Home buyers should prepare carefully before taking out a first mortgage, a leading broker says.
Buying a first home could be nerve-racking but it can also help the buyer’s financial future, says Mortgage Choice senior corporate affairs manager Kristy Sheppard.
“Property ownership need not be scary, as long as you take the time to research your options, prepare yourself for the lifestyle chance – emotionally and financially – and think through each decision before finally committing yourself,” Ms Sheppard said.
“So, while accruing the related debt may be daunting, you’re actually adding to your long-term financial wealth.
“There are no real tricks to achieving property ownership; it’s hard work but many Australians will vouch the treat is well worth it.”
Ms Sheppard said the top concerns for home buyers were how long it would take to repay their loans, whether they would be able to make their repayments, how much the whole loan would cost and whether they have bought the right house.
“These are all valid concerns, especially when considering imminent rate rises, widespread pay increase freezes, high migration figures and the pressure of supply versus increasing demand,” she said.
“Yet, undertaking thorough research while seeking professional knowledge and support can help ensure nothing scary comes your way.”
Buyers should create a budget and a savings plan to ensure they will be able to make repayments, particularly with interest rates expected to rise, Ms Sheppard said.
Financial markets expect the overnight cash rate to rise by 1.25 percentage points by June next year.
Demand for home loans from first time owners has fallen to 24.7 per cent of all mortgages taken out in August, down from a record 28.5 per cent in May, official data showed.
Ms Sheppard said first time buyers should set up a folder for the paperwork needed in making a mortgage application.
“Documents such as passports, bank statements, recent pay slips or tax returns, plus written details about assets, liabilities and any other income will all be required,” she said.