The fact that you have landed on this page shows that you are emotionally ready to buy a new house and settle down. But are you financially prepared to buy a new home and take out your first mortgage?
Well, if you are in a dilemma, then our team at APW Finance is here to help and guide you through all the requirements and procedures of taking out a mortgage. Through this article, our team of financial mortgage experts has compiled a few essential points to consider regarding your first mortgage and financial stability. Read on.
Top 5 Things To Know Before Taking Out Your First Mortgage
Fixing the budget and planning the finances
Finance management is an essential factor needed in all first-time homebuyers since many new expenses will follow. Apart from the interior cost, many other expenses like insurance, water bill, council rates, etc., are involved. You will also be responsible for the upkeep of all the electronic appliances, maintenance, etc. So, owing to these expenses, you have to ensure that you have money to fulfill these expenses apart from your first mortgage. To ensure everything runs smoothly, it is essential to have a fixed budget and futuristic financial planning.
Knowing your borrowing capacity
Borrowing capacity always plays a vital role in buying a new house. Apart from the fact that you want to live in the home of your dreams, you must also know whether you can afford it even in the long run. Your borrowing capacity directly depends upon your repayment capacity, which is directly proportional to your job stability and your salary. Suppose your earning is good enough to withstand all the expenses of your new home today and even ten years down the lane. In that case, your repayment capacity will be high and, eventually, your borrowing capacity. However, always remember that lenders meticulously check for the length of your employment.
Requirement of the deposit amount
Generally, 20% of the total property price is required as a requisite deposit. To explain with an example – if your house costs $500,000, you will need a required deposit of $100,000 upfront. Being a first-time buyer, saving for the deposit amount is always a challenge. But we at APW Finance can let you overcome this hurdle by associating you with lenders who give LMI – Lenders Mortgage Insurance. You can contact us for more elaborative information on this. We would also like to tell you that having a higher deposit value is always beneficial, as it means having a higher equity amount.
Handling repayments must be smooth
Repayment is yet another significant factor to consider while considering your first mortgage. It is just like paying rent on time, but the only difference is paying a higher amount to the bank or the lender directly along with the levied interest rate. You can check the repayment amount with our loan repayment calculator to anticipate the exact monthly repayments. Before taking out your first mortgage, make sure you are financially stable enough to fulfill monthly repayments.
Being prepared to withstand interest rate spikes
Interest rates play a significant role in home loan repayment. If you have taken the home loan at a fixed interest rate, you would be better positioned when the rates go high. Your repayment amount will not be affected. But on the flip side, if the interest rate goes low, your repayment amount is still not affected, and you will be paying a high amount. So irrespective of fixed or variable interest rates, you must be prepared to face the sudden spikes and lows.
You can contact us for more information on the first mortgage and the entire loan procedure. Get associated with the right kind of lenders through us.
Check out our Mortgage Calculators for more details.
Experienced Director with a demonstrated history of working in the accounting industry. Skilled in Tax Preparation, Self Managed Superannuation Funds (SMSF), Accounting, Income Tax, and Tax. Strong professional with a Master of Applied Finance focused in Taxation from University of Western Sydney.