For Sydney first home buyers, purchasing a home is an exciting time. But, you will find the process much smoother with proper research and good advice.
With careful planning and an understanding of the finance options available, aspiring homeowners can be confident they are making the right choice to suit their circumstances and financial goals.
The home loan process explained
Sydney first home buyers will find that securing a home loan is the first hurdle to entering the property market. It can be challenging, given increases in property prices, for newcomers to enter the market.
When applying for a home loan, here are some of the steps you will need to take:
Engage a mortgage broker
Before you do anything, it is recommended you work with a home loan broker in Sydney. A broker will have a good grasp of the market and will be able to guide you through the home buying process. A good broker will also try where possible to get you the best home loan rates in Sydney.
A home loan broker will be able to take you through your loan offers, comparing each option and providing advice on which is the best home loan rate in Sydney that suits your financial means and goals.
Gather your documentation
In order to apply for a home loan, Sydney first home buyers will need to provide evidence to your lender. This can include:
- Proof of identification
- Proof of income
- Proof of expenses
- Proof of other assets
- Proof of debt
Apply for pre-approval
Your home loan broker in Sydney can help you apply for conditional approval. This gives you a general idea of how much you might qualify for based on your income and other information. Plus, pre-approval can strengthen your appeal to sellers as they know that you are already pre-approved for that loan amount and the buying process will go smoothly.
Get official approval
Once you’ve received pre-approval and have found your dream home, you can now officially apply for your home loan. Your home loan broker in Sydney will walk you through the process, ensuring your documentation is in order and then help you with submissions.
After you’ve been approved for your loan, your conveyancer or solicitor will take you through the settlement process. This is the process in which the home is transferred from the seller to you. When the funds have been released by the lender, settlement is complete.
At this time, your home loan broker in Sydney can also guide you through finalising transactions and setting up your payments.
Government support
Both federal and state governments facilitate several programmes and schemes to help first home buyers purchase property sooner.
- First home owner grants: This is a once-off sum paid towards your new home. Each state has slightly different rules. For Sydney first home buyers, the New South Wales government gives a grant of $10,000 for newly built or substantially renovated homes.
- Home Guarantee Scheme: The government will guarantee up to 15% of the value of the home, allowing you to take out a loan with as little as 5% deposit without having to pay lender’s mortgage insurance. There are three types of guarantee within this system, including the First Home Guarantee, Regional First Home Buyer Guarantee and Family Home Guarantee (which applies to single parents rather than first home buyers).
- Stamp duty discounts: Also known as transfer duty, stamp duty is a tax on sales and transfers of properties. Most states and territories offer some kind of stamp duty concession for first home buyers. In NSW, depending on the value of your home, you may be able to pay no stamp duty or receive a discount.
Home loan tips for first home buyers
When applying for finance for your home, here are three tips to follow to try get the best home loan rates in Sydney:
Check your credit score
Before diving into the home buying process, check your credit score with one of Australia’s three credit reporting agencies (Experian, Illion or Equifax). Lenders assess your creditworthiness to determine your loan eligibility, so it is helpful if you can flag any errors in your report before a lender sees them.
Compare all your options
When your home loan broker in Sydney shows you your loan offers, compare all of them carefully. This means assessing their interest rates, duration and loan terms. Don’t always assume that the lowest interest rate is the best home loan rate in Sydney. Depending on your circumstances and financial goals, you should also factor in the length of the loan and other additional features.
Factor in all financial scenarios
While calculating what you can afford, try to take into account any possible changes in your financial situation. This can be positive like a promotion and salary increase, or negative like being made involuntarily redundant. Evaluating these scenarios may help in choosing what type of loan will suit you, any additional features you may want and any insurances you may need.
Becoming a first home buyer
Armed with comprehensive research and expert guidance from a home loan broker in Sydney, you can navigate through the process of securing finance, finding the right fit for your financial situation.
Engaging with a seasoned mortgage broker, ensuring your credit score is clean and that you have all your documentation ready are the first steps. Then, your finance broker will help you compare loans to try to find the best home loan rates in Sydney that suit you. Knowing what options are out there to help you become a first home buyer will help. From pre-approval to settlement, buying property can be a rewarding experience for Sydney first home buyers.
Are you looking to enter the property market but are unsure of how to get started? Securing finance is the first step. Contact Loan Station today, an experienced home loan brokerage.
