What Do I Need Financially To Buy My First Home?

Buying your first home is a massive financial undertaking. You will need to be psychologically, emotionally, and, of course, financially ready before you make the big purchase.

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If you are looking to purchase your first home, don’t sweat it. We have rounded up things you need financially to make the whole process effortlessly easy.

Sufficient Savings to Buy the Property

If you have enough money saved or your relative or parents have given you a monetary gift, you can easily buy your first home outright. That’s a wise way to do it without incurring additional costs in interest charges. The problem, however, is that not everyone can afford to buy a home without the need for a loan.

A Spotless Credit History and Rating

If you don’t have enough savings to buy it outright, the best way to finance your big purchase is to borrow a home loan or mortgage. However, lenders will look at your credit rating and history to establish if you will be able to manage to make monthly repayments. Of course, the lenders see people with low, bad or no credit history as a higher credit risk.

You must stay on top of your debt repayments, and pay your utility bills, rent, credit cards, and so forth on time.

Down Payment - Enough Home Loan Deposit

Traditionally, you will need to raise 20% of the value of your home as a deposit to get a home loan. Other lenient lenders require only 5% of the home loan value. Either way, if you cannot come up with enough deposit, you might have to resort to perhaps a Family Pledge loan, if you are not sure how they work, ask a Mortgage Broker. In such a case, you will need a sibling or parent to provide a security guarantee to the loan as the Bank will use another security to assist you to obtain a mortgage.

First Homeowner Grant

Here’s a financial instrument that can be a money-saver, if not a lifesaver, when looking to buy your first home. Designed for this very reason, FHOG can be applied for during or even before the home loan, your Mortgage Broker can advise on how to do it and your eligibility.

Stable Employment Income

It is crucial to borrow money to buy your first home only if you can afford to make monthly repayments over the loan lifecycle. If not, you can risk repossession of your home and the impending loss of savings and credit standing. That means you should have a well-paying job that guarantees a constant stream of income. In most cases, you might want to take out an income protection policy to safeguard from not being able to work.