How will I know when I’m ready to take out a home loan?

How will I know when I’m ready to take out a home loan?

For millions of Australians, buying a home is the biggest purchase they will ever make. It takes years to save up for the deposit, months to plan, and weeks to move into your new place. And it’s not over when the boxes are all unpacked – you’ve now got years of monthly repayments ahead of you.


It can be equal parts exciting and terrifying. It’s a huge multi-year commitment and it’s a huge personal decision. This property will be part of your life for years to come and you want to be absolutely sure that you’re going to be happy there.


So where do you start?


If it’s your first time buying a home, you can alleviate a lot of the stress by preemptively getting your finances in order and doing your research early. This will put you in the driver’s seat as you attend housing inspections and you’ll know your limits when you’re chatting to brokers and banks.


Start by making a list of the non-negotiable features that you want in a home. What are the things that you absolutely need? Perhaps you need a larger living space for family time, a study where the kids can do their homework, or a backyard for the dog. Once you’re clear on these things, you’ll know in a heartbeat whether the home you’re inspecting is fit-for-purpose.


Have you calculated your borrowing capacity?


Knowing how much you can afford to borrow will also put your house-hunting into perspective. You will quickly begin to get a sense of what you can get for the money you’ve got or the home loan you are eligible for. Start exploring your options by using a home loan calculator. Most lenders will have one available on their website to help you with your planning.


LoanDolphin has it’s very own borrowing power calculator to get you started.


Here are some more to help you with your research:


Before you approach lenders, it’s a good idea to check your credit score and history to see how things are looking to avoid any unnecessary surprises or delays . The better your history of managing debt, the more likely the lender is to consider your application. If your record isn’t as clean as you’d like it to be, perhaps it’s worth holding off for a while and making some changes to see if you can improve your score.


Have you considered the other costs involved?


Buying a home is expensive as it is, but there are plenty of hidden costs that tend to be forgotten. Avoid surprises by keeping track of loan application fees, valuation fees, pest inspections, the cost of liasing with the council regarding development applications, conveyancing costs, stamp duty, insurance and many more. These can add up quickly, and that’s before you’ve even looked at the cost of physically moving in.


Having said that, the Australian Government offers grants and subsidies to reduce the financial strain of breaking into the housing market, so be sure to check out the First Home Owner’s Grant and see whether it applies to you.


If you’ve hit your savings goal, you’re on the hunt for the perfect home, you’re ready to commit to researching your options thoroughly and you’ve got these things on your radar, it may well be time to seriously consider your home loan options.


Want to know what questions you need to be asking at home inspections? Listen to the first episode of our new podcast series, The Home Stretch, for the low-down on where to start your research.


LoanDolphin is a home loan bidding marketplace where you get banks and mortgage brokers competing for your loan in just a few minutes. For free!