Finding the right property is essential to securing the right home loan.
There are a many details you need to consider when selecting your home including: location, property type (unit, townhouse, freestanding house), services (roads, public transport, schools, shops, etc.) and how much you can borrow.
Organise a home loan pre-approval
Before beginning the search for your first home, it’s worth securing a home loan pre-approval regardless of how much you’re intending to borrow. An official, written home loan pre-approval will give you clear guidelines on your borrowing capacity, allowing you to negotiate or bid at auction with confidence.
Many of the decisions you make concerning which property to purchase will be personal, but there are some serious financial considerations you will need to take into account prior to committing to the purchase of your first home. Your local mortgage adviser can help you understand how each one relates to your situation.
- Securing home loan pre-approval
- Sourcing your deposit
- Buying within your limits
- Understanding interest rates
- Fees, charges and associated costs
Buy within your limits
Being conservative with your property purchase can pay big dividends down the track. Not only are your repayments easily manageable, but you will accrue equity much quicker. This will allow you to upgrade or move into property investment much earlier and more easily than if you had purchased at the edge of your limits to start with.
Budget in an interest rate rise
When determining how much you should borrow, you need to take into account the possibility of interest rate changes to ensure you can continue to service your loan should rates rise. The general rule is to allow for an increase of around two to three per cent.
The past few years have shown that a larger margin, as much as five per cent, may be the safest option, however most lenders work on around three per cent.