News

October 24, 2018

Spotlight on first home buyers: getting your finance sorted

Purchasing your first home is one of those monumental moments in life that you will never forget. The process leading up to the purchase, however, can be at times, difficult to navigate. Our agents Liliana Innocente and Gina Borrelli have compiled a list of their tips and resources to help make your journey to purchasing your first home as seamless as possible.

Government incentives 

Saving for your first home requires sacrifice and dedication. Luckily, however, there are government incentives in place to make it that little bit easier. As of July 1st, 2017, the government introduced a new package that aims to give first home buyers a fair go. The package includes the following concessions,

  • Abolished stamp duty on all homes up to $650,000,
  • Stamp duty relief for homes up to $800,000,
  • $10,000 grant for builders of new homes up to $750,000 and purchasers of new homes up to $600,000,
  • Abolish insurance duty on lenders’ mortgage insurance.

If you would like more info on how to access these government grants and concessions, get in touch. You can find out more here.

185A2361.JPGBuying your first home may seem daunting, but our agents are here to step you through the process to ensure it is as seamless as possible. 

Deposit

One questions we often receive from first home buyers is; “How much should I save for my deposit?” Unfortunately, there’s no simple answer to this question as it depends on a range of factors – from how much a lender is willing to lend to you, to whether you’re willing to pay a little more on the loan. There are, however, a few common tips that will help you make the right choice for your deposit;

  • Aim to save approximately 20% or more of the property value. A big deposit shows the lender what a great saver you are which can increase the likelihood of your home loan application being approved.
  • If your deposit is less than 20% of the property value, there may be added costs involved in getting a home loan. This is partly because you may need to pay for Lenders Mortgage Insurance.
  • Work out your LVR or Loan to Value Ratio. This is basically how much you need to borrow, expressed as a percentage of the lender-assessed property value. For example, if you have a deposit of 20% of the lender-assessed property value, you will need a home loan for the remaining 80%. That means your LVR would be 80%. Why is it important? Because it impacts your Lenders Mortgage Insurance (LMI). LMI is a type of insurance you may need to pay for if your LVR is over 80%. 

 

185A1784.JPGEnsure your finances are in order to avoid disappointment when applying for your home loan. 

Hunting for a home loan

First thing’s first when looking for a home loan; you need to decide which loan will suit you best.

  • If you'd like the security of knowing exactly the amount of your repayments, then a fixed loan could be for you. If you think interest rates could fall in the future, then a variable rate might be more suitable.
  • Loans which offer redraw facilities are popular as they allow borrowers to repay more than the minimum regular mortgage repayments and withdraw surplus repayments. 
  • If you have surplus disposable income, then an all-in-one loan or 100 per cent offset account might be the ticket. Putting your savings and income into these accounts offsets the loan principal and reduces the interest you pay on your home loan. This can save thousands of dollars in interest costs over the term of a loan.

 

Once you've determined the type of loan that best suits your needs, it's time to go mortgage shopping. You'll need proof of income such as pay slips or recent tax returns, proof of your savings history and other documents that may be required by specific lenders or brokers.

We're here to help

Thanks for reading and please get in touch with Gina or Liliana if you have any questions about financing the purchase of your first home. They're always happy to help clients through this exciting stage of life. You can reach Liliana on: liliana@fnnewcastle.com.au or Gina on: gina@fnnewcastle.com.au.

Warm regards,

The First National Newcastle Team