First Home Buyers
We understand that buying your first home can be daunting – everyone in our office was a first home buyer at some point! With the right planning however, your first home will not only provide a secure roof over your head, but should also generate medium to long term financial gains to accelerate your pathway towards financial freedom.
TSC Mortgage Brokers will assist you to enter this market with confidence and will support you throughout the entire home buying process.
The process we follow with first home buyers is usually
Chat by phone, face to face, Skype to understand your personal financial situation, the amount you want to borrow and your suitability for borrowing at this time.
Determine your borrowing capacity based on your personal scenario including income, expenses, existing debt, deposit saved, employment details – ultimately, we provide a thorough assessment of your ability to borrow money.
Based on the above, assess which lender’s product may be most suited to your scenario – whether it be a mainstream bank; a non-bank lender or a specialist lender.
Provide all of the available options to you, along with some recommendations and then on agreement, proceed with completing an application for either a pre-approval (very wise to give you peace of mind if you are serious and ready to buy) or formal approval if a contract has been signed.
Whilst we do the majority of the application paperwork for you, we do require a range of documentation from you as a part of the application process and in order to comply with all lender and regulatory stipulations. The sooner you supply ALL of the required documentation, the sooner we can get your application in to the lender.
Once we receive an approval (or pre-approval), we then follow the process through to settlement, which includes ordering valuations; working with lenders and their lawyers to get loan documents produced, signed and checked whilst liaising with other legal teams that may be involved on either side of the property transaction.
TSC Mortgage Brokers mortgage broker 3 top tips for first home buyers
- Get your finances in order well before you make an offer on a property. Trim down or ideally get rid of your credit card debt; cut back on all non-essential expenses; draw up a budget and stick to it (this will show the Lenders you are disciplined); DO NOT leave your job in the lead up to purchasing a property, as most lenders need to see consistent income well outside of probation periods. Also, save up for the largest deposit that you can manage. This will just make it easier and cheaper for you in the long run.
- Plan in advance and be organised. Getting loan approvals generally doesn’t happen over night and for some can be a long drawn out process. Brokers may be at the whim of a lender, especially if your scenario isn’t straightforward (ie. A small deposit or recent change in circumstances) Ultimately this causes stress for everyone. Have the required documentation ready to go and provide EVERYTHING that is requested to ensure the process goes as smoothly as possible.
- Be very clear and firm on your maximum purchase price. Whatever you do, do not buy what you can’t afford. It’s easy to convince yourself that you’ll only have to struggle for a couple of years and that everything will be alright once that big promotion comes along. What if something were to happen in the meantime, or the promotion never came? You could stand to lose everything, and you will not have the benefit of the First Home Owner Grant or any other first home buyer incentives the second time around.
Some of the most common questions we are asked from First home buyers are:
How much can I borrow?
Everone’s situation is very different. It depends on income, expenses, other loans or credit cards that you have and a whole lot more. Its wise to talk to us well in advance so we can help you set a strategy around your income and expenses, to make the process much easier when you are ready to purchase.
How much deposit do I need?
This also varies dependent on your situation. There are lots of options though. Generally a 20% deposit plus costs is a great start, however there are other options if you don’t have 20%. Lenders Mortgage Insurance is a valid consideration, as is using a guarantor (your parents perhaps). Different professions, such as doctors or engineers also have different policy options that we can help you assess.
What are all of the costs involved?
Costs involved in purchasing property vary by product, by lender and by the State or Territory that you are buying in. Some of the common costs to consider, not all specific to finance, are:
- Stamp duty
- Mortgage or loan application fees
- Valuation fees
- Legal / conveyancing fees
- Pest and building inspection reports or a Strata search (for apartments)
We would explain all of finance related costs up front and generally impart any other knowledge we have, to try and take the stress out of the process for you. Like anything, prior planning will make this process much easier for you.
I’ve heard people speak about LMI and LVR. What are these and how do they affect me?
Lenders Mortgage Insurance (LMI) is one of the most popular ways to achieve the dream of home ownership sooner, for borrowers that don’t have a large deposit. LMI is an insurance policy that protects the lender from financial loss in the event that the borrower can’t afford to keep up their home loan repayments. The financial institution may make it a condition of borrowing that you pay for a lender’s mortgage insurance policy. There are a number of factors that affect the cost of LMI – the size of the loan; the amount of the deposit; whether the property is for investment or owner occupier purposes and the insurer that the financial institution uses.
Generally though, LMI can either be paid upfront or capitalised into the loan, which means payments are made over the life of the loan – a great option for many.
LVR stands for Loan to Value Ratio and is the proportion of money you borrow for a home loan, compared to the value of the property. Lenders place a large emphasis on the LVR when assessing your loan application. The lower the LVR, the lower the risk is to the bank.