Home Finance – Everything you need to know

House-hunting is an exciting time – but it also gives you plenty to think about too. One of the first and most important things you need to consider is your finances, including your budget, deposit amount and type of loan you’ll need.

The Loan Company is one of WA’s most recognised mortgage brokerages, and is the dedicated finance division of BGC Housing Group. They are specialists in the first home buyer segment and winners of multiple industry awards, and are here to offer some helpful advice in making your home ownership journey easy.

The Loan Approval Process

One of the best decisions you can make is to utilise the services of a mortgage broker, who can match you with the best lending solution for your specific needs. They can also provide you with a range of suitable options, as all of The Loan Company’s brokers have access to a panel of over 30 lenders. A great mortgage broker can save you time, effort and most importantly money in securing a home loan at the lowest rate, often with additional features that suit your individual needs.

Saving up for a Deposit

There is a common misconception amongst first home buyers that you need to save up a 20% deposit for a home loan, which could mean putting down up to $80,000 on a $400,000 home. A 20% deposit will help you avoid paying Lenders Mortgage Insurance (LMI), but there are other low deposit finance options available to you. These include Keystart, which is a government-backed lender that only requires a 2% deposit (with no LMI). You could also ask your parents to act as guarantors for you, which will help you avoid LMI and secure a cheaper interest rate.

Budgeting

Creating an airtight budget (and sticking to it) is critical. This not only includes saving a deposit, but also the costs of stamp duty, conveyancing, title search and registration fees, building inspections and insurance. To help save money, consider opening a high-interest savings account and filtering a percentage of your salary in there each month. Plot your expenses and see where you could save money, and try to pay off any debts that you have that could turn away lenders.

A general rule is not to allocate more than 30% of your monthly household income towards repaying your home loan

Borrowing Capacity

The amount you can borrow and what you should borrow are two very different things. A general rule is not to allocate
more than 30% of your monthly household income towards repaying your home loan. This way, you’ll have plenty of wiggle room to address the additional household expenses in your new home (such as council rates, utilities, insurance,
maintenance and other unexpected bills). Once again, the best first step is to speak to a mortgage broker who will help you analyse your financial situation and provide specific advice on how much you can borrow.

Getting Started

Whenever you’re ready to take the first step, The Loan Company – who are experts in first home buyer construction
finance – can help. Talk to the team today for an obligation free conversation to discuss your circumstances and see
what’s possible.

To book your free appointment visit theloanco.com.au

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