Ready to Buy Your First Home? Here’s How to Get Started with a First Home Buyer Loan

By Deltos Finance on November 17, 2023
first home buyer loan

While the dream of owning a home is universal, facing the financial intricacies of a first home buyer loan can seem intimidating. That’s where we step in. Our mission? It is to simplify the process and guide you to ensure a seamless experience.

For starters, here are some tried-and-true tips for applying for a first home buyer loan:

1. Understand the Basics of a First Home Buyer Loan

If you’re stepping into the property market for the first time, a first home buyer loan is a financial solution that allows homebuyers to borrow the funds needed to acquire property. Essentially, it’s a mortgage for those buying a home for the first time. 

Depending on the lender, there are different requirements for the deposit amount. Some lenders require a 10% deposit whereas others are happy with 5%. Keep in mind that having a deposit amount that’s less than 20% of the property value will require you to pay an additional sum for lenders mortgage insurance. 

2. Craft a Realistic Budget

Before dreaming about four-poster beds or marble countertops, get a clear picture of your finances and budget. Remember, it’s not just about the monthly loan repayments; factor in maintenance costs, property taxes and insurance premiums.

Use online calculators dedicated to first-time buyers. They factor in diverse financial elements, ensuring a realistic view of what you can afford.

3. Navigate Your Mortgage Options

When it comes to first-time home buyer loans, the market is chock-full of choices. Do you want a fixed interest rate to keep things predictable? Or maybe a variable rate, hoping it might drop in the future? You can also consider split home loans. Read up more on home loan structure and other mortgage programs for first-timers like you.

4. Check Eligibility for Grants or Concessions

The Federal and state government’s offer First Home Owner Grants or other concessions to first-time buyers. These initiatives can significantly ease the initial financial burden of a property purchase and are designed to help people seamlessly purchase their first home. To find out more about first home owner grants or concessions in your area, visit your state government’s website for details. You can also consult a local mortgage broker who knows these grant programs and concessions like the back of their hands. 

5. Choose the Right Lender

While it might be tempting to go with the first lender you come across or the one your friend recommended, it’s wise to shop around. Compare the first home buyer mortgage terms, interest rates and other features of various lenders. 

When comparing rates, be sure to keep an eye on the comparison rate more so than the interest rate. The interest rate tells you how much interest you’ll be charged, while the comparison rate takes into account additional fees and charges, and presents it as a single rate. For example, you may have found a loan with the lowest interest rate, but if there are other fees associated with the loan, the comparison rate might be much higher than another product with a higher interest rate. 

home loan for first home buyers

6. Prepare Essential Documentation

Acquiring a home loan mandates several documents, ranging from proof of income and notice of assessments  to credit reports. Keep this in mind: being methodical expedites the process. Start by maintaining a digital repository of your fiscal documents. It will surely be a boon during the home loan process and an asset for personal financial management.

7. Gauge How Much You Can Borrow

Your borrowing capacity isn’t just based on your income. It’s also influenced by your outstanding financial obligations and habits, credit history (or lack of) and current credit products (such as credit limits on credit cards). So, make sure to understand your budget and where your money goes to gauge how much you might be able to afford to borrow. You can also use free mortgage calculators to have a better idea of your borrowing capacity. 

8. Seek a Home Loan Pre-approval

Want a better way to gauge your borrowing power? Seek a home loan pre-approval. A loan pre-approval gives an indicative amount of how much a lender is willing to lend to you. By being pre-approved, you have a solid idea of your budget for a home. It also places you in a strong negotiating position, as sellers are more likely to transact with buyers who have pre-approved home loans—even if it’s their first time in the real estate market. 

9. Don’t Underestimate the Role of a Mortgage Broker

A mortgage broker is your navigator, helping you chart the most favourable course through the expansive ocean of home loans. With their industry insights, they ensure you dock safely at the most advantageous port. Their expert guidance is especially beneficial if you’re applying for a mortgage for the first time. 

Take Your First Step Towards Homeownership Confidently

The journey to your first home is paved with decisions, and it’s essential to have the right partners by your side. Our seasoned Hobart mortgage brokers at Deltos Finance are committed to making your path smoother and more predictable. From unravelling complex loan terms to guiding you to the most beneficial loan structures, we’re here to empower your choices. So, why navigate the maze alone? Reach out to Deltos Finance today, and let’s lay the foundation for your first home together. 

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