3 Golden Rules For First Home Buyers

Are you a first home buyer looking to make the most of the current market conditions? Purchasing a home is a major financial decision that requires careful consideration and planning. You need to take into account a range of factors such as your budget, lifestyle, and the current market conditions. To help you on your property journey, here are 3 golden rules for first home buyers that will help you to make informed and strategic decisions.

Start Saving Early

One of the most important rules for first home buyers is to start saving early. The sooner you start saving, the better – it will give you a greater chance of reaching your goal faster.

When it comes to saving, it’s important to understand the power of compound interest. Compound interest is the interest you earn on top of the money you have already saved. Over time, it can have a significant impact on the amount of money you have saved. The earlier you start saving, the more time you have for compound interest to work its magic.

It’s also important to understand the power of budgeting. Setting a realistic budget and sticking to it is essential for successful saving. Make sure that you’re aware of all of your expenses and that you’re not overspending. Automating your savings can also be helpful – you can set up regular transfers to your savings account and forget about it.

Finally, don’t forget to make the most of government initiatives. In Australia, the First Home Super Saver Scheme (FHSSS) allows first home buyers to save money for their deposit in their superannuation. This can be a great way to save money, as the money contributed is taxed at a lower rate. It’s also important to be aware of other government grants and incentives available to first home buyers in your state.

By understanding the power of compound interest, budgeting and taking advantage of government initiatives, first home buyers can put themselves in the best possible position to reach their goal of owning a home.

Research the Mortgage Market

Researching the mortgage market is an important step for first home buyers. Knowing the different types of mortgages, the conditions of each, and the costs associated with them is vital for making an informed decision.

The first step is to understand the different types of mortgages available. This includes variable, fixed, and split-rate mortgages. Variable mortgages are typically the most popular, as they offer lower interest rates and can be adjusted to suit your budget. Fixed mortgages are good if you are looking for security and stability, as they offer fixed rates for a set period of time. Split-rate mortgages are a combination of both variable and fixed mortgages, and are good for those who want the benefits of both.

The next step is to understand the conditions of each type of mortgage. This includes the loan-to-value ratio, loan terms, and the fees associated with them. The loan-to-value ratio is a measure of the amount of money you are borrowing in relation to the value of the property. Loan terms are the length of time you will be paying back the loan, ranging from five to thirty years. Fees include the establishment fee, the annual fee, and the exit fee.

Finally, you should compare different lenders and their mortgage offers. Compare the interest rates, the loan terms, and the fees associated with each offer to make sure you are getting the best deal. Look for lenders that offer flexible repayment options, lower interest rates, and waive some of the fees.

Researching the mortgage market is an important part of the home-buying process. Taking the time to understand the different types of mortgages, the conditions of each, and the costs associated with them can help you make an informed and confident decision.

Consider All Costs

One of the most important things for first home buyers to consider is all the costs associated with purchasing a home. It’s easy to get caught up in the excitement of buying your first home, but it’s important to remember that there’s more to it than just the purchase price.

First and foremost, you need to consider the deposit and loan amount. The larger the deposit you can put down, the more likely you are to get a better loan rate. You should also consider any additional fees that may be associated with getting your loan, such as loan application fees, legal fees, settlement fees, and lenders mortgage insurance.

You should also factor in any additional costs that may be incurred during the purchase process, such as building and pest inspection fees, conveyancing fees, and stamp duty. Stamp duty is a government tax that is payable when you purchase a property, and the amount you’ll need to pay will depend on the state or territory you’re buying in.

You should also think about the ongoing costs associated with owning a home. This includes mortgage repayments, insurance premiums, council rates, water rates, strata fees and maintenance costs. It’s important to budget for these costs and make sure you’re able to cover them each month.

Finally, you should consider the impact on your lifestyle. Buying a home is a big commitment, and you should think about how it will affect your day-to-day life. You may need to adjust your budget or lifestyle to accommodate the additional costs, so it’s important to factor this into your decision.

Ultimately, it’s important to be aware of all the costs associated with purchasing a home, and to factor these into your decision making. Doing your research and budgeting carefully can help ensure you’re making the right decision for your financial future.

Speak To A Mortgage Broker

One of the most important steps that first home buyers should take is speaking to a mortgage broker. A mortgage broker can provide invaluable help and guidance when it comes to navigating the complex process of buying your first home.

When selecting a mortgage broker, it’s important to ensure that they have a good reputation and are a member of the Mortgage & Finance Association of Australia (MFAA). This will ensure that they adhere to the standards of the industry and have a thorough understanding of the products and services available.

It’s also important to determine how much experience your mortgage broker has in the field and to ask for references from previous clients. This will give you a better idea of their level of expertise. It’s also a good idea to ask them to explain any fees and charges that may be incurred during the process.

When it comes to the actual mortgage, your broker can help you to compare different loan products and advise you on the most suitable option for your individual circumstances. They can also help you to understand the different features of the loan, such as the interest rate, repayment frequency, and any upfront fees.

Your broker can also provide advice on other aspects of the home buying process, such as understanding the process of applying for grants and concessions, or how to negotiate a better deal on the purchase price.

Finally, your broker can also help you to understand the different types of insurance that you may need to protect your new home and investments.

In summary, speaking to a mortgage broker can be one of the most important steps in the home buying process. It’s important to take the time to do your research and select an experienced broker who can provide you with the best advice and guidance.

Got questions about your home loan? Let's talk

At Ello Lending, we understand that buying your first home can be a daunting and overwhelming process. That's why we want to help make it easier by providing you with these three golden rules to help you on your journey. We would be more than happy to answer any questions you may have and assist you in any way we can. So if you're a first home buyer, please don't hesitate to contact us today and let us help make your dream of owning your own home a reality.