Low interest rates, which are predicted to be in place for some time, make it an opportune time for first home buying. But, many first home buyers can find that home prices rise around this time and this can be tricky for some to negotiate.
However, the good news is that this need not be the case. First home buyers who are concerned can follow a few simple tips to give themselves a stronger buying position.
First Home Buying Tips to Follow
1. Save a deposit – Having a 20 percent deposit will allow you to avoid paying Lender’s Mortgage Insurance (LMI), which can add thousands to the cost of your home loan. Most lenders will require you to have a deposit that is a minimum of 5 to 10 percent of the value of the home you are seeking to buy. Plus, in many cases, you will also need a 6-month saving history.
2. Set yourself financial goals – To save enough to cover your expenses and to cover the cost of the home you are looking to purchase, you need to set yourself financial goals. Work out what you can afford to borrow and then aim to save $5,000.00 of this amount. Once you have saved $5,000.00, then aim to save $10,000.00. Continue doing this until you’ve reached your target.
3. Establish a separate savings account – Rather than putting your home deposit money into your usual savings account, create a new account. Make sure this account is a high investment account so that your money works for you to generate a greater savings. This will help you to build your money faster.
4. Reduce your costs – If you have any loans or credit cards, then aim to pay these off. Look at how you can effectively reduce your debt.
5. Look into first home buyer’s grants – Find out what you’re eligible for and then apply for any grants. Just remember that lenders won’t include this as part of your savings towards a deposit, but it will reduce your stamp duty and other costs.
6. Compare home loans – Research the market and know what you want from your home loan. Look at features and interest rates and do a comparison. If you find this daunting or difficult, then hire a mortgage broker to help you.
7. Have a stable income – Having a stable employment history of more than 6 to 12-months will enable you to secure a home loan. Lenders want to see that you’re reliable and dependable financially.
8. Buy what you can afford – Your first home may not be your dream home, but it allows you to get into the property market. Use it as a stepping stone to bigger and better property in the future.
9. Seek out advice – Mortgage brokers can help you make sense of home loans and they can help you to find the best deals. They often don’t cost you anything and they are a wealth of advice. So don’t be afraid to use them and their services.
10. Consider using loan features – Many home loans can come with redraw and offset features. These are great ways of reducing your principal, shaving years off your mortgage, and saving yourself thousands in interest. But, be aware that these features often cost you more in interest. So if you’re not going to use them then go for a no frills loan.
Are you seeking to buy your first home? Then contact eChoice and find the right home loan for YOU.