Navigating the home loan world can be challenging for first home buyers. Complicating the challenge is the awkwardness over interrupting the discussion with a would lender to ask, “Excuse me, how much do I need as a down payment? What is my credit score?” It seems as if everyone else understands this stuff.
No, they don’t know all – so you must ask these questions. Or, at the very least, research a bit so you know the basics.
To help you accelerate your first home buying journey, here are five questions that you seemingly didn’t even know you needed to ask
1. What Do You Need To Get A Home Loan?
Before applying for a home loan, lenders want to see proof that you have a reliable credit history, so you will need to begin establishing credit.
Here are the documents needed for a home loan pre-approval:
- Proof of savings and bank statements.
- Proof of income (tax returns, payslips, etc.)
- A list of current liabilities and assets (such as personal loan and credit card debts)
- 100 points of ID (Medicare card, passport, driver’s licence, etc.)
Note: Getting a pre-approved loan does not guarantee your mortgage application will be successful.
2. How Much Home Deposit Do You Need?
On average, you need 20 per cent of the property purchase price for a deposit.
Alternatively, if you can pay for Lenders Mortgage Insurance (LMI), you may be able to access a home loan with as little as 5 per cent for a deposit.
3. What Extra Costs Are Involved On Top Of A 20 Per Cent Deposit?
Lots of costs involved when buying a house. You must research these costs or consult with a first home buyer specialist to ensure you have enough funds to pay for them all.
- Home loan registration fee
- Stamp duty
- Loan application fee
- Lenders Mortgage Insurance (if applicable- can be a premium of $15000 for a 500,000 purchase at 95%)
- Legal fees
- Rates & council fees
- Building inspection
- Strata searches
4. Can I Buy A House With Bad Credit?
We talk to many first home buyers in Adelaide who come to us with this question.
Our first piece of advice: Check your credit report, and you may be surprised by what you find. And, if the news is severe, there is still hope.
Typically, when you have bad credit, there is old activity on there – a medical bill, an old collection, something you forgot about or didn’t know.
Connect with one of our credit solution experts and discuss ways to raise your credit score.
5. What Kind Of Down Payment Assistance Is Available For First Home Buyers?
SA First Home Owner Grant: Qualifying home buyers can access a $15K grant from the SA government when building a new home. The good news is you can use this amount towards your deposit.
However, to be eligible for SA FHOG (First Home Owners Grant), you will need to meet several requirements.
There are many challenges and risks you experience as a first home buyer, and you will need to arm yourself with valid information to avoid pitfalls.