First home buyers guide

We understand that buying your first home is a big step. To make it stress free we've put together some ideas to help you. Our Zar mortgage consultants will also guide you through the process. Below are some of the options which may be available to assist you with your first home although we suggest speaking with a consultant as other options can be available.

Deposit Requirements

In the current lending environment most lenders are looking for a minimum 10% home loan deposit although there are options which may allow you to purchase with a 0% home loan deposit with 100% home loan mortgages.
A home loan deposit is a very important consideration when planning your property purchase. When lenders look at a deposit they will consider several factors in deciding what level of deposit the will be happy with.

Factors which affect a deposit for home loan

How do I work out how much deposit I have?
The easy way is to speak with your Mortgage Broker although the simple way is to divide the amount you can use towards the property by the purchase price e.g;
Amount for property $22,500 divide Purchase Price $450,000 = 5%
Remember that the amount for the property is after you pay stamp duties and other fees like legal, building inspections, etc.

Current Bank

A factor which the majority of the general public are unaware of is that you the bank you have your accounts and credit cards with can greatly affect your deposit requirement. The lenders like this as it gives them some history on how you operate your banking accounts. In some cases holding a credit card with a bank for 1-6 months can reduce your deposit from 10% to 3% which based on a $450,000 purchase is a difference of $31,500 in savings. To overcome this factor we strongly suggest speaking with your mortgage broker at least 6 months prior to your purchase. This will allow them to offer you more product options when it finally comes to purchasing. If you do not have 6 months it is still worth speaking

Savings History

If you have over 6 month’s savings history you will probably not have an issue. Savings history requirements vary between lenders and range from 1 day – 6 months. In addition some lenders will have differing history requirements dependant on how much deposit you have to contribute. E.g. 5% deposit may require 3 months, 3% may require 6 months and 10% may not require a history. As these policies change regularly we believe it is best to get some advice from your mortgage broker.

Credit History

If you have a clean credit history (No Defaults) you should not have an issue with the lower deposits. If you do have minor issues you will probably require between 10-20% deposit.

Borrow up to 100% of the property value

Even without a deposit you may be able to borrow 100% of the purchase price of your new home.
You will need to show a good savings history over the previous six months, and rent payments may be counted as savings.
If you qualify for the FHOG, this money can be used towards your purchase costs.

Family guarantee

A family guarantee allows certain family members to use the equity in their home as additional security for a portion of your loan amount.
This means you may be able to buy a property sooner, avoid paying the premium for Lenders Mortgage Insurance and maximise the amount you can borrow.

First Home Owners Grant (FHOG)

Detailed information about the FHOG for each state and territory is available at www.firsthome.gov.au.

First home concession
If you have never owned a home before, you may be entitled to a ‘first home’ concession (which is greater than the home concession).
You can claim a first home concession if you:

  • buy a home and move into it within one year of the date of transfer or acquisition
  • live in the home as your principal place of residence
  • do not sell, transfer, lease or otherwise grant exclusive possession of part or all of the home, or surrender the lease to another person(s) before moving in or within one year of the date you move in
  • have never held an interest in residential land anywhere in the world
  • are at least 18 years of age (we may waive this requirement in special circumstances).

 

Disclaimer

This information was accurate at time of release. You should always check the websites to ensure that the relevant government websites to ensure that the correct and current forms are used. This information has been prepared without taking into account your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs.