First Home Buyer Guide
Buying your first home will be one of your most significant financial milestones, and there are many ways you can achieve this. We have plenty of tips for first home buyers to ensure you’re informed at every stage of your journey.
- Finance Journey
- Deposit Options
- Type of Home Loans
Step 1: Get home loan healthy
If you’re considering purchasing your first home or are preparing to apply for a mortgage, it’s important to speak with a mortgage broker as soon as possible. Getting approved for your first loan is not as simple as it used to be. Banks now look beyond your income and deposit. They want to analyse your bank account statements to confirm details such as living expenses, account conduct, liabilities and spending habits. Our deposit planner is a great tool to help you get started with being home loan healthy.
Step 2: Set your budget
Often the bank may approve you for more than you are comfortable with. Your Inovayt mortgage broker will sit down with you to analyse the budget you created as a part of the Home Loan Healthy process to help you determine what you can afford.
We will then ‘stress test’ your budget with you to factor in potential interest rate rises which may occur over the 30-year loan term.
Once your mortgage broker has finalised your budget, we can determine what price you can purchase a property for and what kind of deposit is required, including savings, First Home Buyer Government incentives, gifts and parental guarantee.
Step 3: Supply supporting documents
When preparing your home loan application, your mortgage broker will need to collect supporting documents to verify your financial circumstances, including documents such as payslips, ID, bank statements and tax returns.
We’ve invested in technology to ease the collection of these documents and minimise the time and stress involved in this process.
Step 4: Choose a lender
Your mortgage broker will sit down with you to discuss your requirements and objectives for a home loan. This is critical information that will assist us in recommending a product that suits your best interests.
Your dedicated Client Service Manager will prepare your home loan application. They oversee the signing and submit your loan application to the chosen lender.
Once submitted, the lender will typically take 3-5 business days to assess your loan application.
If the lender is happy with your loan application, they will issue you a ‘pre-approval.’ This means you have essentially ticked 6 out of the 8 required boxes, which include your income, savings, credit history, living expenses, account conduct with only satisfactory security (property) and valuation of the security outstanding to obtain full loan approval. Note: The lender will need to reassess your income, savings, credit history, living expenses and account conduct once you have secured a property.
Here’s where the fun begins! It’s time to start scrolling through real estate websites day and night and attend inspection after inspection until you find ‘the one!’ Your mortgage broker will explain the various purchasing options, including buying privately with a ‘subject to finance’ clause, buying at an auction, buying unconditionally, settlement terms and deposit options.
After securing your dream home, the lender will need to value the property to ensure it’s worth what you’re paying.
It’s now time to satisfy those last two boxes. Once we send in the signed contract of sale along with the completed valuation, the lender should proceed to unconditional approval. Note: The lender will need to reassess your income, savings, credit history, living expenses and account conduct once you have secured a property.
It’s official! The lender will issue you with your mortgage contracts, including a letter of offer. Your Inovayt Finance professional will sign these with you and answer any questions you may have.
Dot the i’s and cross the t’s! Your lender will confirm the mortgage contracts have been signed correctly, that you have taken out insurance on the property, a repayment account has been set up and that the settlement has been booked in.
The day has finally arrived when your keys are handed over! The time of day your settlement has been booked will depend on when you can get your keys.
Note: There is nothing you need to do for settlement. Your legal representative will complete this on your behalf.
Your dream has become a reality! It’s time to celebrate and enjoy your hard work and the sacrifices and dedication that have got you to this point. One of our financial professionals will ensure you have your internet banking set up, so you know your first repayment date and how to access your repayment account. They’ll also provide tips to pay off your loan sooner.
There’s no one-size-fits-all when it comes to home loan deposits.
Traditionally, banks required borrowers to contribute a 20 per cent deposit. However, lending criteria today are changing for the better. You can enter the property market much sooner than the time required to save for a deposit. Use our deposit calculator to help you understand and play for your home loan deposit. We explore how much of a deposit you need for a home loan, along with the different deposit options that may be worth considering or exploring further below.
Low deposit home loan
A low deposit home loan allows you to purchase a property with a 5-10 per cent deposit and borrow the rest.
Lenders impose two additional requirements with low deposit home loans. They require the borrower to show evidence of 5 per cent ‘genuine savings’ and to purchase Lenders Mortgage Insurance (LMI).
Although they impose some additional requirements, low deposit home loans have some key advantages, which include the following:
– You can enter the property market sooner due to not needing to save the full 20%
– Additional funds left over for personal use such as renovations or investing
Guarantor and other deposit options
A Guarantor Loan allows you to borrow up to 105 per cent of the purchase price to include purchasing costs such as stamp duty, legal fees and bank fees. A guarantor could be a parent or close family member offering up some of the equity in their property to guarantee your deposit.
The guarantor does not physically hand over the deposit to you – the lender will register a mortgage against the guarantor’s property or asset for the deposit. This can be up to 25 per cent of the purchase price of your property.
If your guarantor does not have an existing property or sufficient equity, but they have some savings, they can provide you with a non-refundable gift that can go towards your deposit.
First Home Buyer Government Incentives
First Home Buyers have access to various government incentives such as Stamp Duty Exemptions and Concessions, First Home Owner Grants, First Home Loan Deposit Scheme and First Home Loan Super Saver Scheme, which can go towards the required deposit. Please see below relevant state SRO websites to find your specific incentives.
required deposit. ➔ VIC
➔ QLD
➔ NSW
➔ ACT
➔ NT
➔ SA
➔ WA
➔ TAS
How much can I borrow?
Curious about how much you can borrow? Our home loan deposit calculator can help you to understand how much you can borrow, considering your current circumstances.
Types of home loans
There are many different home loan options available. We explore the four most common loans below. Your Inovayt Finance Broker can help you to determine which options best suit your needs.
Variable rate loans
Variable home loans are where your interest rate will vary with market changes. This may mean that your minimum repayments will vary, generally inline with the cash rate set by the RBA.
Variable rate loans can be a great option for many customers, the advantages include: ➔ Save money if interest rates go down over the course of the loan.
➔ Capturing a lower initial rate
Deciding what’s right for you can be a difficult decision, however our team work tirelessly to find the solution that best fits you and your goals.
Fixed rate loans
Fixed home loans are where your interest rate is essentially fixed for a set period. This means your minimum repayments will remain the same over the length of the loan.
The benefits of a fixed rate loan include:
➔ Certainty of repayments
➔ Locking in a lower interest rate before rises
Our team of mortgage brokers can work with you to find the right outcome for your needs.
Construction Loans
Construction loans are designed to help you build your dream home. It allows your finance to be paid in stages as the build progresses. Typically, you only pay interest on the amount drawn at each stage instead of the whole loan amount. Construction loans will save you money over the course of the build, making it a great option for home builders. Our team can walk you through the process step by step, to ensure you get to best possible loan, matched specifically to your requirements.
Guarantor Loans
Guarantor loans are a type of loan that requires a guarantor to co-sign for a limited portion of the finance. Essentially, this means the guarantor agrees to repay the borrower’s debt should the borrower default. Guarantor loans are great for a multitude of reasons:
➔ Avoid LMI
➔ Get into the market sooner
Find out if a guarantor loan is right for you by reaching out to any one of our specialist mortgage brokers today.
Helpful resources
Buying Your First Home
Becoming a first home buyer is exciting and doesn’t have to be complicated. Our guide will walk you through what you need to know.
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Simple
We understand it can be challenging to apply for finance for your first home, but it doesn’t have to be. Our experienced team can help you easily apply for a loan that suits your individual needs.
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