Obtaining your first home loan can be very exciting, as it means you finally get a house to call your own and don’t have to worry about paying rent any longer. However, the process of getting your first home loan may seem a bit daunting at first, since a lot of calculations to do to make sure it all works out well and a lot of careful planning. This guide will help you to acquire your first home loan with ease, so you can enjoy your new home in no time!
1. Determine Your Budget
As soon as you decide you feel ready to get your first home loan, you want to make sure you decide your budget accurately. To do this, you should add together all of your earnings for one month. Then, you should subtract all of your spending, including credit card payments, food, gas, and any other expenses you have each month. The amount you are left with will be a bit more than what you should be able to afford for monthly repayments, since you should leave some room for other expenses (such as utilities) and in case interest rates rise.
2. Consider The Costs
There are many costs you should consider when obtaining your first home loan, including the following:
Deposit: You will likely have to pay about 5-20% of the value of your home as a deposit.
Loan Application Fee: There is a standard loan application fee for preparing your home loan and to cover legal fees.
Government Fees: There are government fees, such as land transfer fees and stamp duties that are determined upon the price of your property.
Lenders’ Mortgage Insurance: You will need to take out Lenders’ Mortgage Insurance if you are borrowing more than 80% of your home’s value.
Inspection Fees: It is advisable to get a building inspection when buying a home to make sure there are no pests or structural damage to the property.
Utility Connections: You will have to pay for utilities, including electricity, gas, or water to be connected.
3. Decide Which Loan is Right For You
Once you have taken the costs into consideration and determined your budget, it’s time to decide what type of loan is right for you. There are typically two types of loans, fixed rate and variable rate loans. Fixed rate loans are a good choice if you want more certainty about the amount of your repayments and are worried that interest rates will be rising. However, they also offer less flexibility in making any additional repayments and you can miss out on some savings when interest rates go down. On the other hand, variable rate loans are a great option if you want more flexibility of making payments, but you need to keep in mind that your repayment amounts will be higher when interest rates rise. Once you have an idea of the type of loan that will work well for you, you can take the steps to get your pre-approval. Talk to the lending managers at Newcastle Permanent to find out more about obtaining a pre-approval for your first home loan.
4. Find the Perfect Home
Here comes the fun part of the process! Once you know your budget and have an idea of how the loan process will work, you can begin to seriously search for your home. Consider all of your preferences, such as proximity to your work or a good school for your children, a fenced in yard, or a single story home, and begin your search. There are many ways to find properties, including newspapers, the Internet, and, of course, a real estate agent, who can let you know about any new properties on the market. Once you think you have found the perfect home for you, it’s time to talk with your lender about using your pre-approval to acquire your first home loan!
What do you think readers? What recommendations do you have on first time home purchasing?
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