Purchasing your first home is a major milestone in life. It can be exciting but also overwhelming. One of the most daunting aspects of buying a home is understanding the financing process.
From knowing your credit score to selecting the right type of mortgage, there are quite a few details to consider, so it is no wonder the process can get overwhelming. Here we will provide an overview of the key steps involved in financing your first home.
Know Your Credit Score
Before you begin shopping for a house, it’s important to understand and get in order your credit score. A good credit score can help you to qualify for lower interest rates from lenders, which saves you money over the life of the loan. We can help you get your credit report. If needed, take some time to improve your score before applying for a mortgage by reducing debt, paying bills on time and disputing any errors.
Compare Interest Rates
We recommend you compare interest rates from different lenders and loan structures available to determine who will offer you the most suitable rate and structure. This can be quite confusing and time-consuming to go to each lender.
As your mortgage broker, we know loans and can compare and walk you through all your different options. Our comparison will take into account fees, and other costs associated with each lender’s loan offers—these can vary significantly between lenders and should be factored into your decision-making process when selecting a lender.
Your Deposit
Generally speaking, most lenders will require you to contribute 20% of the property value as a deposit; if you have less than 20%, then you may be required to pay for Lender’s Mortgage Insurance in order to secure a loan. Depending on your lender, they may accept a guarantor on your loan. A Guarantor who accepts liability if you can’t repay your debts.
Choose The Right Type Of Mortgage
Various types of mortgages are available, depending on your circumstances, goals and products the lenders have available at the time of your application. Fixed-rate mortgages keep payments consistent over time, while variable-rate mortgages fluctuate according to market conditions. Shorter terms may result in higher monthly payments but lower overall costs due to fewer years’ for interest to accrue. Longer term loans typically have lower monthly payments but may cost more overall due to the build-up of interest over time.
You may also consider if you require other items in your package such as a redraw facility or offset account. Understanding the full cost of your purchase can help you ensure you can make an informed decision about the right option for you.
Get Pre-Approved For A Mortgage
Once you know the type of loan that you want, you might consider getting pre-approved for your mortgage. This helps you to understand exactly how much you can afford and give you the confidence to make an offer when your find your new home.
A pre-approval does not guarantee approval once an actual offer has been made – but it can speed up the process. The lender will do their own due diligence, including a valuation of the property, to make sure that they are not lending more then what the property is worth.
Other Costs
Understanding the full cost of your purchase means that you are prepared for the expenses that may arise, and yo can enjoy your new home. Some expenses that you may need to budget for include:
- Solicitor Fees
- Transfer Duty
- Exit fees if you are rolling previous debt into your loan
- Renovations
- Moving Costs
Purchasing your first home is a momentous decision that can be both exciting and overwhelming. Our team of experts stands ready to help you make the best choices for you and your family through careful research and planning. With our knowledge of the market as well as sound advice to guide you, we’ll ensure it’s an experience that won’t leave you feeling anxious or stressed about your finances. Reach out today so we can get started on making your property dreams come true!
Disclaimer:
Terms are subject to approved persons only. This information is true and correct as of 27/11/2022. All of the content above is general in nature and may not suit your personal needs, situation objective & goals.
