Buying your first home in Melbourne, especially in a hot property market, can feel like a challenging task.
In Melbourne, where the real estate market can be competitive and prices can be high, it’s crucial to be well-informed before seeking a home loan.
Moreover, saving for a deposit, understanding loan applications, and knowing the whole process can be tough.
We at Credit Hub, have an expert home loan broker Melbourne, who understands this. Therefore we decided to share 10 key points to consider before you start your Melbourne home loan journey.
10 Key Things To Know Before Opting For A Home Loan
Following is the table which you must refer to before you embark on your home loan journey:
| Tip | Description |
| Find the Right Lender | Engage with a lender early for budgeting and savings plan assistance. |
| Determine Savings Goal | Understand the required deposit amount and explore options like LMI. |
| First Home Owners Grant | Check eligibility for the grant to reduce your savings goal. |
| Alternative Deposit Options | Consider gifted funds or family guarantees to reduce the deposit amount. |
| Track Spending | Use tools like Money Tracker to gain transparency into your expenses. |
| Borrowing Capacity | Calculate your borrowing capacity based on income, liabilities, and expenses. |
| Debt Repayment | Prioritise paying off existing debts to increase borrowing capacity. |
| Budget for Fees | Factor in additional fees like stamp duty and mortgage registration. |
| Savings History | Provide proof of savings history to improve credit rating. |
| Search Options Carefully | Research around for lenders and loans, but be cautious of potential biases. |
Let’s understand these few points briefly.
#1 Find the Right Lender
Engaging with a lender early on is essential. Lenders can assist you with budgeting, setting up a dedicated savings account, and developing an achievable savings plan – all crucial components of a successful home loan application.
#2 Determine Your Savings Goal
Understand the amount of deposit you need to save upfront. This knowledge will help you set a clear savings goal and potentially explore options like Lender’s Mortgage Insurance (LMI), which can help you get into your new home with a smaller deposit.
#3 Check Eligibility for First Home Owners Grant
If you’re a first-time homebuyer, research if you qualify for the First Homeowners Grant. This grant can contribute to your deposit, significantly reducing your overall savings goal.
#4 Consider Alternative Deposit Options
The traditional 20% deposit is a good starting point, but don’t be discouraged if you can’t quite reach that yet. Lenders Mortgage Insurance (LMI) can help you borrow more with a smaller deposit, but it adds to the overall cost of your loan.
#5 Track Your Spending
Monitoring your expenses is critical to achieving your savings goals. Use tools like NAB’s Money Tracker to gain transparency into your income and expenses, enabling you to create a realistic budget and boost your savings.
#6 Understand Your Borrowing Capacity
Knowing how much you can borrow will help you focus your property search on realistic options. Online tools can estimate your borrowing capacity based on your income, expenses, and existing debts.
#7 Prioritise Debt Repayment
If your borrowing capacity is lower than the required amount, prioritise paying off existing debts like car loans or credit cards to free up your borrowing capacity.
#8 Budget for Additional Fees
Factor in fees associated with buying or building a new home, such as stamp duty, mortgage registration fees, and land transfer fees. Meeting the First Home Owner criteria for stamp duty exemptions can result in significant savings.
#9 Provide Proof of Savings History
When applying for a home loan, provide proof of your savings history by depositing your savings into a separate bank account. This practice can improve your credit rating and increase your chances of loan approval.
#10 Check Around Options And Be Cautious
Compare rates and terms offered by different lenders to find the best deal for your needs. There’s no single “best” lender – what works for one person might not be ideal for you.
How A Reliable Home Loan Broker Melbourne Can Help?
Buying a home in Melbourne requires careful planning and financial preparation. Credit Hub’s experienced home loan brokers Melbourne can help with this. They can help you understand the loan process, and set realistic goals.
With their professional advice, you can easily understand the complications of a home loan, discuss the wide variety of options and choose the right one.
