Borrowers Guide in Buying your First Home
The Borrowers Guide to buying your first home has been designed to assist consumers who are looking to purchase into the property market to gain a better understanding of how the lending process works. The process can be confusing and overwhelming at times, but when you understand the basic process, you’ll be much more prepared. The purpose of this guide is to assist you through each step. We believe the collection of the enclosed mortgage information will make your journey to owning your own home an enjoyable one with Gorila Loans!
What savings do you currently have? Most lenders will want to see that you are able to save consistently and will usually require your last six months saving history prior to considering you for a loan. If you are able to afford the repayments some lenders will loan you up to 95% of the property purchase price. This may even allow you to add mortgage insurance costs to the loan as well meaning you may be able to borrow up to 97% of the property value. However even in this situation the lender will require you to have at least 5% of the property value in genuine savings as well as enough money available to cover the other costs of purchasing a property. Sitting down with your Gorila Loans trusted mortgage professional they will ensure you know which options are available to you.
Current Financial Situation
What current debts do you have? The amount of current debts that you have will affect how much you can borrow. You may want to consider reducing your current debts prior to purchasing your first home.
Owning your own home should be an enjoyable experience not a financial burden. You may wish to consider what concessions you are prepared to make to own your own home. Think about how repayments on your new home will affect your current lifestyle and whether borrowing to your maximum capacity will prevent you from doing things you enjoy. You may wish to consider borrowing a smaller amount that you are completely comfortable with. Talk to a mortgage professional about what you feel comfortable in repaying each month prior to making decisions about planning a family in the near future you may also want to consider how you will manage your repayments on just one salary.
Important information to consider is Pre-Approval and conditional Approval, which one matters Most???
A pre-approval home loan is stating that with the information you have provided the bank will give X amount and is only a guide until all the evidence and documents are verified. A pre-approval is to say yes but not 100%
A Conditional Approval is what you need before you start to think about a purchase, because the conditional approval is stating that with the evidence provided and documents and under those conditions they will give you a 100% approval because they have viewed the evidence and documents provided and the bank is happy to continue the transaction.
What is also very important is you must find out for what length of period the conditional approval is given, because some banks are valid for 3 months and others are for 6 months.
What is also very important is some banks call it different names, like approval in principle, so please ask your bank.
Gorila Loans will guide the client (YOU) through the WHOLE process of your journey from start to finish AND advise you which step to take and when for a smooth transaction and to have a stress free ending.>
Before you start looking for a property to buy there are several key details to consider such as:
- How much can I borrow?
- Understanding the costs involved
- How much deposit do I require?
- Can I afford it?
How much can I borrow?
How much you can borrow depends on several factors including:
- Your income
- What deposit is required
- Eligibility for The First Home Owner Grant
- Other loan repayments and commitments
*An important factor to consider is how comfortable you are financially to repay the proposed loan. It is imperative that you do not over stretch yourself, it is best if you sit down and work out a budget and understand how much you have left over to repay a loan comfortably. You should also factor in interest rate movements as this will affect your repayment amount.
Tips on getting your home loan
Home loans are a really big deal. Often there is a lot of planning and consideration to be done before deciding if you should take out a loan, and before you are approved.
There are some very key questions that you should be asking yourself as you go through this process. Try to keep in mind how much money you are going to need to borrow and how much time it is going to take you to pay back that money. It really all comes down to if you can afford to take out a loan or not, and if you can, how much money can you afford.
It might seem like a complicated thing to try to figure out, but it really is quite easy once you get the hang of it.
You really have to remember when trying to get a home loan that you are not just going to have to pay for the purchase price of the home. There is a lot of fees, charges, and other expenses that go along with buying a home, especially for the first time. Remember that you are going to have to pay things like home loan setup costs and if you need a lawyer or an inspector they are going to cost money too. Try to come up with every single thing that could possibly go wrong so that you can have the most accurate number possible. You never want to over borrow on a home loan, but you do want to make sure that you are going to have the money that it takes to get the job done the first time so you don’t have to go back and ask for more money on your loan. Leave yourself a little bit of wiggle room to try to make sure that you are allotting yourself a decent amount of money in case anything should happen or a hidden fee pops up that you weren’t planning on.
Take into account how much income you have and how much your projected income is for the next few years. This will help you to get an idea not only of how much money you will be able to pay back, but also how long it will take you to pay back your loan. You don’t want to be stuck paying off your home loan for any longer than you have to. It can help to talk to an expert about this to try to fire out exactly how much money you should take out on a home loan and how many years you are comfortable being sucked into the loan.
Refinancing your home loan is another way that you can get the home loan experts to help you figure out your financial commitment. A Gorila home loan broker is there to help you figure out the things that you need help with.
