First Home Owner

10 Useful Questions And Answers For First Home Buyers!

By admin ⋅ April 25, 2008 ⋅  Email this post ⋅  Print this post ⋅ Post a comment

Purchasing property for the first time can all be very confusing! First home buyers usually have a lot of questions so let’s look at a few basic questions and answers regarding property, first home buyers, lenders, deposit and all that other tricky stuff!

Where do I start on my First Home purchase journey?

Check out my post on the First Home Buyer’s checklist!! Start researching the areas that interest you, the type of dwelling you’re looking for, the amount of money you’re looking to borrow. Just get stuck in and do a lot of research!! The internet is a great place to start!!

now this is my idea of a first home! friends over by the pool on a summers day!!

How much deposit do I need to purchase my first home?

It varies and is really up to you! Lenders will consider lending you 100% of the purchase price if you do not have a sufficient deposit and have adequate capacity (income) to service the debt! The larger your deposit the lower your repayments will be and the larger the equity in your home will be, and if you have 20% deposit you can avoid paying Lenders Mortgage Insurance!!

What is Lenders Mortgage Insurance (LMI)

If your ‘Loan to Value Ratio (LVR)’ is above 80% then it is mandatory to pay LMI. It is a fee to protect the Lender incase you default on your home loan. The higher the LVR, the larger the LMI fee will be!

What’s an easy way I can increase my borrowing capacity?

The best way besides earning more income (lol if only it were that easy!) is to reduce your personal debt such as a reduction in your credit card limit.

How many types of Home Loans are there and which one is best for me?

There are tons!! And it’s important to find the best one for you! If you can’t afford too many rate rises then it may pay to fix your loan. If you want to pay off your loan quickly and make extra payments then you may want a variable rate with additional features such as offset.

How much is the First Home Owner Grant?

$7000 and in NSW you are exempt from Stamp Duty for purchases up to $500,000 and a reduction in stamp Duty for purchase over $500,000. Check out my post on First Home Owners Grant (FHOG)

Are there any ways my parents can help me out?

Yes! Many lenders have products where your parents can assist by using equity in their home. Products such as Family Pledge (St George) and Fast Track (Rams) can help with First Home Buyers.

What is a Non-Bank Lender?

Non Bank Lenders such as Rams and Wizard provide alternatives to the main stream Banks such as Westpac and CBA etc.. and have been very important in increasing competition in the Mortgage Industry the last 10 years. Without Non-Bank lenders we would have much less choice and even much higher fees due to lack of competition in the marketplace. Non Bank lenders have really struggled the last 6 months due to the Global Credit Crisis as they need to borrow money to lend you money and the cost of this has dramatically increased, thus seeing the closure and/or re-structure of many of these lenders. For example, Rams is now funded by Westpac. Non Bank lenders offer the same products as the Big Banks and are very competitive with rates.

What is a non-conforming lender?

If you have bad credit or poor repayment history, or have just arrived in the country or have issues elsewhere etc. then a non-conforming lender will often look ‘outside the box’ and consider your application! Basically if your application won’t be approved anywhere else, then we may try a non-conforming lender often as a ‘last resort’.

What should I be aware of when taking out a Mortgage?

Purchasing property for most of us is a huge decision so find a broker you can trust and always watch out for loans that seem too good to be true!!

What should I ask you as my Mortgage Broker?

Ask if i’m member of the MFAA! Ask about loan types, rates, comparison rates, features, fees, any additional costs involved, the process…ask anything and i’ll do my best to support you from application to settlement!