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Buying a new home can be a complicated process. How do you ensure you get the best home loan with payments that will suit your lifestyle? How much money should you keep aside from your savings for lawyers and real estate agent fees? And how much will you need for settlement costs? These questions and more are commonly asked by people looking to purchase new homes.
Admittedly, the process is easier if you've already owned a home before. As a first time home buyer, your main goal to ensure that you can afford a suitable home is to save as much money as you can for your initial deposit. The size of your deposit will directly affect the size of the loan you need to take out and the amount of your monthly repayments.
Therefore if you're serious about getting on the property ladder, find a way to make your savings work for you. Investigate savings accounts and term deposits that will offer you a high rate of interest. If you don't put a lot of faith in your discipline with money, set up an account that will penalize you if you break a term deposit early. Your goal should be to make the maximum amount of interest on regular deposits. Remember, every dollar counts when it comes to purchasing your own home.
If you have a sound credit rating, you will find a variety of loans available to you. Many of these target first home buyers and offer flexible terms. You should investigate which type of loan will cost you less in the long run. Do you want to make regular repayments at a fixed interest rate for 25 years, or would you prefer to take advantage of falling interest rates and take out an adjustable loan?
Finally, you should be aware of the closing fees associated with any deal you enter into. Make sure you have budgeted adequately, for example, you have $10,000 saved that will not be included with your deposit. These fees cannot be borrowed and must be factored into your budgeting when you begin searching for a new home.
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