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Buying a home for the first time can be both exciting and overwhelming. To help you navigate the process, here are some practical tips for first-home buyers:
Determine how much you can afford based on your income, expenses, and potential mortgage repayments. Stick to your budget when searching for properties to avoid financial stress.
Pre-approval will give you a clear idea of how much you can borrow and show sellers that you are a serious buyer.
Understand the property market in your desired area, including recent sales and trends. This will help you make informed decisions and negotiate effectively.
Seeing properties in person will give you a better understanding of what you want and need in a home.
Engage the services of a reputable mortgage broker, real estate agent, conveyancer, and building inspector to guide you through the process.
It’s unlikely that you’ll find the perfect home within your budget, so be prepared to compromise on certain aspects, such as location, size, or property features.
The home-buying process can be lengthy, and it may take time to find the right property. Be patient and avoid making hasty decisions out of frustration.
Obtaining pre-approval for a home loan is an essential step in the home-buying process, as it provides a clear understanding of your borrowing capacity and helps you make informed decisions when searching for a property.
Pre-approval also puts you in a strong position when negotiating with sellers or bidding at auctions, as it demonstrates to sellers that you’re a serious buyer with the financial backing in place.
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Budget clarity: Pre-approval helps you determine the maximum amount you can borrow, allowing you to focus your property search on homes within your budget.
Confidence in negotiations: With pre-approval, sellers and real estate agents recognize that you are a serious and qualified buyer, which can give you an advantage during negotiations.
Faster loan processing: Pre-approved buyers often experience a smoother and quicker loan process, as a significant portion of the paperwork and credit checks have already been completed during the pre-approval stage.
Assess your financial situation: Before applying for pre-approval, review your income, expenses, debts, and credit score to ensure you’re in a strong position to borrow. A mortgage broker, like Hatch, is your perfect place to start.
Gather documentation: Collect necessary documents such as pay slips, tax returns, statements for your savings accounts, credit cards, personal loans etc, and identification to support your pre-approval application.
Choose a lender: With the assistance of your mortgage broker, find the right lender for your circumstances.
Submit your application: Complete the pre-approval application form provided by your chosen lender and submit it along with the required documentation.
Await the lender’s decision: The lender will assess your financial situation, credit history, and the documents you’ve submitted. They’ll then provide you with a written pre-approval letter outlining the maximum loan amount you’re eligible for, subject to certain conditions.
Begin your property search: With pre-approval in hand, you can confidently start looking for properties within your budget, knowing that you have the financial backing to make a purchase.
Keep in mind that pre-approval is typically valid for a limited period, usually 60 to 90 days. If you don’t find a property within that timeframe, you may need to reapply for pre-approval. Also, note that pre-approval is not a guarantee of final loan approval; it’s subject to the property’s valuation and any changes in your financial situation or the lender’s criteria.
You would think that if you have a pre-approval, you have done exactly what you need to do to be ready to buy a home…unfortunately, that is not always the case.
If after you get your pre-approval, your financial position changes (for instance, your salary diminishes, you start a business, you take on a new loan or credit card), your pre-approval is no longer valid
Also, some lenders have automatic assessment tools and need to manually verify the data provided with an application for pre-approval. So when you go back to the bank and ask for the full approval (having bought a home) and a real person looks at your application, they may evaluate your application differently and not give you the loan amount you want or need.
Furthermore, most lenders issue pre-approvals based on the interest rate at the time. If rates go up, then the amount they will lend you may drop, which could leave you short of funds for your purchase.
This is where a mortgage broker like Hatch is invaluable. Hatch can help you to get a pre-approval you can bank on (pardon the pun). And it can identify potential issues (that automated assessment tools won’t pick up) so they can be cleared with a lender in advance, preventing nasty surprises later.
A: You may still be eligible for some grants and concessions, provided you have yet to live in any of the investment properties you own. Eligibility for specific grants and concessions will depend on individual circumstances.
A: Yes, you can apply for both if you meet the eligibility criteria for each program. Hatch Financial Services can help you determine your eligibility and guide you through the application process.
A: LMI is insurance that protects the lender if you default on your home loan. You typically need LMI when you borrow over 80% of the property’s value. However, the First Home Buyer Deposit Scheme can help eligible buyers avoid paying LMI.
At Hatch Financial Services, we understand that first-home buyer may be apprehensive about making mistakes during home buying. With our experienced team by your side, you don’t need to worry. We have helped countless first-home buyers successfully navigate the property market, and we can do the same for you.
Purchasing a home involves many moving parts. We’ll take care of the finance component, allowing you to focus on finding your dream home.
If you’re a first home buyer in Melbourne, Hatch Financial Services is here to help. Contact us today to start your journey toward homeownership with confidence.
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