Ready to buy your first home? These are some questions we might ask you - PART ONE

24 August, 2018

Are you a first home buyer looking to break into the market?

First things first - well done! This is an exciting milestone and you should be really proud.

On the other hand, it is also a leap into unchartered territory, and a big life decision that needs to be carefully considered.

So, it’s worth sitting down and figuring out where you’re at financially, setting some goals and getting everything prepared for your loan application.

We’ve put together this series, which will go over some of the key questions our Lending Specialists might ask you.

They will be released in parts, so you can take the time to digest the information and even start getting organised.

Part One: How much do you have set aside for the deposit and initial costs?

You’ve worked really hard to save and now you have a nice figure sitting in your savings account ready to go towards a house.

When thinking about how much is needed for a deposit, many people have that ‘10 percent’ figure in their head - ‘if I want that $300,000 house, I need to save $30,000.’ 

This is a reasonably good estimate, but with most lenders prepared to loan you up to 95%, your deposit could be as low as $24,000 which is made up of the deposit ($15,000) plus Mortgage Insurance (approx $6,500).

And don’t forget loan establishment fees (approx $800) and solicitors costs (approx $1,700). The more you save as a deposit, the lower your mortgage insurance costs will be.

Setting your goal at 10 percent is great, but there is the option of waiting a bit longer and aiming for 20 percent. There are major benefits to this, with the big one being - no need to pay lenders mortgage insurance (which saves you thousands of dollars).

Are you are struggling to save the entire deposit you need? Why not have a conversation with one of our lenders who may be able to provide you with some other options. 

Other factors 

There are also some other things to consider.

First up - you may not wish to spend ALL your savings on a deposit and have nothing set aside for a rainy day, so it’s wise to keep something in the bank (especially if you are looking at an interest offset loan, which rewards lenders for their savings).

Also - while that $24,000 is what the Credit Union may require, there are other people you’ll have to pay during this ‘new home’ purchase process. (Things like a pest and building inspection - and don’t forget that new coffee table that will look fantastic in your new living room).

With all these balls in the air, it can be a daunting task to figure out how much money you’ll need to set aside for these initial costs. 

But there’s good news here! At CWCU, you can sit down with someone who knows all about these things - and who will take the time to explain it to you.

We have Lending Specialists in all of our branches, ready to have a chat. Or if you would like, our Mobile Relationship Officer can come to you! We go the extra mile to provide quality face to face service, because we believe it’s really important.

Also, one little side note - the NSW government offers a First Home Buyers package, that offers grants and either abolishes or helps with contract stamp duty, depending on the cost of your house. 

This could be a big help, so make sure you check it out.

Chat to someone who knows what’s up!

Our Lending Specialists have a wealth of experience and have helped many young people achieve their dream of home ownership. 

Stop into a branch and say hello, if you prefer to deal with a financial institution that puts you closer to the decision makers and saves you the stress of back and forth administrative red tape.

We also have a Mobile Relationship Officer who will come to your doorstep, at a time that suits you, if getting into a branch is tricky. 

Stayed tuned for part two of this series, which outlines another major question lenders will ask you - how much do you earn?