Congratulations! You’ve made the decision to buy your first home – this is a hugely exciting step. It can often be slightly overwhelming with lots of different options to choose from – not only in the property that you go for but also in the type of home loan you apply for.
Do as much research as
you can and follow these top tips to help your first home loan application lead
to a successful purchase:
Check your eligibility: you need to check your credit score, as well as the credit score of your partner or anyone else you may be buying your home with. This will help to give you a rough idea of what you can expect to borrow from lenders and how eligible you are for a home loan application.
Know your options: you’ll want to take a bit of time to research the home loan options available. There are so many different variations and each will have a different rate of interest, features and charges. Understanding a bit about home loans can help you to decide what will work best for you.
Improve your credit score: there’s a high chance that as a first time home buyer you may need to improve your credit score. This could involve clearing current debts, proving to a lender that you are able to pay back loans or simply showing evidence of a stable address and a regular income.
Increase your down payment: if you’re young and you don't have a significant credit history to show to a lender, a large down payment could really help your chances of success with a home loan application. Whatever you can afford to offer as a down payment will be taken off the amount you’ll need to borrow, and will lessen the amount that you’ll be paying interest on during the loan term.
Budget carefully: this is really important as you don't want to stretch yourself financially and end up defaulting on your loan or missing/making late repayments. This could really damage your credit history for the future and harm your chances of borrowing again. Do your sums and figure out how much you can realistically afford to spend on a home loan.
Remember extra costs: a home loan is just the start of your costs. Remember that when you buy a home you’ll also have legal fees to pay as well as other associated costs such as renovations or extra construction that you may want to be doing. Budget all of this into your calculations so you aren’t left with unexpected surprises.
Jamie is a 5-year freelance writer who enjoys real estate. He is currently a Realty Biz News Contributor.