Buying your first home can be a doozy, especially if you don’t know your way around the best home loans or what realtor to work with. The wrong choice can result in long term financial struggles. Here are some mistakes you can avoid:
Mistake 1: Thinking Your Circles of Influence Know Best
Research and experience are necessities if you want to find the right mortgage. Don’t rely purely on word of mouth or inexperience from friends or family. Do a background check to verify if the broker has dealt with similar situations in the past. Nothing beats good, old-fashioned, tried-and-tested advice from someone in the real estate industry.
Mistake 2: Not Making the Right Deposit
It was common practice to put at least 20 per cent of the sales price down when purchasing a home. However, since the old belief of putting down at least 20 per cent is no longer valid, it’s much easier to own a house now since you avoid paying mortgage insurance if you can save up a big enough deposit.
Of course, if you wait to save up that 20 per cent, you might have to wait years and years until you have enough savings. In that case, it might put you at a disadvantage compared with other homebuyers who can buy without putting down as much and get the best home loans as a result.
Mistake 3: Thinking Pre-Approval Works for Most Properties
Many first-time homebuyers do not know that banks can vary the amount they are willing to lend, depending on the property type and location. If you do not live in a bank’s lending area (also known as an origination), the bank may decline your loan even though you are pre-approved.
When the buyer finds a house out of the bank’s origination, they should run it by their bank representative to see if the bank will still be willing to provide financing.
Mistake 4: Avoiding Fixed Rates
Many first-time homebuyers choose a variable rate because they want to pay less. But you shouldn’t. You should choose a fixed rate if you're going to know your total expenses over a 1-3 year period. Fixed rates are the best option if you have a family event coming up, such as a wedding, that is going to cause an increase in your monthly expenditures and force you to change your budget.
Another option that most first-time homebuyers don’t know about is the split mortgage, which gives you the security of a fixed rate and the flexibility of a variable rate—the best of both worlds.
Mistake 5: Not Prioritizing Debts
You can still buy a property with a HELP or HECS debt since banks calculate your borrowing capacity by looking at what you‘re required to pay each year on your loan.
For example, if you earn $55,000 per year and owe $10,000 through your HECS scheme or HELP loans, then you‘ll need to pay $1,100 each year to cover your repayments. This will slightly lower your borrowing capacity.
If you have very little debt left, you can simply pay back the loan, which will then be removed from your ongoing assessment, and your borrowing capacity will increase. You need to provide proof that you have paid back your loan.
However, don’t take on too much debt since you’ll run out of funds to pay them off and may affect your search for the best home loans in Sydney.
Buy a Home without the Hassles
If you want to buy a property, you should compare a range of the best home loans Sydney has to offer to ensure you get the right one for your circumstances. A good broker will help you find the right home loan, so ask a mortgage broker to help you get the best deal. Always rely on experienced professionals so you can buy a home without the hassles.
Get the best home loans in Sydney today with the help of Wealthy You! We’re a mortgage company offering various mortgage solutions to meet our customers’ specific financial needs. As an alternative lending specialist, we make refinancing your home simple. Apply for a mortgage now!
