First Home Buyer Myths Busted!

For some First Home Buyers, the stories they hear about buying a property from friends or family can encourage them to continue to rent, rather than get into the property market.

While some of their worries are valid, others are simply not true. We’ve put together the below list to differentiate fact from fiction.

1. I NEED TO PAY OFF ALL MY OTHER EXPENSES BEFORE I CAN APPLY FOR A HOME LOAN

Not true! You can still secure a home loan if you have an existing student study debt, or a car loan.

When a lender is assessing your ability to service a loan, they certainly look at your current expenses such as any outstanding loans or credit card limits – but just because you might have one or both of these expenses, does not mean you won’t get your loan approved.

Lenders look at your whole financial situation – your income, your expenses and other debts, the valuation of the property you are wishing to buy, and the percentage of that value you are hoping to borrow from them – before they determine your suitability to pay off the loan.

2. IF PARENTS GO GUARANTOR THEY WILL BE OUT OF POCKET

A lot of first home buyers wrongly believe that their parents will be out of pocket if they go guarantor on their loan. This is simply not the case.

A guarantor is a third party to a home loan. They are essentially a parent or family member acting as a guarantor to your mortgage, giving you the extra financial support needed to maximise your chances of meeting the requirements of the bank. If your parent goes guarantor on your loan, they do not have to pay the bank money – nor do they have to give you money. Instead, they put their property (be it their owner occupied or investment property) up as security for your loan.

3. YOU NEED A 20% DEPOSIT TO BUY YOUR FIRST HOME

While it’s always good to have a decent sized deposit, you can still secure a loan with a minimal deposit.

A mortgage broker can help you find the right loan through the right lender for your needs.

4. IT’S CHEAPER TO RENT

Some people believe they will never be able to get into the property market because they cannot afford the mortgage. They also believe it will be cheaper to rent for the rest of their lives rather than buy and pay down the mortgage debt. In some cases mortgage repayments can be similar amounts to the rent they are already paying, and the money is going towards your own home, not someone else’s.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.