As interest rates continue to fall, the dream of owning your own home may seem more achievable for many Australians. So if you’re a first home buyer with a goal of securing a property next mortgage season, here are some tips to help make the dream a reality.
First, you’ll need to set a budget and start a savings plan. There are some great online budget planners available now, such as the government’s Money Smart budget tool, which will do most of the hard work for you. Try also using a mortgage calculator to determine the monthly financial commitment you’ll be facing.
For a $300,000 home loan a 10 percent deposit is recommended, so you’ll need to be putting away about $580 per week to get there within 12 months.
Also consider that depositing this money into a high interest savings accounts will help to get you across the threshold to home ownership sooner. There are heaps of great savings accounts available online so start comparing today.
Start researching home loans to not only understand the concepts, how they work and different fees and charges involved but also so that you find what type suits you. For instance the two main types of loans available are fixed-rate home loans and variable-rate home loans.
Fixed-rate home loans offer a fixed interest rate for a specific term, usually from one year to 10 years. During this time your rate is locked in so your repayments are the same, which makes it easier to budget for. At the end of this time your rate will then revert to a variable rate for the remainder of the term.
Variable-rate home loans are a type of mortgage where the interest rate can fluctuate, making it harder to budget for as your repayments may change. The interest rate is usually lower than fixed loans at the time the loan is taken out, but that can obviously change over time.
Throughout the whole process it may be beneficial to monitor the property market to get a feel for pricing. Also, look around and choose the suburbs you’d like to live in so when you are ready you know what areas to look in and what areas meet your price range.
A few months before you’re ready to buy you should compare home loans online to make sure you are getting the best deal for you. Look for a loan with lower fees and a lower interest rate to help you save and pay your dream home off sooner.