8 tips to get first home finance ready
Are you ready to build your first home but you’re not sure where to start?
Making your first home happen is easier than you might have first thought, and we’ve got all the steps you need to take to make this dream a reality.
Getting guidance on how to find the right home loan for you from a finance expert is important to help find the right home loan for you and learn how to get into a home sooner. We’ve spoken to the experts in finance, Resolve Finance for a few helpful tips for savings and advice on how to find the right home loan for you.
1. Work out your budget and stick to it
Your budget is the first and most important step. Without it, it’ll be harder to save for a deposit and pay off your mortgage repayments in the future. We’ve spoken to Resolve finance to find out the basics of creating a budget and sticking to it.
- Know how much you earn and how often.
- Add up your expenses.
- Set an achievable savings goal.
- Set your spending limit.
- Review and adjust your budget to meet your savings goal.
- Make budgeting easier using automating tools.
Top tip:
By utilising three separate accounts; spending, savings, and fixed costs (bills, savings, groceries etc…), it makes it easier to understand what money you have set aside for the necessities and what you can afford to spend as your ‘play money’ when the weekend comes around.
Need an extra hand to get finance fit?
Sasha from My Home Plan^ is on your side to help you plan, track and build your way to owning your own home. My Home Plan is a super unique program, exclusive to Homebuyers Centre that will help you keep track of your finance goals with the help of our own dedicated Finance Coach. Plus, your plan is tailored to your own income and expenses, and usually involves only a few tweaks to your spending habits to get you finance fit, how awesome!
2. Research First Homebuyer Perks
Check out first homebuyer perks before diving into home building, you could save yourself a lot of money.
In WA, we have an awesome scheme called the First Home Owner Grant (FHOG)*. It’s a one-off payment of $10,000 by the WA State Government for first homebuyers, if you’re buying or building a brand-new home. Score!
And don’t stop there – the Federal Government might have more goodies for you. There’s something called the First Home Guarantee by Housing Australia which could save you heaps in Lenders Mortgage Insurance (LMI) and Stamp Duty Concessions.
Explore these options to see what you could be eligible for.
3. Save for at least a 2% deposit*
The larger your home deposit is, the more likely you’ll be able to secure a home loan. So with that said, it’s probably a good idea to start saving sooner rather than later to really set yourself up for success. Small, consistent savings can make a huge difference when it comes to buying your first home.
However, gone are the days you need to have a 20% home deposit. Now, with Government Lenders, like Keystart*, and schemes such as the First Home Guarantee Scheme, you could get started with a deposit from as little as 2%* of the property’s purchase price if you meet the eligibility criteria.
Find out more about low deposit options from the experts at Resolve Finance here.
4. Pay off your debts
It’s a smart idea to sort out any high-interest debts before the lenders start looking at your finances. Lenders will examine all your finances (including debts), checking if you can handle a home loan. But not all debts are created equal in the lender’s eyes.
It’s often the debts with high interest that have the worst impact on your credit score – for example, stuff like credit cards, store cards, or those short-term payday loans. Tackle these first, and you’ll look way better to the lenders. It’s like cleaning up your financial room before the big inspection.
5. Reduce your ATM and PayPal spending
Before a lender (the bank) approves your loan, they’ll want to take a peek at your spendings in your transaction statements, this could be from either the past three to six months. If the bank sees large ATM withdrawals coming out of your account, they may require further information before making the decision to give a home loan.
This is basically the bank’s way of making sure your finances are in shape before they lend you money to make your dream of homeownership come true 🏡
6. Say goodbye to 'buy now, pay later' services
Even though Afterpay and Zip Pay are interest-free loans, this type of lending may impact your loan application or the amount you’re able to borrow.
We know how tempting it can be but if, by chance, you accidentally miss a payment, it may impact your credit score and your chances of getting a home loan. It’s generally best is to close these services and pay for larger expenses by saving up and then paying in cash!
7. Plan for additional expenses
Get your ducks in a row for those extra expenses because lenders love people who are organised. Don’t just think about your home deposit; consider these potential costs of taking out a home loan:
- Stamp Duty: This is basically the tax you pay to the State or Territory Government when buying a home. For first homebuyers building a brand new home, this tax might be exempt or at least reduced depending on your house & land value. For more details click here.
- Lenders Mortgage Insurance (LMI): If your deposit is less than 20%, LMI could be a thing. It’s like insurance for the lender. Your mortgage broker can give you the lowdown before you make any commitments.
- Application fees: Applying for a home loan comes with some fees. Your mortgage broker can help you figure out the right loan option for you.
- Conveyancing/legal fees: Turning your dream home into reality involves some legal stuff. Make sure to put aside some extra cash for the legal and conveyancing fees.
Being prepared for these costs is like having your financial A-game, and lenders love that.
8. Research, research, research!
Buying a house is a long-term investment in your future, so keep it real and do a bunch of research.
Your first home might not be your forever home, but it’s a big leap toward setting up your long-term financial security.
Think of it as a learning journey. Don’t shy away from asking as many questions as you need– that’s how you become a home buying expert. It’s probably not the best idea to settle for the first mortgage option you get given. Team up with a mortgage broker, explore your options, and find the mortgage that fits you like a glove.
Are you ready to build your first home? With finance, land and home all in the one place, Homebuyers Centre can make your first home happen.
Reach out today to one of our friendly New Home Consultants to find out how we can get you first home ready.
Speak to a New Homes Consultant today
*Eligibility at the discretion of state and/or federal government. Please refer to the Government website for First Home Guarantee scheme: www.housingaustralia.gov.au/support-buy-home/first-home-guarantee, for full details on First Home Owners Grant visit: www.wa.gov.au/organisation/department-of-finance/fhog, for full details on Keystart visit: https://www.keystart.com.au/. Lenders terms and conditions apply. Resolve Financial Solutions Pty Ltd trading as Resolve Finance ABN 65 079 545 378. Australian Credit Licence No.385487.
^My Home Plan is operated by Resolve Financial Solutions Pty Ltd trading as Resolve Finance. ABN 65 079 545 378. Australian credit license No. 385487. Terms and conditions apply. My Home Plan application fee of $499 is non-refundable. Homebuyers Centre Pty Ltd Reg 8370. Photographs may depict fixtures, finishes, features, furnishings and landscaping not supplied by Homebuyers Centre including, but not limited to, planter boxes, retaining walls, water features, pergolas, fences, outdoor kitchens and barbeques. Photographs depict architectural facades. For more information on the pricing and specification of these homes please contact one of our new homes consultants. Homebuyers Centre BC 5409.