So you’re getting ready to buy your first home. Congratulations! In all the excitement, it’s imperative that you get your head around a few things. Your MediPro Specialist can answer your questions and we’re there to help you every step of the way, and beyond.
How MediPro Can Help You
What can you afford to buy
Before you purchase a property, it’s important to do your homework and find out exactly how much you will be able to borrow and what repayments you will be able to manage.
Let’s get you started on the path to figuring that out. Contact your MediPro Specialist in order to get a complete picture and get some exact figures.
Take a good look at the numbers and get a rough estimate of how much you can borrow, your loan repayments, costs and more with our trusty mortgage calculators. Your MediPro Specialist can give you an exact picture, so it’s always better to speak to us.
By getting a pre-approval done prior to shopping, it allows the lenders to assess your financial position ahead of time. A pre-approval is valid for up to 3 months, so you have the confidence of knowing exactly how much you can borrow for when you go to auctions, open homes or private sale discussions. This could be a powerful position if you’re in competition for a property where the other party may not be as well organised.
Lenders use a number of different things to determine if you qualify for a loan, and just how much you qualify for. Your MediPro Specialist have access to all the criteria and can help you understand all your options, and give you an opportunity to choose where you would like to place your mortgage, and who would suit your needs best.
Purchasing a property can often become emotional, stressful and confusing. Especially when in competition for a property you really want. This is when it’s easy to make costly mistakes. Your MediPro Specialist will be there to be the calming influence you need, so that rational and wise choices will be the order of the day.
Your MediPro Specialist will show you how a good budget can avoid you living and working just for your mortgage. The right repayment, and money aside for the unexpected can make your life with a mortgage much easier, so you don’t become the cliché.
How Much Deposit will you need?
In order to secure a first home loan, you will need a deposit, other fees like stamp duty and land tax may apply, as well various other lender requirements. Your MediPro Specialist will help you sort through your options, and work out the figures so it’s easy to understand.
Most lenders will accept a 5% deposit of the purchase price of the property, however this needs to be genuine savings, additional to the First Home Buyers Grant. Your MediPro Specialist will weigh up your options using all the lenders available and advise you of your best options for you to choose from.
You will need money aside to pay for stamp duty, legal fees, conveyancing and other costs of buying a property. This is aside from the deposit you will need to pay. Also is worth a mention, that you may potentially incur Lenders Mortgage Insurance depending on your Loan to Value Ratio (<80%).
Genuine Savings mean that the lender may want you to demonstrate your savings history over at least 6 months. In some circumstances, lenders may count rent as de facto savings.
If you need to borrow more than 80% of the property value, you may potentially need to pay LMI to protect the lender should you default on the loan. The more deposit you can present, the better your premiums.
The Costs to Purchasing Property
Budgeting for fees, taxes, insurances and other costs, are a necessity for when you buy your first home. This will ensure that you are not surprised by anything just when you’re making the biggest investment of your life. Here are the main costs:
This is also called an establishment fee. You pay this fee in order for the lender to process your loan. The cost can vary from lender to lender, but should never be more than $750.
Your property will need to be valued in order to assess its value. Your lender will arrange the valuation, and you should allow approximately $250 for it.
This is a one-off fee that protects your lender should you default on your home loan and the property has to be sold. This fee is often rolled into the mortgage (costing you more as interest is applied) but can also be requested to be paid by you. If you need to borrow more than 80% of the property value, you might have to pay LMI.
This is a government charge to register your mortgage. The amount varies by State, so please go to our stamp duty calculator or speak to your MediPro Specialist to get your exact figures.
GST does not apply to all properties, only to those built after 1 July 2000, as well as new house and land packages. It is unlikely that you will have to pay GST on a pre-owned property, and it doesn’t apply to your repayments, bank charges, residential rent or council and water rates.
Fees for solicitors and conveyancers vary from State to State. The fees should include checking the contract, carrying out of searches, and generally making the transaction go smoothly.
This in an important element of the property buying process. Costs can depend on the size and condition of the property you want to purchase. This report could potentially save you from making a big mistake.
Unless your friends are extremely generous with their brawn and time, make sure you get 3-4 quotes and don’t forget to check on their insurance of your goods should something go wrong in transit.
Home Loan Types
How do you find a home loan that fits our unique needs and set of circumstances when there are literally hundreds of options for first home loans? You speak to your MediPro Specialist and let them do all the hard work, that’s how. It will save you time, stress and a whole lot of confusion. They will even negotiate for you and do all the paperwork and legwork right up to settlement.
