The Process of Getting a Home Loan in Australia – Explained for First Home Buyers

Getting a home loan, especially when it is your first time can really be a difficult and confusing process. As with any endeavour, planning and strategising is what will give you the confidence to take the big leap and proceed.

What do I need to prepare? What do I need to consider? What pitfalls should I be mindful of? Am I able to get help from others? These are some of the questions that you should be asking yourself when preparing to apply for a home loan. These are the same questions too that we have addressed in this video too. Please keep in mind that for you to get a more detailed list of all things that you need to prepare based on your own unique mortgage requirements and scenario, it is recommended that you consult a mortgage broker.

What is the process of getting a home loan?

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Are you in the market for a new home but don’t know where to start. In this video, we’ll discuss eight things first home buyers should know before securing their home loan. Hey, everyone! Michael here from Lendstreet, helping you make informed decisions about your loan and finance needs. Home buying can be an overwhelming process especially if you’re a first home buyer. But it doesn’t have to be. A little research and preparation can go a long way. So today, we’ll be talking about eight things you need to know as a first-time homebuyer to help you secure a good loan and own your dream home. But before we start, you should know that this video must not be construed as professional or financial advice. In particular, you should seek independent financial guidance from a professional who can advise you on the best ways to proceed with your personal circumstances in mind. Alright, let’s get into it. The first thing you need to do is make

Budget

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sure you have a budget in place and that you can save up for a deposit. The deposit is typically around 20% of the property’s purchase price. So, it’s important to make sure you have the saved up before beginning the application process. Lenders will also want to see that you have a healthy savings history. Just start putting money away early to show them that you’ve been financially responsible. The second important thing you need to consider before taking out a home loan is to

Check any existing debts

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check on any existing debts you may have.You can quickly improve your serviceability ratio and credit score by eliminating reducing or consolidating any previous debts. This simply refers to your ability as a borrower to meet the loan repayments based on the loan amount – income and other expenses. For example, if the monthly loan repayment is $2,000 and your monthly income is $7,000, the serviceability ratio would be 29%. Keep in mind that the majority of lenders in Australia will not approve a home loan if your serviceability ratio is above 35%. Along with considering any existing debts, lenders will also look at your credit rating when

Credit Rating

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assessing your loan application. If you don’t have a strong credit rating, now is the time to start working on improving it.There are a few different ways to do this such as, making all your credit card and loan repayments on time, maintaining good balance on your credit cards, and avoiding opening too many lines of credit in a short period of time. When taking out a home loan,

What to look for in a property

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it’s also important to choose a property that suits your needs both now and in the future. Ask yourself, how long you plan on living in the property and if it has the potential to grow with you over time. Also consider the location, the transportation options, schools in the area, and nearby amenities. By doing your research up front., you can avoid taking up more than you can afford or choosing a property that doesn’t meet your long-term needs. When looking at the property

How much room in your budget do you have for repayments

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market, you also need to pay attention to the monthly payments and total house costs. Look at your income and debts and figure out how much room you have in your budget for a mortgage repayment.

Other costs when buying a property

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Keep in mind that home ownership has other costs such as property taxes, insurances, repairs, and maintenance. Once you understand your finance as well, you’ll be in a better position to determine how much house you can afford. Now that you’ve found a few homes that fit within your budget, it’s time to start thinking about applying for a home loan. The next step is to schedule a meeting with a mortgage broker or banker to discuss your options. Before heading into your meeting,

Home Loan Requirements

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make sure you have all the necessary documentation with you including, proof of income, tax returns, identification, and anything else the lender may require. Depending on where you live, there may also be government schemes available to help first-time home buyers get onto the property

First Home Guarantee

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level. For example, Australia has the first home guarantee as part of the home guarantee scheme in which eligible home buyers can purchase a home for as little as a five% deposit without paying lenders mortgage insurance provided they meet all other criteria. Doing some research into these types of schemes could help you save thousands in the long run. Last but not least,

Work with a trusted and experienced mortgage broker

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one of the most important things you can do when securing a home loan is to find someone with your best interests at heart. Look for a mortgage broker who has the experience working with first home buyers and answer all the questions about the process. They’ll be able to offer you advice on which type of loan is right for you and help negotiate with lenders on your behalf so that you can get the best possible interest rate. On top of that, working with a mortgage broker removes the risks involved as opposed to doing it DIY.

Buying your first home is an exciting fighting time, but it’s also a big financial commitment. There are a few things all first home buyers should know before they start shopping for their dream home – from budgeting and getting your deposits ready to finding an expert mortgage broker that can help guide you through the process taking care of all these things will help you ensure that securing your home loan is as smooth and stress-free as possible.

Anyway, that’s it from me, guys. I hope you found this video informative. If you did, remember to hit the SUBSCRIBE button and stay tuned for more tips and advice to help you make informed decisions about your loan and finance needs. See you next time!