Important Information For First Time Australian Home Buyers
Buying your first home is a time full of anticipation and great excitement. Right from the first house you look at until you are settled into your new home, first time home buyers often feel like they are on cloud nine. There is a lot to consider as a first time home buyer and making sure that you make wise choices is critical. Here is some great information that you can use to help get you started in the process of home ownership.
Know Your Benefits
First time home owners can look forward to numerous benefits when they make the jump from renting to buying. Here is a look at the some of the benefits you will enjoy.
- Ownership Pride. Owning your own home is something to be proud of. It gives you comfort and security as you look towards the future. You no longer have to follow rules set by a landlord, you are free to do as you wish when it comes to remodeling and decorating your new home.
- Build Equity. Owning your home is a great way to build your equity. As long as you keep up on your payments, as your principal home loan amount goes down, your equity goes up.
- Mortgage Interest Deductions. Australian home owners are able to deduct home loan interest on their tax return.
- Appreciation. The longer you stay in your home, the more its value will go up.
- Savings Over Rent. Very often you mortgage payment will be less than what you currently were paying in rent. Even, if you do pay more, the money you are spending now helps to increase your equity, where rent money once it is spent, will never be seen again.
Preparing For The Big Purchase
Before making the jump to homeownership, make sure you are prepared. Here is what you can do to get ready.
- Pay Off Your Debts. As you are preparing to apply for a home loan you will want to make sure you have paid off all of your debts. This includes any credit card debt you have as well as personal loans, etc.
- Start Using A Budget. Owning a home takes careful financial planning and if you are not already using a budget now is the time to start. You will want to make sure you choose a home that is within your financial means and the best way to determine this is through careful budget planning.
- Determine If You Need Extra Income. If you are not sure you are financially ready, consider getting an extra job to help pay off debt, or build up equity before taking on the commitment of home ownership.
- Build Your Savings. Start early building your savings. Open a first time home saver account and make sure you are consistently adding funds to it. When you are ready to get a home loan, the more money you have saved the better off you will be. If you can put down 20% of your home’s value you will save a great deal of money, as you will not have to pay mortgage insurance.
What Will Lenders Look At
When you are ready to get a home loan be prepared to verify for lenders:
- What your current income is. Your gross annual income will help determine your loan amount.
- What current expenses you have. This includes car payments, credit card debt, dependent care and more.
- How much money you have in savings. The more you have the better off you will be.
- What your credit history is. A good credit history is important when it comes to securing the best home loan financing.
Additionally, you will need to demonstrate to the lender the ability to repay your home loan. Lenders rarely will approve a home loan that is above 40% of your gross income.