The professionals at Vision Property and Finance are here to help you, with 5 First Home Buyer Tips to help build your future. Committing to owning your first property is a great way to build equity, have more control over your income, and can grant you the freedom to create your dream home. However, navigating the vast amount of information, policies, schemes, and processes involved in purchasing your first home can be a headache-inducing process.
First Home Buyer Tip 1: Reduce your Liabilities
Reduce any ongoing commitments. Outgoing expenses such as buy now, pay later debt repayments, expensive telephone plans, and credit cards can impact both your savings and your home loan application. Banks will analyse your expenses and liabilities to build a profile on how you manage your money when applying for a home loan. If large amounts of your income is tied to large expenses, it is worth re-evaluating which expenses are essential, and which can be cut.
Beware of little expenses, a small leak will sink a great ship – Benjamin Franklin
First Home Buyer Tip 2: Boost your Credit Score
Your credit score is a numerical indicator to banks on how well you can pay back your lenders. These credit scores are determined by a range of factors, with the primary ones being:
- The amount you have borrowed
- The number of credit applications made
- The types of debt you apply for. (E.G an application for a credit card will have a larger negative impact than a home loan enquiry.)
- When you pay these amounts back on time
Therefore, for your home loan application to paint you in the best possible light, you should aim to have the best possible credit score by:
- Paying back bills on time
- Keeping credit balances low – don’t spend what you cannot afford
- Not opening credit accounts for the sole purpose of improving your credit score – it may damage your score
- Dispute any inaccuracies with the accounts listed on your credit report – could unfairly drag your credit score down
First Home Buyer Tip 3: Provide Genuine Savings at least 3 months
Most lenders that provide capital for more than 90% of the property price will require at least 5% of this price to be shown in genuine savings. This is an amount earned through accumulated savings, term deposits and shares and other equity types. It is important for those developing a savings fund that it will not only cover the savings required for the bank but also ensure you have some reserves for the initial period after you have purchased. This demonstrates to the banks that you can plan and save, with a larger genuine savings fund being an indicator to banks that you are a better borrower.
4. Be aware of the help available
There is an array of assistance available for first home buyers, including governmental support in the form of the First Home Loan Deposit Scheme, First Home Buyer Assistance Scheme, the First Home Super Saver Scheme and the First Home Owner Grant (New Homes) Scheme. Through utilising these schemes, first home buyers can receive over $55,000 in benefits. To help ensure that you can make the best out of these government schemes and various other renting assistance, private mortgage brokers like us can help. What’s even better is that the banks cover our fees, not you.
5. Be realistic with what you can afford
Often when looking towards purchasing a first home, buyers can lose sight of what is financially realistic for them. Buyers often fail to account for the costs of children, health-related, and unforeseen expenses when looking for home loans. It is important that when looking for your first home, you can understand the stability, growth, and the associated expenditures with your income. Our calculator is useful for helping you to determine the costs of your repayments and the overall loan.
A Final Thought
5 First Home Buyer Tips aren’t enough to encapsulate the difficult process of arranging a mortgage is hard. We recommend checking out more of our blog for more insights or giving us a call at 8354 3000 for a chat about how we can help you.