The first question you'll want answered when deciding to buy a new home is how much you'll be able to borrow for the purchase.
Your borrowing power will determine how much you can spend, and the type of property you can afford to buy based on your current financial circumstances.
Once you know what your budget is, you can begin to research the property market to discover your first home buying options.
You can quickly and easily calculate and estimate of your borrowing power using a borrowing power calculator.
It makes sense that if you've earning more and your living expenses are consistent, a bank will give you more options for your first home mortgage.
No matter what your income is, all lenders look for a strong savings history. So even if you're saving a small amount each week, this is going to look great to a lender as they can see that you're totally committed to the goal of owning your first home.
Demonstrating a strong savings history gives you a greater choice of home loans and mortgage features, as well as access to lower interest rates.
When you apply for your first home loan, it's essential that you include all of your monthly bills, living expenses and your regular spending when you consult with your mortgage broker to find the right home loan.
Living expenses includes everything such as food, utilities, education, healthcare, and transport - all the things that contribute to maintaining a lifestyle you can enjoy.
If you have any debts outstanding, like credit cards, car or personal loans, now is the time to consolidate these and pay them off. This will put you in a stronger position when you apply for your home loan pre-approval.
In order to prepare for your future mortgage repayments, you might take the challenge of saving up to 30% of your after-tax income each pay cycle for a few months.
When you can demonstrate through bank statements that you have consistently been saving for 3-6 months, you'll be in a much stronger position for your first home loan pre-approval.
Plus, if you can save up 20% of the purchase price of your first property, you’ll avoid having to pay Lenders Mortgage Insurance (LMI).
As well as the first home deposit amount, you need to have enough saved for the other one-off upfront costs of purchasing a property.
When you are thinking about purchasing a home, it’s a good idea to find out your credit score. A mortgage broker can do a 'soft' credit check for you which won't show on your credit file, so find out where you stand now.
While the borrowing power calculator gives you a rough guide of what you can aim for, consulting a mortgage broker will give you the most accurate borrowing power assessment.
You can use your borrowing power to set your savings target and prepare your first home buying timeline. A good mortgage broker will help you prepare a budget to reach your savings goal.
Our savings target calculator can help you to work out your timeline to your first deposit too.