Buying your first home is about moving forward, embracing life. It’s also about goals, dreams, commitment and the rewards that come from sticking to a plan.
First Home Buyers in Newcastle will surely love this website. We have helpful tips about budgeting, saving, and managing personal finances, which could help you buy your dream home in Newcastle.
No more rent, freedom to renovate or decorate the way you want, and the ability to provide security for you and your family in the future. To help you get started consider these seven factors when applying for a home loan:
1. How much can you afford to borrow?
The first step for First Home Buyers is to work out how much you can borrow. You need to look at your income and all your current living expenses to work out how much you can put towards your home loan. Whilst all lenders do not lend the same, as a guide your home loan repayment should not exceed 30% of your pre tax income.
2. How much deposit do you need?
The total amount of your deposit will affect the types of loans and lenders that are available to you but with a little help from your specialist home loan adviser at Channel Direct Home Loans, securing your first home or investment loan at a competitive interest rate may be easier than you think.
3. 90-95% or 5%-10% deposit home loans
Some lenders will allow you to borrow between 90% and 95% of the property value at their regular interest rate terms, provided you have the required genuine savings and can prove you can service the loan. Some may also allow you to capitalise your Lenders Mortgage Insurance costs. With the most common low deposit home loan, this effectively takes your borrowings to around 92% of the property value. These loans are suitable for any type of borrowing but particularly effective for first home buyers or Investors looking to maximise cash flow and gearing benefits. Please note that one impact of the Global Financial Crises is that true 100% loans that cover the entire purchase cost of the property are unavailable in the current economic climate.
4. Savings History
Most lenders have introduced the requirement for borrowers to put a minimum of 5% of genuine savings towards their deposit. The “genuine savings” requirement is explained as 3 – 6 months saved in a consistent and regular pattern. Need help with how to go about this? Give us a call or email your enquiry here.
5. Lender’s Mortgage Insurance – What do I need to know?
LMI is usually required when the Loan to Value Ratio (LVR) (the value of the loan amount opposed to the value of the property) is greater than 80%. LMI protects the lender from any losses that may occur as a result of a default by the borrower (i.e. the borrower forgoes repayments). LMI only covers the lender if you default, not you. Dependent on the lender and the risk, LMI can cost up to 3% (and more for larger amounts) of the amount you are borrowing. Up to 95% loans (or 5% deposit), the amount would typically be at the highest. As you get closer to 80% home loans (or 20% deposit), the cost usually discounts substantially.
6. How to avoid paying LMI
To completely avoid paying LMI, you will need to pay a 20% deposit. Your deposit may be provided from a combination of genuine savings, gift or by way of a “family pledge” or Limited Guarantor Loan.
7. First Home Buyers Grant NSW
From 1 October 2012, the $7,000 First Home Owner Grant will be replaced by the $15,000 First Home Owner Grant (New Homes) Scheme. First home owners who purchase or build a new home where the eligible transaction commencement date (contract date) is on or after 1 October 2012 will be eligible for the $15,000 grant. The grant will reduce to $10,000 on 1 January 2016 for eligible transactions which have a commencement date (contract date) on or after 1 January 2016. The $7,000 first home owner grant for established properties ended on 30 September 2012 and will not be available where the eligible transaction commencement date (contract date) was on or after 1 October 2012. For Tips on how the First Home Buyers Grant can be used. follow this link.