How To Prepare For Your First Home Purchase
Brand new apartments in Liverpool for under $500k. Image courtesy of realestate.com.au.
We are finding that a number of First Home Owner clients that approach us for home loan assistance are eager to get into the market on their first property purchase, but are not yet in a confident or comfortable position to purchase their first property.
We usually tell them to give it another three to six months to make sure they have the right finances and tools in place to (1) get the property they want and (2) receive home loan options from a wider scope of lenders.
Here are some things you can do in three to six months to help you get the right home loan for your first ever home purchase:
Keep saving as much as you can
Try and save at least 20% of the property value. A solid LVR (loan-to-value ratio) will help increase your chances of getting a loan approved, and you also avoid paying LMI (Lender’s Mortgage Insurance).
Know all costs involved, not just the deposit
Have a clear understanding of all upfront costs and ongoing costs such as stamp duty, legal and conveyancing costs, and council rates.
Keep raising your credit score
Pay down your credit balances as much as you can. A credit score above 700 is considered very good, and anything above 800 is considered excellent.
Get pre-approval on your home loan
Get pre-approval so you have a clear indication of how much you can borrow.
Research the location of where you want to purchase
Know the cost of the types of properties, whether a house or apartment, in the suburbs you are looking to buy.
Check your options with financial assistance
Search government support options such as First Home Owner Grant and stamp duty concessions, or see if a family member can act as a guarantor to help secure a home loan.
Familiarise yourself with the different loan types
Understand the difference between a fixed rate and a variable rate, and whether you want a loan on principal and interest or interest only.
Understand whether interest rates are going up or down
Know the changing trends of interest rates and whether they are likely to increase in the next three to six months.
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