If you’re looking to buy your first home, you’re also looking to secure your first home loan. What do bankers look for?
How will I know how much I can afford?
Don’t stress - home loans might seem daunting for the first home buyer, but we have five tips to help you secure your first home loan – and the quicker the better, as rates are set to rise in the latter half of 2022.
Get your paperwork in order
We live in the digital age, but the hard copy is king – and it was the same in the heyday of life long bank teller and now Shepparton bank manager Bryan Gannon.
Before you even think of walking into a lender or bank office to ask about a home loan, you need to get all your paperwork in order.
Not sure where your birth certificate is? Get it sorted. Save bills in your name, payslips or notices of assessment, get photocopies of your Medicare or ID cards, drivers licences, etc.
You will need at least “100 points” of ID – here’s a list to make sure you’re up to date.
Use a home loan calculator
Looking at your current income and expenses, you need to do the maths before you make a move on either looking at homes or home loans.
You can use a home loans repayments calculator to figure out how much you’ll be paying each month. You will need the loan term, the amount you want to borrow, and the interest rate.
Bonus tip: look for comparison rates, as they include most fees and charges as part of the percentage.
Check your credit
Banks and lenders will conduct a credit check on you (and your partner) to determine your creditworthiness – the better your credit, the lower your interest rate will be in most cases.
If your credit score is low or if your credit report contains errors, you need to fix these before applying for loans of any kind – additional applications and subsequent rejections can impair your credit further.
Research available grants and incentives
When you are looking at buying your first home, make sure you take advantage of first home buyer grants or funds.
There are state and Commonwealth grants on offer, such as the Victorian State Government Homebuyer Fund, which grants up to a 25% contribution towards the purchase price of your home.
There may also be stamp duty concessions, off-the-plan concessions, First Home Owner Grants, and budget planners available – check out Housing Victoria for more information.
Turn to a broker
A mortgage broker can help you with the home loan process and find different mortgage products from many banks and lenders instead of just one or two.
A broker is almost like your home loan advocate, pushing for the best deal that suits your needs and financial goals. You’ll be well on your way to home ownership!
Remember the information here is general in nature and is not a substitute for professional financial advice.