A Guide to Applying for Your First Home Loan

Applying for a home loan is one of the most significant decisions that you can possibly make in your lifetime. The process involves many important considerations, and you need to be mindful of each one so that you can secure a suitable home and, more importantly, a stable financial future.

Out of the many aspects involved in applying for a home loan, perhaps one of the most crucial is the first. That is, how much can you actually borrow? The answer to that questions will determine what types of homes you can afford, the payment terms you will have to abide by, and many other concerns that will affect your life.

To give you a better idea of how to answer this question, we’ve listed the different factors that will affect it. Additionally, we’ll guide you through the early stages of your home loan application so that you can make the best decisions possible.

How Much Can You Afford?

There are several factors to consider when taking out a home loan. These include, but are not limited to, the following:

• Your Income and credit history

• The size of your deposit

• Your employment history

• Your residential history

Depending on your status, you may be able to borrow an amount that exceeds what you can comfortably afford. However, you must be careful so that you don’t inadvertently set yourself up for financial difficulty.

Here are a few ways you can ensure that doesn’t happen:

Know the Upfront Fees

Before you start your regular mortgage payments, there will be upfront costs that you first need to deal with. In addition to the deposit, some of these fees include application fees, stamp duty, and settlement costs. 

Depending upon your circumstances some of these costs may be mitigated or reduced via government sponsored deposit schemes or stamp duty waivers.

Knowing how much you need to pay upfront will help you plan your finances accordingly. It will also help you identify the size of the mortgage loan that you can comfortably afford. If you struggle with the upfront fees, for example, then it would not be a good idea for you to apply for a large mortgage. 

Know Home Ownership Expenses

When you have the upfront costs sorted out, it’s time to think about the expenses when it comes to owning a home. These will go beyond your regular mortgage payments. 

You will also need to pay for homeowner’s insurance. This is essential to keep your investment protected should something bad happen to it, such as earthquakes or floods. Council fees and utilities, such as water and electricity, should also be considered because these are recurring costs that come with owning a home. If you purchase a home unit, then there will also be quarterly body corporate strata fees.

Whilst enjoyable to many, there are also costs associated with maintaining a garden and home improvements. (Plan for a few trips to Bunnings!)

Determine the Lifestyle That You Want

Taking out a home loan means that you will probably need to make certain lifestyle changes to afford your investment. While owning a home can be a great boon to your life, it is not without its complications.

For one, you may need to cut down on your spending in other areas to pay off your loan. It’s all a matter of the kind of lifestyle that you wish to maintain when you get a house for yourself. If the sacrifices are going to be worth it, then you can’t go wrong with buying a house. On the other hand, if you’re not ready to say goodbye to your shopping and eating out habits, then you might want to rethink your decision. 

Evaluate Your Self-Discipline

When you have decided on the kind of lifestyle that you can be comfortable with, you need to evaluate your dedication and self-discipline towards maintaining a home. Ask yourself whether you are ready to commit to your choice and make the necessary changes needed to follow through.

Conclusion

When it comes to buying a house and taking out a home loan, it’s all a matter of your financial capability and your overall sense of responsibility. Before you take that step, evaluate where you stand financially and how much you’re willing to change in case you need to. 

Do you need help with your home loan? A reliable mortgage broker in North Sydney can help you. Here at Brickhill, we can help you get the right amount of mortgage loan that will suit your needs!