Home Loan First Time Buyer Guide 2024

Your guide to getting a home loan for the first time in Australia

Securing financing to enter the property market can be a daunting task, especially for first-time home buyers. The process involves not only searching for the perfect property but also conducting house inspections, all while trying to secure suitable finance. 

Nevertheless, making that first step towards your dream home is a significant life decision and commitment. You can accelerate the realisation of your dream home by obtaining approval for the right home loan with the assistance of Koalify. We will allow you to focus on searching for your dream home, while we do all the hard work obtaining your finance approval.

When you choose Koalify as your finance broker, we will assist you in finding the right financial solution for you. This involves identifying the right lender, negotiating the most favorable home loan rate, and expediting the approval process.

Dream Home? We’ll help make it happen

We are committed to helping make your dream home a possibility. Koalify are home loan experts in Sydney, we conduct a comprehensive and in-depth research of credit policies, we negotiate with credit managers, and complete thorough interest rate comparisons among our 30+ lender partners.

We meticulously examine the fine print and provide industry-leading advice on the home loan that best aligns with your financial circumstances to help you achieve your goals.

Here are some common questions from individuals looking to apply for their first home loan. Discover how our team of home loan experts can guide you in securing the right home loan for your first home purchase with a free no obligation consultation.

How to Begin the Home Loan Process?

Before making long-term commitments such as applying for your first home loan, we recommend defining your goals and understanding the path you should take. This involves discussing your mortgage plans with one of our experienced home loan experts. Our experts work closely with you to grasp your immediate and long-term objectives, allowing us to determine your current borrowing capacity, financial capability, and the ideal property value to secure the right type of financing.

Our team of experts assesses your present financial situation and presents you with suitable lenders that align with your financial requirements. With a network of over 30 lenders we will be able to match the right loan to meet your requirements.

Should I Prepare a Home Loan Deposit?

Absolutely! Lenders view applications more favorably when there is a substantial deposit. The larger the deposit, the more attractive your application becomes to lenders. Typically, most lenders prefer applicants to have a 20% deposit, which should also cover other associated costs such as conveyancing, stamp duty, and government processing fees. If stamp duty is not waived, this translates to approximately 25% of the property's purchase price.

However, if you cannot secure a 20% deposit, there are still viable options available, including the First Home Loan Deposit Scheme (FHLDS) and guarantor home loans. Our home loan experts will guide you through all these options, ensuring you can make informed decisions throughout your first home buying journey.

What Documents Do I Need for a Home Loan Application?

When applying for your first home loan, it's essential to prepare the following documents:

  1. Passport or Driver's License

  2. Recent bank savings and credit card statements

  3. The two most recent consecutive pay slips for PAYG employees

  4. Most recent tax returns, financial statements, and notice of assessment for self-employed borrowers

These documents provide crucial personal information, and we recommend having soft copies of each document ready. Reach out to us today, and we'll provide you with a tailored list of required documents to streamline your home loan application process.

What Is LMI (Lenders' Mortgage Insurance)?

Throughout your journey in securing your first home loan, you'll likely encounter the term Lenders' Mortgage Insurance (LMI) multiple times. In essence, LMI is insurance designed to protect the lender, such as a bank or financing institution, in case the borrower defaults on loan repayments. Your lender may require you to pay for LMI if you cannot meet the 20% deposit requirement.

It's important to note that LMI is designed to safeguard the lender, not the borrower. However, it's crucial to consider the cost of LMI if you anticipate being unable to make a substantial deposit.

How Much Can I Borrow for a Home Loan?

Your borrowing capacity depends on various factors, including your existing income, liabilities, expenses, and the amount of deposit you have available. As a general rule, your borrowing capacity is limited by either your deposit or your income.

Use our free Borrowing Power Calculator to help give you a rough guide

Important to know this is a high level indication, we can complete an assessment prior to submission to the lender and be able to help determine your maximum borrowing power, speak with us today.

Are There Fees Associated with Home Loan Finance?

Here is a list of common costs you may encounter when purchasing a new home. Keep in mind that specific requirements may vary depending on individual circumstances.

  • Home loan deposit, typically around 20% if you're not eligible for government schemes

  • Conveyancing fees

  • Lenders' Mortgage Insurance (LMI) fees – we can assist you in negotiating for up to 95% LVR with no LMI for first home buyers (applies to doctors and other allied health professionals)

  • Establishment fee, also known as upfront or application fees, typically for specialist loans at larger amounts

  • Stamp duty – waivers may be available for first home buyers, subject to specific conditions

Additionally, you should consider the costs of moving, furnishing, and any renovation expenses for your new home. Don't forget to account for your monthly mortgage repayments and the cost of living.

What If I Can't Provide a 20% Loan Deposit?

If you are unable to meet the 20% loan deposit requirement, there are alternative options available, such as finding a family guarantor, exploring low deposit home loans, and considering the First Home Loan Deposit Scheme (FHLDS). We recommend discussing your situation with our experts to identify the best option for you.

In some cases, you may need to pay for Lenders' Mortgage Insurance (LMI) to secure loan approval, provided both you and the property meet the eligibility criteria. Many lenders also offer special home loan deals for specific occupations, potentially allowing you to secure up to 95% LVR without LMI. We encourage you to consult our mortgage professionals to determine your eligibility.

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