10 Mortgage Tips for First Home Buyers

Maybe you are getting married or sick of living in share houses and tired of renting. Whatever the reason, you have come to the decision you are ready to own your own home – and that’s great. You’ve probably also come to the realisation that you have got absolutely no idea how to go about buying your first home.

Here’s our top 10 tips to boost your know-how and confidence.

1. Budget

You should start saving for a deposit and having a budget in place is the first step. Think about how much money can you put towards paying off a mortgage. What are your living costs? And what areas could you start to make savings? Remember to be realistic in your estimations; remember you’ll need a holiday or two over the next five years too! Check our budget planner calculator online.

2. Research

A good place to start is asking your friends and family members who’re paying off a mortgage. Their insights will be helpful. Consult a mortgage broker or lending specialist who can help you find the right home loan for your situation, show you the ropes and explain all the features available.

3. Set a limit

To get an idea of how much you can borrow use a Borrowing Calculator. This will give you an indication of your borrowing power. Keep in mind that repayments should ideally not exceed 30% of your pre tax income.

4. Save a deposit

Aim for a minimum of between 5-20% deposit for your home. You may also want to

look at other options to raise a deposit, like family pledge. Work out if you need to save a higher deposit to avoid Lender’s Mortgage Insurance, which normally applies when you borrow over 80% of the purchase price.

5. First Home Owners Grant

The most appropriate time to apply for the First Home Owner Grant is at the same time you apply for your home loan. You can lodge your grant application through most lenders, if they are an authorised agent and able to receive it.

6. Get rid of debt

Your home loan should become your main priority as it’s a huge financial commitment. To improve your financial standing t’s best to start shaving excess debts first, like high-interest credit card balances and personal loans.

7. Check for concessions

The various state and territory governments also offer their own incentives to first home buyers. Make sure you know what’s available in the state you’re buying in to get maximum concession for first home buyers like stamp duty concessions.

8. Get familiar with the lingo

What’s a ‘split’ loan and an offset account? You are worried about paying LMI plus you need to make sure you get a LVR and you have very little idea what any of it means. Do your homework and get familiar with commonly used mortgage terms.

9. Factor in other mortgage costs

First homebuyers are often shocked at the number of expenses involved in buying a property, from valuation and conveyancing fees, loan application fees to government charges, the costs add up. Don’t forget to budget for these initial costs when determining how much you need to borrow.

10. Get a pre-approval

Pre-approval simply means a bank or lender agreeing in principle to provide you with a home loan at an early stage in your home-buying process. It helps give you an idea of your borrowing power so you’re not wasting time looking at houses beyond your reach.

Mortgage House

At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.

But don’t worry, we can help with that.

If you’re thinking of buying a home, or you are a second home buyer, you can contact us for advice about the best options for you when it comes to your mortgage.

Click here to speak to us!