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How to Finance Your New Home

Getting out of the rental game is a huge milestone that many people dream of achieving. With some smart financial moves, a First Home Buyers Grant and solid savings, you’ll be in a much better position to build the home of your dreams. At Hotondo Homes we understand that taking the plunge into building a new home can be intimidating and stressful – not to mention the level of commitment that is needed throughout the process. It’s always best to fully understand the financial implications when embarking on a home loan to build your first home. Let us put your mind at ease with some answers to the most common questions that are raised by first home buyers when it comes to getting their required finance.

How much do I need to save for a house deposit?

There really is no magic number when it comes to a house deposit – but 5% of the property value is the lower threshold, although ideally it should be more if you have it. The price of the property will give you an idea of how much you need to have saved as a deposit – just work out what 5% or 10% of the total purchase price is to get an idea on what a suitable deposit amount will be. From government grants, to reduced deposit loans, there are government incentives and options available to help you move into your dream house sooner. Speaking to a mortgage broker will help you understand exactly how much you can borrow, how much more you need to save and whether you will need to pay any mortgage insurance.

As a borrower you may already have an idea of the threshold you need to meet in order to have a bank loan approved. It’s essential that you have at least 5% of the property value before you will even be considered for a home loan. It’s good to remember that the amount able to be borrowed will vary between lenders. When it comes to your Loan to Value Ratio (LVR) the following is a general guide you can look at:

  • Less than 80%: No need to prove savings
  • From 80-85%: Most lenders don’t need you to prove savings
  • Above 85%: Strong chance you’ll need to prove your savings

Am I eligible for the First Home Buyer Grant? 

The First Home Owners Grant is a single payment from the government that aims to assist people when buying their first home and is only available if you buy or build a new home. If you’re planning on buying or building a home that is valued up to a certain amount defined by the government, you could be eligible for this lump sum depending on the state or territory you live in.

What is a financial health check? 

A financial health check is essentially a review of your personal finances. The stability and current state of your financial affairs is known as your ‘financial health’. This helps you to focus on your goals by understanding how to make better decisions about your finances for the present and the future. Once you know the ins and outs of your finances as a whole, you’ll be able to create better habits around spending and saving, make a solid plan and perform regular check-ups to enable your goals to be met. Strong financial health has a steady income flow, a cash balance that continues to grow, rare exchanges in expenses and strong ROI. 

Take the first steps towards building your very own beautiful home with Hotondo Homes, you won’t regret it. Get in touch with our friendly team and we can answer any questions you may have. For more information about the different floor plans and home designs that will suit first home buyers, please visit the Hotondo Homes website today.

 

Hotondo Homes is not a registered financial advisory, so we recommend you speak to your trusted financial advisor or a mortgage broker to receive expert advice before entering into a real estate contract of sale.

 

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