Buying your first home is a major milestone for many people, but becoming familiar with the process can take time and error most don’t have the luxury of making.
You can always seek guidance from professionals in the mortgage industry, but you should also be primed with some knowledge so you’re able to take even your first step with enough confidence.
At LiveInvest Financial Solutions, we’ve seen every step of the mortgage process since our early days in the industry, so we’ve compiled everything first-time homebuyers in Australia need to know to prepare for their first home purchase.
Understanding First Home Owner Loans in Australia
First homeowner loans in Australia are designed to make homeownership accessible for people entering the property market.
Some of these loans usually come with benefits like lower deposit requirements, competitive interest rates, and government incentive schemes. For example, if you qualify for the First Home Owner Grant (FHOG) or the First Home Guarantee Scheme, you might be able to reduce your upfront costs or secure a loan with a smaller deposit.
Knowing about these assistance programs and familiarising yourself with some of the requirements you’d need to meet to qualify can save you money and help you achieve homeownership sooner.
Key Considerations for First-Time Homebuyers
Consider the following factors before you dive into the application process, whether by yourself through a financial institution or with a broker by your side:
- Determine Your Budget
You may fall in love with a home at first look, but you need to know how much you can afford before your heart is set on it. You should factor in all costs, including the deposit, loan repayments, insurance, legal fees, and stamp duty. You should also consider having a small fund for contingencies. - Mind Your Credit History
Lenders use your credit history to assess your financial reliability. A cleaner history can increase your chances of securing a loan with a favourable rate and terms, so make sure to work on improving your credit history if you need to. - Save for a Deposit
If you have the numbers but have yet to round up the cash, work on saving for a deposit for your home. Most lenders require a 5-20% deposit for first-time homebuyer loans, although larger deposits could benefit you with lower interest rates. - Understand Loan Types
Be aware that there are different types of loans. Your financial representative can help you understand each type, so make sure to ask any clarifying questions to ensure you sign up for a loan type that takes your financial goals and risk tolerance into account. - Research Government Assistance
As mentioned above, make sure you research government programs for first-time homebuyers before you apply for a mortgage! You could reduce your costs significantly.
Steps to Applying for a First Home Loan
- Research Lenders and Products: Explore different lenders to find an option that suits your needs. Instead of doing the legwork yourself, consider working with a broker specialising in home financing for beginners. They have access to a variety of lenders in one place, simplifying the process by comparing multiple products on your behalf.
- Get Pre-Approval: Pre-approval doesn’t mean you have secured financing, but it can give you a clearer idea of your borrowing capacity and can show sellers you’re a serious buyer.
- Gather Documentation
Updated financial and personal documents could help you have a smoother application once you choose a lender. - Submit Your Application
Once you’ve found the right loan for you, submit your application and wait to be approved. This can be the most exciting, but nerve-wracking stage. - Settle Your Loan
If you were approved, congratulations! The lender will release the funds for your property and you’ll officially become a homeowner.
How a Mortgage Broker Can Help
A mortgage broker like LiveInvest can greatly simplify the process of buying your first home. They’re well-versed in navigating home financing for beginners and always willing to break down even the most complex of terms into easily digestible information.
Aside from their advice and guidance, mortgage brokers can compare multiple lenders and loan types so you’re able to access deals suited to your circumstances. They look out for any assistance programs you can use to your advantage, and help you avoid common errors when applying for a first home loan.
Conclusion
While applying for a first home loan in Australia can be a confusing, lengthy process, it doesn’t have to be. With the right knowledge and preparation, you can venture into homeownership without worrying too much. Plus, with the right guidance by your side, you can have an even smoother process!
If you’re ready to explore your loan options as a first-time homebuyer, contact us today! LiveInvest is here to offer you personalised support and guidance to help you find the right loan for your first home.
