Buying a property is an exciting and life-changing step. It can also be daunting, with various confusing terms and processes to understand. But don’t worry – this article answers all your common questions about purchasing a property, from understanding how much deposit you will need, and the type of documentation you will need to get ready to the process involved and the role of a broker or conveyancer. You’ll soon have all the knowledge you need to make an informed decision about your purchase. Let’s dive in!
What sort of a Deposit will I need?
When it comes to buying a house, the amount of deposit you have saved up can have a significant impact on the type of mortgage you’ll be eligible for and the terms and conditions that come with it. If you’re unable to put down a deposit of at least 10% of the purchase price, you’ll typically be required to take out loan mortgage insurance (LMI), which protects the lender in case you default on the loan. This can add a significant cost to your monthly repayments, and it’s something to keep in mind when budgeting for your new home.
On the other hand, if you’re able to save up a deposit of at least 20% of the purchase price, some lenders may offer you a preferred interest rate, which can help you save money over the life of the loan. This is because a larger deposit reduces the lender’s risk, and they’re more likely to offer you a competitive rate as a result. It’s important to research and compare different lenders’ rates and terms to find the best deal for your specific financial situation. Ultimately, the more you’re able to save for a deposit, the more options you’ll have when it comes to choosing a mortgage and the better positioned you’ll be to achieve your dream of owning a home. You can always use our Borrowing power calculator to determine how much you can borrow, based on your deposit and income.
What documentation do I need to provide?
Depending on the type of home loan you are applying for it can be an overwhelming process, particularly for first-time homebuyers. One of the critical components of the application process is documentation. Proper documentation is necessary to ensure that your application is processed quickly and accurately.
Here are some of the key documents you will need to provide when applying for a home loan:
1. Proof of Income
One of the primary factors that lenders consider when assessing your application for a home loan is your income. Therefore, you will need to provide proof of income, such as payslips, bank statements, or tax returns. These documents help the lender to determine your capacity to repay the loan. Most lenders will require past 3 months payslips as a minimum.
2. Identification Documents
To verify your identity, you will need to provide documents such as a driver’s licence, medicare card, a form of government ID if there is no licence available or a passport. These documents are essential in preventing identity fraud, and need to be provided for each borrower that will appear on the loan.
3. Employment Details
Apart from your income, your employment history is also a crucial factor that lenders consider. You will need to provide details of your employment history, including your employer’s name, address, and contact details.
4. Proof of Savings
You will also need to provide proof of your savings. This includes bank statements, investment account statements, and any other evidence that shows you have sufficient savings to cover the deposit and other expenses associated with buying a home.
5. Property Details (If you have identified a place to purchase)
The lender will need details of the property you intend to buy, such as its address and a valuation report. This helps the lender to determine the loan-to-value ratio (LVR) and the amount they are willing to lend you.
6. Other Financial Obligations
You will need to provide details of any other loans or financial obligations you have, such as credit card debts, car loans, or personal loans. This information helps the lender to assess your overall financial position and your capacity to repay the loan.
Providing accurate and comprehensive documentation is crucial when applying for a home loan. The above-listed documents are just some of the essential documents you will need to provide to ensure a smooth application process.
What’s the process of getting a home loan?
At Clearwater Brokers, here is how we will work with you;
Understand your Goals: We’ll take the time to understand your unique situation and goals.
Provide you with some Options: We’ll do thorough research, provide you with a few loan options and help guide you through your decision.
Get it sorted for you: Once you’ve selected your preferred loan we’ll do the legwork to get it lodged, approved and settled.
Help you save: We’ll stay in touch to make sure that you still have the right loan as your situation changes (and try and save you money along the way!).
How does a Broker help me?
In 2022, over 70% of loans were assisted by using a Mortgage Broker. When it comes to securing a mortgage, some homebuyers choose to go directly to their bank or even attempt to navigate the process online themselves. However, utilising a mortgage broker like Clearwater Brokers can often be a much better option. One of the biggest advantages of using a broker is the wide choice of lenders we have access to. Instead of being limited to one bank, brokers can connect borrowers with a variety of lenders and their respective offerings. Additionally, Clearwater Brokers have established relationships with business managers from various lenders, allowing us to negotiate more favourable terms on your behalf. This can include better rates, waived fees, and more flexible terms. At Clearwater Brokers we have access to tools and resources that can help find the right loan for your unique financial situation, such as loan calculators and comparison software. We can save you time, money, and provide a more favourable mortgage experience.
We work for you!
If you require assistance or would like to discuss these matters further, please be sure to contact us on 1300 85 64 65 or email us at email@example.com or find a convenient time to book a meeting.