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5 steps to set, plan and action your home buying goals

By Mo Zeitouneh

If you’re setting out on your home buying journey, you need to have a financial game plan in place.

Buying a home is one of the biggest steps you’ll make in your life. It won’t happen overnight — you need to set your financial goals, plan it out step-by-step and put it all into action.

Plus, with the Australian Government expanding the Home Guarantee Scheme, the path to home ownership might be a bit easier than you think.

Time to turn your home buying dreams into reality! Picture: Getty

We spoke to Greg Hooper, head of customer lending at Newcastle Permanent, to get some expert advice on how to set yourself up to buy.

1. Understanding the Home Guarantee Scheme

With the expansion of the Australian Government’s Home Guarantee Scheme, the goal of buying a home might be closer to reality than you think.

Previously known as the First Home Loan Deposit Scheme, the renamed and expanded First Home Guarantee gives eligible first home buyers the opportunity to buy or build a home with as little as a 5% deposit without needing to take out Lenders Mortgage Insurance (LMI). The Australian Government acts a guarantor to the lender for up to 15% of the property value.

There’s also a new Family Home Guarantee that assists eligible single parents.

Greg says the Guarantees may translate to big savings for prospective buyers.

“The Guarantee is not a cash payment or deposit for the home loan,” he says.

“However, it does remove the requirement for Lenders Mortgage Insurance to be charged to the loan, which can be a significant saving for home buyers.”

Places in the Guarantees are available through lenders — like Newcastle Permanent — so reach out to a lender to see if you are eligible.

2. Save

The figure that is usually quoted as being necessary to buy a property is a loan-to-value-ratio (LVR) of 80%. This means the buyer is typically expected to contribute the remaining 20% themselves.

So, to buy a home for $500,000, a buyer would be expected to have $100,000 available in savings for the deposit with the bank lending the balance.

A higher deposit could potentially get you a lower interest rate. Picture:

Of course, there are paths —such as the aforementioned First Home Guarantee —that may allow you to buy a home with less than 20% of the purchase price saved. LMI and a family guarantee are other potential options to consider.

However, saving a higher amount will not only give you access to potentially lower home loan rates, but will help cover other associated purchase costs, including things like mortgage registration, conveyancing fees and stamp duty (though first home buyers may be eligible for stamp duty concessions).

3. Plan a budget

Getting preapproval from a lender is a great way to not only know what your borrowing power is, but also to help set a budget for the entire buying process.

“It’s really important to determine how much you are comfortable borrowing and your lender will help with this,” Greg says.

If you’re uncertain where to start, then you can reach out to the experts to work out how to create a personal financial budget.

Newcastle Permanent offers direct consultation with lending experts who have expansive local expertise and various contact options – in person, online or over the phone.

You don’t have to go it alone! Reach out to the experts for their advice. Picture: Getty

4. Put together an expert team

Support from the right people will help you navigate the home buying journey.

A mortgage broker or lender can help sort out your financial position.

You’ll also need a conveyancer or solicitor to handle all the legal aspects of the home buying process.

“A solicitor will review the sales contract to identify any unusual clauses or red flags, and check the property title for any notations or unpaid rates,” Greg says.

“They can also help arrange building and pest inspections, all the way to finalising settlement and preparing all legal documents for the transfer of title.”

You may also want to consider a buyer’sagent, who can help guide you through the buying process from start to finish.

5. Choose the right home loan for you

When it’s time to make a purchase, you’ll need to decide on a home loan that is right for you.

While it can be overwhelming, especially when you are a first home buyer, Greg says the most important factors to consider are:

  • What is the interest rate
  • What fees may be charged
  • What features are available on the loan
  • Fixed term vs variable interest rate
  • Loan term duration

Starting out on your property journey may seem daunting, but with the right help, it doesn’t have to be.


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