i want to buy my first home but have no idea how to approach banks or lenders for loans.
how does it work?
i have more than enough for a deposit on a unit but how do i know that i even earn enough to qualify for a loan and repayments etc?

Go into a bank and have a chat to them? I'm pretty sure there are some online tools on banking websites that allow you to input different monetary values and it'll give you some idea of what you can borrow. But I do believe that banks go off your overall income, without taking away tax and such, which is useless because you don't get all that money at the end of the day.

How much money do you have spare weekly now? I guess it comes down to your age, how much money you make, how long you have been in your current job for, and the prospects of continuing to work for your current employer.

Get onto a broker.

This is the mob I used - Finance Plus

We'd spoken with the like of Aussie, Wizard, Rams and a couple of others and Ken Beuthin from finance plus was the best to deal with. He wasnt pushy. Asked us if we had any preferance of bank or institution or if we just wanted him to track down the best loan for us in his opinion. He came back to us with a could of options. All paper work was done by email and post. I wouldnt know him even if I fell over him.

Even if you just talk to these guys they can point you in the right direction. I also sat down with 2 banks and to be honest I felt a little uncomfortable with them.

My loan is with Bank West ive got an 8.14% intrest rate fixed for 5 years. We decided to go fixed cause if the intrest rates went up we knew we could afford it (which has come in handy) and if they went down well thats bad luck for us but its only fixed for five years any way.

My loan is a 95% borrow I had lightly more than 10% deposit but once all the fee and taxes come in i needed the 95% borrow (well about 94% so we got slightly under 1% back which was a bonus and bought us a few things we needed once we moved in).

One thing I can suggest if you dont already live out of home - start putting together a "glory box". Garden tools, cleaning products, pegs, towels, light globes, condiments etc all add up very quickly when you first move into a place.

Dont borrow as much as you can - cause it costs more to live comfortably than you will first budget. Plus now you've got bills and rates.

Kel and I earn about $120k PA combined and we end up with about $300 by friday each week (we get paid thursday) after we have paid all the bills, home loan, credit card, personal loan, rates and grocery shop etc. Thats $300 to get gifts for friends (remember at this age theres heaps of weddings, baby showers, engagements and the odd 21st or 30th) have weekend entertainment, get the occasional take aways, buy CD's DVDs etc, but stuff for the house, vet visits for the dog, beer budget, go out with the boys and try to put some into the emergency fund. We live pretty much week by week and we both have company cars so theres no fuel and servicing costs to factor in.

Its not easy - but its definately worth it. I mean we never seem to have any money - but by the same token we never seem to go without anything either.

If I had the $ id buy another one tomorrow as an investment property. At this stage thats about 2-3 years off.

interesting little article on the topic

Matt I didnt see anything much interesting in that article?
got any points to highlight?

Oh Westpac would be a bank I'd be looking at for a loan at the moment. Their new CEO, Gail Kelly - formerly from St. George, is very keen on revamping their relationships with new borrowers and they are also looking like they may buy bankwest from HBOS who are in financial difficulty. Other wise it looks like NAB will go bankwest - hopefully not though cause NAB are useless as tits on a bull

yeah plenty. The information about borrowing becoming more difficult and the reasons why are good for the prospective borrower so that they can position themselves as quality customers

"Overall, the responses suggest that home loans will be harder to get but the banks are still keen to talk to quality customers."

Likewise, the increasing reluctance of the large banks to lend outside thier long term existing customer base would suggest to me that you target the bank with whom you've been with the longest, and leaverage this relationship when going for a mortgage with them.

"ANZ says it has tightened up in one area: it has removed interest-rate discounts on new low-doc loans with high ratios". In other words, it has become even more important to ensure that you have the maximum amount of paperwork available, that you're prepared to jump through the hoops, and you can show good savings and financial accountability. If it were me thinking about a mortgage, I'd be holding off and continuing renting until I was able to achieve those requirements.

It all equals lower interest repayments in the long run.

Anyway, that was my synthesis...

Find a good broker. They do all the legwork they do it every day and also know who is easier to get money out of.

true but also consider that brokers dont work for free. many of them will wack it to you in forms of an amount ontop of the loan or if they say they get paid by the lender you will find that the fees are factored into the monthy fees or even the interest rate itself.
i see a brokerage figures every day and i see the way they charge everyday.
sure they do know who to get the loan through and they make it easy, but it does cost.

Thats the tradeoff i suppose. go direct through the lender you can save, but you have to do your own legwork.

