Buying a home is a huge step. Most people have an idea of what type of house they want to buy, but they might not have as clear an idea of all the costs involved in purchasing a property and how much you'll need to pay upfront. Here we break down everything you'll need to know.
This is an important question because it informs how much you can borrow. In order to be approved for a home loan, lenders want to know that you have a steady income and the means to repay the loan in full. If you're already paying rent, you can put this money towards your home loan repayments.
The purchase price can depend on a number of factors including the area the property is situated, and how close it is to facilities such as public transport, good schools and hospitals. Typically, the better the neighbourhood the more expensive it is to buy into since there is a lot more competition.
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Borrowers typically aim to save a deposit of at least 20% of the property purchase price, however, this is not a realistic option for many first home buyers. This target of 20% is set by lenders who view anyone with a low deposit as higher risk. As a result, many lenders charge borrowers with a low deposit Lenders Mortage Insurance (LMI).
However, it's not all bleak. There are a lot of low deposit home loan options available and, for a lot of first home buyers, this is the only way they can get a foothold on the property ladder while prices continue to climb.
See how much you might need to pay if you're low on a deposit.
Low on a deposit? We could have the home loan for you.
Stamp duty is a one-off government fee that you may need to pay when you purchase land or property. However, there are government concessions and exceptions available that you may be able to use, which vary in each state and territory.
For example, in NSW, the First Home Buyers Assistance Scheme allows first timers exemption from paying stamp duty for properties valued up to $650,000.
Find out how much stamp duty you might need to pay.
Check out our guide to stamp duty for more information.
When you purchase a property, the deposit isn’t the only cash you’ll hand over. You’ll also need to set aside funds to pay for stamp duty, pest and building inspections, legal and conveyancing fees, council fees, and possibly Lenders Mortgage Insurance.
One extra fee many people don’t know about is that lenders charge a fee to set up a home loan and that can be as much as a $1,000. However, some lenders will waive this fee - Lendi’s Home Loan Specialists can help you with this.
Learn more about the hidden costs of buying a property here.
Borrowing power refers to how much you will be able to borrow from a lender. Your borrowing power will depend on a number of factors including your lender's policy, your credit history, your income and financial situation.
Calculate your borrowing power with our borrowing power calculator
Your lender will always conduct a credit check during the home loan approval process. Your credit rating indicates how much of a risk you are in regards to your ability to repay your home loan.
Try to pay off any existing debts so to present less of a risk and therefore, possibly reduce the interest rate you'll be offered. A stable income and employment history will also help your chances of home loan approval.
Speak to a Lendi Home Loan Specialist today for free expert advice.
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