Great tips for first home buyers
Tip 1 – If this is your first home, you may be eligible for certain entitlements, but remember that home loans can have hidden costs, so ask about application fees, mortgage insurance and any other charges as well.
Tip 2 – The amount you can borrow isn’t necessarily the amount you should borrow. You may be told you qualify for a larger loan than you thought, but taking it isn’t necessarily a good idea. Interest rate rises and changes in your circumstances (like one of you taking time off work) might affect your ability to repay, so only borrow an amount you’re comfortable with.
Tip 3 – Once you start house hunting you’ll see a lot of tempting properties, but they won’t all be in your price range. Set a limit to the amount you’re going to spend and stick to it! Be patient – something that suits your needs and your budget will come along eventually.
Tip 4 – It’s tempting to throw everything you’ve got into your mortgage, but you still need to be prepared for life’s little ups and downs by maintaining an emergency fund that will cover your living expenses for at least six months. If your loan has a redraw facility think about keeping your emergency fund in your home loan – you’ll reduce the principal of your loan (and the overall interest you’ll have to repay), and your emergency fund will be accessible, but not too easy to tap into.
Tip 5 – You’ll need to be able to prove your income and expenditure, show that you have your deposit and demonstrate your ability to save and if you have any assets or liabilities you’ll need to declare them as well. Get your documents organised to make gathering all of the information easier (it’s also a great money management strategy).
When you decide to buy a home you’ll be amazed by the hoops you’ll need to jump through before you can move in, but with the right information and a little bit of legwork it won’t be long before you get started on the exciting journey from ‘renter’ to ‘homeowner’!
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Tags: first home, mortgage advice, home loan information
Wilson Luna is an author, wealth adviser and founder of Your Family Your Money. Your Family Your Money’s goal is to simplify traditionally complex financial strategies, demystify financial jargon and debunk common financial myths, becoming every family’s first stop for financial advice, information and inspiration.