Are you looking at buying a home for the first time? Congratulations! This is a very exciting time and there are a lot of important things to consider. From mortgages to finding the right real estate agency, there is plenty to research when it comes time to buy a property as a first home buyer.
This article will touch on the main points you need to consider as you begin your journey into the real estate market, including:
- Home loans and mortgages
- Support for first home buyers
- Home loan pre-approval, and
- Real estate agencies
Saving for a deposit for your home loan
When looking for a home loan you need to show a savings record and have amassed a deposit.
A deposit is generally between 5 and 20 percent of the purchase price and can take years to attain. Factors that lead to the amount of deposit required for a mortgage include, whether you have a guarantor, the size of the mortgage and your income.
The good thing is that the more deposit you have as a first home buyer the smaller your mortgage will be, leaving you more funds to cover other costs associated with purchasing your first home.
Are you ready to apply for a home loan?
When it all comes down to it, as a first home buyer, you will probably need to get a mortgage to purchase a home for the first time.
It will pay to get your finances in order. You should probably start by:
- Checking your credit score – a higher score will improve your chances of getting a home loan.
- Paying off your debts – pay off or reduce high interest loans. Reducing debt will increase your chance of getting a home loan.
- Working out how much you can borrow – the average home loan for first home buyers is about $500,000. Most lenders will have home loan calculators to give you guidance.
Assistance for first home buyers to get a mortgage
As a first home buyer looking to get a home loan, there are several ways you can ease your burden such as:
- Lender’s Mortgage Insurance
- A guarantor
- First Home Super Saver Scheme
- Home Buyer Concession Scheme
Lenders Mortgage Insurance
To help first home buyers to get a mortgage when a 20 per cent deposit is out of reach you may be required to take out lenders mortgage insurance. You can also take out mortgage protection insurance that will insure you as the borrower.
The bank of mum and dad – guarantor
A parent, family member or another third party, can provide extra security for your home loan. Basically, they are a backup in case you cannot make your repayments on your home loan.
From 1 July 2018, the Australian Tax Office will allow first home buyers to release a maximum of $15,000 of their voluntary contributions per year, up to a maximum of $50,000 across all years.
There are eligibility requirements including that you will occupy the premises you are intending to buy for at least 6 months of the first 12 months you own it.
The ACT Government has the scheme to reduce stamp duty for home buyers.
The maximum concession amount for 2022-23 is $34,790.
There are eligibility requirements, such as:
- All purchasers need to be over 18 years old.
- All buyers, including partners, must not have owned property in the past two years.
- There are income restrictions that include partners' income.
- One buyer needs to live in the property for 12 months, starting from 12 months of the settlement date.
Partner with an experienced real estate agency
This article covers the ‘tip of the iceberg’ for first home buyers looking to get a mortgage and start their journey as a property owner.
One of the best ways to get a head start on your property buying journey is to partner with an experienced real estate agency, such as Maloney’s Property.
Maloney’s Property has been serving the Canberra property market for nearly 30 years and has a team with combined real estate experience of hundreds of years.
The Maloney’s Property website contains a wealth of information for first home buyers – it’s a great place to start your first home buyer journey.