Finding a home loans broker that you can really trust is very important. They are going to be helping you make a lot of really important decisions, so you want to make sure that they really have your best interests at heart. This will make sure that you don’t get scammed. That is something that you are going to want to avoid at all costs because it could really mess up your financial situation. Making the decision on who your home loan broker is going to be is very important, so try to find out the most that you can about your broker. This will help you to make the most informed decision about which one to choose. Try to look for someone who seems like they really care about your situation and is taking a real interest in your own personal financial situation and who isn’t jus trying to fit you into their mold of a normal client. This can really make sure that you are completely prepared for your home loan and they will help you to form a great plan about how much to take out, how long it will take you to pay it off, and what type of loan you should be getting.
Don’t let the stress of getting a home loan deter you from making the leap. They can be really helpful if you know what you are doing and you aren’t afraid to ask intelligent questions when you need to. It can help to make sure that you are getting the home of your dreams for the right price and that you are getting it in the quickest way possible. It can make sure that you don’t get stuck in a home or apartment that you really don’t love just because you couldn’t afford it at the time you needed to buy it. Home loans are there to make sure that you have the cash that you need when you need it, no matter what. The only trick is making sure that you can afford the money that you are borrowing. Making sure that you have your finances figure out the best that you can will make sure that you don’t get stuck with money that you can’t afford and that you can pay it back in the easiest and fastest way possible.
Making the decision to take out a home loan is a big one, but it isn’t one that you should make yourself worried about. Just ask the questions that you feel you need to ask. Make a plan to make sure that you are borrowing the proper sum of money. And find someone that you can trust to give you the real truth about what you can and can’t do with the money that you have. Answering all these questions and going through all the hoops will make sure that you are getting what you need to out of this transaction and that it is one that will make you happy for many years to come as you get to enjoy your dream home with your family and those that you love.
First Home OwnersGrants
Thankfully there are several government incentives and benefits available to provide a little helping hand.
For more information visit www.firsthome.gov.au
To check what’s applicable in your area, visit your relevant website below:
- Australian Capital Territory www.revenue.act.gov.au
- New South Wales www.osr.nsw.gov.au
- Northern Territory www.revenue.nt.gov.au
- Queensland www.osr.qld.gov.au
- South Australia www.revenuesa.sa.gov.au
- Tasmania www.treasury.tas.gov.au
- Victoria www.sro.vic.gov.au
- Western Australia www.osr.wa.gov.au
Lenders will require a paper trail for money that has been deposited into your account. The paper trail will verify from where the money came and that the money is not a loan that will have to be paid back. So if the credit assessor discovers that a large amount of money has been deposited into your account, the credit assessor may want further information/ verification of where it came from. When you go to sign your mortgage documentation, bring your driver’s license or some form of picture identification.
How long Does it take to obtain a loan?
- Not having the finance at the right time could cost you money, potentially thousands or even your whole deposit.
- Understanding the time frames in getting a loan can help you be prepared and remove much of the stress in obtaining a loan.
Private treaty or auction are two types of ways to purchase property.
Buying your house with a Private treaty
- Finding out as much information as possible from the agent may be helpful to you. For example, if you find out the vendor has purchased another property already, they may be more willing to negotiate on the purchase price.
- Try to keep your enthusiasm for a property to a minimum when talking to the agent.
- Never start with your highest offer. Begin low so that there is room for you to negotiate.
- If your offer is accepted you will usually need to pay a 0.25% deposit on the day however a cooling off period will normally apply in which time valuations can be conducted and a formal approval is gained prior to you paying your 10% deposit.
- It is always best to have a conditional approval prior to beginning to look for a property so you know exactly how much you can borrow.
Buying your House at Auction
At auctions you will be required to pay a 10% deposit immediately and there is no cooling off period so you need to be very careful. Issues can arise such as if the property values less than the purchase price you will need to provide the difference between the value and the purchase price. If you cannot come up with the extra funds you are at risk of losing your deposit. Below are some useful tips in regards to auctions -
- Ensure you have finance approved and do not bid above your limit.
- Complete the necessary building and pest inspections prior to auction.
- Get your conveyancer to look over the contract prior to auction.
- Take photo ID with you and remember to register to bid.
- Have your deposit ready to pay on the day of the auction.
Below are a few tips to getting the best out of your mortgage:
- Pay weekly or fortnightly
This will mean you will pay an extra repayment in the year but will reduce your interest.
- Reduce your loan by making additional repayments
Making extra repayments will allow you to reduce your debt quicker. Note there may be penalties for paying extra on fixed loans. Check with your mortgage professional about penalties or fees.
- Pay Higher than your minimum repayment
Paying more than your minimum repayments can make a large difference over the term of your mortgage. Note there may be penalties for paying extra on fixed loans. Check with your mortgage professional about penalties or fees.
- Home loan Health Checks
Because our needs change, the loan that you originally got may not be the best loan for you in the future.Review your home loan on a regular basis to make sure it still suits your circumstances.