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Buying First Home

Before you start looking for your first home, you will need to be financially prepared by saving a deposit. Generally, saving 10% of the value of your first home is a great target since it meets most lender’s requirements. Ideally that 10% has been saved over a minimum period of 3 months which is known as ‘genuine savings’. Showing lenders you can regularly save means they trust you more to make your loan repayments.

That 10% will be split into 1) your deposit and 2) associated costs. One of the biggest costs will be stamp duty, along with legal costs, strata and building report costs.

It is now time to figure out exactly how much a lender will loan you, and how much you can afford to repay. Financial factors that are considered include, how much you get paid, how much debt you have, your living expenses, your assets and more.

It will also be time to figure out what incentives are available to first home buyers in your state. Depending on the value of your first home, stamp duty might be waived or discounted along with potential first home owner grants.

This is a pretty big step. Choosing your lender and the loan product you like is a big decision. But remember, choosing a loan is not just about the rate. Additional considerations, like if there is a fee to pay off a lump sum of your loan, if the rate is fixed for a period or the availability of offset accounts are all important. And sometimes a slightly higher rate might give you all the additional features you want.

Having a home loan pre-approval means that your lender has given you a conditional ‘thumbs up’ for your home loan. This means you can go out and find that dream home secure in the knowledge of how much you can spend. The pre-approval to aim for is one where the lender has seen proof of your income, debts and other financial factors as this is the most secure.