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Home Loan Strategies For First-Time Borrowers

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First-time home loans can be a little scary, and extremely stressful. Panicking will not help you get through the situation, but some advice will. There are some very simple things that you can do to save for your deposit. First, though, you need to know a ballpark figure of what you will need.

  1. Down Payment-You will first need to know about how much money you will need to be able to get a loan. This is the deposit or down payment. You will need to find a home in the area that you want to live in. Get the listing price and write it down somewhere. Decide on how much of a down payment you are planning to come up with. gov claims that the best amount is 20%, so we will use that as the starting point. If you find a house that is listed for $527,000 you would multiply the asking price by 20%, which gives you the amount of $105,400. This is the amount that you will need for a down payment.
  2. LVR-Your Loan Value Ratio is a number that a lender will use to assess your risk as a borrower. To figure this number out divide the loan amount that you want by the appraisal amount (if you have it). If you don’t have it use the asking price just to give you a ballpark figure. If you don’t have a loan amount yet, take the asking price minus the down payment amount for now. Using the numbers above you will have $527,000 minus $105,400 which gives you the loan amount of $421,600. You will now take $421,600 and divide it by $527,000, which gives you the answer of .8. So, your LVR is going to be 80% in this instance. Anything at 80 percent or above will require you to get an LMI, which is a Lenders Mortgage Insurance policy. This protects the lender by giving them a payout if you are not able to make payments.
  3. Loan Assistance-Before actually trying to get a loan check some programs that may help you. As a first-time home buyer, there are a couple of options for you to apply for. The First Homeowner Grant will give you some money to help with the down payment if you qualify. The First Home Super Saver Scheme is a savings account set up for you. You can also apply for help through the First Home Loan Deposit Scheme program.
  4. Lending Agencies-Now it is time to try and get pre-qualified for a loan. The best home loans can be found online, or in person, by simply doing some research. Find a company that will work with you. If you find out that you cannot get a loan to get the house you want, look around in the surrounding neighborhoods and see if you can find a home that fits your budget better.
  5. Save For Down Payment-Trying to save for the down payment can be the most difficult part of the process. Use your imagination and figure out simple ways to increase the amount of money that you can save every month. If you have a spare room or basement, rent it out. Sell some stuff that you don’t need. Sell your extra cars. Open a savings account that automatically draws from your paycheck. Get a second job. Etc.

These ideas are only a few that you can use to maximize your ability to pay for the deposit on a house. Ask family and friends for a loan. Whatever you can do, within reason, of course, get on it. The faster you get your deposit, the quicker you get to move into your new home.

 

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