The home loan application process
Buying a house as a young person often means buying your first home and with that comes lots of things you’ll need to consider. While the same tips will apply to you as to other first home buyers , there’s a number of things in particular that will especially help you on your home buying journey.
The bigger your deposit the better when it comes to purchasing a house. This is because your deposit will have an impact on your loan to value ratio (LVR) and whether or not you will need to pay lender’s mortgage insurance. Your LVR may also affect the interest rates you are offered which contributes to working out your repayments.
As a young person your deposit may be smaller. If this is the case you could consider getting a guarantor involved. Products such as our Family Guarantee loan is a way for immediate family members, like parents, to help you purchase a home without them actually providing the cash for a deposit. While no cash is provided by your guarantor, equity in their own property can be used to reduce your LVR to 80%. This means avoiding the need to pay lender’s mortgage insurance. For more information speak to one of our lending specialists by calling 13 14 22 or by visiting your nearest branch.
Your credit history can have an impact on your ability to take out a home loan. Most lenders will perform a credit file check as part of the loan application. As a young first home buyer, your credit history may be less extensive than other home buyers.
Having little or no credit history alone is not generally a reason to be declined for a home loan. However, the details on your file can mean the difference between having a loan approved, or not. It will list any instances where you have applied for credit, the outcome of those applications and any default information registered by a third party.
You can check your credit history via credit bureaus such as Equifax Pty Ltd (www.equifax.com.au)
Proving your ability to manage your money wisely will help towards showing a lender you are ready to take on a mortgage. When it comes to your savings history, remember:
The property you buy will have an impact on how much you’ll need to borrow, how much your repayments will be, and how much it costs to maintain the property into the future. As a first home buyer, you will most likely have to make compromises when it comes to finding a suitable property to purchase. Check out our home buyer brainstorm checklist to help you get your ideas onto paper.
Consider the costs associated with maintaining the property. While you may find a bargain, think about whether you or tenants will be able to live in the property and what else needs to be considered to keep the property maintained. Take a read of our article What to look out for at an open house from a tradie.
When looking at purchasing your first home it is a good idea to consider seeking advice. There are a number of options available when seeking advice. These can include talking to a financial planner, using online tools such as a home loan calculator and by speaking to one of our lending specialists by calling 13 14 22 or visiting your nearest branch.