Buying your first home is an exciting journey, especially in a bustling real estate market. Securing the best home loan rates in Sydney for you and navigating the complexities of home buying requires careful planning and strategic decisions. Over years of experience, we’ve developed a deep understanding of property buying and have compiled this list of top tips for buying your first home
1.Get your finances in order
As a first home buyer in Sydney, before you dive into viewing homes and putting in offers, you should comprehensively evaluate your financial position. Calculate your income, expenses, debt and savings. Understanding your financial capacity will help determine the type of property you can afford and the loan amount you will need. You will also have a good idea of how much you can comfortably pay towards your home loan each month
2. Save Enough for Your Deposit
If you are serious about buying property, you should start saving for your deposit well ahead of time. Lenders generally prefer borrowers to have a deposit of at least 20% of the purchase price of the property. How much deposit you put into your mortgage will determine your loan-to-value ratio (LVR). The LVR is the difference between the value of the property and how much you owe on the loan. A higher deposit means you owe less, making you more attractive to lenders. This improves your borrowing capacity and can possibly secure you the best home loan rates in Sydney for your needs. A higher deposit also demonstrates financial discipline and reduces risk for lenders. While you will probably still be able to secure a loan with a lower LVR, you may be required to pay lenders mortgage insurance (LMI). This is insurance that the lender takes out in case you default on the loan and are unable to pay it back.
3. Do Your Home Loan Research
Sydney first home buyers should familiarise themselves with the available home loan options and interest rates. Different lenders offer various packages tailored to first home buyers in Sydney. Compare the best home loan rates to find the one most suited to your needs. A mortgage broker specialising in home loans in Sydney can provide expert advice and guidance.
Within this research you will need to understand the differences between types of loans, as well as the rates and terms being offered. Options like fixed-rate and variable-rate mortgages, principal-and-interest versus interest-only loans are all mortgage types you need to decide between.
4. Engage a Mortgage Broker
Partnering with a mortgage home loan broker in Sydney is a wise decision, especially for first home buyers. A mortgage broker can navigate the complex mortgage market, help you find the best home loan rates in Sydney that suit your needs and assist in securing a mortgage that aligns with your financial goals. For first home buyers in Sydney, a mortgage broker will also remove much of the stress out of the process, handling the legwork of liaising with lenders. Your paperwork will be managed efficiently to ensure the best chance of securing a loan and your broker may even be able to negotiate rates and terms on your behalf
5. Apply for pre-approval
Getting pre-approved for a mortgage by a lender will give you a good idea of what your borrowing capacity is. This means when you are searching for property, you can do so within your means and not set your heart on a property you can’t afford. Getting pre-approval will also give you an idea of the best home loan rates in Sydney that lenders are offering so that you can make informed decisions.
Pre-approval gives you a competitive edge in the market as you are more appealing to sellers. They know that it is highly likely you will get finance for the property and the sale will go smoothly.
Your mortgage broker will be able to take you through the steps to get pre-approved. Luckily, the paperwork for pre-approval and the final home loan are very similar so you will only have to go through the process once.
6. Be Prepared for Additional Costs
There are more costs associated with home buying than just your deposit and loan payments. You should factor in items such as property and pest inspections, legal fees, stamp duty and insurance. For first home buyers in Sydney, these expenses can sometimes add up so you should be prepared ahead of time. But, on the other hand, you can also take advantage of what government grants and incentives you qualify for. In New South Wales, the state government offers the First Home Buyers Assistance Scheme and the First Home Owners Grant (specifically for new homes). There is also the Shared Equity Home Buyer Helper for key workers
7. Get a Building Inspection
As part of your due diligence, it is important that you get a building inspection and pest inspection. This will help you understand the physical condition of the property, spot any red flags and be alert to any future issues that may arise. In some cases, your lender may require building and pest inspections as part of the loan approval process but even if they don’t ask for it, it is recommended you have the building inspected yourself. For the lender, knowing the condition and value of the property will help determine what they can offer in terms of the best home loan rate in Sydney for you and your property.
8. Negotiate with Confidence
Don’t let being a first home buyer in Sydney deter you from standing your ground in negotiations. You should be prepared to walk away if you’re not happy with the price or terms of the Sale.
Enjoy Your New Home
For first home buyers in Sydney, following these tips can help make the home buying process smoother. By knowing what to expect throughout the process, getting expert advice and ensuring your finances are in order, buying your first home can be a successful journey.
Sydney first home buyers interested in starting the process can contact Loan Station by filling in this form or emailing us at info@loanstation.com.au.
