You finally found your dream house but there's a problem, you don't have enough money to buy it.
The first thing that may come to your mind is "go to the bank and ask for a mortgage." As easy as it may sound applying for a home loan and getting one is no smooth ride.
As a first home buyer you may have several questions that you want answered before you take this important first step. Go ahead and learn your first mortgage ABC's with Verne Johnson, Mortgage Broker and Owner of Impress Financial and get ready to take that big step you've always wanted to take.
- Owner of Impress Financial Solutions
- Key role as a Mortgage Broker
- Helps provide his clients with the best possible mortgage solutions
- Has built deep knowledge of the financial industry in Australia
Verne's top tips
Don't sweat the small stuff, get a mortgage broker
A mortgage broker will normally have a wide range of lenders products to choose from. Varying credit policies mean a first home buyer has a far greater chance of securing finance through a broker than approaching a lender directly. A good broker will represent their client and present a good case to potential lenders. A broker can also help a first home buyer by helping to facilitate the property transaction which is particularly valuable for what can be a daunting experience for many buyers.
Get your funds and assistance ready
The amount a first home buyer needs is dependent on the situation and the type of property being purchased. In some circumstances it is possible to proceed with a purchase where there are no savings in the bank if there is a family member who is in a position to and willing to provide assistance. This entails a family member offering a property as additional security to the property being purchased. Family support may also save the first home buyer a considerable amount in fees.
If family support is not available then a 5% deposit plus funds to cover fees applicable to the type of transaction is generally a minimum requirement. Also home loan fees vary according to the situation and property being purchased.
The best mortgage: The one that suits your needs
Many first home buyers gravitate towards a basic no frills loan for their simplicity. However, as everyone's situation is different the best mortgage is the one that suits their needs and provides the best balance of interest rate, fees and loan features. The better the first home buyer can communicate to the broker, what is important to them and their future plans, the better the options and recommendation a broker will be able provide to the customer.
Let the mortgage broker help you with the first home owner's grant
A mortgage broker will normally assist the borrower to complete the required form and lodge the first home owners grant with the lender. The lenders will then claim the grant on behalf of the borrower and make these funds available for settlement of the transaction.
According to the Australian Bureau of Statistics In 2010–11, banks and other lending institutions financed 580,000 dwellings for owner occupation, 68,000 fewer than in the previous year, but still 28% higher than in 1994–95.
Now you're well informed and have an idea of what it takes to apply for your first mortgage. The next step: decide on a lender and a mortgage broker so that they can guide you through the home loan process. And remember whatever road towards applying for your home loan you decide, don't let your first mortgage become a headache!