When you’re purchasing your first home, applying for a home loan may seem like a daunting prospect. But it really doesn’t have to be that way. We show you what you need to know about finding and, most importantly, securing your first home loan so that you can get onto the property ladder as soon as possible.
Know what you can borrow
Before applying for your loan – and before you even begin your property search – you should always have an understanding of how much you can borrow. The best way to do this is to use a mortgage calculator easily found online.
While they aren’t always exact, it will provide a fair estimate of how much a lender will let you borrow and therefore what your budget is when it comes to buying.
You should also take time to make sure you know the criteria lenders will take into account when assessing your loan application, such as your credit history and ability to service a loan.
Save what you can
Obviously, the more you have saved towards your first home, the less money you’ll have to borrow to purchase it. It should also make the process of getting a mortgage a lot easier.
Take advantage of first home buyer subsidies and payments
The good news for first homeowners is that the government provides incentives towards getting into your first home, in most states. These include stamp duty exemptions or concessions.
These benefits tend to be particularly generous if you’re buying a brand new home under a certain value and can make it a lot easier to get into your first home.
Think about using a mortgage broker
When you’re applying for a loan, it may be tempting just to speak to the financial institution you already bank with. But it usually pays to look around. The mortgage market is competitive and you may be able to get a much better rate by going elsewhere.
Better still, consider using the services of a mortgage broker. A good mortgage broker has access to a large number of lenders and knows their lending application processes. This should save you time and money and give you the best chance of getting your mortgage when you need it. They also should be able to advise you on which home loan is right for you given your own personal circumstances.
Once you’ve worked out what you want to buy and have an idea of how much to borrow, it’s time to get conditional approval This isn’t a firm offer of finance but a statement that you should be able to borrow up to a certain amount, so long as you can supply information to support the figures you’ve based your application on – such as salary, savings, assets and expenses – and the value of the home you’re purchasing is verified by a professional Valuer.
Conditional approval usually lasts for 90 days and can give you some certainty in your property search. If you use a mortgage broker they’ll generally apply for conditional approval on your behalf.
Finally, a lot of first home buyers put off applying for a home loan and buying their first property because they’re worried about the state of the property market, how much they’ve saved, or whether they can get a mortgage in the first place.
Given that the market can move rapidly, it pays to be both decisive and confident. So, if you don’t know about how the loan application process works, read up on it. Find out how to get the ball rolling on your application, or what to ask a mortgage broker if you want someone to smooth the process for you.
After all, when it comes to getting into your first home, knowledge really is power.
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