First Home Buyers Guide
✅We'll cover everything you need to know when buying your first home.
✅If you're a teacher, paramedic, firefighter, police officer, doctor, nurse, accountant or pharmacist your borrowing capacity and LMI requirement improves significantly.
✅If you're a teacher, paramedic, firefighter, police officer, doctor, nurse, accountant or pharmacist your borrowing capacity and LMI requirement improves significantly.
Set a budget
1. How much can you afford to borrow?
✅Living expenses✅Existing debts
✅Income - different lenders specialise in different sources of income such as PAYG or self employed.
✅Lenders will calculate your serviceability using a much higher interest rate to test for resilience. Add at least 2-3% as a buffer in your expectations. Mortgage Broker Revesby will do this for you.
✅https://moneysmart.gov.au/home-loans/mortgage-calculator
2. How much deposit do I need as a First Home Buyer
✅Typically a First Home Buyer will need 5%-10% of the purchase price.✅You may qualify for a First Home Buyers Grant if buying a NEW home.
✅Lenders Mortgage Insurance - unless you work in a profession where this is exempt.
3. What government grants am I eligible for?
✅Your mortgage broker will walk you through your specific scenario.4. What are the purchasing costs?
✅Loan establishment fees
✅Mortgage registration
✅Settlement fee
✅Stamp duty - First Home Buyers are usually exempt or get a concession.For Example: Jane's first home is in NSW cost $650,000. Being a first home buyer has saved her a stamp duty fee of $24,585! She still pays a mortgage registration fee and transfer fee of $293 (total).
First Home Buyers Tip! You really should plan this out with your broker. Mortgage Broker Revesby will do this for you. No fee.
Your first home loan is as easy as 1,2,3
1. Loan to Value Ratio or LVR
✅The percentage amount you are borrowing versus the property purchase price.- Example: Jane wants to buy a house for $800,000. She has a deposit of $200,000. This means Jane is borrowing $600,000. The LVR is 600/800 or 75%. As it is less than 80%, Jane won't pay Lenders Mortgage Insurance.
✅The higher the LVR, the higher the risk to the bank.
✅A first home buyer can borrow up to 95% or even more with a guarantor.
✅Use the lower of the purchase price or the valuation to be cautious.
2. Lenders Mortgage Insurance (LMI)
✅Is applicable when borrowing more than 80% LVR.✅Is typically waived up to 85 or 90% if you are a doctor, paramedic, firefighter, police officer or teacher. Mortgage Broker Revesby can guide you through your entitlements in these professions.
✅LMI fees go up as the LVR increases.
- Example: Assume Jane only had a $100,000 deposit for her $800,000 home. Let's put it through the Genworth LMI calculator to determine the fee.
Genworth LMI calculator
- $11,349.55 is the LMI fee.
✅As you can see LMI is not insignificant. Your home loan choice must take this into consideration when selecting lenders. It's wise to ask before you head to the bank.
First Home Buyer Tip! For simplicity sake, let's assume LMI is worked out in brackets.
- less than $300,000
- less than $500,000
- less than $1,000,000
- Your LMI fee will increase significantly as you creep into each higher bracket. You really should speak to a mortgage broker before making any decisions here. A small negotiation with the seller or changing your budget can radically change your LMI fee by thousands.
✅LMI is waived for First Home Buyers! Under the First Home Loan Deposit Scheme, first home buyers can have LMI waived. To qualify you will need:
👉Must be earning less than $125,000 (single) or $200,000 as a couple.
👉Need a 5% deposit.
👉Must be an owner occupied property.
- less than $300,000
- less than $500,000
- less than $1,000,000
- Your LMI fee will increase significantly as you creep into each higher bracket. You really should speak to a mortgage broker before making any decisions here. A small negotiation with the seller or changing your budget can radically change your LMI fee by thousands.
✅LMI is waived for First Home Buyers! Under the First Home Loan Deposit Scheme, first home buyers can have LMI waived. To qualify you will need:
👉Must be earning less than $125,000 (single) or $200,000 as a couple.
👉Need a 5% deposit.
👉Must be an owner occupied property.
3. Genuine Savings
✅Your 5% deposit must come from savings that have accumulated in your account over time.✅Cannot be gifts from parents or lump sum payments.
There are some exceptions:
✅Some lenders allow you to present your rental history in lieu of a savings pattern. Their reasoning is if you can pay rent over time, you can pay a mortgage.
✅Some lenders do not have the genuine savings requirement.
First Home Buyers Tip! Simply leave your parents gift or work bonus in your savings account for 3 months and then it's considered genuine savings. Easy!
For example: Jane didn't have her $100,000 deposit saved through her teachers wage. It was a gift from her parents. She put it in her savings account, added to it from her teachers wage, and then in three months - voila - genuine savings.
Lenders Credit Assessment - the 5 C's
1. Capacity - First Home Buyers borrowing capacity.
2. Capital - your deposit and overall financial strength.
3. Collateral - the property you're purchasing which is to be used as security.
4. Character - credit history and the way you use your money.
5. Condition - Age, employment history, bankruptcy, credit score.
2. Capital - your deposit and overall financial strength.
3. Collateral - the property you're purchasing which is to be used as security.
4. Character - credit history and the way you use your money.
5. Condition - Age, employment history, bankruptcy, credit score.
Am I eligible to buy a home?
Did you save a deposit?
✅Employment history and financial stability.✅Get a mortgage broker & conveyancer.
✅Organise your pre-approval through your mortgage broker.
Choose your house
✅Research the area.✅Understand what kind of house suits your needs - unit, house, townhouse etc.
✅New or existing dwelling? Buying off the plan or already built?
✅Do you need a construction loan?
✅Is my property acceptable as security by the lenders?
✅Make an offer.
✅Wait the cooling off period - this differs between states.
✅Pest, building & strata inspection.
✅Auction or real estate agent?
✅Contract of sale.
✅Get formal approval.
Settlement
✅Sign loan offer✅Do you need insurance?
✅Have you applied for any government grants?
✅Final property inspection.
✅Settlement 6 weeks after you pay your deposit.
I need help!
There is a lot to know and keep track of in buying your first home. Mortgage Broker Revesby will make this process simple. We do all the paperwork (to make sure it's correct) & do not charge a fee. We're paid via the lender. So would you go it alone? Send me an email or give me a call.
There is a lot to know and keep track of in buying your first home. Mortgage Broker Revesby will make this process simple. We do all the paperwork (to make sure it's correct) & do not charge a fee. We're paid via the lender. So would you go it alone? Send me an email or give me a call.
Matthew Stack
matthew@mortgagebrokerrevesby.com.au
www.mortgagebrokerrevesby.com.au
0423 237 242
#mortgage #mortgagebroker #firsthomebuyer #FHBG #teacher #paramedic #firefighter #police
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