From saving to settlement: how to buy your first home

You became aware of the important reasons why you should buy a home and you familiarised yourself with some of the common home loan terms. Now you finally decided to jump into the property market and buy your first home—but how do you exactly do it?

Here’s how to nail your first time:

Save for a deposit

Essentially, the more money you put down upfront, the less you’ll have to borrow. The ideal amount you’ll need to save is 20% of the property price, plus a bit more to cover the fees or extra costs such as stamp duty.

However, in case that you only have less than 20% of the purchase price, you may need to pay Lenders Mortgage Insurance (LMI) which enables the lender to lend you a larger percentage of the purchase price. This added cost protects the lender if you can’t pay it off.

There are also banks and lenders who offer no deposit home loans. Hence, you should not only just rely on one source because a slight difference on the interest rate can potentially save you a lot of money over time. Consulting a finance broker can be really useful as she can help you find a loan that suits your budget and lifestyle. As a mortgage broker myself, we have access to a variety of lenders and we can help you shop around for the most competitive deal that fits your situation no matter how much deposit you were able to save.

Secure a Loan

If you have a finance broker helping you out, securing a loan will be a breeze. At Soul Finance Group, I personally set a meeting with my clients to be able to know their financial situation and home loan needs. During the meeting, I ask questions to understand your financial circumstance. I analyse your financial conditions and devise the most efficient possible outcome to meet your needs.

Considering your financial situation and capability, I will check out the available loan products through our variety of banks and non-bank lenders. I will review which lenders’ products fit your need. I can advise you on things that are not familiar to you such as how much you can borrow and/or stamp duty. If you are eligible to a First Home Owner’s Grant, I will guide you throughout this process.

Once you’ve decided which lender you’d prefer, we will complete the application form and prepare all the necessary documents on your behalf. Your signature will seal the deal. For faster process of your application, you’ll be asked to provide supporting documents for verification purposes. We will provide you a list. For your convenience, here are the list of document requirements. For the complete home loan process, check it out here.

Look for House

House hunting can be a tedious task. The trick is to familiarise yourself with the market in your area. There are times when your expectations don’t really match your budget so it’s always a good idea to compromise. While you can’t compromise your budget, try changing your location—look out for some properties near your original desired location. Or you can consider an apartment. Choose something that is less modern or consider a renovation job. Better yet, consult a real estate agent to guide you in choosing the best property for your taste and budget.

Settlement

After the purchase, you need to negotiate a settlement period. There are times this can fall between 30-90 days. You are required to pay the property price in full on the day of settlement.

Congratulations on settling a new property (which you can now finally call your own)!

Disclaimer:

Credit Representative (486927) is authorised under Australian Credit Licence 389328.

 This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. Subject to lenders terms and conditions, fees and charges and eligibility criteria apply.

The post From Saving to Settlement: How to Buy Your First Home appeared first on Soul Finance Group.

However, if you just deposit this in the bank, you know too well it won’t grow as much because of the minimal interest on deposits. You read it online, you occasionally see it in the news—if you want to ultimately grow your funds, investment/property investments and stocks are the way to go.

Consulting a finance professional is a smart step. Initially, you will be asked what are your goals. Of course, your ultimate goal is to build and grow your funds by investing. You will then be offered an investment + insurance plan. Depending on the proposal, this finance professional will show your projected earnings in the next, say 10 years. You will learn that the first few years, your initial premium will be spent on insurance and protection benefits. According to your agent, it’s wise to insure yourself first so that in case of hospitalization or death in the future, your beneficiaries (in this case they could be your family) have something to receive. I’m a finance broker myself and I’m not saying that’s wrong. In fact, that’s a good proposal if and only if you are investing for your and your family’s future.

You are a young professional starting to build your funds, insurance is good for safety net purposes, however, it is best for you to prioritise to earn in such a way that your funds will maximise its earning, the product that the agent offers does not align with your purpose.

In a financial pyramid, this is the guide I show my clients:

Financial pyramid

In as much as you want to agree with the proposal, if 1, 2, and 3 are not yet fulfilled, don’t sign up just yet. As a young professional who just joined the workforce, establish your finances well. Millenials today have the tendency to be impulsive but I also believe some have the ability to be critical especially when it comes to money matters. It just doesn’t make sense that you are preparing what you can leave to your family (insurance) without actually preparing how you are going to live (basic, emergency funds, savings.)

First, determine how much money you can set aside a month for investment. Second, look for an investment outlet. There are a lot of competitive deals in the market which I’m happy to introduce you to. Feel free to shoot me a message or call me.

Disclaimer:

Your full financial needs and requirements need to be assessed prior to any offer or acceptance of a loan product.

Credit Representative (486927) is authorised under Australian Credit Licence 389328.

The post A Millennial’s Guide to Building Funds appeared first on Soul Finance Group.