A credit report details your other credit arrangements and repayment history and could affect your ability to get approval on a loan, especially if it highlights missed repayments and other past financial issues.
Each lender will assess your credit file against their own policies and there may be instances where some approve your application, while others reject it, or delay the process to investigate further.
It’s important to figure out what money you’ll have access to (savings or other financial assistance) to cover the upfront and ongoing costs, in addition to any other financial commitments you may need to prioritise.
There will be things to think about if you’re buying a property with your partner as well, or if you have a family member helping you, signing as a guarantor, or going in as a co-borrower.
A big part of knowing how much you can spend will also come down to how much you can borrow and under what terms.
It’s worth having your loan pre-approved so you know how much you can borrow. However, it’s not a guarantee and you’ll also need formal approval closer to purchasing and to have your deposit ready, or you may miss out.
This might mean having a bank cheque ready if you’re buying your first home at auction. Your lender will also advise you if lender’s mortgage insurance is required.
Some things worth giving some thought to include:
For a bit of help, speak to local real estate agents or look at real-estate companies online.
Below are some financial assistance options that may be worth investigating.
State governments may offer a one-off grant to eligible first home owners. Contact your state revenue office to check what you might be entitled to.
Certain state and territory governments offer additional incentives to first home buyers, some of which involve stamp duty concessions. Research what’s available in the area you’re buying.
The New Home Guarantee is an Australian government program, which replaces the need for Lenders’ Mortgage Insurance for someone who’s building or purchasing a newly-constructed property. Application for the guarantee is made by participating lenders only when you make your loan application. Note, guarantee places are limited.
Under the First Home Super Saver Scheme (FHSSS), eligible first home buyers can withdraw voluntary super contributions (made since 1 July 2017), of up to $50,000 for individuals or $100,000 for couples (plus associated earnings/less tax), to put towards a home deposit. Find out more about whether you may be able to withdraw under the FHSSS.
Depending on whether you’re after a basic package or one with extra features, home loans can vary greatly when it comes to interest rates and fees.
To get a better idea of costs, when you see a home loan advertised, you’ll notice two rates displayed – the interest rate and the comparison rate.
The home loan comparison rate will include the annual interest rate, as well as most upfront and ongoing fees. Some home loans with lower interest rates are laden with fees, so while they appear cheap, they could end up being more expensive. The comparison rate can help you identify this and compare loans more accurately.
Be sure to look into the potential advantages and disadvantages of various features of the loans you’re considering as well. For example, some loans may allow you to make extra repayments, redraw funds, or use an offset account, which could reduce the interest you pay over time.
Home inspections could alert you to serious issues that may not be visible, such as asbestos or termites, or electrical, ventilation and serious plumbing faults. These problems could cost you a whole lot more than the inspection itself.
Meanwhile, if you’re buying a townhouse or apartment, strata reports can tell you whether the property is well run, maintained to a decent standard and adequately financed.
©AWM Services Pty Ltd. First published Jul 2022