First Home Buyer
Welcome First Home Buyers
Buying a house can be an overwhelming process for first home buyers. That’s why Will Bell Mortgage Broker is here to hold your hand the whole way.
Check out the guide to buying your first home for all you need to know.
What does a Mortgage Broker do?
Most first home buyers get that a Mortgage Broker helps them out with the home loan. However, your typical customer focussed Mortgage Broker does so much more than that.
The best way to explain it is that you don’t go and climb Everest without a Sherpa, a Sherpa helps you get to the top of the mountain. A good Mortgage Broker will help you to make your home buying dreams a reality.
The Mortgage Broker will help figure out how to get the home loan as well as access to the relevant first home buyer grants and schemes that you are eligible for. They will hold your hand the whole way through and keep you on track.
How does a home loan work?
A home loan requires and borrower (you) and a lender (the bank). The lender wants to be able to lend you the money so that they can make money on the home loan interest rate you pay.
There is however a risk to the lender that you do not pay hence they want to see a couple of things.
- That it is secure. Generally, this means you need to have a certain amount to deposit
- That you show the income to make the home loan repayments
What is Lenders Mortgage Insurance (LMI)?
Lenders Mortgage Insurance (LMI) is an insurance policy the lender takes out when there is increased risk. That increased risk is when you have less than 20% deposit to go toward the purchase of the house.
The LMI covers the lender in case the borrower cannot pay the loan and the lender does not get all their money back after they sell the property.
The LMI is paid by the borrower but there is no benefit to them apart from getting access to the home loan and being able to buy the property.
What First Home Buyer Schemes can I access?
What First Home Buyer Schemes can I access? 14.44
The are a few different schemes that you can access. Keep in mind that these things change on a surprisingly constant basis. All these schemes have different terms and qualifying rules and can get quite confusing. This is why you should let your Mortgage Broker figure it out and let you know which ones you can apply for.
- First Home Loan Deposit Scheme (FHLDS) / New Home Guarantee (NHG)
These are the latest schemes the government has put in place for First Home Buyers. For the FHLDS and NHG the Federal Government act as guarantor to the lender. This means the lender does not require LMI. It also means you will likely get a much cheaper interest rate as the risk is much lower to the lender.
This one has been around for a while and has changed a fair bit in time. This is applicable when you buy a new home either house & land or off the place. The borrower will get $10,000 as first home buyers. This is usually used as part of your deposit in the home loan process.
- First Home Owner Stamp Duty Concession
This one means you can get your stamp duty waived or discounted depending on the purchase price.
How much deposit do I need to buy my first home?
Trying to figure out how much deposit you need to buy your first home is a hard one. The reality is there’s no set amount or percentage we can give to work off. This is because lender policies, regulations, grant and schemes change on a constant basis.
A good rule of thumb you can use when asking yourself how much deposit you need to buy your first home is 10%.
There can be a few different scenarios where you can get in off a lower deposit. This is why you need to work with a good Mortgage Broker.
To give you an idea right now you can get in off 5% under the First Home Loan Deposit Scheme (FHLDS). You can even get in off 0% if you have a family guarantor to help you get into your first home.
The First Home Buyer Purchase Process
Once you figure out if you can get the home loan then your next problem is how do I buy the house? The following is probably the best process.
- Pre-approval Granted
Once your pre-approval is granted you’re almost ready to go shopping!
- Organise your Conveyancer and/or Buyer Advocate.
Your conveyancer is the most important part because they will look over any contracts that you want to sign and make sure there’s no funny business going on!
- Sign a contract: Finance Clause and Building & Pest Inspection
Most first home buyers will want to put in these two clauses. They protect you from loss if things don’t go right.
Once you’ve signed a purchase contract to buy your first home then the lender will get a valuation done on the property and ask for any further information required. Once that’s all ticked off then you are approved for the home loan!
Once you send the loan contracts back to the lender then it’s up to your Conveyancer to arrange the settlement. You will soon be ready to move into home sweet home!
The Most Important Thing A First Home Buyer Needs To Do
Arguably the most stressful part of buying your first home is getting the home loan approved. Here are a few tips for the aspiring first home buyer.
- Don’t be naughty – you need to have a good record of paying your bills on time and not overdrawing your accounts to show the lender that you’re applying for a home loan from that you are good for the money. A good place to start is checking your credit file for free.
- Prepare. What I mean is do not go out looking at houses when you have not get your home loan pre-approved. This can often take months just to sort out. You need to follow a process and that process means knowing what your home loan options are before going shopping.
- Stop researching. If you are one of those people that feel as if they need to know all of the information before doing something the just stop. This is a road to nowhere because there is so much information out there. Added to this, the lending policies for lenders are constantly changing and things that apply to some people may not apply to you. Get good help!
We always bang on about getting to the top of Everest. No one goes up along, that’s just crazy talk. Let us be your Sherpa’s on your home loan journey!
For advice, help or just someone to tell you if you’re on the right track or not, call Will direct on 0448111046