Buying your first home is one of the biggest financial decisions you will ever make. It can feel overwhelming, with so many factors to consider, from understanding borrowing capacity to navigating the complexities of home loan options. To help simplify the process, we have answered some of the most common questions first-home buyers ask.
How Much Can I Borrow?
Before you start browsing listings on realestate.com.au, it is essential to understand your borrowing capacity. Speak to your lender to determine how much you can borrow based on your income, expenses, and financial commitments. Getting pre-approved for a home loan is a smart first step, giving you a clear idea of your budget and increasing your negotiating power when making an offer.
What is a Pre-Approval?
A pre-approval confirms the amount you can borrow, subject to conditions, for a set period (usually three months). It provides financial clarity, helping you search for homes within your budget and negotiate with confidence.
What is a Guarantor?
A guarantor is typically a parent or close family member who uses their property or equity as security for your home loan. This can reduce the deposit required and help you avoid paying Lenders Mortgage Insurance (LMI).
What are the Real Costs of Buying a Home?
The purchase price is just one part of the total cost. First-home buyers should also factor in additional expenses such as:
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Lenders Mortgage Insurance (LMI): Required if your deposit is less than 20% of the purchase price.
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Stamp Duty: Costs vary by state; use our stamp duty calculator to estimate expenses.
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Legal Fees: Covering conveyancing and contract reviews.
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Mortgage Registration Fee: A government charge for registering your loan.
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Building and Pest Inspections: Essential to identify structural issues or infestations.
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Moving Costs: Hiring professional movers or renting a truck.
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Home Insurance: Required before loan settlement to protect your investment.
What is Lenders Mortgage Insurance (LMI)?
LMI protects the lender in case you default on your home loan. It allows buyers with less than a 20% deposit to enter the property market sooner. To estimate your LMI cost, speak with a MOVE Bank home loan specialist.
What to Look for in a Home Loan?
Finding the right home loan involves more than just comparing interest rates. Consider features such as:
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Offset Account: Reduces the interest you pay by offsetting your loan balance with funds in a linked account.
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Extra Repayments: Allows you to pay off your loan faster without penalty.
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Redraw Facility: Lets you withdraw extra payments if needed.
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Ongoing Fees and Early Payout Fees: Compare costs across different lenders.
What is an Offset Account?
An offset account is a savings or transactional account linked to your mortgage. The balance in this account reduces the interest charged on your loan. For example, if you have a $260,000 mortgage and $10,000 in your offset account, interest is only calculated on $250,000. This feature can save you thousands over the life of your loan.
How Can a Lending Specialist Help?
Buying a home is a major financial commitment, and having expert guidance can make a huge difference. A lending specialist will:
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Assess your borrowing power and loan options.
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Provide advice on deposit savings strategies.
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Explain loan features and terms.
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Assist with the application and approval process.
At MOVE Bank, our lending specialists are dedicated to helping first-home buyers navigate their journey with confidence. From saving for a deposit to securing the best home loan for your needs, we are here to guide you every step of the way.
Final Thoughts
Purchasing your first home can be daunting, but with the right knowledge and support, you can make informed decisions and set yourself up for success. By understanding your borrowing power, comparing loan features, and factoring in all costs, you will be well-prepared for homeownership.
For personalised advice and expert guidance, contact MOVE Bank today and let us help you take the first step toward owning your dream home.
This blog post is for general information purposes only and is not intended as financial or professional advice. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product or other professional advice. You should seek your own independent financial, legal and taxation advice before making any decision about any action in relation to the material in this article.
