• Step 1: Save up for deposit
  • Aim to save at least 20% for deposit. Otherwise, there are options if you don’t/can’t save for a deposit or at very minimum 5% saved “genuinely”.
  • Avoid paying the lenders mortgage insurance (LMI) by paying more than 20% or more on deposit.
  • Use an appropriate calculator (budgeting/repayment).
• Step 2: Questions to answer
  • This will be important in the succeeding steps.
  • How long are you planning to live in this area/location?
  • Who will be living there-are you planning a family-or reducing size of current family, kids leaving soon
  • Have you researched facilities/amenities/services in this location?
  • Will you need to let out to take a job elsewhere someday?
• Step 3: Know your budget
  • You need to manage your expectations relative to your budget.
  • Have you used our Intellichoice budget calculator?
  • What is your income likely to look like in the future?
  • Will someone else be contributing?

READ MORE: What are First Home Owners Grant?

• Step 4: When comparing lenders, consider these:
  • Ask from at least two or more lenders as a comparison.
  • Who authentically aligns with your beliefs/values?
  • What track record does the lender possess?
  • Would you feel proud to be associated with this lender?
• Step 5: Choosing the best deals/rates
  • Fixed vs. variable rate
  • Remember, getting a mortgage is a long-term commitment. Be ready.
  • Who is explaining the products & features to you-the bank who has a vested interest in making a sale-or a broker who is searching for a suitable product?
  • What is the actual three-year cost versus the “here and now cost”?.
• Step 6: Consider the costs
  • The cost of getting a mortgage does not end with the interest rates.
  • Generally, you still have to pay for stamp duty, legal fees, processing fees, etc.
  • Some lenders waive these fees, so you need to take this into account when choosing the lender
  • What are upfront costs?
  • What are ongoing fees?
  • What are exit fees?
  • Is there any way to avoid paying for these fees?

READ MORE: RBA Retains Lowest Cash Rate In Recent Update

• Step 7: Only borrow what you actually need
  • You need to also take note all the other expenses associated with your new home.
  • It can be easy to borrow more to help furnish the home-but should you really be doing that?
  • Can you hold off on doing the renovation until 6-12 months after moving in?
• Step 8: Make repayments
  • Make sure you make the repayments religiously.
  • Generally, it will be advantageous on your part to pay fortnightly as opposed to monthly due to interest savings.
  • Have you considered insurances in case something unforeseen happens?
  • Are there “buffers” in savings to protect against another Covid-like event?
• Step 9: Dangers and when to ask for help
  • Real estate is a major investment and the number of homeowners in Australia who are on the brink of default has surpassed the 1-million mark with 28,000 are in serious debt trouble.
  • Always get in touch with your broker/lender if you experience any mortgage-related issues.
  • If you’re struggling with the repayments, it’s best to address it sooner than later as lenders tend to be less forgiving if the account is badly in arrears before you call.
  • Contact us as soon as you perceive a potential problem so we can offer some guidance.
  • Is there another way of purchasing a home if deposits are not readily available.

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Darin Hindmarsh is the founder and CEO of Intellichoice Finance, a broking firm based in Brisbane. He’s been providing financial and broking services in the past 18 years. Hindmarsh is also finalist in the 2020 Australian Mortgage Awards – Pepper Money Broker of the Year – Specialist Lending. To jumpstart your home loan application, visit their home loan online application page today.!

Darin Hindmarsh

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