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First Home Buyers

LET’S FACE IT, BUYING YOUR FIRST HOME IS A BIG STEP. AS WELL AS THE FINANCIAL SIDE OF THINGS TO THINK ABOUT, EVEN JUST THE PROCESS OF BUYING CAN SEEM CONFUSING.

With so many different people involved and all that paperwork, it can be hard to know where to start. But it can also be fun. Finding your perfect place, and planning how you’ll furnish and decorate it is really exciting.

So don’t worry, if you’re feeling a bit overwhelmed, help is at hand SAF Finance Group will guide you through the process.  To make things a little easier, we have created a step by step guide to help you understand the process.

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STEP 1 – WHAT CAN YOU AFFORD
HOW MUCH MONEY WILL I NEED?

As a first time buyer, you might not have a large bundle of cash to buy a new home. It’s more likely you’ll need a loan secured against your new home.  Your loan repayment are usually set on a 25 to 30 year loan term, in monthly installments.

So before you start house hunting, work out how much you’re willing and able to afford in loan repayment.  Take in to consideration, your spending and saving habits to ensure that future life changes wont impact your lifestyle.

SAVING FOR A DEPOSIT

It’s important to make sure your savings can cover the costs of buying your first home. You’ll need to put down a deposit (usually at least 10% of the purchase price) on the property.

OTHER UPFRONT COSTS TO THINK ABOUT

It’s important to get the full picture of what buying your new home will cost. As well as the deposit and purchase price, there will be other one-off fees that will be added to your new loan.  Each Lender has different fees and charges and this may also help determine which lender is better for your particular situation.

Legal Fees

A Conveyancer or Solicitor carries out all of the legal work involved in buying a property.

Valuation Fees

The lender arranges a mortgage valuation on the property to confirm the use and value of the property.  They also check the condition of the property to ensure the property is habitable and there are no other risks associated with the property.

Disbursment Fees

The conveyancer pays these to other third parties on your behalf, so he can obtain searches on the property.

Building & Pest Inspection

For added peace of mind, a survey goes further – checking the building is sound and highlighting major problems. A pest inspection will ensure that there are no pests or rodents that will effect the structure and quality of the property.

Stamp Duty

A Conveyancer or Solicitor carries out all of the legal work involved in buying a property.

Loan Application/Establishment Fee

Most mortgages have a product fee. This can usually be added to the mortgage and is subject to interest.

Lenders Mortgage Insurance (LMI)

Lenders’ Mortgage Insurance (LMI) protects a lender against loss should a borrower default on the loan and the property is subsequently repossessed and sold. The insurance covers the amount from the sale where it is not enough to pay off the loan in full to the bank or lender. LMI is payable by the client.  To avoid this fee you must have a 20% plus enough funds to cover your borrowing costs.  LMI is a once only fee which is paid at loan settlement. How much money you borrow and the size of your deposit will determine the fee amount for the LMI.

Building Insurance

Buildings insurance covers you financially against damage to the structure of your home. This includes permanent fixtures and fittings against loss or damage by an insurable peril such as fire or flood.

Loan Protection Insurance

Loan Protection Insurance provides financial assistance where you suffer a serious illness or injury that is likely to prevent you from making your loan repayments for a period of time.

10% Contingancy

For peace of mind it’s worth having additional savings to cover any unexpected costs.

HOW MUCH COULD YOU BORROW?

Contact us at SAF Finance Group, we’ll give you an understanding of what you will be able to borrow and which lenders and products are available to you, ensuring you are able to meet long and short-term goals.

We will complete a full finance assessment and loan comparison, ensuring you can afford the loan repayments even if interest rates rise.  All fees associated with a loan will be outlined so you know exactly what is required from you.

At this stage, we suggest that we apply for a pre approval with your preferred lender.

Working out what you can borrow and having a pre approval in place might be easier than you think.  This could put you in a strong position when making an offer on a property. It’s proof that you’re serious and can get the money to buy it.

PRE APPROVAL PROCESS:

They’ll run a quick check on things like your address history, current earnings and any outgoings such as loans and credit cards that you might have.

Of course, the pre approval depends on a satisfactory valuation of the property to be mortgaged and the information you’ve given is confirmed.

We recommend that you obtain a copy of your credit report from Veda prior to applying for finance.

Step 2

STEP 2 – START LOOKING

Once you have an idea of what you can afford, you’ll be ready to start the fun part – looking at properties. But where should you start? When you’re choosing a new home there’s a lot of basic stuff you need to ask yourself. Such as:

  • Where you want to live?
  • How much space do you need?
  • How much work are you able (or willing) to do on the property?
  • What kind of niggles can you live with – and what would drive you mad?
  • What kind of niggles can you live with – and what would drive you mad?

Your priorities might shift once you start looking, but it helps to write down the basics, before you begin your search.

STARTING YOUR SEARCH

A good place to start is by contacting estate agents in the area. And there are also some useful websites that can tell you lots about areas and properties before you even set foot in them.

WHAT’S UP & COMING, OR GONE?

Not sure where your dream place to live is? Consider looking into which area is ‘up and coming‘ and whether now is a good time to buy there. Or, whether it’s better to wait and see how it develops.

Striking a balance can be hard. Affording a home in a nice area can mean compromising on the size of property. If this is your situation, don’t lose heart. There are plenty of other first time buyers in the same boat.

Look at a map and check the outer edges of your favorite location. Because once a good area is established it tends to ripple out attracting people, just like you, to buy there.

GOING TO SEE PROPERTIES

When you see somewhere you like you should arrange an inspection, usually with an estate agent, or at “Open House.”

It’s really important not to feel rushed or pressured. Take your time and ask all the questions you want. And do some initial research.

Ask friends and family who own their own homes about their experiences and what to look for. Consider the following:

  • View with a friend – they may spot something you don’t.
  • Take notes – if you’re visiting lots of properties you could take photos as a visual reminder.
  • A tape measure might come in useful too. Properties can be pared back to make a room look deceptively big. Equally clutter could make a good space feel small.
  • Don’t be blinded – decoration is easy to remedy, other things aren’t.
  • Don’t ignore any pungent odors. They could indicate damp, which can be a serious problem. Or they could be from pets or smokers, which can be sorted by fitting new carpets.
  • Have a second viewing at a different time on another day – things like neighbor noise, light and traffic can vary dramatically.

If you find a property you like, before making an offer ask the Agent for the Section 32 and copy of Contract of Sale and forward the copy to your Solicitor or Conveyancer to advise you on your legal obligation if you make an offer on the property, the conveyance/ solicitor will let you know of any special conditions.

Special Conditions may include a finance clause such as “Subject to Finance”

“Subject to satisfactory Building and Pest inspection”

WANT TO BUY BRAND NEW?

Then you may be buying ‘off plan’ or building your own home with a registered builder “house and land package”.  This means that you decide to buy before your home is finished, after looking at the drawings or a display home. Remember:

  • the property you want to buy is likely to be different from the display home
  • the room sizes may be smaller than those in the display home, so look closely at the plans
  • ask the developer/ builder how many houses will be on the finished site and what the timescales are to complete the work. Are any additional facilities being added (such as playgrounds)? And what, if any, properties will be allocated to rental housing?
  • read the small print in the developer’s/builders specification, to check the finishes are what you want
  • ensure you have enough time to monitor the builders progress and work being carried out.
  • Sign a “fixed price contract”
Step 3

STEP 3 – PUT IN AN OFFER

Finally found the home of your dreams? Then it’s time to take the plunge and put in an offer.

When it comes to negotiating, there’s no one, fool-proof method. But remember the asking price is what the seller hopes to get, not necessarily what they will get. And as a first time buyer you may be able to move quickly. This could be more important to the seller than a slightly higher offer.

MAKING THE OFFER

When it comes to price, avoid putting in your best offer straight away. Give yourself room to manoeuvre.

And bear in mind that the longer the property stays un-sold, the more likely the seller will drop the price.

Try not to worry if your first offer is turned down. You can still increase it if you want, or can afford to.  You can always offer a fast settlement time such as 30 days, time equals money.

WHAT TO ASK YOURSELF WHEN MAKING AN OFFER:

  • How much do you want the property?
  • How much can you afford and are other people interested?
  • Does it need a lot of work doing to it?
  • Has it been on the market long?

WHAT HAPPENS ONCE YOUR OFFER HAS BEEN ACCEPTED?

Firstly, congratulations! No doubt you’ll feel excited, and also a little apprehensive too. After you’ve discussed things in person with the estate agent, they’ll usually ask you to sign the Contract of Sale confirming:

  • everything you consider relevant to the deal, e.g. fixtures and fittings, and
  • how you will pay for the property (such as your mortgage).
  • Settlement date and terms
  • Deposit and date due
  • Which lender you are applying for
Step 4

STEP 4 – LOAN APPLICATION:
HOW YOUR MORTGAGE APPLICATION IS ASSESSED

The lender will assess your application on several different key areas, they will look at the information you have given, along with your credit history as well.

  • How much spare income do you have to repay your mortgage?
  • Do you have a good credit profile?
  • Where does your deposit come from?
  • Are you the right age?
  • What is your work situation?
  • Is it the right kind of property?
  • Is the property worth the purchase price?

Your identification is really important too.  Ensure your drives license has the correct spelling, include your middle name or initial and correct residential address.  This goes for any other ID you may have also.

Whether your application is successful or not, we’ll provide you with an action plan to move things forward.

If your application is unsuccessful, we’ll help you understand why.

 THE LOAN ASSESSMENT PROCESS

Forward through your recent and current paperwork including the signed Contract of Sale and section 32.  Extra questions maybe asked relating to your individual circumstances.

Assessment should take place in 3-5 business days depending on order of priority and lender service times.

If your application ticks all the boxes with the lender, your loan will be approved “subject to valuation”, and “Lenders Mortgage Insurance Approval (LMI)” if applicable.

A valuation will be ordered on the property to ensure that the property is worth the purchase price, is a habitable property and research any risks with area, location etc.  The time frame for valuation to be completed is usually within 3-4 business days.  However access to the property maybe delayed if the valuer has difficulty gaining access to the property.

Once the valuation in returned and approved. Your loan will be sent through to LMI for final approval.  (If LMI is required)

At this point LMI could request further documentation or they will Unconditionally Approve your loan.

Step 5

STEP 5 – GET PROTECTED
GETTING THE RIGHT COVER

Once the property is yours, it’s your responsibility to look after it. So you’ll want to make sure it’s covered if anything goes wrong.

Get your insurance sorted now and you can enjoy some welcome peace of mind, right from the word go.

WHAT KIND OF HOME INSURANCE DO I NEED?

There are two types of home insurance: buildings insurance and home contents insurance. Here’s what they cover:

BUILDINGS INSURANCE

This covers you financially against damage to your home from things like fire and high winds. All lenders will insist that you take this out – it’s not optional.

When you choose your policy, check the level of cover as well as the cost. Buildings insurance covers you for the cost of rebuilding your home, rather than what you paid for it.

CONTENTS INSURANCE

This covers your home contents against damage and theft – things like TV and audio equipment, clothing and furniture.

If you’re on a tight budget, it’s tempting to skip this. But consider carefully how much it would cost to replace everything in your home.

To avoid being under-insured list down everything you own and tot up the value, you might be surprised by how high it is.

MAKE YOUR HOME SAFER

Take these steps and as well as making your home more secure, they could lower your insurance premiums.

  • Install window locks
  • Fit a fire and burglar alarm
  • Replace your locks.
  • Install video surveillance

PROTECTION FOR YOU AND YOUR FAMILY

Amid all the excitement of buying your first home, it’s worth thinking about how you or your loved ones would manage in the unfortunate event of one of you getting seriously ill or even passing away.

With the right kind of cover, you could receive a lump sum payment which could be put towards repaying any outstanding mortgage amount. As your mortgage is likely to be the biggest debt you’ll ever have, it’s worth protecting it.

The kind of cover you could consider include:

  • Critical Illness with Life Cover
  • Critical Illness Cover on its own
  • Life Cover on its own.

Don’t worry, we will go through your insurance requirements with you when you are ready to complete your loan application.