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Home Loan and Mortgage Refinancing Tips From Loan Monster

Buying your First Home? Let Loan Monster answer some of your questions.

  1. How much will I be able to borrow?

This is the most frequently asked question when it comes to purchasing your first home. The ‘technical’ term for this is your ‘borrowing capacity’.

At Loan Monster we will be able to analyze your details to understand what your borrowing capacity will be, everyone is different with individual situations, so it is best to chat with a Mortgage Broker before looking for a property.

The borrowing capacity is how much you can borrow and what you can comfortably afford when making your mortgage repayments. BE AWARE! When lenders make an assessment, they will generally apply a ‘buffer’ which means they will add anywhere between 2% – 4.5% generally as a margin above the quoted interest rate. This allows for you to have certainty based on your current financial situation that you could still afford the repayments if rates increase in the future. A broker will walk you through all of this by examining your current living expenses & current liabilities and determining whether your current income will service this with an additional mortgage repayment.

  1. What are living expenses?

These are your day to day expenses which can include but are not limited to the following list:

  • Utilities and rates
  • Transport expenses, Petrol, Registration, etc.
  • Groceries
  • Medical
  • Clothing and Grooming
  • Insurances – eg. health, home contents, car

You would be surprised where your money goes when you see it written in front of you. Sometimes completing a budget can help to look at how to tighten things up to make owning your own home more affordable.

  1. What deposit will I need?

The deposit will vary depending on the lender and your personal situation. In most cases the lender would prefer a 20% deposit plus all of the costs relating to the purchase, such as Stamp Duty (If applicable) and set up costs. Having a 20% deposit ensures you avoid paying Lenders Mortgage Insurance (LMI) most of the time. Some lenders do special deals depending on your occupation, for example if you are a doctor, engineer or accountant then you may avoid LMI with a 10% deposit in some circumstances. It can be hard to save a large deposit, so if you are OK with paying LMI then a 5-10% deposit may suffice depending on the lenders’ individual policies. A non-refundable gift from a parent of family member can also assist to get a deposit together or a security guarantor can allow you to avoid needing a deposit completely in some cases.

  1. How much will I need for set up costs?

You need to be familiar with all of the costs involved in buying a property. It is important to ask your Perth mortgage broker early on in the process so there are no surprises at settlement.

The costs of purchasing a property may include the following:

  • Stamp duty
  • LMI
  • Legal / conveyancing fees (it is good to shop around for good service and quotes)
  • Mortgage or loan application fees
  • Pest and building inspections
  • Utility connections
  • Insurance

Loan Monster will help you identify the costs that will apply to you.

Give us a call on (08)93364489 or visit www.loanmonster.com.au today.

* The information contained in this website should not be taken as constituting personal advice. We recommend that you seek professional assistance before acting upon any information provided or linked on this web site.

 

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