Are you ready for a home loan?

We've talked a lot here on the Beyond Bank blog about the various steps that property buyers need to go through when purchasing a new home. What we haven't covered in as much depth, however, is whether or not somebody is truly in a position to take their first steps onto the property ladder.

This can be more difficult to work out than you might realise, as simply having enough money to pay for a deposit is only one small part of being ready to take on a mortgage. To help you clarify whether or not you may be ready to purchase a home, we've put together a handy list of four questions to answer before looking at taking the plunge.

1. Have you saved your deposit?

First and foremost, before you can start seriously thinking about taking out a home loan, you'll need to have your deposit saved up. This is typically between 10 and 20 per cent of a property's value, and provides security to your lender. However, it's important to keep in mind that this deposit isn't the only cost associated with taking out a mortgage. You'll also need to make sure you have enough money to cover any other fees and charges including but not limited to stamp duty, settlement costs and solicitor fees.

Once you've saved up your deposit, and have enough cash left over to cover the rest of the property purchasing costs, you can move on to the next questions on our list.

2. Do you know how your mortgage will work?

Even if you have plenty of money saved up to secure your dream home, taking on a mortgage still requires you to do your research and understand exactly how your home loan will work, and how much you'll be required to pay back each month. As a general guide, your mortgage repayments should be roughly 30 per cent or less of your monthly income. This should leave you plenty of room to take care of other expenses, including basic living costs such as food, as well as your new property commitments, such as insurance, council and water rates, and general maintenance etc.

3. Have you done your market research?

Even once you've saved enough money to cover your mortgage and understand how it will work, there's still the vital matter of finding and purchasing the right home. This is where a bit of market research can pay big dividends in the future, ensuring that you know exactly how much you should be spending in your desired area. Take a look at recent sale prices and speak to agents to get an idea of how much you'll need to pay for the property you want, and don't be afraid to take your time waiting for the perfect property to crop up.

4. Do you have a good credit rating?

Finally, even if you can comfortably repay your mortgage and know exactly where you want to buy, you still may struggle to secure a home loan if you have a poor credit rating. If you're not sure what your credit score is, you can check it for free by contacting a credit reporting body (CRB), such as:

• Equifax: Call 1300 762 207
• Dun & Bradstreet: Call 1300 734 806
• Experian: Call 1300 783 684

If you've answered yes to all of these questions, congratulations, you're ready to make an enquire about a home loan! To find out more and get the process started, contact Beyond Bank today.