Applying for a home loan as a first time buyer

First time buyer jitters? We understand! Buying your first home is a huge undertaking. Here's 6 things to do before you apply for a home loan.

Getting home ready for sale

Buying your first home is one of the most important, exciting and sometimes stressful decisions you will make.

To help take some of the stress out of it we’ve put together six tips every first home buyer should consider to give them the best chance when applying for a home loan.

1. Budget effectively

When looking at your budget you will need to consider your deposit, repayments and existing financial responsibilities. Ask yourself: 

  • How much do you need for a deposit
  • How much will your repayments be, and
  • How will you afford to do this, taking into account your current financial situation and responsibilities?

Online mortgage calculators are a great starting point to see how much you can afford to borrow. However, for more detailed and personalised information, you can speak to a Heritage Lending Specialist at your local branch or over the phone. Even if you aren't quite ready to buy, speaking to a Lending Specialist can give you the reassurance that you are on the right track.

2. Research, research, research

Keep an eye on property prices in the areas you are interested, read up on property prices in the newspaper or online and scour online real estate guides to get an idea for property prices. Not only will this help you to budget, it will also help you know when you’ve found a bargain! 

3. Save as much as you can for a deposit

The larger your deposit, the smaller the loan amount will be. This means you’ll have smaller repayments and the interest you pay will be less. While Heritage is able to lend up to 95% of the purchase price of properties, lender’s mortgage insurance (LMI) substantially increases if you have a higher loan-to-value ratio.

4. Obtain a copy of your credit file

Most lenders will check your current and past credit activity by contacting a credit ratings agency. By checking your file you can keep a track of what information is stored and if the details are correct. You can order a copy of your credit file through credit bureaus such as Equifax Pty Ltd or illion Australia and you can usually access a free copy of your credit report once a year. Learn more in our article - What is a credit report?

5. Keep your bank account in order

Lenders will check account statements for the last three to six months when assessing loan application so keep track of bills and payments to make sure there are no late payments, over-limits or overdraws.

6. Keep your saving habits consistent

A solid track record of employment and a history of regular savings in your bank account will make it easier for you to get a home loan. Use a separate savings account with a higher interest rate to make regular deposits and few withdraws. Lenders want to see evidence of good financial management to ensure they aren’t taking unnecessary risks. If you plan on applying for a loan with only 5% deposit, it’s important you put forward an excellent application and demonstrate financial reliability to increase chances of approval.

To find out more and get the ball rolling on purchasing your first home enquire online, call our Queensland based Contact Centre on 13 14 22 or drop into your local branch.

Related tips 

The benefits of home loan pre-approval
Watch this quick video to learn the benefits of seeking home loan pre-approval before you put an offer on a property.
Home Loan Borrowing power calculator
Calculate an estimate of how much you may be able to borrow for a home loan. Simply enter your income, expense and loan details to get an estimate.
The home loan application process
Find out what's involved in the home loan application process with this simple, 4 step graphic.

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