Buying your first home represents a significant milestone and financial commitment. Understanding the application process and preparing thoroughly can help ensure your journey towards homeownership proceeds smoothly. This comprehensive checklist will guide you through the essential steps when applying for a home loan.
Assess Your Financial Situation
Before exploring property market options, conduct a thorough review of your finances. This assessment forms the foundation of your borrowing capacity and determines which first time home buyer programs may suit your circumstances.
• Calculate your total income, including salary, bonuses, and other regular earnings
• List all monthly expenses and existing debt commitments
• Review your savings for deposit, stamp duty, and associated costs
• Obtain copies of recent bank statements and financial documents
• Check your credit history and address any outstanding issues
Your loan to value ratio (LVR) significantly impacts your loan terms and whether you'll require lenders mortgage insurance (LMI). Most lenders prefer an LVR of 80% or less to avoid additional insurance costs.
Research Available Home Loan Options
Home Finance & Mortgage Brokers can access Home Loan options from banks and lenders across Australia, providing you with comprehensive market coverage. Understanding different loan types helps you make informed decisions about your first Home Loan.
Fixed vs Variable Interest Rates
Fixed interest rates remain constant for a specified period, providing payment certainty. Variable interest rates fluctuate with market conditions but may offer more flexibility and potential interest rate discounts.
Loan Features to Consider
• Offset account options for reducing interest payments
• Redraw facilities for accessing additional payments
• Repayment frequency choices (weekly, fortnightly, monthly)
• Professional packages that may include fee waivers and rate discounts
Explore Government Assistance Programs
First time home buyer schemes and first home owner grants (FHOG) can provide valuable financial assistance. These programs vary by state and territory, offering different benefits and eligibility criteria.
Common assistance programs include:
• First home owner grants for eligible new homes
• Stamp duty concessions or exemptions
• Shared equity schemes in some states
• First home super saver scheme for using superannuation
Research the specific programs available in your state, as eligibility requirements and loan amounts vary significantly across Australia.
Get Pre-Approved for Your Home Loan
Obtaining pre-approval demonstrates your borrowing capacity to real estate agents and vendors. This process involves a preliminary assessment of your financial situation and provides conditional approval subject to property valuation.
Pre-approval benefits include:
• Clear understanding of your budget parameters
• Stronger negotiating position when making offers
• Streamlined application process once you find a suitable property
• Confidence when attending property inspections and auctions
Understand Additional Costs
Beyond the purchase price, first-time buyers must budget for various additional expenses:
Upfront Costs
• Stamp duty (varies by state and property value)
• Legal and conveyancing fees
• Building and pest inspections
• Loan application and valuation fees
• Lenders mortgage insurance (if LVR exceeds 80%)
Ongoing Costs
• Council rates and water charges
• Property insurance
• Maintenance and repairs
• Loan repayments and account keeping fees
Choose the Right Mortgage Broker
Working with experienced mortgage brokers provides access to banks and lenders nationwide, potentially securing more favourable terms than approaching lenders directly. Professional brokers can:
• Compare loan products across multiple lenders
• Identify suitable first time home buyer programs
• Assist with the application process and documentation
• Negotiate on your behalf for improved terms
• Provide ongoing support throughout the loan term
Prepare Your Documentation
Lenders require comprehensive documentation to assess your application. Organising these documents early expedites the approval process:
• Recent payslips and employment contracts
• Tax returns and payment summaries
• Bank statements for all accounts
• Details of assets and liabilities
• Identification documents
• Proof of genuine savings
For those considering investment loan options as part of their property portfolio strategy, additional documentation regarding rental income projections and investment property management may be required.
Final Steps Before Settlement
Once your loan application receives approval and you've secured a property:
• Arrange comprehensive property insurance
• Complete final property inspections
• Confirm settlement arrangements with your solicitor
• Prepare for initial loan repayments
• Set up your offset account and online banking access
Successfully buying a home requires careful planning, thorough preparation, and professional guidance. Understanding the various components of the home buying process empowers you to make informed decisions and secure suitable financing for your first investment property or family home.
Call one of our team or book an appointment at a time that works for you. Empire Road Investments can help you access comprehensive home loan options and guide you through every step of your home buying journey.