You may have read articles written for first home buyers on where to start your home buying journey. Many of them will say that step one is to save a deposit. Sounds reasonable? While it is important to save as much as you can to put towards your new home, there are other things that also need to be considered. The first stop on your journey towards home ownership should be your home loan specialist. This is a good idea because they can:
- Figure out how much deposit you need and develop a savings plan if you’re not quite there yet. A good home loan specialist won’t turn you away if you’re not ready but partner with you to help you towards your home ownership goals.
- Advise if there are other lender requirements you need to meet and how you can work to achieve these
- Help you decide whether building or buying is the right decision for you (more info to be shared about this on our Facebook Page soon!)
- Introduce you to your FHOB Squad; a team of professionals who are experts in their fields so you don’t have to be!
You may need less deposit that you think! With the new proposed First Home Owners Grant (FHOG) doubling to $20,000 in regional Victoria, as well as stamp duty savings, the amount you need to contribute to your purchase is now dramatically less. The State Government of Victoria announced these changes and are expected to come into effect from July 1st, 2017. More info here: http://www.sro.vic.gov.au/regional
If you’re eligible for stamp duty savings and the increased FHOG (and all of the relevant terms and conditions are met) you may only need to contribute around $3,000 to purchase a new house and land package worth $350,000.
Other boxes to tick
Most first home buyers will be seeking the assistance of a home loan lender to buy their new home. Different lenders have different criteria and usually the higher the loan amount, in relation to the value of the property, the lower deposit but also the more policy hoops you need to jump through! For example, if like most first home buyers you don’t have 15% to 20% of the purchase price (plus costs) you may need to demonstrate these two criteria:
5% Genuine Savings: While you may not have to come up with 5% savings to buy your new home, some lenders still require you to demonstrate your ability to save this amount. Back to our example of a new house and land package worth $350,000, you may be required to show bank statements with savings of $17,500 with no lump sum deposits over the past 3 months (unless from such things as tax refunds/sale of shares). Remember you may only need to contribute around $3,000 but you need to show that you’ve saved $17,500? That’s confusing! To make it easier some lenders will accept 12 months rental ledger from your real estate agent showing good rental history to tick this box.
Funds Required to Contribute: Lots of first home buyers make the wise decision of seeking a pre-approval from their home loan specialist before they have found their home-to-be or while they’re choosing and working with a builder. Even though you may not be buying your home yet, you still need to show the lender that you have the funds to complete the purchase now. A bank statement is required or a statutory declaration if you are receiving a gift from someone to assist you on your way to home ownership. (Keep an eye out for info on the benefits of a pre-approval, coming soon!)
Good news! You don’t have to remember all of this and don’t need to be an expert on the home buying process. Your FHOB Squad can guide you through the whole way.
To speak with me or one of our experienced and friendly home loan specialists feel free to PM on Facebook or call us on 5332 9697, email email@example.com or drop into our office at 426 Sturt Street.
Written by FHOB Squad member Rebecca Ebbels, local Ballarat finance specialist.
Any advice does not take into account your objectives; financial situation or needs and you should consider whether it is appropriate for you. You should read the relevant disclosure documents and seek independent financial advice. Lenders’ policies are subject to change at any time, which could affect the above information.