How to qualify for a home loan as a first-time buyer.
There are many unanswered questions around the process of buying your first home. Buying a property is one of the biggest financial investments that you will ever make, and we want to give you some guidelines on how to get it right when you apply for a home loan.
We don’t just want to find you a home that meets your functional needs and budget. We look to inspire young, savvy professionals who are starting their investment journeys and we are here to assist you through the journey. We strive to find you the perfect property that will create personal and financial value for your future.
Veza Properties walking with you every step of the way!
Guidelines on how to qualify for a home loan as a first-time homeowner.
The first and most important step is to establish whether you are ready to make a big ongoing financial commitment. It is always important to know that you have a stable income that will be sufficient to cover your bond. If you have a job and earn on a monthly, you will have a general idea of what you will be able to afford. If you are self-employed this makes the process a bit more difficult because you would need to prove that you have a stable income and will be able to pay off the bond on your property "Home Loan".
All your monthly expenses should not exceed 30% to 45% of your gross income. This could affect your overall score and could mean that a bond might not be approved by a lender.
Having a deposit increases the chances for your application to be approved and helps to reduce your monthly repayment.
Here are some other additional costs to keep in mind when buying a property:
- Rate and levies (If applicable)
- Pay bond registration costs (If applicable)
- Pay transfer costs (If applicable)
- Pay transfer duties (If applicable)
- Pay a portion of body corporate levy figures (If applicable)
- Moving Costs
- Homeowner’s Insurance
- Occupational rent (if applicable)
These additional costs are often missed and not calculated in the overall expenses.
Is having no debt a good idea when you want to buy a property?
Having no debt sounds like a great idea but when you apply for a home loan, the banks want to see if you meet your debt obligations. If you have a zero-credit profile, your application might be unsuccessful, or you might not qualify for a 100% home loan. Once you have a good credit score it would be beneficial to any buyers to settle any debt they currently have i.e., car repayment, personal loans, or credit card debt before applying for a home loan.
What is pre-approval?
Pre-approval is obtained prior to purchasing a property. Pre-approval means a lender has reviewed your financial situation and credit score and has pre-approved you for a particular loan amount. This helps you as a potential buyer to get a clear view on the bond that you will be able to afford.
Is it beneficial to do pre-approval before buying?
Yes, Buyers can do a pre-approval. Our advice to buyers is, try and keep these pre-approvals to a minimum because doing them constantly will have a negative effect on your credit score.