How to get into your first home quickly

Now you’re on a career path, you might start thinking about home ownership. Here’s how to get there faster.

 4.5 minutes

When you’ve settled into your career and are looking to buy your first home, being unprepared can lead to frustrating delays. Scouring property listings and making time to view houses can be stressful enough, so it’s important to be aware of the pitfalls that could slow you in reaching your goal. This guide will help you navigate some of the hurdles faced by first home buyers.

Saving for a deposit

For many people, property values in Australia’s capital cities are rising at an uncomfortable pace every year. Median dwelling prices in Brisbane as of 31 May 2017 were $490 000, while in Melbourne and Sydney they were $665 000 and $872 000 respectively, according to CoreLogic data.

Saving a home deposit of 20 per cent can seem like a daunting task, but it doesn’t have to be.

Working out a budget and establishing a savings account is a good start. A 20 per cent deposit will likely be upwards of $100 000 if you’re looking to buy in a capital city, so it helps to figure out weekly or monthly savings targets.

Beware Lenders Mortgage Insurance

While many lenders will loan you 90-95 per cent of the purchase price, it’s worth remembering you may have the additional cost of Lenders Mortgage Insurance (LMI)—a one-off fee to guarantee against default.

Look for a bank that will lend you a large percentage of the purchase price, but doesn’t necessarily insist on LMI.

You should also speak with your bank to find out what types of savings accounts are available, as well as what term deposits are on offer. Term deposits typically have better interest rates than standard banking accounts which can help you reach your home loan deposit faster.

Getting loan approval

Getting pre-loan approval is also a great way of speeding up the finance process once you’ve signed the contract of sale. An approval letter also shows sellers and real estate agents you’re a serious bidder.

Before applying for a home loan, it’s important you estimate your borrowing capacity correctly. Using a home loan calculator will help you work out what fortnightly or monthly loan repayments may be.

Lenders will assess your loan application on your ability to meet those mortgage repayments based on your income, as well as a judgement of your savings record, debt and expenses.

Overlooked costs and time-wasters

On top of your home loan deposit, it’s important to be aware there are a number of other costs you’ll incur before you set foot in your home.

Stamp duty is a tax levied when you buy a property. Its cost can vary from state to state, but it’s not a small change, so you need to be aware of it when you apply for your home loan. You can use BOQ Specialist’s stamp duty calculator here.

Getting a building and pest inspection could save you from unfortunate and costly surprises down the track. It could also help you negotiate a better purchase price.

Look out for financial speed bumps

There are a host of legal speed bumps that can slow the settlement process and using a conveyancer or solicitor will save you time transferring legal title, arranging the mortgage and other related documents.

If you’re buying at auction, remember there is no cooling off period, so if you’re the highest bidder when the gavel comes down, you’re bound to go through with the sale. It’s important you have a solicitor or conveyancer look at the contract of sale before bidding starts.
 

In the market for a home loan? Click on the link to find out more about our tailored financial solutions for home loans. Ready to take the next step? Contact us to find out how we can tailor a finance solution for you, or call us on 1300 131 141.

 

 

 

BOQ Specialist - a division of Bank of Queensland Limited ABN 32 009 656 740 AFSL and Australian credit licence no. 244616 (“BOQ Specialist”).

The information contained in this article (Information) is general in nature and has been provided in good faith, without taking into account your personal circumstances. While all reasonable care has been taken to ensure that the information is accurate and opinions fair and reasonable, no warranties in this regard are provided. We recommend that you obtain independent financial and tax advice before making any decisions.