Making the decision to purchase your first home is a major life milestone. Whether you’re buying an existing house, purchasing a new home is an exciting and challenging process. For many first-home buyers, most of the headache of buying a new home is in the early stages of working out finances and getting a home loan. The number of options on the market combined with competing information spread online and by word of mouth only complicates matters further. Read on 4 tips to secure your first home loan.

1. Know how much you can borrow

Before you start searching for your dream home, it’s important to know how much you’re actually able to borrow. The size of the home loan you can take out will depend on your income and financial situation, and determine what sort of property you can buy (Borey, Condo, Flat…) and where. To work out how much you can borrow, find out with a representative person at any bank, and work with them to determine a figure you can use as a guide. If you’re keen to start your house search sooner rather than later, use the loan calculator to calculate the amount of money you can check in: First Finance Loan Calculator.

2. Shop around

Shopping around is the key to getting the best interest rate. Before entering a home loan agreement, always check in with multiple providers to see which can provide you with the most competitive interest rate and meet your other needs. Beyond the interest rate, other factors to consider include associated costs, fees, property valuation fee, monthly repayment method, partial prepayment condition, grace period, locking period, paid-off condition and customer service, in addition to the different types and features of available mortgages.

3. Get the necessary documents in order

If you’re buying a house, your lender will request a list of necessary documents before you move to the application stage. This list will vary from lender to lender, but typically includes proof of:

• Identity
• Income
• Assets
• Liabilities

Having these documents ready and in the correct form can save you a lot of time during the home loan application process.

4. Research potential additional costs

Before diving headfirst into buying a house, it’s important to note that mortgage repayments will not be your only responsibility. Additional costs may include:

• Stamp Duty Fee– As stamp duty is collected by the local authority, a rate may vary. You have to pay for stamp duty on hypothec registration or/and stamp duty tax for property transfer. Please check with the local authority and tax officer or consult with the bank/MFI’s staff if you are not sure about those fees.
• Legal Fee- Some lenders will require you to pay for a legal fee.
• Property Valuation Fee– Most lenders will require you to pay out of pocket. Generally, this is a valuation of the property you are using as security when you apply for a home loan.
• Credit Life Insurance and Fire Insurance – An insurance policy that protects the customer from the event that can’t keep up with their home loan repayments by accidentally dying or house fire as cannot be seen in the future.

Source: betterbuilthomes.com.au