4 experts share their top tips for first home buyers
We talk to some of the top names in the game to find out their tips for purchasing a first home.
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If you're preparing to buy your first home this year, it can be tricky to know where to start. So we spoke to 4 experts in the home loan field to share their insights and highlight what's important to them about the process.
Pat Priest: "LMI can help you get into a home sooner."
General Manager, LMI – QBE Insurance
When you're looking at purchasing your first home, Pat Priest of QBE believes you need to look at 3 key factors – your own financial situation, how much you can borrow and what compromises you might be willing to make as the wider housing situation evolves.
But this doesn't mean saving indefinitely, either, Priest is quick to point out. Rather, you need to be able to leverage the tools you have at your disposal to get a foot on the property ladder.
She points to lenders mortgage insurance (LMI) as a key means for prospective buyers to get ahead.
"LMI can enable people to buy a home, even when they haven't been able to save a 20% deposit," she says. "Essentially, the LMI provider offers security for the lender, so they feel more comfortable about providing a home loan to a given borrower."
Although you still need to be able to demonstrate that you're a responsible borrower and will be able to repay the loan, Priest notes that LMI can serve as an effective shortcut to the conventional saving process.
"Once you've secured a loan, you're able to get into a home faster and start building equity in the property," she says.
Andrew Hadley: "Know your budget."
CEO of P&N Group
"Be prepared" has long been the motto of the Scouts. For Andrew Hadley of P&N Bank, it's an equally good motto when it comes to applying for a home loan.
"You need to know your budget," Hadley says. "When you're applying for a loan, the lender is assessing your ability to repay the loan itself. But you also need to account for the other expenses that come up – stamp duty, moving costs and other miscellaneous items."
Hadley advises that a key part of this process is doing your homework ahead of time.
"Make sure you take the opportunity to speak to experts in the field, whether it's estate agents, brokers or lender representatives," he says. "There's no need to rush – a house is a long-term investment, so you want to make sure you're well-prepared ahead of time."
Hadley also recommends reducing personal debt before approaching lenders.
"Clearing off debt before you borrow can help you pay back your home loan much more quickly," he says. "Having less debt will also put you in a more favourable position with home loan providers, too."
Eliza Owen: "Interest rate rises can present opportunities for buyers."
Head of Research, Australia at Core Logic
Rising interest rates have been a point of concern for more than a year for prospective home buyers. As Eliza Owen of Core Logic notes, it tends to deter buyers in general.
"We definitely see people putting off making big commitments," Owen says. "But it's important to remember that interest rates and property prices tend to be inversely related – so there are definitely still opportunities to be had."
As of April 2023, Owen feels that we're largely in a buyer's market.
"The time it takes to sell a property is averaging at 37 days – well up from the 21 days it was in spring 2021," she says.
This frequently provides more buyer choice. In practical terms, Owen notes, it also means that prospective buyers have more time to get their finances in order, apply for pre-approval and also to negotiate price.
"I think if you're going through that process, one of the best things you can do is lean on professionals," she says. "It can seem a bit daunting at first, but there are definitely opportunities out there that can help you get on the property ladder."
Rebecca Pike: "Working with brokers can streamline the process."
Senior writer for money at Finder
As someone who spends her days writing about Australian finance, Rebecca Pike is highly conscious of the wider effects it has on the home loan market.
First home buyers, she notes, can have an extremely tough time navigating the market.
"The Australian home loan landscape is quite complex," Pike says. "There are so many lenders and products to choose from. Then outside factors like rising interest rates can come into play – it can all be overwhelming."
But the good news is that there is help available. Pike points to mortgage brokers as useful allies in securing your first home loan.
"Having that support throughout the application process – and the life of the loan – can really help streamline the whole process," she says.
Additionally, Pike notes, you should also look for someone who has a big panel of lenders.
"This way you'll have plenty of choice about who you work with," she says. "Brokers can help steer you in the right direction and also advocate to a potential lender on your behalf."
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