites and then ask your real estate agent to book appointments with properties that have tickled your fancy.
Since the number of listings can be overwhelming, the best strategy to find the right property is to separate your must-have features from those you fancy but don’t necessarily need.
Make a list of your needs and wants, and narrow down your options. Once you find your dream property, make an offer to the seller.
#6: Close the Deal
Closing the deal is done after the property appraisal and building inspection. A property appraisal is where the lender checks if the property is a good investment, while an inspection involves checking if the property is in good condition. Once the two processes are complete, you can proceed to close the deal.
Closing a deal involves all parties who are part of the deal: the mortgage representative, the agent, and the seller. During closing, the buyer pays the parties involved and gets the keys to the property.
When purchasing property, you have to be decisive about what you want. However, you must be patient to find the most suitable property. Don’t let frustration get to you, or you may purchase an inferior property at a premium price. We hop these top tips for first home buyers set you on the path to owning your dream home!