7 things a first home buyer should know

7 things a first home buyer should know

There are certain things a first home buyer should know. Here are our top seven tips to make the process easier.

While buying your first home can be overwhelming, there are a few helpful ways you can ensure your experience is a smooth one. Here are our top seven tips for new home buyers.

Be deposit-ready

While some non-banks may offer loans if your deposit is under 10 per cent, saving a bigger amount (around 20 per cent) can benefit you in more ways than one, including:

  • Wider pool of lenders and products to choose from.
  • Puts you in a better position to negotiate a lower interest rate.
  • Borrowing less money means lower repayments and paying less interest in the long run.
  • Shows the lender you are disciplined in managing your finances.

Keep in mind that deposits of less than 20 per cent may require Lenders Mortgage Insurance (LMI), so a larger deposit also means you can avoid this extra cost.

Did you know? Deposits can be in the form of genuine or non-genuine savings. Learn more about the definition of each of these types of savings.

Learn about credit ratings

Your credit rating is used by traditional lenders to assess your eligibility for a loan. At Pepper we review your financial circumstances as a whole, so your credit rating is not the defining factor when you apply for a loan.

Understanding what makes up and affects your credit rating is important for any home buyer since credit scores are so closely linked to home loan applications. You can get a copy of your personal credit file to review your credit rating including any defaults listed against your credit file. There can be mistakes on your report, which you can amend if you pick up on them. Learn more about credit ratings and how they can affect your ability to borrow money.

Understanding what makes up and affects your credit rating is important for any home buyer since credit scores are so closely linked to home loan applications.

Work out your bottom line

We can’t all afford a mansion – well, not right away – so determine how much you can reasonably borrow, taking into account the various fees that may be applicable when taking on a home loan, such as stamp duty, legal fees or mortgage risk fees. Also consider your lifestyle, current income and expenses, any dependents, and any lifestyle changes you envisage – like a job change or starting a family so you can make sure that your repayment amount is still affordable in the future.

To get you started, use our mortgage repayment calculator as a guide to what your repayments could be on your new home loan. 

Find a home loan to suit your needs

When it comes to finding the right home loan product it’s important to consider all aspects of the loan, rather than just the interest rate. Research the loan options available and consider redraw and offset facilities, refinance costs, repayment flexibility, fixed or variable interest rates, loan terms, and fees.

One of our Pepper Lending Specialists can assess your individual circumstances and explain the loan options that could work for you. You can also view a summary of Pepper Money home loan features here.

Research the market

The more you know about the property market in the area you are interested in, the better. Being a savvy home buyer can help you spot a diamond in the rough, or a dodgy deal.

Consider not only location in your research, but median prices over the last decade, rental returns and local amenities like schools, shops and transport links. This information can help you determine if the area where you want to buy has capital growth opportunity in the long term. Learn more about what makes a good suburb here.

Invest in potential

Sometimes the best locations for property growth are not the ‘hot’ suburbs, but neighbouring suburbs, as these provide a cheaper entry point and potential for development.

Also, if you buy a brand new or newly renovated property, you will generally pay a premium for the aesthetic. Buying an existing home that has previously been lived in may not look as pretty, but may provide better value and let you put your own stamp on its appeal.

Get home loan pre-approval ready, especially if buying at auction

There is no cooling-off period at auctions, and buyers can find themselves in serious strife if they sign a sale contract without finance approval as a deposit is required immediately. Having home loan pre-approval ready not only ensures that you are buying a house that is within your budget, but it also gives you the reassurance that you can negotiate on your purchase price with confidence. 

If you're a first home buyer ready to enter the market, keep these seven tips in mind during your search. They could help you find the dream home you've been looking for and make you a savvy home buyer.

Ready to take the next step? Try our borrowing power calculator and get an estimate of how much you could borrow with Pepper Money today. 

Alternatively just give us a call on 137 377 and have a chat to one of our friendly Lending Specialists. Pepper has a personalised approach with help available on hand on to find a home loan solution that suits your individual needs.

Enquire now

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