For most of us, buying a home is probably the biggest financial investment we will make in our lives, so it’s important to understand the financial commitment in both the short and long-term.

Plan Your Budget

You need to work out a budget and find out how much you have available each week to cover your mortgage repayments. Deduct all your regular expenses from your salary, and see what is available for saving for a deposit or for future home loan repayments. If you are presently paying rent, it is easy to allocate this amount to a mortgage payment, but a budget will also help identify other areas where savings can be made. You can also speak to a Satterley Sales Professional who can refer you to a finance broker who can help you start the budget process.

Deposit

Depending on your income, lending history and personal circumstances most banks or home lenders will want around 5-20% of your property’s value as a deposit. If the deposit is less than 20% of your home’s value, most lenders will require you to take out lenders mortgage insurance (LMI). This insurance protects the bank or lender in case you default on the loan.

http://www.yourmortgage.com.au/calculators/mortgage_insurance/

Calculators

Before you go shopping for your house and land, you will need to consider how much money you can borrow. This will be based on your income, your current loans such as your car and credit card, and your day-to-day expenses. When you apply for a home loan, you’ll want to know roughly what the minimum monthly repayment. You need to make sure you can meet your repayments based on your lifestyle and what you can afford.

View a range of home loan calculators here

Applying for finance

Banks and other home loan lenders want to know that you will be able to repay the money they lend you. It’s your job to gather all the documents and proof to show the bank that you will be able to meet your repayments. Lenders want to see you demonstrate a strong employment history with a stable Income, low levels of debt – if you have high limits on your credit cards or loans reduce the debt owing, a regular savings history with regular deposits over three to six months and a good credit history where you have demonstrated successfully managing and repaying a loan.

Types of Home loans

Once the construction of your home is complete, you will need to decide what home loan is right for you. The different types of loans include; a fixed rate mortgage means your interest rate is locked in for an agreed period of your loan term with the option of 1-5 years. It also gives you peace of mind in case interest rates rise. Variable rate is a home loan product which has an interest rate which fluctuates up or down in accordance with market changes. A split loan allows you to borrow part of your mortgage on a fixed interest rate and the remainder on a variable interest rate – all under the one loan product.

Repayments

Your Required Monthly Repayment Amount (RMRA) is the minimum amount you must pay each month under your home loan contract, based on the loan balance and interest rate. You can choose to make your home loan repayments monthly, fortnightly or weekly however, if the loan is an interest only loan or construction loan that is not fully funded, repayments are made monthly.

First Home Buyers Grant

If you are buying or building your first home, you may be eligible to apply for the First Home Owner Grant (FHOG). In Victoria, if you’re a qualified first home buyer you’ll receive the FHOG of $10,000. You will also receive a 50 per cent reduction on your stamp duty if the total value of your house and land is $750,000 or less. In Queensland, from 1 July, 2016, the Great Start Grant will be known as the Queensland First Home Owners Grant. The Queensland Government announced a one-off, 12 month boost of $5000 to the grant, which will now be worth $20,000.

Disclaimer: The information contained on this page is general in nature and does not take into account your personal situation. You should consider if this is appropriate to your needs and where appropriate, seek professional advice.