We are industry members of:
Australian Finance Group; Finance Brokers Association of Australia; Credit Ombudsman
 

We are industry members of:
Australian Finance Group; Finance Brokers Association of Australia; Credit Ombudsman
 

First Home Buyers – So where do you start?

As a First Home Buyer is can be a very exciting but also a very confusing time for you. You want to buy your first home but do not know what comes first. There are some simple steps to follow that will assist you in being ready to present to a lender, signing a purchase contract and settling on your first home.

Step 1. BUDGETING

Do you know how much you earn? Do you know what other loan commitments you have each month? Are you eligible for the First Home Owners Grant? How do you find out? Do you know how much you can borrow? Can your afford the costs involved in borrowing? There are plenty of loan calculators on various websites, but what do they actually mean?

It is imperative that you know what your income is, how much you can allocate to a home loan, what your other regular outgoings are and what it costs to buy a house. In other words, you need to have a budget for your incomes and outgoings and know what your Assets and Liabilities total. It helps you to understand where you are at financially, so it is very important that you are as accurate as possible. Writing a budget and sticking to it, is potentially the best start for any purchase. It will demonstrate to a potential lender that you are committed and know what you are doing.

You can begin by writing down all of your incomes, including rent or investment income, and all of your monthly expenses. Remembering to include things like car expenses and insurances. Then list all of your credit cards, personal loans and other monthly repayments to financial institutions. Something to bear in mind is that most lenders work on monthly figures, so it will be easier if you do the same. The government have a great Budget Planner Tool on their website at www.understandingmoney.gov.au.

Once you have deducted your total expenses from your total income, this is what you have left to put towards paying off a home loan. This may prompt you to want to change some things so you can borrow more, simple things like cutting back on takeaways, being wary of how much you spend when going out, etc. Always try to make sure you keep your expenses realistic.

The sooner you work out these figures the sooner you can make a serious step towards buying your first home. If you leave it until you have signed a contract, it can turn out to be very disappointing.

Being a genuine first home buyer means you are potentially entitled to up to $21000* via a Grant from the State Government, it also allows you to receive a significant discount to Stamp Duty. Each state has an Office of State Revenue website, where it explains any benefits you would be entitled to receive, dependent on what state you are purchasing in. Eg: The Qld website is www.osr.qld.gov.au (*$14,000 if buying an established property or $21000 if you are building a house)
Most people think the biggest cost when purchasing a house is the deposit, but there are also a number of additional fees and costs you need to consider. Mortgage Stamp Duty, legal or conveyancing fees, building and pest inspections, property surveys and the list can go on, which means more costs and this all adds up very quickly.

Another cost to be wary of is Lenders Mortgage Insurance (LMI), depending on how much you borrow you may be charged LMI. This is an insurance policy taken out by the lender, that you pay for, to cover the lender should you go into default on your loan. The premium is a one off fee charged at loan settlement. If the property is sold by the lender and there is a shortfall, the Mortgage Insurer will cover this for the lender. Then the Mortgage Insurer will then come to you for reimbursement of this shortfall. LMI is charged for loan amounts over 80% of the purchase price for fully documented loans and over 60% for low document loans.

It is a market standard that a 10% deposit be paid immediatley upon signing any purchase contract however, some vendors can and will accept less. Remember, it doesn’t hurt to negotiate and is a simple discussion with the real estate agent.

If you want more comfort in the above or before you start looking at properties, speak to your Mortgage Broker. They can work out all of the above for you and calculate all the set up costs. They can even arrange an Approval In Principle so that you know what the lender will let you borrow.

So now that you have a rough idea of what you need and what you have available to you to buy a home, you can start to have a look around and see what type of property that sort of money will buy you.
Read our next issue for Step 2 in “First Home Buyers – Where do you start”, where we talk about Researching your Purchase.

Why choose KFS? We are small enough to care about you and your personal needs, yet big enough to find you the right financial solutions.

Contact Susan today for a hassle free chat about your needs - 1300 859 598.

First Home Buyers – So where do you start?

As a First Home Buyer is can be a very exciting but also a very confusing time for you. You want to buy your first home but do not know what comes first. There are some simple steps to follow that will assist you in being ready to present to a lender, signing a purchase contract and settling on your first home.

Step 1. BUDGETING

Do you know how much you earn? Do you know what other loan commitments you have each month? Are you eligible for the First Home Owners Grant? How do you find out? Do you know how much you can borrow? Can your afford the costs involved in borrowing? There are plenty of loan calculators on various websites, but what do they actually mean?

It is imperative that you know what your income is, how much you can allocate to a home loan, what your other regular outgoings are and what it costs to buy a house. In other words, you need to have a budget for your incomes and outgoings and know what your Assets and Liabilities total. It helps you to understand where you are at financially, so it is very important that you are as accurate as possible. Writing a budget and sticking to it, is potentially the best start for any purchase. It will demonstrate to a potential lender that you are committed and know what you are doing.

You can begin by writing down all of your incomes, including rent or investment income, and all of your monthly expenses. Remembering to include things like car expenses and insurances. Then list all of your credit cards, personal loans and other monthly repayments to financial institutions. Something to bear in mind is that most lenders work on monthly figures, so it will be easier if you do the same. The government have a great Budget Planner Tool on their website at www.understandingmoney.gov.au.

Once you have deducted your total expenses from your total income, this is what you have left to put towards paying off a home loan. This may prompt you to want to change some things so you can borrow more, simple things like cutting back on takeaways, being wary of how much you spend when going out, etc. Always try to make sure you keep your expenses realistic.

The sooner you work out these figures the sooner you can make a serious step towards buying your first home. If you leave it until you have signed a contract, it can turn out to be very disappointing.

Being a genuine first home buyer means you are potentially entitled to up to $21000* via a Grant from the State Government, it also allows you to receive a significant discount to Stamp Duty. Each state has an Office of State Revenue website, where it explains any benefits you would be entitled to receive, dependent on what state you are purchasing in. Eg: The Qld website is www.osr.qld.gov.au (*$14,000 if buying an established property or $21000 if you are building a house)
Most people think the biggest cost when purchasing a house is the deposit, but there are also a number of additional fees and costs you need to consider. Mortgage Stamp Duty, legal or conveyancing fees, building and pest inspections, property surveys and the list can go on, which means more costs and this all adds up very quickly.

Another cost to be wary of is Lenders Mortgage Insurance (LMI), depending on how much you borrow you may be charged LMI. This is an insurance policy taken out by the lender, that you pay for, to cover the lender should you go into default on your loan. The premium is a one off fee charged at loan settlement. If the property is sold by the lender and there is a shortfall, the Mortgage Insurer will cover this for the lender. Then the Mortgage Insurer will then come to you for reimbursement of this shortfall. LMI is charged for loan amounts over 80% of the purchase price for fully documented loans and over 60% for low document loans.

It is a market standard that a 10% deposit be paid immediatley upon signing any purchase contract however, some vendors can and will accept less. Remember, it doesn’t hurt to negotiate and is a simple discussion with the real estate agent.

If you want more comfort in the above or before you start looking at properties, speak to your Mortgage Broker. They can work out all of the above for you and calculate all the set up costs. They can even arrange an Approval In Principle so that you know what the lender will let you borrow.

So now that you have a rough idea of what you need and what you have available to you to buy a home, you can start to have a look around and see what type of property that sort of money will buy you.
Read our next issue for Step 2 in “First Home Buyers – Where do you start”, where we talk about Researching your Purchase.

Why choose KFS? We are small enough to care about you and your personal needs, yet big enough to find you the right financial solutions.

Contact Susan today for a hassle free chat about your needs - 1300 859 598.