Setting goals is arguably one of the most important steps when planning to buy your first home. As one of the most expensive and significant purchases you make in your life, it pays to be as prepared and informed as possible.
Many people begin by setting financial goals and developing money management strategies, but sometimes the best place to start is with you.
These things will not only help you determine what kind of home you might like to buy, but also what approach to home ownership you will take. You may wish to be an owner-occupier, and live in the home you purchase straight away, or you may wish to invest in property and rent it out.
Whatever you decide, the best thing you can do is think about your current life stage and your immediate, medium and long-term needs. Buying now with an eye for the future can save you money in the long run.
Of course, even with thorough research, you can’t plan for everything in life, but mapping out these scenarios will help you find the best property ownership approach for you.
Before you start searching for your home, it’s very important to know your price range and how much you feel comfortable spending.
Of course, if you find yourself in a position to borrow more than you first thought, it doesn’t necessarily mean you should. While there is no right or wrong answer to how much you should spend on your first home, it’s important to ask yourself how comfortable you feel about entering into a long term home loan agreement and how much you can actually afford to spend. Remember, you have to keep living too!
Do your home loan repayment sums in relation to your overall budget. Factor in your living expenses and any additional loans or credit card debts you have to pay. It’s always better to over budget so you’ve got the flexibility to cope with any changes that might come your way – changes in interest rates, renovation or unexpected repair costs, or loss of income due to illness or injury. The more you’ve got up your sleeve, the less stressed you’ll be in the event something happens.
You can use our helpful Savings Planner to see how fast you can save for a deposit.
Saving for a deposit can be a daunting process, and sometimes it can feel like you might never reach your goal. That’s why we’ve put together some helpful tips to keep you motivated and on track to get into your first home.
Once upon a time, a deposit of 20% of the purchase price was necessary to secure a home loan. Now, with the availability of Lenders Mortgage Insurance - insurance that protects your lender in the event you can no longer pay off your loan - the deposit amount required is much less strict, at a minimum of 5% of the value of the home.
We recommend you aim for around 10% as a starting point, so you can set a savings goal. The more you save, the less you have to borrow, and the less you’ll pay in interest over the life of your loan.
You will also need to cover all the additional costs associated with buying a home, like stamp duty and legal fees.
Saving a deposit is often the hardest part of your first home buyer journey. It takes the average Australian First Home Buyer four years to save a deposit for a house, and that’s a long time to stay motivated and stick to your goals.
It may seem like an impossible task at first, but if you break it down into small and achievable goals, we guarantee you’ll get there quicker than you think.
Create an automatic savings plan – set up a high interest savings account, like our Online Saver and aim to save 10% of your pay every time it comes in. By automatically moving money over every time you get paid, you’re less likely to spend it on things you don’t need.
Pay off your debts – reducing any debt like credit cards and personal loans may not sound like the fastest way to save, but it’ll save you from paying interest and free up more of your income in the long run. Plus, making regular repayments on other loans puts you in a good position when it comes to formally applying for your home loan.
Decide what you can live without – You don’t have to give up everything, but making some small sacrifices can really add up when it comes to saving for your deposit. If you find it difficult to cut things like going out for dinner, buying new clothes or cable TV out of your life completely, try eliminating them for just one month at a time. For example, take your lunch to work every day one month, then vow not to buy new clothes the next. It all adds up.
Sell what you don’t need – we’ve all got unworn clothes or old furniture laying around, so why not make the most of them and sell them on eBay or host a Garage Sale for some much needed extra funds? You could be hoarding hundreds of dollars worth of unused items without even realising!
Review your statements regularly – knowing exactly what you spend your money on helps you determine which areas you can free up a little extra cash.
Make a budget and stick to it – use our Savings Planner to help you map out your regular payment commitments like phone bills and insurance, so you know how much money you’ve got left for everything else.
Choosing your first home should be fun, not stressful. Once you’ve sorted out how much you can afford to spend, the next step is to think through what you’re looking for in a property, and try to match that with what’s actually in the market. Here are some things to consider when looking for the right home.
From here it’s great to make a list of things you are and aren’t willing to compromise on. You may not be able to find a house that ticks all of your boxes and is still in your price range, but prioritising your needs will help you make sure you get as close to the perfect home as possible.
There are a number of websites and property sections in the newspaper that can help make your search for the perfect home a little easier. Check out the websites below as a starting point.
Of course, while online research is a helpful first step in your property search, the best way to get a feel for a property is by attending open house inspections and auctions. You can also talk to your local real estate agent about your needs.
As you search for the right home, you may wish to access some more detailed information about a specific property, suburb or recent sales prices for similar homes in similar areas. There are a number of reports you can access to help you get the information you need.
You can also purchase property reports from real estate data companies such as RP Data, APM and Residex. They’ll generally give you sales data for your chosen suburb over the last 12 months, as well as previous sales prices for a specific property address. In most cases, you’ll be able to preview a sample of the report, so you can see what kind of information it contains before you purchase it.
When deciding on a home loan, it’s important to choose one that’s right for you. In addition to comparing rates and product features, you also want to think about what it will take for you to become debt free sooner, and to pay as little as possible in interest and other charges.
With a variable rate home loan, your interest rate fluctuates as the market does. The Reserve Bank of Australia’s monthly Official Cash Rate announcements, along with local and global economic decisions all influence financial institutions’ decision to shift or hold rates.
With a fixed rate home loan, you can lock in your interest rate for a specified term, usually 1, 2 or 3 years. This can give you certainty when it comes to repayments, as you know they won’t change, even if the interest rate does.
