First Home Buyers

 

 

Today it is becoming more and more difficult to save for a deposit for your first home due to escalating housing prices and the costs of government and state charges.

 

Federal and state governments offer grants and concessions for first home buyers to ease the burden of these upfront costs, however, they differ from state to state. It is best to refer to your state revenue office for this information.

 

Applying for Finance

Before you purchase your first home you will need to know if your application for finance will be accepted.

 

The best way to do this is to pre-qualify through your lending institution or through a mortgage broker. Never accept  pre-qualification to a loan based on what you tell your lender or mortgage broker until you supply supporting documentation.

 

You will need to supply documentation such as proof of employment, pay slips, tax returns, source of funds, proof of genuine savings,  identification and current commitments. A broker or your lender will tell you exactly what you require to pre-qualify for a loan.

 

Do not make the mistake of purchasing your first home without pre-qualifying. This can prevent future disappointment or even worse a loss of your deposit for breaking the contract.

 

If you do purchase a property before pre-qualifying make sure you state on the contract that it is subject to finance being approved. This only applies for properties sold by private sale.

 

Purchasing at auction does not allow for this condition so make sure you have pre-qualified for a loan before purchase.

 

 

Your Deposit

Most lenders require you to have at least 3 to 5 percent deposit to put towards your home. Apart from government grants your deposit will either come from your savings, the sale of an asset or gifts from family members.

 

For most lenders you will have to show genuine savings. Genuine savings is showing that you can save money over 3 to 6 months to prove that you have the capacity to pay your loan. Some lenders will accept rent paid but you will have to show some evidence that you can afford to make your loan repayments.

 

On top of your deposit your will need to cover state and government taxes which can be as much as 5% of the purchase price. Some states offer significant concessions on their charges and it would be best to contact your state revenue office for this information.

 

 

Other Deposit and Payment Options

Apart from saving for a deposit here are some other options you may consider

 

No deposit home loans

Some lenders offer 106% finance where they will lend the total cost of the property and the stamp duty. Typically these loans are 2% higher than standard loans and you must have a strong income to qualify.

 

Family Equity

There are a range of financing options for first home buyers to secure their first home through the help of family members.

 

Family members can help in a number of ways by;

 

          ▪   Using the equity in their home as security for a deposit. This can also help cut

                 the  cost of mortgage insurance.

 

          ▪   Loan payment support where family members can help pay for the loan if your

                 income is not high enough to service the loan

 

          ▪   Combination of the two above.

 

 

These are just a few of the better options to help you get into your first home sooner.

 

 

For more information about these products and your home loan options  contact us or call 1300 726 136 for more information.