BUYING YOUR FIRST HOME
Buying your first home is an exciting journey, but can also be complicated, confusing and time consuming. We can make this process stress-free so you can focus on the fun stuff!
FIRST STEPS
DEPOSIT
Firstly, you'll need a deposit. Most lenders accept 5% of the purchase price of the property, but 10% is a more appropriate goal in order to cover additional costs, such as stamp duty and settlement fees.
BORROWING CAPACITY
Contact us to find out your borrowing capacity. We’ll look at your financial situation and your borrowing capacity to make sure you’re on the right track.
THE PROCESS
ARRANGE A PRE APPROVED LOAN
Some people believe your finance application should start after you've found a property you’re interested in, but we think finance should be the first step. Before you begin the property journey, it's best to know all the basics. How much can you borrow? Do you meet the lender’s criteria? How much of a deposit do you need? Arranging a pre-approved loan and having the lender assess your finance application can eliminate some of the possible doubt prior to placing an offer on a property, and avoid potential disappointment.
Read more about the benefits of home loan pre-approval here.
FIND A PROPERTY
When looking for property, be sure to do plenty of research. Compare property prices across locations and be mindful of your budget. Look into areas which could have potential for capital growth, and areas which have existing and planned infrastructure, such as roads, public transport, schools and shopping centres. If you’re unfamiliar with property values in a particular area, we can prepare a property comparison report for you at no charge.
MAKE AN OFFER
The sales contract (also known as an Offer and Acceptance), will confirm the selling price as well as any terms and conditions associated with the sale. Your commitment will usually be subject to finance approval, a building inspection report and a pest inspection. When signing a contract, we recommend you allow 21 days for finance approval, and a further 28 days for settlement.
HOME LOAN TYPES
VARIABLE
Variable interest rates can fluctuate over time. If rates move up or down, your loan interest rate will adjust accordingly. Generally, interest rate movements are determined by the Reserve Bank, however, lenders have recently started independently raising their interest rates for varying economic reasons. Variable loans usually allow you to pay additional repayments, and there is less risk of penalties if the loan is paid out early.
FIXED
Fixed interest rates are locked in for a set period of time, usually between one and five years. If interest rates move up or down, your interest rate is secured. Fixed rate loans can have a downside – you’re limited in making additional repayments (if any), and you may also have to cover potential break costs if the loan contract is paid out during the fixed rate term.
SPLIT LOAN
A split loan gives you the option to fix part of your home loan and leave the other part variable. Having part of the loan variable means you can still make extra repayments without being penalised on the variable portion, and gives you peace of mind on the fixed portion, knowing the rate won’t change. Many people tend to go with a split loan to manage some of the risks if interest rates rise.
PROFESSIONAL PACKAGES
Most professional packages come with an annual fee. In return, the lender will provide a significant discount on the interest rate, as well as other products, such as fee free offset accounts, reward credit cards and discounts on insurance products.
BASIC LOANS
Generally, basic loans are variable loans, but without the frills. They may offer an introductory rate, and there are usually no application or ongoing fees. Basic loans don’t offer as much flexibility as professional packages, such as offset and free redraw.