​Considerations when purchasing your first home

Purchasing your first home is often the most important financial decision you will make. While you are likely to sell your first home and purchase a second or third property over your life, the first property you purchase will often influence your purchasing capacity in the future.
 
Further your first home can be the most difficult to finance as you do not have security of a second property to assist with securing the financing you require.
 
Key Steps / Processes Involved:

1. Calculate your deposit
2. Calculate your maximum financing capacity
3. Find a loan that works with your specific requirements
4. Consider obtaining pre-approval for home loan
5. Find your first home (House, Townhouse or Apartment)
6. Review the section 32 (Legal review)
7. Purchase your first home (Private sale, auction or off the plan purchase)
8. Finalise your home loan and settle on the purchase of your first home

 
Some considerations:
 
What is the average length of a mortgage?
 
A standard home loan will be based on a 30 year period.
 
Should I fix the interest or go with variable interest rate?
 
The answer to this question depends on your specific requirements. However some considerations when deciding include:
 
Variable Rate:

• Can change at any-time and will affect your monthly repayments
• No one knows for sure which direction variable rates will be going in the medium to long term future
• You are able to pay a higher monthly repayment if you wish to repay the principal amount borrowed more quickly than required

 
Fixed Rate:

• The fixed period can vary between providers
• You may be able to fix a portion of your home loan
• One advantage is that you will have budget certainty of what your future repayments will be
• Fixed rate loans can sometimes attract penalties for early repayment (or refinancing)

 
What is redraw?
 
If your loan provider allows for redraw it effectively means that you are able to redraw on any repayments over and above the minimum repayments that were required.
 
What is an offset account?
 
An offset account is an account that is linked to your home loan. Any funds in your offset account effectively reduce the balance outstanding that is used when calculating the interest you owe the bank. For example:
 
Home Loan - $300,000
Offset Account - $50,000
Loan Balance - $250,000
 
How much deposit do I require?
 
As a guide banks prefer you to have a minimum of a 20% deposit. This also allows you to avoid any lenders mortgage insurance which is required for deposits of less than 20%
 
Brookline Group is a finance broker that can help you secure the financing you need for your first home. We offer all customers a no obligation initial consultation to explain how we can help you achieve your goal of purchasing your first property.

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Home Loan Financing