However, below you will find the most popular types of home loans to give you some basic ideas on what you may need.
Bad credit home loans are designed for borrowers with a bad credit file. They are said to separate ‘unconventional’ applications from regular ones, specifically borrowers who fail to meet the bank’s guidelines because of their bad credit. Types of ‘bad credit’ include:
- Bad credit history – adverse listings can make your home loan application questionable
- Mortgage arrears – any missed payments on your home loan can prevent lenders from approving your refinancing application
- Lender credit history – any past issues with the lender you are currently applying for can put you on their credit blacklist
- Financial trouble in your practice – this can also affect your personal credit history
- Over commitment – if your total liabilities are greater than your total assets, or you have too many debts for your income, then lenders may consider you insolvent
Bad credit home loans are usually offered by non-traditional lenders, and may be challenging to find. However, you can be approved for this type of loan by building a good case with the right lender. Speak to a MediPro Lending Specialist today for expert assistance.
The basic interest rate on a home loan product is known as the standard variable rate. It can move up and down, based on many factors. There are often advantages to variable loans, like being able to:
- Make extra repayments and pay your loan off faster
- Access extra repayments if or when you need to
Whilst the Reserve Bank of Australia set the cash rate, lenders only use it as a guide, and they don’t always pass on rate cuts as they happen.
Depending on how much you borrow you can get a discount on the standard variable rate. Your MediPro Specialist will negotiate your rate with the lender.
A fixed interest rate means that your rate is set for an agreed period of time, typically from one to five years. Fixed rates can protect you against interest rate rises, and they can help with budgeting in the first few years of a loan.
What is important to know, is that you usually cannot vary or make extra repayments on fixed loans. There are also costs involved if you break the loan before the end of term.
If you like the flexibility of a variable loan, but the certainty of a fixed rate appeals to you, you might consider a split loan. This means you can fix part of the loan and maintain the rest at a variable rate.
This is a ‘no-frills’ product that offers a very low variable interest rate with little to no regular fees. However, if you want flexibility, such as a redraw facility, you may need a better package.
If you are borrowing more than $150,000 and earn more than $50,000, you should be eligible for a professional package. It’s a way of packaging a loan with extra benefits such as interest rate discounts, lower fees and discounts on other bank products. Often a package can provide you with much better value for money than a basic home loan.
Normally a discounted interest rate that:
- Is usually valid for the first 12 months
- Helps you pay off more of your loan faster
- Protects you against interest rate rises during that time
- Can have high fees if you cancel during or just after the initial period
Some introductory rate loans revert to the standard variable rate after the introductory period, but some revert to a cheaper rate.
If you’re in a position to pay a little bit extra into your mortgage, a redraw facility might work well for you. Loans with a redraw facility allow you to:
- Deposit extra money into your mortgage
- Put money in regularly or just now and again
- Withdraw that extra money out again whenever you need it.
Some lenders charge a fee to activate this feature so you need to take these costs into consideration. However over time these extra deposits can greatly reduce your interest payments and the life of your loan.
An offset account is a bank account that is linked to your loan, that you can deposit all your income into, and use it for all your :
- Daily eftpos transactions
- Cheque transactions
- Internet banking
- Credit transactions
The best part is, that the balance in the account is directly offset against your loan, meaning you won’t pay interest on that amount. So the more money you have in that account, the more interest you save.
A line of credit is a pre-approved loan amount that you can access progressively, or all at once. It means you can:
- Borrow: as all your income goes into your loan account
- Have a cheque, credit and savings account combined
- Reduce your loan and interest payments by having money in the account
A line of credit is useful for a range of investment situations, but you need to be disciplined with your money management as:
- Interest rates tend to be higher than standard variable rates
- There are usually fees
- You have no set monthly repayments
Low doc home loans are designed for borrowers who don’t meet the usual income verification policies for a standard home loan product, such as people who:
- Earn irregular income like the self employed
- Have difficulty separating personal and business cash flows
- Don’t yet have up-to-date financial statements
It’s important to know that over the years it has become more difficult to access low doc loans. Borrowers need to offer substantial equity in the property, have a clean credit history and more. Your MediPro Specialist can work through these with you.
A family guarantee can help borrowers enter the property market for the first time, or for an investment property.
Should such a family member offer security in the form of their home for the amount needed to borrow, it could mean:
- No deposit may be required
- Reducing or avoiding Lenders Mortgage Insurance