First Home Buyer

Home Loans for First Home Buyers

Cracking the property market as a first-time homebuyer is tough. Scouting the perfect home, negotiating a better deal with property agents, attending house inspections, and getting reliable financing can be too heavy to deal with at once.

That’s where a financial strategist and mortgage broker come into the picture. We will take the burden of getting finance off your shoulders by looking for the right lender, negotiating better loan rates, and educating you about the loan and your next steps.

We’ll Help You Land On Your First Home and Investment Property

Here are some FAQs on home loans for first-home buyers. Read on to know more about how we can help you secure your first home loan without the hassle and hidden fees.

How Do I Start With a Home Loan as a First Home Buyer?

Before making any long-term decisions, such as applying for a loan, we recommend establishing your goals and properly understanding which options you can pursue.

That means speaking to a mortgage broker or strategist to establish your goals, preferred property price, and borrowing power or capacity to get finance. At JFS Financial Strategists, we can help evaluate your financial position and determine which lenders best suit your needs.

How Much Deposit Should I Have?

Most lenders will require a 20% deposit for home loans and processing fees. That’s why we suggest having at least a 20% deposit so we can better negotiate the rates for your loan.

Otherwise, we can look for other solutions such as a Family Guarantee or government grants such as the First Home Loan Deposit Scheme (FHLDS).

What Documents Should I Need for a Home Loan?

When applying for a home loan for the first time, the basic requirements should indicate your personal information and financial position. That includes PDF or hard copies of the following:

• Passport or Driver’s License
• Latest two (2) consecutive payslips for PAYG employees
• Latest income tax returns for the last two (2) consecutive years for self-employed individuals, along with Notice of Assessment & Financial Statements
• Updated bank savings and credit card statements
• Updated statement of assets and/or liabilities

Reach out to us today for an enquiry, and we’ll give you a bespoke list of required documents to help you kickstart your home loan application.

How Much Amount Can I Borrow?

The amount and Loan to Value Ratio (LVR) you can borrow will depend on your capacity to repay the loan. In other words, your net income is gross income minus tax and other expenses you need to make.

How Much Will Getting a Home Cost?

Here is the breakdown of costs in processing or buying a new home. Note that your real estate broker may have more or fewer requirements and fees depending on several factors.

• Home loan deposit (we recommend a 20% deposit if you don’t have government schemes in place)
• Legal fees
• Lenders’ Mortgage Insurance (LMI), although we can help you negotiate for an 80% LVR with no LMI for home loans depending on your financial position.
• Lender’s Establishment Fees for Specialist Loans

Furthermore, your local council may require you to pay the following fees:

• Government Registration & Transfer Fees
• Due Diligence Fees (pest inspection, strata report, etc.)

Aside from legal and lending fees, you should also note labour costs, moving, and furnishing your new home. Don’t forget about living expenses and your monthly mortgage repayments.

What if I Can’t Make the 20% Loan Deposit?

Usually, you only need to have a minimum deposit of about 5-10% of the property value to purchase it.

But if you still don’t have that amount, we recommend opting for a family guarantee, especially if your parents have considerable equity in their property. Otherwise, paying for LMI should help you get finance as long as you and the house you want to purchase are eligible.

What is LMI or Lenders’ Mortgage Insurance?

When applying for a home loan, you should hear the term LMI or Lenders’ Mortgage Insurance from your bank or broker.

You pay your insurance provider a one-time fee when applying for loans above a specified Loan to Value Ratio (LVR).

LMI is required when the bank or lender is exposed to higher risk on your loan. What happens when you’re borrowing more for less deposit.

If you default on the loan and the bank sells the property at a loss, the LMI insurer will reimburse your lender for the loss. On your end, that means you can borrow more and purchase higher-valued properties. The only con is that you need to pay an LMI fee which increases along with LVR and loan amount.

Can I Apply for First Home Owner Grant? 

You can apply to your State Government for First Home Owner Grant (FHOG) or First Home Loan Deposit Scheme (FHLDS) for open slots and requirements for eligibility. Our team at JFS Financial Strategists can also help you assess your entitlement to FHOG, FHLDS, or stamp duty exemption.

Contact us today, and we’ll help you discover how you can apply for your first home loan and turn your dream home into a reality.