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| Loan Programs : "A GUIDE FOR FIRST TIME HOME BUYERS" | Page: 1 |
Buying or building your first home is a very exciting and sometimes nerve-wracking experience. To ensure it is a completely satisfying experience, a lot of planning and checking should go into this very important milestone in your life.
To help with this big task we have set out below some important points to consider to successfully own your own home.
How Much Do I Need?
Well it depends on where you would like to live and whether you are looking for a house or a unit. Most people prefer to save a deposit, which is used as their contribution towards the purchase, and to cover the associated transaction costs. They may then borrow up to 100% of the purchase price. GN Home loan also makes it possible to borrow the whole cost of the home you wish to buy plus all of the set up costs involved.
How Much Can I Borrow?
The amount that you can borrow is determined by the lender by testing your repayment ability based on your income, some other personal information, such as credit card limits, and assumed details, such as living expenses. Usually, loan terms are for 25 or 30 years, the longer the loan term the smaller the monthly repayment.
For an indication as to the amount that you may be able to borrow simply enter some information about yourself into our serviceability calculator. You may also check what your minimum monthly repayment would be for a given loan amount.
Where Will I Live?
Where would you like to live? Are you looking for a house or a unit? Are the available homes in your preferred area within your price range? Are you looking for a home for the next few years, or to live in for an extended period? If you have a young family, does the area you have chosen suit the needs of children? Does the area have good access to amenities and to major centres? Does the council have plans for any further developments in the area? What is the capital appreciation history of this location?
Selecting Your Home
Be absolutely sure that the home you have selected has no hidden surprises. Obtain a building report to ensure you are not buying someone else's problems. Check that the local council has approved all alterations and renovations to the house. Check the area at different times such as weekends and weekdays to confirm it is as you think it is and that there aren't any noise, traffic and parking issues that would be a nuisance to you. Obtain other opinions as to the value of the house. Ensure that the council rates (if a house) or the Body Corporate levies (if a unit) are within your budget.
Obtaining a Home Loan
Calculate the cost of purchase and all of the additional costs that will be incurred such as:
- Stamp Duty on the purchase contract.
- Stamp Duty on the mortgage.
- NB - the government provides assistance to most first homebuyers to reduce the cost of stamp duty - see First Home Owners Grant below.
- Loan set up costs .
- Lender's Mortgage Insurance (Usually applicable if you have less than a 20% deposit) .
- Legal Fees .
Contact GN Home loan, who will arrange for a consultant to call on you to complete a loan application form. Ensure that you obtain a conditional loan approval before you commit to purchasing a property and ensure that you understand the conditions that must be met before an unconditional approval will be given.
Exchanging Contracts
Once you have located the home you wish to buy and made an offer that has been accepted by the vendor, the next step is to exchange contracts. Employ a solicitor to review the contract of sale on your behalf - they will be able to advise if there are any non-standard conditions.
Fully understand the "cooling off period" terms and conditions. Be certain that your finance is approved and will cover the amount required to settle, before you execute the contract. When you sign you will be required to hand over a small deposit, usually 0.25% of the purchase price, so on a $400,000 purchase approximately $1,000. A 5 day 'cooling off period' usually follows, which allows you to withdraw from the contract should you discover something unsatisfactory (This benefit is not available at auction).
It is during this period that the lender will value the property, pest and building inspections would be completed and you would satisfy any outstanding conditions on the conditional loan approval. The deposit (usually 10% of the purchase price) is paid on expiry of the cooling off period, however it is common for a lesser amount than 10% to be negotiated.
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