For home loans you can get a good idea of who to choose by looking at the millions of reviews. Money magazine and Choice, regulary provide what is claimed to be unbiased reviews.

go into a bank or mortgage broker and make an appointment. they will sit down with you and work out the maximum you can borrow for your income/expenses etc etc...then you can look for a house. the real estate agent deals with your loaner and all you have to do is sign a s%it load of paperwork.

also look around for the cheapest etc...we are with members equity (dont know if its just WA or Aus wide) but they have no account keeping fees etc...and we get a slighty discounted interest rate because they are based on superannuation companies so if youre with one of them on the list you get a better rate.

Good Luck

-miss626

Also, don't forget, as a first time home buyer you get about $15 000 back. There is a first time home owners grant ($8000 i think), and you get around $7000 back from the stamp duty.

Nice little bonus

We just went into NAB, spoke to a lady, and got a nice home loan. You just need supporting documentation (pay slips, ID books etc), and the rest is easy as. I would do it yourself, just goto the banks in your area, sit down with the ppl, get their best rates, compare, and make an informed decision.

We locked ours for 3 years, mainly because I like stability, but there are many options.

GL mate.

I actually found my broker got me better rates than the banks would offer me.

I would always go to a broker as opposed to a bank. The bottom line with this sort of thing is dollars. Plain and simple. Theres no reason you should stay loyal to your specific bank just because you bank with them. If you haven't dealt with a mortgage broker before, then speak to more than one. Some mortgage brokers might be inclined to steer you towards a deal that is better for them than it is for you.

Mortgage brokers usually have access to a lot of lenders, so you should be able to get a better package from a mortgage broker than an individual bank, and if you can't then your broker is not doing his/her job properly. Another reason to be talking to more than one.

The other thing which you should be looking for is the features your mortgage includes. there are heaps of options with this sort of thing that can save you a pile of money. For example, how often can your repayments be made? ie: paying weekly means you'll accrue less interest than paying monthly, does the mortgage have a redraw facility? if it does, and you are good with your money, you can save money for a rainy day and reduce your interest at the same time. Offset accounts? If you aren't good with money, stay away from this feature because you could end up paying for your groceries over thirty years.

You should check what sort of fees the loan has attached to it, some loans penalise you for paying off the loan early, which means that if you decide to sell the place before you pay it off, you'll get slapped with a fee...

A good mortgage broker should be able to help you out with all of these questions and more.


Theres a lot of good info here:

http://money.howstuffworks.com/personal-fi...te/mortgage.htm

I think someone above also said don't borrow to your limit if you can help it, in the last twelve months my minimum repayments have increased by around $350 a month, which if you can't afford to pay...

you don't get the stamp duty back, you just don't pay it in the first place

- Stooge007 out

Stooge = the man on tax

The only way i know of to get out of paying stamps in buying off the plan.

Ill give you a bit of advice based on my experiences.

1st mortgage was with NAB had a mobile banker come and see me at work, she took all the details she required called me a week later letting me know of approval. Found the place, paid the deposit rang the bank went into a brank 5 days before settlement, gave the relavant docs to the conveyoncer all went well.

2nd mortgage was for a apartment in South Yarra. This mortgage was through Bankwest. I can still see why I went with Bankwest, they have some excellent products, but they flood the market with these products, then the influx of new clients is too much for their infrastructure and their customer service was apauling. Mortgage docs being lost via registered post to W.A changing settlement dates. It got to the stage where I had to move in because I had let my other place so I had to pay the vendor rent for the time I was in there before settlement and also was fined for breaking contract. I am still chasing Bankwest to recoup these funds.

I have since re financed the existing NAB loan with Bankwest and intend to add to that a property I bought off the plan last year which wont be complete till mid 2009. If you are buying OTP be careful with the suburb, if its an established suburb then its hard to lose but I have heard plenty of stories, but if your are astute then the stamp duty savings are worth it alone.

My advice is do it as young as you can afford. Without doing your nuts. But also rememebr you will aways get that pay rise, and you will always earn more as you get older (typically) I had to make some sacrifices at an age where instead of being out on the turps thurs fri sat sun like the rest of my friends I was working. I still had a life just different priorities.

Try to avoid mortgage insurance as much as possible, but then saving for longer generally means house are going to be going up quicker than the rate your saving.

Good luck mate, its a good thing your planning early!

Cheers.

MPI - Mortgage Protection Insurance is where they make their money off you! Avoid at all costs!
If you can avoid it (good deposit, low risk borrower), you are much better off.

My first house required me to take MPI (which incidentally is protection for the lender, not the borrower!), and that was a 6K waste.
This house we didn't need MPI and with the FHOG we got some real savings.