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The Borrowers Guide to buying your first home.

Updated: Aug 7, 2020

The Borrowers Guide to buying your first home.  This Guide to buying your first home has been designed to assist consumers gain a better understanding of how the lending process works.  The process can be confusing and overwhelming at times, but when you understand the basic process, you'll be much more prepared.  The purpose of this guide is to assist you through each step.  We believe the collection of the enclosed mortgage information will make your journey to owning your own home an enjoyable one! Factors to consider Before Deciding to Buy: Savings  What savings do you currently have?  Most lenders will want to see that you are able to save consistently and will usually require your last six months saving history prior to considering you for a loan.  If you are able to afford the repayments some lenders will loan you up to 95% of the property purchase price. This may even allow you to add mortgage insurance costs to the loan as well meaning you may be able to borrow up to 97% of the property value.  However even in this situation the lender will require you to have at least 5% of the property value in genuine savings as well as enough money available to cover the other costs of purchasing a property. Sitting down with your trusted mortgage professional will ensure you know which options are available to you. Current financial Situation  What current debts do you have? The amount of current debts that you have will affect how much you can borrow.  You may want to consider reducing your current debts prior to purchasing your first home. lifestyle Owning your own home should be an enjoyable experience not a financial burden.   You may wish to consider what concessions you are prepared to make to own your own home.  Think about how repayments on your new home will affect your current lifestyle and whether borrowing to your maximum capacity will prevent you from doing things you enjoy.  You may wish to consider borrowing a smaller amount that you are completely comfortable with.  Talk to a mortgage professional about what you feel comfortable in repaying each month prior to making decisions about your loan amount rather than just borrowing the maximum that you can.  If you are planning a family in the near future you may also want to consider how you will manage your repayments on just one salary. Preparation  Before you start looking for a property to buy there are several key details to consider such as:

  • How much can I borrow?

  • Understanding the costs involved

  • How much deposit do I require?

  • Can I afford it?

How much Can i borrow?  How much you can borrow depends on several factors including:

  • Your income

  • What deposit is required

  • Eligibility for The First Home Owner Grant

  • Other loan repayments and commitments

An important factor to consider is how comfortable you are financially to repay the proposed loan.  It is imperative that you do not over stretch yourself, it is best if you sit down and work out a budget and understand how much you have left over to repay a loan comfortably.  You should also factor in interest rate movements as this will affect your repayment amount.Understanding The Cost Stamp Duty  This is a government cost that is usually the biggest expense outside the purchase price of the property.  Stamp duty varies between the states and territories.  For guidance on the approximate stamp duty cost in your relevant state go to: FIRST  HOME OWNERS  GRANTS Thankfully there are several government  incentives and  benefits available to provide a little helping hand. For more information visit: For more information please download: FIRST HOME OWNERS GRANTS AND CONCESSIONS.pdf loan Set up Costs This includes establishment fees and will vary pending on the lender and the loan product chosen.  It is important to note that you may also require Lenders Mortgage Insurance (LMI) depending on your deposit size. Conveyancing Costs  Conveyancing is the process of which a property's ownership is transferred from the current owner (the vendor) by the buyer. Either a conveyancer or solicitor will review your Contract of Sale and ensure appropriate checks are conducted on the property with local government agencies. Inspection Costs It is always recommended that prior to purchasing a property, you hire professionals to inspect the property for structural defects, concerns, pest infestations, or anything else that could potentially cause damage to your property. There are 10 steps to the Mortgage process. These are:

  • STEP 1:   Interview

  • STEP 2:   Completion of a Loan Application    

  • STEP 3: Lender Assessing Application

  • STEP 4:  Obtaining a decision - Conditional Approval

  • STEP 5: Valuation of Security being provided

  • STEP 6:   Lenders Mortgage  Insurance

  • STEP 7:   Formal Approval

  • STEP 8:   Mortgage  Documentation

  • STEP 9:   Insurance Requirement s

  • STEP 10: Settlement

For more information please download our booklet: Borrowers-Guide-to-First-Loan.pdf Call or email today for the best rates, mortgage advice and a FAST mortgage pre-approval! Need Accountant Service? Please follow the link Trimm Bookkeeping


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