Getting your foot on the property ladder can seem pretty overwhelming. It can help if you take things one step at a time with this simple guide to having your finances ready when you find that perfect property.
Having your very own home is an important goal. Knowing that you’ve got somewhere to live long term can make a real difference to how you feel about your future. Like many important goals, buying a home takes a lot of time and effort. If it’s something that you’ve set your heart on doing in the next one, five or even 10 years’ time, here are some of things you need to know about and get organised:
Save your deposit
The first step to getting in a good position to buy your first home is having a deposit saved. As a general rule, most home lenders will expect you to put at least a 20% deposit towards the price tag for your home.
Whether you’re just getting started with your savings, or want to reach your deposit goal faster, making small changes to your cash flow can help you save more. Another option for getting ready to buy sooner is to ask for help from your parents. Perhaps they could help you out with a gift or loan to put towards your deposit, or use some of the equity in their home to help fund yours?
Know your budget
To start shopping around for property you need to know what your budget is. This will depend on how much you have for your deposit and how much you’re able to borrow. When you add these together, you’ll have a pretty good idea of how much you can afford to spend on your first home.
Before you head out and start looking, you should remember that the price tag for the property isn’t the only cost you’ll need to cover. You should also factor in stamp duty, inspection fees, conveyancing costs and possibly Lenders Mortgage Insurance (LMI) depending on the Loan to Value ratio for your property.
And while there may be a maximum amount you’re able to spend, it’s important to feel comfortable that you can afford your home loan repayments. Our calculator can help you explore what your repayments will be depending on how much you borrow.
Arrange your home loan pre-approval
Calculators are handy for knowing roughly what your borrowing capacity is for your first home. Taking it one step further and organizing your home loan pre-approval is the best way to get clear on what your home buying budget is before you make an offer or go to auction.
You can speak to a Beyond Bank home buying specialist to understand all the costs involved and the different types of loans you can get. They’ll tell you all about the process and the documents you’ll need for your loan pre-approval.
Get extra help
As a first-home buyer you can get extra help that isn’t available to other buyers. Depending on your state or territory, the type of property you’re buying and the price tag, you may be eligible First Home Buyers grants and stamp duty concessions. And to help you save faster for your deposit you can use the First Home Super Saver Scheme (FHSSS). This allows you to make extra payments into super and withdraw the money later for a deposit when you’re ready to buy your home.
If you have the option to get financial support from parents, you could ask them to guarantee part of your loan using equity in a property they own. This gives them a way to help you get into your home sooner without having to make a cash contribution. You can speak to one of the Beyond Bank home loan team about our Parent Equity option to find out if this could work for you.