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Buying your first home – Questions Answered. (It’s easier than you think)

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Tired of living with Mum and Dad?
Can’t stand living in a shared house with people who don’t clean?
Are you sick of paying off someone else’s mortgage?
Hate rent inspections?
Or just want a place of your own?

Whatever the reason, it’s time to start thinking of getting your own home. Don’t worry, it’s actually much easier than you think!

Let’s look at the Top 5 reasons to buy rather than rent:

• Renting is dead money.
• Perth’s average rent is around $400 per week ($20k per year or $100k over 5 years!), that equates to borrowing around $320,000.
• Interest rates are at a record low
• The Perth Market is anticipating an upward trend (Kerry Stokes is on record as saying “Now’s the time to buy a house in WA”)
• You can take advantage of government initiatives including the First Home Owners Grant (FHOG)

Financing your first home can be easy with a total outlay of as little as $3,500. Still, many people choose to rent because they don’t know how easy first home ownership can be.

 

 

Do you work part time? Are you Self-employed? Do you do overtime? How much savings do you have? The reason I ask is because from my 15 years in the industry, I have never seen 2 clients have the same situation – everyone is different and there are so many options. It’s just a matter of finding the right solution for you.

 

 

To help you make a start, together with our finance partners at V Homeloans*, I have put together a list of the top 5 questions I get asked about getting into your first home:

 

1) Do I have a deposit? How much deposit do I need?

V Homeloans General Manager, Paul Bradley says that low deposit lenders usually require a minimum of 5% genuine savings as a deposit to purchase your first home. Savings are considered “genuine”, when you have the 5% deposit amount in your bank account for a period of time (usually about three months). This is a way to prove to your lender that you’re able to save!

The good news is, we know that many of our clients are not always able to demonstrate genuine savings, or have the full 5% saved. That’s why V homeloans have access to an extensive panel of lenders, with access to a variety of different products that may allow you to get into your new home without genuine savings, or with less than the full 5% deposit if you are renting.

Different banks have different policies so make sure you ASK FIRST!

 

2) What if I don’t have any or very little savings?

In Perth we are extremely fortunate to have a State Government based financial institution called Keystart. First Home Buyers only require a 2% deposit, of which only 1% needs to be genuinely saved.

A $350,000 House & Land Package = $3,500 savings (yep, that’s it!).
We can also help with savings plans – just ask!

 

3) How much can I borrow?

Again – everyone’s circumstance is different. To accurately determine how much you can borrow, I suggest speaking to one of our expert V Homeloans mortgage brokers who can give you a borrowing capacity based on your own personal situation. Different banks have different policies (e.g. the percentage of overtime they include) which can make a huge difference. If you’d like to learn more, I’d be happy to set up an appointment, or check out our loan calculator to find out how much you can borrow to build you home. Knowing how much you can borrow is important to also give you an idea of home loan repayments. There is also lots of other helpful information on the building and finance journey to help get you started.

 

4) What will my repayments be?

This will depend on a few different factors;
1) Your borrowing amount
2) Interest rate
3) Loan term (a shorter loan term borrowing the same amount = higher payments)

I’ve put together a rough guide on repayments below. What do you think you could afford?
*These repayments are based on 4.5% over 30 years (some bank options have introductory rates starting from under 4%!)

 

Borrowing AmountRepayments per week
$300,000$351
$325,000$380
$350,000$409
$375,000$439
$400,000$467
$425,000$497
$450,000$526
$475,000$555
$500,000$585

 

5) Do I have to make repayments during construction?

House & Land Packages happen in stages, so payments are made to the bank in what the industry calls ‘progress claims’.

The full Principal & Interest payments do not start until you get the keys. However, during construction you are responsible for making the interest payment on the amount of money that has been drawn down on the mortgage. Different banks have different rules, but some allow you to make extra payments during construction if you wish – all you have to do is ask!

Keystart only require a minimum of $50 per week from settlement of the land until key handover – that’s it!

 

 

WANT TO LEARN MORE? BUYING YOUR FIRST HOME CAN BE MADE EASY!
Get in touch with us today!

 

*V Homeloans – Corporate Credit Representative Number 495067 is authorised under Australian Credit Licence Number 389328. Lender credit criteria, terms and conditions, fees and charges apply. Your full financial situation would need to be reviewed prior to acceptance of any offer or product.

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