With an Interest Only home loan, you can repay only the interest on your loan for a specified term, usually up to 5 years, reducing your monthly repayments and maximizing your tax benefits.
Every home loan is different, and there are a range of features and benefits to consider before you decide on the right one. Here are a just a few that will help you determine which loan is right for you.
Look for a loan that gives you flexibility with your repayments. Most loans let you choose between weekly, fortnightly and monthly repayments, giving you the freedom to pay off your loan in a way that suits you.
Some loans charge you an additional fee for making extra repayments. If you think you will be able to make extra lump sum contributions to your loan every once in a while, look for a loan that lets you do this for free so you can get ahead faster and don’t forget, making repayments more frequently e.g. fortnightly or weekly can help you pay off you loan sooner too.
When it comes to managing your home loan, you want to pay as little in fees as possible. As well as being able to make additional repayments fee free, look out for things like establishment fees, account keeping fees and early payout fees. You want the freedom and flexibility to pay off your mortgage as you choose (while meeting your monthly minimums of course), so it’s important to look for loans that won’t charge you for getting ahead on your mortgage.
An offset account is an everyday savings or transaction account that is linked to your home loan account. The money in your offset account is used to offset the amount of your loan, helping you to reduce the life and cost of your loan, without tying up all your funds. For example, if you have a loan amount of $250,000 and an additional $15,000 in your linked offset account, you’re only charged interest on $235,000 of your loan amount.
With a home loan redraw facility, you can access any additional funds you’ve deposited into your home loan account. This means any lump sum repayments you make on top of your regular monthly repayments are not only helping you pay off your home loan sooner, but can also make budgeting easier when life’s little extras, like Christmas presents or renovations, pop up.
There’s no doubt that buying your first home is as exciting as it is challenging. There is so much information to sift through, not to mention the home loan application itself. Our local home loan experts are there to help you every step of the way. Not only do they offer helpful, expert home loan advice, but they also help you to set and achieve realistic goals. They can tell you everything you need to know about the first home owner grant, budgeting, and all the ins and outs of buying a home, like insurance, stamp duty and legal fees.
Come in for a chat.
If you’d like to know more about applying for a home loan or think you’re ready to apply, you can speak to one of our local lending experts. They’re as local as you are, so they can tell you everything you need to know about purchasing your first home.
Simply make an appointment with your local lending expert at your nearest Rock branch, or call us on 1300 083 793.
Something to consider when buying your first home is how you’re going to protect it. We have a range of insurance products to help you get the cover you need, from Home and Contents Insurance, to Landlord Insurance, to Loan Protection Insurance, which helps protect your loan repayments in the event of illness or injury. View our insurance products.
Having a pre-approved ‘yes’ from The Rock gives you the ability to say ‘yes’ too. Pre-approval allows you to make an offer quicker, with the confidence of knowing exactly how much you can afford to spend. To find out more about home loan pre-approval make an appointment online with your local lending expert today.
Applying for a home loan with The Rock is easy, and we’ll keep you up to date with what’s happening every step of the way. Check out our step-by-step guide to the application process below.
Download our home loan checklist to help you get your documents ready, then drop into your nearest branch or call 1300 083 793 to begin the application process. We’ll process your loan application on the spot, subject to an employment check, valuation & lender’s mortgage insurance. You’ll have a decision on your home loan within 60 minutes, guaranteed.
We’ll check your documents, including your employment history, to verify that they’re all correct.
We’ll order a valuation to verify the value of your preferred property. The valuer will get in touch with the real estate agent directly and arrange the valuation; then report back to us.
If it’s required, we’ll apply for Lender’s Mortgage Insurance. If you have a sizeable deposit, you may not need it. We’ll let you know either way.
At this stage, once your details have all been verified, the valuation is satisfactory and mortgage insurance (if required) approved, we’ll unconditionally approve your loan, which is a 100% guarantee that we’ll be financing your home loan.
At this stage, your loan will be opened, and the arrangements to book settlement will be made with your conveyancer and settlement will take place at an agreed time.
Think you’re ready to apply? Make an appointment with your local lending expert today, give us a call on 1300 083 793 or drop into your nearest branch.
With a variable rate home loan, your interest rate fluctuates as the market does. The Reserve Bank of Australia’s monthly Official Cash Rate announcements, along with local and global economic decisions all influence the banks’ decision to shift or hold rates.
The Rock's Line of Credit facility is an effective way to access the equity in your home whenever you need to. It also provides great flexibility by offering access via ATMs, EFTPOS, Internet Banking, Phone Banking and cheques together with direct entry facilities.
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We don’t give compliments often but in this instance Adam has gone above and beyond to secure us our home loan and see us through to completion of settlement, he is a valuable asset to the Rock.
I was very pleased with the service, honesty and especially the positivity of The Rock. Thanks to Paul Wilson I am now on my way to owning the home I have been renting for nine years.
At The Rock, we strive to do the kind of things we believe other banks should be doing. Like offering local, friendly service backed by competitive products and giving back to the communities we’re part of.
Having been around for more than 50 years, we’re experts in transaction facilities, savings accounts and lending products and offer a range of comprehensive insurance products through a partnership with CGU, a leading Australian insurance provider.
We’re all about exceeding our customers’ expectations and we’ve built a strong reputation offering a wide range of financial services right across Australia.
The Rock - A division of MyState Bank Limited (MyState) ABN 89 067 729 195 AFSL 240896 Australian Credit Licence Number 240896. A wholly owned subsidiary of MyState Limited ABN 26 133 623 962.