real estatereal lifestyle estate The number of first home buyers taking out home loans is surging.
FIRST HOME BUYERS ON THE RISE BUDDING home owners are out in force, with the number first-home buyers taking out loans surging to a six-year high. The proportion of first-time buyers in the home loan market has risen to 18.3 per cent. According to CommSec chief economics Craig James, first home buyers are celebrating the greater choice of properties on the market, more attractive prices and super-low interest rates. But getting into the property market is a huge financial commitment that can costs new home buyers more than they might expect. One-in-five people under 35 save less than 10 per cent of their after-tax income, and 17 per cent save nothing at all, research from financial comparison website Canstar found. Canstar group executive, financial services, Steve Mickenbecker, said the
first step towards reaching a homeownership goal was committing to a savings plan to reach a 20 per cent deposit plus additional purchase costs. "First-time buyers should also be aware of the mistakes easily made that could impact their ability to buy, (their) loan application, or cost them more in the long run," he said. Here are seven tips to help first home buyers avoid financial mistakes that could cost them: 1. Know your budget Use a home-loan borrowing calculator or speak with a lender to find out what the banks may be willing to lend. 2. Save a 20 per cent deposit While not all lenders require a 20 per cent deposit, falling short of this can be costly, with buyers required to pay Lenders Mortgage Insurance, sometimes in the range of $15,000.
If you cannot save a 20 per cent deposit, the First Home Owner Grant or having someone to go guarantor may help you avoid LMI. Or consider holding off until you can save more. 3. Understand interest rates Interest rates fluctuate and as rates rise so will the monthly repayments. Read up on what influences interests rates so you're not blindsided when rates increase. 4. Factor in fees Remember to factor in annual fees on a home loan. Some loans, such as package loans, can have annual fees of around $395 that are added to the overall cost of the loan. 5. Keep some savings As well as the purchase price, you may need to for pay stamp duty and a range of other fees, then there are moving costs and furnishing. Do your research before you buy to understand the associated
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costs and set your buying budget to include them, and plan to have money left over for any unexpected expenses or repairs. 6. Look for grants The First Home Owners Grant is designed to encourage and assist home ownership, and for eligible buyers it can contribute to a great start to life as a property owner. Check out the requirements and details at https://bit. ly/2Nk81Og 7. Negotiate Don't just rely on what lenders present. Take a pro-active approach and negotiate on interest rates to avoid paying too much. Research home loans offered by a number of lenders to ensure you're in a position to make an informed choice. ●
Thursday, 7 February, 2019
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