Thursday, 13 December 2012

Guide to buying your first home

The financing process for a first home is generally the same as outlined in my post on the mortgage application process:
http://www.millionaireonheels.com/2012/12/mortgage-application-process.html

The main differences that you’ll see as a first home buyer are that typically:
  • Your target equity in the property will be lower
  • You won’t have a track record in paying off such large loans
  • There is additional support for you from the state and national governments such as the First Home Owners Grant, which will also require additional applications
The Millionaire on Heels bought her first property nearly a decade ago.  Here are a few things I learned:
  • The best thing you can do is have a small loan size.  The incentive when you are looking for that first property is to borrow as much as you can possibly afford to make repayments on.  However, unless your salary increases a lot in the short term, this will result in you struggling to pay off much more than the minimum repayments.  A better strategy is to borrow a bit less, to allow you to pay off some of the principal and build up equity so that you can upgrade to your next home sooner.