Buying your first home can be very stressful and intimidating. Do you know that mortgage brokers need a diploma and two years on the job experience before they can offer you advice. So do you really think that you can learn all there is to know about home finance in a few days or even weeks. Friends and family will be full of advice but that doesn’t mean it is good advice, it just means that they think they have a good outcome.
Save yourself a great deal of stress and confusion by spending half an hour with your mortgage broker. Your broker will help you to understand the advantages and disadvantages of all of the different types of loans and why they may or may not be suitable for your needs.
It is common to assume that most first home buyers are best suited to a simple basic variable home loan. However given that most first home buyers tend to buy the best property that they can afford, they typically struggle for the first year or two simply keeping up with the repayments and other costs associated with running their own home. As a result most first home buyers have very little spare cash and this can be an important consideration.
This means that a 100 percent offset account may be of absolutely no value or may be a disadvantage if you are paying more in fees to have it. However it may also mean that the restrictions that typically apply to fixed rate loans are less relevant. In the current very low fixed rate climate many first home buyers are locking in for 2 or 3 years knowing that by that time with pay rises and inflation they will be better placed to cope if interest rates were to rise. Everyone is different so please get our advice.
Unless you have guarantor you will usually need at least 5% deposit. That is 5% of the agreed purchase price and most lenders require that your deposit is genuine savings. That does not include proceeds from sale of an item such as a boat or bike etc. Likewise gifts, bonuses or tax returns are not usually considered genuine savings.
If you have at least 10% deposit, the genuine savings requirement can be waived and with some lenders proof of 6 months timely rental payments can remove the need for ‘genuine savings’
This is an important question and so we have full post on this page /how-do-guarantees-work/