Planning
Borrowing Essentials
We’re here to help you better understand your finances and borrowing capacity. Identifying your financial goals and understanding your circumstances are key to figuring out how much you can borrow.
Eligibility for a home loan
To be eligible for a home loan, you need to meet certain criteria that satisfies a lender’s requirements. What is a lender? A lender is anybody or any institution that provides credit assistance, i.e. a loan. They can be banks, credit unions, etc. Lenders will assess your employment status and income level, as well as any outstanding debt or credit history you may have. To satisfy lenders, you also need to have a substantial deposit saved. Lenders want to know that you are in a comfortable position financially so you can make regular repayments on your loan. To find out if you’re eligible to apply for a home loan, or are interested in how much you could borrow, book a complimentary consultation with us today
Credit Report
Once you have spoken with a broker and are happy to move forward, you’ll then choose a lender. The lender will perform a credit check and assess your financial history, including any previous credit applications made by you, and any payments on which you may have defaulted. We’re here to make sure the lender completes all the steps to secure your loan in a timely manner.
It is important that you check your own credit report. If there is something on your report that you think could hinder your application, please let us know as part of your application.
What Deposit Will I Need?
We’ll help you factor in fees and other costs you may have to pay to decide how much savings you’ll need to purchase your dream home. Most lenders require at least 10% deposit, plus a history of savings. In some cases, you might be able to use the government first home buyer’s grant to put towards your deposit
When you’re thinking about your deposit, think of it this way: The bigger your deposit is—the less you’ll have to borrow—the lower your repayments will be. A mortgage broker will assess your personal and financial circumstances and work with you to determine your deposit requirements.
Other ways of building your deposit:
If your personal situation is right, you may purchase a home in partnership with a family member or friend. This helps both parties to enter the property market. If this is an option for you, it’s important to know that jointly owning a home means you may not qualify for the First Home Owner Grant.
It may be the case that your parents are able to help you with your deposit. In this scenario, banks will require the family member to formally declare that the funds are a non-refundable gift.
Your parents may help you if your financial situation does not appear secure enough for the lender. Acting as a guarantor means they mortgage their property as additional security for your home loan. Having a guarantor may allow you to borrow more money or possibly avoid paying lenders mortgage insurance.
If your parents have available finance, they may agree to help you enter the property market with a supplemental loan. These types of loans can seem appealing as they usually have low or no interest at all. We recommend that you document the terms between both parties.
Do Your Research
We’re here to help you better understand your finances and borrowing capacity. Identifying your goals and understanding your spending is key to figuring out how much you can borrow.
By researching residential property listings online and attending house inspections you can get a rough idea of property prices in different areas. This will help you figure out where you can afford to buy. It’s important to take into account both financial and lifestyle factors when buying a home.
Things to consider when looking at potential areas:
- Will the area suit my lifestyle in five years time?
- Proximity to public transport, local schools and shops
- Construction in the area
- Access to local parks, bike tracks and community facilities
- NBN internet and phone coverage.
Driving or walking around your chosen area will also give you a feel of the suburb and help find streets that are more appealing. It’s also invaluable to keep track of prices on recently sold comparable homes in the suburb. There are lots of online resources to help you compare property prices in different areas or you can ask us to provide you with property information.
Understanding The Costs Involved
Purchasing a property comes with a lot of additional expenses. It’s important you keep a detailed and accurate account of everything you spend. Here we’ll outline all the associated expenses that you can expect to incur when buying a property.
Legal representation
When undertaking the purchase of any property, it’s important that you acquire the services of a trusted conveyancer or solicitor. This ensures you meet all of your legal obligations and that all contracts are fair and transparent. Be aware that different legal professionals will have different sets of fees for certain services, so don’t be afraid to shop around. Just ask us if you need a referral.
Loan application fee
This can also be known as the “establishment”, “up-front”, “start-up” or “set-up” fee. It’s a one-off payment at the start of your loan process. The fee covers the preparation of loan documents and the legal fees for loan set-up and one standard valuation. Not all lenders will charge a loan application fee. We can let you know which lenders do, and which lenders do not charge this fee. We can then help you make an informed decision so you get the right loan for your circumstances.
Moving costs
The costs involved in moving can add up. You may need to pay connection or disconnection fees on your utilities. The price to hire a removalist can also vary, and you may want to get insurance in case of any damages to items you own. If possible, compare the prices with three quotes and ask whether or not they will help do the packing for you.
Building and pest inspections
A building inspection could save you thousands by helping you avoid purchasing a property that could require costly repairs. The aim of a building inspection is to highlight any structural issues or damage to the property. You should also conduct a pest inspection to help you discover any pests that pose a threat to it. A professional building inspection report can also serve as a bargaining tool for negotiating on price, or contracts.
Stamp duty
Stamp duty is a tax imposed by State Governments on people buying houses. It varies from state to state. To find out how much stamp duty you have to pay in your state, check your state government website, see below. Alternatively, you can also find out by speaking with us or your legal representative.