Thinking about getting a home loan? While it’s great to get excited about home ownership, it’s important to be well informed. Here are three things that take people by surprise when they start their home ownership journey.
Upfront costs
Most people know they’re going to have to pay upfront costs such as fees, charges and a deposit. However, few are aware of just how much money they will need to meet these costs.
Deposits start from 3% of a property’s purchase price, depending on what type of loan you are eligible for.
On top of this, you will need to cover a range of fees from stamp duty to application fees. The best way to get an idea of what you might need to save is looking at online loan calculators. Most lenders provide calculators on their websites, and you can also find comparison calculators to see how different loans stack up.
Savings history
When a lender is assessing if it’s suitable to give you a loan, they will look for evidence you can make regular payments over a period of time. They need assurance you are capable of meeting your loan repayments and the best way to assess this is to look at your savings history.
At HomeStart, we generally require that you have held a minimum of $3,000 of savings or made regular payments to achieve a balance of $3,000 of savings over three months. We also accept evidence of 12 months good rental history instead of savings in most cases.
Unrealistic expectations
We’d all love to move into our dream home straight away, but for most people the reality is something very different. There is often a big gap between what people expect they can afford, and what they can actually buy with the size of the home loan they’re eligible for.
It’s important to manage your expectations. You might not be able to step straight through the door of a mansion, but any move into the housing market is progress. We all have to start somewhere.
There’s a lot to learn on the home ownership journey – keeping these three points in mind could help make it that bit easier when you do decide to get started.
To learn more, check out these sections on Budgeting and Saving.