How your bank can help you buy your first home
There is no doubt that buying one’s first home is one of the great milestones in life. It’s a transition stage and it is also a major investment. There’s whole range of feelings that come into play; there’s excitement, there’s trepidation (can I manage the financial commitment?), there’s obligations such as maintaining the home and ensuring that you hold down a good job and career.
Rather than a faceless institution a bank can be a great ally; not just because they will (in all likelihood) be providing the bulk of the cost of the purchase of your home by way of a mortgage, but also because, by dealing with the bank in preparing for the home purchase, you may also be able to take advantage of the range of products and services that the bank has available. Indeed banks are a hugely valuable part of the economy precisely because they do facilitate home purchases, business leans as well as acting as deposit takers and financial product providers.
Buying a home may be exciting as well as challenging in terms of getting the finance in order, but with the right planning and strategy, your home will not only provide comfortable accommodation for your family, but can return significant financial gains. The home has been the single most important wealth creator for the vast majority of Australians.
The best preparation comes form understanding that banks are there to lend, not to stop you from borrowing. They are the principle source of finance for home lending and they are often the ones who will be the front line financial ‘advisors’ unless you are using a mortgage broker.
Bank websites can provide a rich array of resources to guide you in the process. For a start you can go online and check how much you can borrow by using the bank’s online calculator. This will immediately set you on the right course as far as what you can afford to buy. The website will also provide a breakdown of all the costs associated with a home purchase including stamp duty and legal cost as well as valuation fees and more incidental costs. For first home buyers this is essential information and information they may not have been aware of.
It is important to do homework and to prepare carefully: the process can be complex, and there are many traps for the unwary. Mistakes can be costly, even devastating!
Although banks are in the business of lending it is in your best interest to show that you have saved money. Simply put; the larger the deposit you save for your property, the more choice you will have in buying the property you want. It will also provide you with peace of mind. Nothing can be more worrying than stretching oneself beyond your comfortable level of repayments in a home purchase. It can set up stresses that will impinge on the quality of your life and that of your family.
A savings history is essential. It will provide the deposit and it will show lenders that you are capable of saving and therefore meeting mortgage repayments. Save 20% of the purchase price as a deposit. A few years of less than ideal accommodation when you are single or a childless couple could make a huge difference to your deposit and give you comfort when you have a family to support.
Incentives offered by government are a “leg up” on to the property ladder. Here, the First Home Owner’s Grant offers amounts that can be substantial. In some states up to $21,000 can be secured in grant money when you count concessions that are also available on stamp duty for people buying or building their first home, or buying vacant land on which to build their first home.
Start searching online now and get motivated.