Buying your first home is a bittersweet moment for everyone. Sweet because of the excitement and freedom you feel as you browse your dream home and take a leap into independence. Bitter, because of all the confusion and stress that springs from trying to finance this purchase – Where do I start? Who do I talk to? What should I do?
In this article, we will do our best in helping you answer some of these critical questions and make sure you are on the right track from the very start.
Purchasing property has become a very tricky game and even seasoned investors can falter and make mistakes that cost them thousands of dollars. Before taking the first step, it is crucial to consider the different options as well as the costs and risks involved.
Two Big Questions You Need to Answer First
Where to buy and what to buy.
The answer to these will almost always depend on your budget and loan affordability. Once you can work out your affordability, you can start to consider your options more seriously – naturally, each option tends to have some advantages and disadvantages.
Some Classic Options:
You want to buy land & hire a team to build your home from scratch.
+ Your stamp duty costs will be much lower.
+ Overall, you should be able to spend less than you would if buying an existing house.
– You are very likely to run into issues with your team of builders (often).
– These projects often take very long and tend to stretch far beyond the building team’s original intended schedule.
Buying An Existing House.
+ It will take far less time than building a home from scratch.
+ The process overall will be quicker and far less stressful.
– Will be more expensive than building your own home.
– You might need to spend (a significant) extra on renovation costs.
– Your stamp duty costs will be lower.
Buying An Apartment.
+ Apartments are typically near urban areas and are cheaper than larger homes.
+ The buying process should be much quicker and less painful than building your own home.
– Naturally, apartments are smaller than houses.
– Currently, the capital growth of apartments tends to be slower.
– Can an apartment suit your family’s needs for the next 5 (or 10) years?.
Once you have set a budget and chose the best option for you, it’s time to get a loan approval from a lender, either directly with the bank with them or through a broker.
Brokers are able to give you many options to choose from as they aggregate offers from a variety of lenders. Banks will inform you of all the loan offers they have, but usually none outside their institution.
What Do I Need To Request a Loan?
- 6 Months of savings history
- Payslips from an employer with a minimum employment history of 6 Months.
- 5 % Deposit + 5% Stamp duty (example: For a $500,000 property, the funds required will be $25000 + $25000 = $50,000
Important Tips to Remember
1. To be able to borrow the maximum amount, based on your income, try to pay off all short-term debts such as personal loans and credit cards – these reduce your borrowing capacity drastically.
2. Make sure your credit file is clear of any defaults and late or missed payments.
3. Look for and compare the best options for home loans, such the ones with the lowest deposit required and with the best interest rates on offer.
4. Keep all your relevant documents handy, such as payslips, recent bank statements, and IDs. This will save you a lot of time and make processing easier.
5. Before signing any papers, make sure you have understood all aspects of the contracts and documents you are signing.
If anything is unclear, it’s always best to take legal or professional advice.
Remember, Banks Will Look At:
1. Your job stability.
2. Your income stability.
3. Your credit history.
4. Your savings and expenses patterns.
5. Your visa and residential status.
If You Are Looking for Advice, Don’t Hesitate to Give Us A Call. Head to the Contact Us Section in the Menu Above.