By Robert Buttenshaw, Westlawn Branch Manager, Ballina 13 November 2013
It appears first home buyers are not getting their fair slice of the real estate market. Despite September home loan approvals being at their highest since October 2009, the proportion of first home buyers dropped to its lowest level in two decades.
Australian Bureau of Statistics (ABS) figures indicate that the first quarter of the 2013/14 financial year saw 12% growth in loan approvals nationally over the previous year. This growth has been attributed to the current record low interest rates, high auction clearance rates and an increase in properties up for sale.
But it appears that investors are forcing many first home buyers out of the market with the number of first home buyers falling from 13.7% of buyers in August to 12.5% in September. This is despite mortgage repayments as a proportion of average disposable income being lower now than for much of the past 15 years.
So how do first home buyers claim their fair share of today’s real estate market? Thankfully for first home buyers in Northern NSW, property prices remain at more affordable levels than in the heated metropolitan markets. And while lending to first home buyers appears to be in decline nationally, that doesn’t mean finance is out of reach.
If you’re dreaming of owning your own home, follow these 7 tips and you’ll soon be joining the ranks of Australian homeowners.
1. Set a limit as to how much you will borrow. Know how much you can comfortably afford to repay. Remember, interest rates won’t remain this low forever. Try these online calculators and financial tools to help determine how much you can realistically afford.
2. Prepare a budget and stick to it. Stick to a realistic budget for at least 6 months before applying for your home loan. Reduce your weekly spending and save as much as possible for your deposit. Show consistent savings and demonstrate good financial management. Use a separate savings account to make regular deposits and avoid withdrawals.
3. Stability is the key. Having a stable job will be a plus in the eyes of any lender. But if you do change jobs, stay in the same line of work. If you’re considering a career change, try and wait until after you secure your home loan. But it’s not just stability in your employment, having a stable rental history will also work in your favour.
4. Know what’s in your credit report. Lenders will generally credit score you via your Veda credit file. This shows your current and past credit activity. To help you understand your credit score, you can purchase your Veda credit file at www.mycreditfile.com.au
5. Demonstrate that you can live within your means. Lower your credit card limits and reduce your cards to no more than one. For every $100 of credit card limit your borrowing capacity drops by up to $500. If possible, pay off your cards altogether. The same goes for those store cards as well. Avoid those tempting store interest-free offers.
6. Ensure your bank accounts are in order. No late payments or overdrawn accounts. Lenders will usually want to see your account statements for the last 3 to 6 months when assessing your application. And if you’re self employed, make sure your taxes are in order and you don’t owe any tax before applying for your home loan.
7. And your final tip … meet with a Westlawn Mortgage Broker. A Westlawn Mortgage Broker can help you prepare for your loan application so you have the best possible chance of approval. A Westlawn Mortgage Broker also has access to a wide choice of competitive variable, fixed rate and split home loans from over 20 leading lenders. This way, you can feel confident knowing you’ll get the most competitive interest rates available for your home loan from any of the lenders available to us.