First Home Buyers

So you have decided it’s time you want to be a homeowner and there are so many things to know.

You want to be sure of what to do. Give yourself some time and read on

Banks and lenders have very specific policies around lending to first home buyers, and the pricing of their home loan products can vary substantially.

How Much Deposit Do I Need For A Home Loan?

One of the frequently asked questions in the loan process is how much deposit do I need for a home loan. As a first home buyer it’s helpful to know how much deposit you need to save for a home loan so you can get started. Minimum deposits vary between lenders and depend on the loan product you choose.

No deposit- We Can Fix That

As a general rule, if you are an:

  • Owner occupier (you are going to live in the property) you will require a minimum 5% of the purchase price as a deposit.
  • An investor, you will ideally require 10% of the purchase price.
  • Always remember though, with a minimum deposit you will need the acceptance on your application by the ’Mortgage Insurer’. The mortgage insurer is not a part of the bank but has just as much say if your loan is to be approved. Your mortgage consultant will help you to understand how the mortgage insurer is placed in the process, and how they can impact your application.

Low deposit home loans can be great for first home buyers who haven’t been able to save a large deposit due to high rental payments.

If you are looking at a minimum deposit then you will also need to provide a proportion of the deposit as ‘genuine savings’. For this there are also some lenders now who will recognise 12 months continuous (and well conducted) rental repayments as part of the ‘genuine savings’ requirement which will remove many of the ‘savings’ roadblocks for you as the borrower

Each lender will have their own credit policy on how they assess your deposit, so it comes down to knowing which bank or secure lender provides a home loan solution that can cater to your particular situation.

Your home loan deposit will usually need to be at least partly made up from genuine savings. You can also use a combination of other sources, including:

  • First Home Owners Grant (FHOG) and state-based first home buyer incentives
  • Monetary gifts, inheritances and tax refunds and sales of an asset such as shares
  • First Home Saver Account

Other options for a deposit

Minimum deposit home loans come with a ‘harder’ approval criteria, but if you had a larger deposit it all becomes much easier. Here are some options for you.

  • Family Pledge/Kick Start

- This where a ‘Family member’ assists with a ‘limited guarantee’ on equity they own on a property. This sometimes can remove many roadblocks compared to a minimum deposit and allow the loan to be approved.

- Gifting of deposit. Where someones receives monies as a deposit via a gift/ inheritance or sale of personal asset and alike.

First Home Owner’s Grant (https://greatstartgrant.osr.qld.gov.au/)

- As a first home buyer, to find a good home loan you should investigate both your home loan options and the governments offer on FHOG you may be eligible for, and how it may assist you.

Other Fees in Buying the house

- Don’t forget to leave some money aside to cover the other fees and charges associated with buying your property. Your mortgage consultant will go through a list of fees and charges you should consider.

Ways to give yourself the best chance of having your “First Home’

We have found that definitely the best step a ‘First home buyer’ can do before any other steps is to obtain a:

-  Full Pre-approval of loan. Not just a ‘conversation’ over the counter of how much your income may qualify you for, (There is a BIG difference between these two, ask us and we’ll show you just how different), but an application before you find a property, where you give over payslips, prove by statements where you have your deposit and enquiries are done against your credit file, and many other items.

-  Once you are then approved you will receive a ‘Full preapproval in writing’, and you are certain that you qualify by 100% to find your dream home, (and you know for certain exactly how much you can offer for the property and the lender is behind you all the way). The only remaining item here is for the lender to agree the property is acceptable as security, but we can give you more help on this aspect.

The Next step

There are many parts of the process, and much to know. Every step is important and has its place. Our clients that have followed our process, used our professional help have given themselves the greatest chance of hearing the words that we are all after “CONGRATULATIONS, YOUR HOME LOAN IS APPROVED’.

Call us now, and find out Where to from here.