“I kept putting off buying my first house because I didn't understand the process or know where to start.”
We hear this all the time! And we get it. It’s quite a process to navigate. But that’s kind of what *we* do best, navigate the process.
So, if you’re thinking about taking the plunge into buying property and not sure you have the tools or wherewithal, this checklist–along with a follow-up chat with us–is a solid gateway to buying your first home with confidence.
Before you meet with us, let’s help break down some of the nitty gritty stuff like;
· Do you qualify?
· How much can you afford?
· How much do you need to save?
· Do you have other loans?
· What other costs are there in buying a home?
· Are there grants available?
· And lastly, what personal information does my broker (that’s us!) need?
Once these things have been determined, we can confidently move through the process together. But don’t be put off if you’re still confused. Call us and we can go through everything together.
If you’re contemplating buying your first home, get yourself first home ready by going through this checklist and familiarising yourself with a few bits of vital information like…
1. Where are you buying?
Before you contact us, it would be good to have an idea about where you want to live. Narrow this to a two or three suburbs or towns that you can comfortably live and work in and carry on a lifestyle that you feel comfortable with.
2. Do you even qualify?
First and foremost, to qualify for a home loan in Australia you need to be over the age of 18 and be a citizen or resident of Australia. And you need to have, and be able to prove you have, an income. You will need to be sure of all of these factors before you even think about buying a home with finance.
Income equates to having a permanent full time or part time job, a casual position you’ve held or greater than 12 months or be self-employed. In our experience, self-employment can be a tricky one and often requires more documentation, but it is still qualifying. If you are self-employed, to make the process simpler, it’s best to have two consecutive years of income tax returns. If you’re a savvy investor and have dividend income or rental income this can also be used.
3. How much can you borrow?
When it comes to determining your borrowing capacity, a lender will look at how much money you earn against how much money you owe. So, as your broker, we need to know these things upfront.
ii) How much money you earn?
Provide payslips showing your year to date income will help with this assessment, as will tax return assessments.
iii) How much money do you owe?
Do you have other debts like HECS; Trade Loans, Car Loan, Zip Pay, After Pay or a Credit Card? We need to detail exactly how much you owe and what your monthly repayments are.
iv) What are your genuine savings?
Genuine Savings are important when buying home. Banks like to see at least three months of savings. Your savings will make up the deposit you’ll use upon purchasing. We’ll share another post around genuine savings - so you fully understand what they are.
v) What deposit do you have?
Perhaps you’ve read about having a 5% deposit, well, realistically you need more! We suggest clients work on having an 8% deposit. If you qualify under the First home Owners Scheme you need 5% plus additional funds for those hidden costs. Just like Genuine Savings we’ll share another post around hidden costs and the First Home Owners Scheme.
4. What are the costs you need to know about?
vi) Stamp Duty.
Stamp duty is a cost included in transferring of all property. Put simply, it’s a levy the government puts on transactions that require recording of all legal documents. Stamp Duty is a well-known cost in buying property. S
vii) Other government fees
Transfer of Land fee covers the process in which you move the title details from the vendor’s name into your name. Typically, this fee is under $1500 but it greatly depends on the purchase price.
viii) Registration of Mortgage Fee
Registration of mortgage marks the title as having a mortgage registered with your bank Allow $125
ix) Bank Fees
Banks do have fees - Application Fee or Settlement Fees may apply; Anywhere from NIL - $1000
x) Conveyancer
Conveyancing Fees will also vary. We have conveyancers that we recommend, but you may want to go with someone of your choosing, it’s a personal decision and not always about who is the cheapest. Although it does vary, we suggest you allow up to $1500 to complete your settlement.
5. What Grants are available?
Narrowing it down to grants available in Victoria alone…
· Stamp Duty Concession and the Stamp Duty Exemption
If you are a first home buyer, and your purchase a property for under $600,000 your stamp duty is waived! If you purchase above $600K but under $750K stamp duty applies, but at a Concessional amount. (If you Purchase above $750K The Full Stamp Duty amount applies)
· FHOG
FHOG is a $10K bonus if you are building a brand-new home, or buy a home that has never been lived in.
· First Home Buyers Scheme
This is split into 3 categories places are available for the following:
a) Buying an Established Home
b) Building a new Home, and there’s a special category for
c) Families and Single Parents (to qualify for this grant, single parents don’t need to be first home buyers and a smaller deposit is required).
6. What information does a broker need?
Information brokers collect is tailored to your personal circumstances, but the following are common requirements for processing a home loan application:
· Current and valid photo Identification to verify who you are
· Payslips and Tax Returns to verify your income.
· Your Notice of Assessment from the ATO is required in some circumstances
· Bank Statements for income and expenditure verification and to confirm your genuine savings.
· Statements for another loans or credit cards
· A HECS Statement if applicable
When you eventually buy we may need other documents like the Contract of Sale and building documents. However, the entire process is a tailored approach and we align the required documents to your personal circumstances!
7. Do I need a credit score?
This is a little bonus myth-buster for you because we get asked this *too often* and we are astounded how many people believe this is still true. We’ve heard home buyers worried about their credit score and credit rating suggest they take out a credit card to generate credit score. Firstly, this is BAD, BAD, BAD advice! And secondly, this is not the 1980s!!
You don’t need to have taken out credit previously to get a home loan. As long as together with the information above, we can demonstrate a capacity to repay the loan and you have available funds to complete the purchase you will “generate” your own line of credit to buy a home. Forget the dated advice and stay away from any new “lines of credit” prior to buying your first home.
Want to discuss further? We’d be happy to make an appointment.
Book a time with me: https://calendly.com/bgibson-tmfg
or
Contact us today at 0448 275 630 or email bgibson@tmfinancegroup.com.au