Ready to buy your first home? These are some questions we might ask you - PART TWO
Buying your first home can be a daunting experience.
So we’ve put together this series, which covers the major questions lenders are going to ask you, when you sit down to arrange your loan.
Hopefully, you’ve already read the first part, which covered your deposit amount and other costs associated with buying a house.
Now that you’re armed with that information - here is part two!
Part Two: How much do you earn? How much can you afford in mortgage repayments and ongoing costs?
When saving for that first home it’s easy to focus on what you can afford in terms of a deposit - and not much else. We put our heads down, work hard and live frugally for a while, then we hit our target and yell, hooray! I can afford my dream house!
But it’s important to think about how you’re going to handle the fortnightly repayments.
Think about it this way - if you were just starting out in the workforce and were on a lower income, living week to week and won $24,000 in the lottery - you would have your 5 % deposit on that $300,000 house plus money for the mortgage insurance and other costs - which would be great.
However, you’re fortnightly income would stay the same. Would you be able to meet repayments of $635 per fortnight on a loan of $278,000 over 30 years?
So it’s worth auditing your monthly spending to come to a repayment figure that you can manage.
CWCU has a Loan Calculator that can help with this task! It’s super quick and easy and can help guide you on how much to expect in repayments, based on your loan amount, terms and interest rates
Another one not to forget about - ongoing costs of owning a home.
Council rates, strata fees, home insurance and other fun bills that only become a factor once you’re a homeowner (like repairs or renovations.)
Something else to consider when calculating your budget - are you making other repayments on already existing debt?
The lender will ask you to provide details about any other loans you may have (things like personal or car loans) and also credit cards.
They will also investigate your credit history, to see if you have managed your debt well in the past - and to see if you have any outstanding debt that is not through your bank.
Be prepared for this, as it will effect the lenders decision about whether to approve your application.
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.
Keep an eye out for part three, which will cover the differences between a fixed and variable loan.
Ready for more?
Are you ready to read Part Three of this series?