Embarking on the journey from the uncertain rental market to owning your first home is an exciting prospect as the New Year unfolds. To guide you through this transformative process, consider these essential steps to align your finances and make 2024 the year of homeownership.
1. Know Your Borrowing Power: Assess your borrowing power using online calculators before delving into the housing market. Estimate how much a lender may allow you to borrow by considering your income, existing debts, and monthly expenses.
2. Obtain Home Loan Pre-Approval: Secure pre-approval for your home loan to gain confidence in your maximum loan amount. While pre-approvals offer assurance, approach them cautiously, as discrepancies may arise during property valuation or lending assessments.
3. Impress Your Lender with Savings: Organise your financial documents to demonstrate a clear understanding of your income and expenses. Genuine savings built up over time enhance your credibility with lenders, showcasing stability and the ability to manage mortgage repayments.
4. Explore Grants and Schemes: Investigate potential grants and government schemes available in your state to assist first-time buyers. Programs such as the First Home Owners Grant (FHOG), First Home Loan Deposit Scheme (FHLDS), First Home Super Saver Scheme (FHSSS), and First Home Guarantee (FGH) can provide financial support.
5. Plan for Additional Costs: Apart from the deposit and loan repayments, be mindful of additional expenses like stamp duty, maintenance, and home insurance. Research state government schemes that may reduce or waive stamp duty fees, and budget for conveyancers, property inspections, pest inspections, and council rates.
6. Research Locations and Properties: Conduct thorough research on potential areas and properties, considering growth potential, amenities, and public transportation links. Attend open houses and inspect properties to gauge the area's feel, pricing trends, and available options.
7. Avoid Lenders Mortgage Insurance (LMI): While LMI can facilitate home loans with less than a 20% deposit, be cautious, as it does not transfer between lenders. Skipping LMI allows more flexibility in refinancing without additional costs.
8. Compare Home Loans: Understand the range of home loans available, exploring terms, interest rates, and fees. For first-time buyers, compare variable and fixed-rate home loans. Currently, variable rates may be more appealing due to potential rate reductions in the coming months.
By following these steps in a strategic order and staying informed, you can confidently navigate the path to homeownership and make 2024 a milestone year in your life.
