Your Step By Step Guide to Getting a Home Loan and Buying Your First Home
This guide takes you through the steps involved in applying for a mortgage and buying your first home.
Along the way, you will discover handy tools and mortgage calculators for quick answers, read up on traps to look out for and questions you should ask your Mortgage Broker or lender before you sign on the dotted line.
Welcome to Your Step by Step Guide to Getting a Home Loan and Buying Your First
Home. This guide will provide you with handy tips, tools and tricks to watch
out for when applying for your mortgage and purchasing your first home. Click on the Play button under the
video to view Step 1.
Before applying for a home loan, it is a good idea to:
Tip: Budget making and budget tracking tools are available at these websites:
www.fido.asic.gov.au, www.infochoice.com.au, www.understandingmoney.gov.au
3. Use a 'How Much Can I Borrow?' Calculator
Press the play button to view Step 3 of the tutorial
Press the button to view the video in Full Screen
This is a quick and easy way to get an idea of your borrowing capacity.
Key Points:
These calculators can be found on most Home Loan websites.
This is an indication of your borrowing power only and is subject to you
completing a full home loan application form.
Visit a few different websites that have these calculators and do the same
exercise. No surprise that different lenders will lend you different amounts.
Note: the lender that offers you the most money doesn't necessarily have the
home loan best suited to your needs.
4. Am I Eligible for the First Home Owner Grant or any other Government
Assistance?
Press the play button to view Step 4 of the tutorial
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Find out if you are eligible for the First Home Owner Grant.
Broad principles of the grant are:
You must be a natural person (not a company) who is an Australian citizen or
permanent resident.
You must be buying or building your first home in Australia .
To qualify, neither you or your spouse (or defacto) can have previously owned a
home.
Joint applicants will be restricted to a single application for a single
property. Only one payment will be granted.
5. Research for Your New Home / Investment Property / Block of Land
Press the play button to view Step 5 of the tutorial
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The most efficient way to research your house is by using the internet.
Key Points:
Researching houses will give you an idea if your taste meets your budget
You can refine your search by number of rooms, close to public transport etc
The internet allows you flexibility to search at a time that is convenient for
you
Note: This is just an initial search and not a step for you to start attending
open houses. It is best to have all your financials and mortgage application in
order before attending open homes.
Tip: Useful websites include www.domain.com.au, www.realestate.com.au,
www.rpdata.com.au, www.residex.com.au
6. How Much Deposit Do I Need and How Can I Get It Faster?
Press the play button to view Step 6 of the tutorial
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It is best to aim for a minimum of between 5-20% deposit for your home. You may
also want to save an additional 5% to cover the settlement costs, such as
legals, stamp duty etc.
How Can I Save My Deposit Faster?
Establish a realistic savings plan.
Set up a living expenses budget and stick to it.
Alternatively, choose a home loan with Family Pledge which eliminates the need
for a deposit. This is where an immediate family member offers their home as
security for your mortgage. You can borrow up to 100% of the purchase price
and a further 10% to cover the purchasing costs.
Tip: Don't be pressured into applying for a loan or fall into the trap of
applying for multiple home loans with different lenders as this may negatively
impact your credit worthiness when lenders see how many different loans you
have applied for in recent history.
8. Absorb and Digest All the Information - Now it's time to Strategise
Press the play button to view Step 8 of the tutorial
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At this point you will now:
Know how much you can borrow and know what your mortgage repayments will be
Have options on a suitable home loan and lender
Have an idea of the area you would like to purchase a property in
Know how much deposit you need.
Strategise
Work out if you need to save a higher deposit to avoid Lender's Mortgage
Insurance (LMI) which normally applies when you borrow over 80% of the purchase
price.
Waiting a few more weeks or months to avoid Lender's Mortgage Insurance could
save you thousands off your mortgage in the long run.
Tip: Check if there is a charge for the Conditional Approval and also if this is
credited toward your actual home loan application fee later.
9. Get Conditional Approval for Your Home Loan
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Getting Conditional Approval requires you to complete a full application form.
The lender will then offer you a Conditional Approval for the specified mortgage amount
subject to you finding a property.
Gather all the necessary documents, including:
payslips
sufficient proof of id for each applicant
details of any debts or loans to be paid out
details of any recurring income (i.e. rental income, pensions etc)
details of your living expenses etc
details of your previous address if less than 3 years at current address
details of your previous employer, if less than 2 years at current employment
Tip: Check if there is a charge for the Conditional Approval and also if this is
credited toward your actual home loan application fee later.
10. Find a Property
Press the play button to view Step 10 of the tutorial
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Once you have found a property:
Check Residex / RP Data reports. Determine if the property is reasonably priced
by comparing recent sales in the same area.
Arrange a walk-thru of the property. Invite your mortgage broker along for a
second opinion.
Make a conditional offer (on your mortgage application being approved) to the
agent.
Negotiate a 10 day cooling off period with the real estate agent, instead of
the usual 5 days, to arrange a building inspection, valuation and pest report.
Submit your home loan application. Ask your broker to arrange a valuation ASAP.
It may take a week to receive a formal home loan approval.
Tip: Speak to your mortgage broker about capitalising some of your upfront fees,
meaning that these fees can be added to your home loan amount giving you the
full term of loan to pay it off.
12. Purchase My Home
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This step covers the conveyancing process including the Contract of Sale.
Congratulations, you are now a home owner!
Thank you for taking the time to read through this guide.
At Mortgage House, we wish you all the success in purchasing your first home and
look forward to assisting you along the way.
button to view Step 1 of the tutorial
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