From looking at different lenders to handling the paperwork, we know that applying for your first home loan can be confusing and intimidating. But understanding home loans and getting the right help can make it an exciting and rewarding experience.
A home is one of the most important purchases you make in your life. So, we take you to the 7 steps that will help you secure the right loan for your dream home:
Step 1: Talk to a broker
The first step to fast-track your home loan journey is to talk to an expert. Consulting It’s Simple Finance’s mortgage brokers can make your home loan application process easy and stress-free as we will handle the paperwork, negotiation and settlement for you.
Getting the right help from the get-go helps you save time and energy. Generally, mortgage brokers can help you assess your financial goals, needs and situation to find the right loan product for you. They can also help you unlock and negotiate the government grants and schemes that you may be eligible for.
Naturally, as they are experts in the field, brokers know how to deal with a range of borrowers and lenders. This gives you an edge when you work with a broker from the start as their experiences and access to lenders improve your chance of securing a home loan that matches your circumstance.
Step 2: Compare home loans
After assessing your goals and financial position, it’s a great idea to shop around. The property market is highly competitive, so why should you settle for less? You have more than a thousand options to choose from. Comparing different lenders and loan products can help you find the perfect one you’ll be happy with.
Plus, let’s be real – a home loan is a long-term and huge debt. So, knowing your options and how much deposit you need to make can save you thousands on the life of your loan. When choosing a loan offer, you should compare the interest rates, different comparison rates, loan features, loan terms, repayments and other fees to find the one that suits you more.
When you get a home loan, you can choose between principal and interest and interest-only repayments. The principal is the amount you borrow, and the interest is the cost charged by your lender.
To put it simply, a principal and interest loan means your repayments include the principal and the interest costs. But if you choose an interest-only loan, you only pay the interest for an agreed period. Then, you switch to paying the principal and interest when the interest-only period ends.
Other than that, the type of loan also affects your mortgage repayments. When choosing between a fixed rate or a variable rate loan, you have to weigh whether you prefer certainty or flexibility. A fixed rate locks your interest rate for an agreed period (usually 1-5 years) while a variable rate fluctuates based on the RBA’s interest rate and your lender.
To help you have an idea of your loan amount, you can use our loan repayment calculator. If you’re unsure, our trusted brokers can help you compare and choose the right loan that works best for your financial situation. Book a FREE consultation now, and enjoy the best rates from 40+ banks and lenders.
Step 3: Get a pre-approval
After picking a lender and loan product, you may consider getting a home loan pre-approval. Your lender will likely assess your payslips, credit history and more. While not a hard requirement, it does have a lot of perks you can benefit from. Pre-approval or conditional approval doesn’t guarantee anything yet, but it indicates how much your lender is willing to let you borrow.
This way, you can narrow down your property search and steer clear of properties you won’t be able to afford! Additionally, you can comfortably and confidently make an offer since you know what fits your budget. So, you avoid second-guessing yourself whether you’re placing a safe bet or breaking the bank.
Step 4: Search for your dream home
Now, the fun part begins! After knowing how much you can borrow, you can begin your looking for the property you want. Once you’ve set your eyes on your dream home, do your due diligence to make sure you pay the right price for the right home. For example, attend inspections before making an offer so that you won’t have regrets later on.
At this stage, having a conveyancer or solicitor can save you from complex legal paperwork and unexpected costs. They play an important role in reviewing the contract and terms and conditions, ordering building and pest inspections to assess the quality of the property and ordering strata reports (if necessary). They can also negotiate the terms of the contract if possible!
Then, your lender will likely order a valuation of the property to check if they can give you unconditional approval (also known as formal approval).
Step 5: Apply for unconditional approval
After finding the right home and reaching an agreement with the seller, your mortgage broker will help you get unconditional approval. At this point, your lender may ask for more documents depending on your situation. Getting unconditional approval means your lender formally acknowledges and approves your home loan. So, you can let out a breath during this stage as you are very close to securing your keys.
Step 6: Review and sign contracts
All you need to do now is wait for your loan documents to arrive. A home loan is a long-term commitment, so make sure you carefully review the documents. Don’t worry, we can help you read the fine print so that you understand your home loan and make sure you get the bang for your buck. If you’re satisfied with the offer, you can now sign it and wait for settlement.
Step 7: Settlement
Once your lender confirms your documents, your solicitor or conveyancer will arrange the settlement date with the seller’s agent or representative. The settlement means the property is officially yours. This is usually the time when you pay other costs, including stamp duty and other fees.
It’s time to celebrate – you now own your home!
Secure your home loan without the hassle
Home loans can be quite confusing, but you don’t have to be alone in this journey. Get in touch with our trusted brokers to get the FREE expert help you deserve. We will guide you through your best options, help you apply for a home loan and settle in your dream house in no time.