You’ve decided it is time to buy your first home. It’s both an exhilarating and daunting time, but knowing where to start, and how to navigate the process is crucial. Our First Home Buyers Guide is your first step in the right direction to ensure you not only find your dream home but can purchase it and not miss an opportunity in a highly competitive market.
Your first home buyers guide
- Contact a mortgage broker. They will provide you with a realistic idea of your borrowing potential. A mortgage broker will assist you to find you the best deal, as they understand the loans available across banks, building societies, and credit unions. Once the right home loan is found for you, your mortgage broker will work through the home loan process with you to avoid delays and unnecessary stress. You will need to have:
- Copies of any loan statements such as a car or personal loan,
- Credit card statements showing your limits,
- Payslips showing the previous month of income,
- Savings account statements for the past six months,
- ATO Notice of assessment with tax returns or group certificates for the past two years,
- If self-employed, you will need the last two years of your profit and loss statements and tax returns,
- If you have already found a home you need a copy of the contract of sale or certificate of sale.
- Do you have a deposit? Most lenders require a minimum of 5% of the total loan amount as a deposit. You also need to account for expenses including Lenders’ Mortgage Insurance (LMI), if your loan amount is more than 80% of the value of the property. Additionally, you may need funds for stamp duty, legal costs, and home insurance.
- What are your options if you don’t have a deposit? A family member can use the equity in their home to guarantee part of your loan, this is called a Family Guarantee Loan. It is important to understand that if you fail to make a payment, the lender may look to them for payment so it is recommended that all parties seek independent financial and legal advice.
- Can you rent out the property instead of living in it? Yes, many first home buyers are purchasing investment properties and living in a rental property in the area where they prefer to reside. It is important to note that in this instance you would not be eligible for the first home buyers grant or any of the 3 schemes below. Speak with your tax agent or financial adviser about rent-investing and the implications of a profit or tax deduction on your finances and tax obligations.
- Am I eligible for a first home buyers grant? Visit the NSW First Home Buyers Grants and Assistance webpage to find out what financial assistance is available and what you qualify for the First Home Owners Grant.
- Visit the National Housing Finance and Investment Corporation webpage (NHFIC) to find out what financial assistance is available.
The Australian Government supports eligible home buyers to purchase a home sooner. NHFIC administers these three schemes on behalf of the Australian Government:
- First Home Loan Deposit Scheme supports you to buy your first home sooner, with a deposit of as little as 5%.
- New Home Guarantee supports you to build or buy a new home, with higher property price caps available in selected areas.
- Family Home Guarantee aims to support eligible single parents with at least one dependent child in purchasing a family home, with a deposit of as little as 2%.
Brought to you Robert Buttenshaw, Branch Manager Finance at Ballina, Westlawn.
The information in this article is for general purposes only. Please consider seeking independent financial, taxation, or other advice to determine how this information relates to your circumstances.