First Home Buyer GuideWhat you need to know about buying your first home.(Minus the stress).

Calling all first home buyers: we’re here to helpBuying your first home typically means you’re on the hunt for your first home loan. Sure, it can be an overwhelming and stressful process… but it doesn’t have to be.

Using one of our Loan Gallery Finance experts means: • Working with an experienced, knowledgeable broker who’s in your corner. • Knowingexactlywhatyoucanaffordto borrow before you get your heart set on a property. • Receivinghelptoboostyourborrowerprofile tominimisethechancesofgettingknocked back for loan approval. • Havingtheabilitytoaskasmanyquestionsas you need to along the way. • Our home loan experts do all of the legwork for you.

And all with no strings attached and at no extra cost (we promise).

Personalised finance solutions. Always.

Please note: we do not provide tax, legal or accounting advice. This guide has been written for general information purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. We encourage you to consult your own tax, legal and accounting advisers before engaging in any transaction.

You are unique and we’ll work with you to find the loan that suits your needs

With so many loans available, you need an expert who’s in your corner and is up to speed on all of the options. Someone with the experience to understand the most suitable loan for your unique circumstances. An expert who can increase the chances of your loan getting approved as they know exactly what the banks are looking for.

Best of all, we do all of the legwork for you and are with you every step of the way. We go that extra mile as part of our service.

Our simple 8 step application process explained

STEP 1: INITIAL MEETINGWe meet with you to understand your unique circumstances and to answer any questions you have.

STEP 5: FULL APPROVALYour chosen lender then prepares your loan agreement and your dedicated Loan Gallery Finance expert reviews the agreement in detail.

STEP 2: LOAN COMPARISON CHECKWe’ll then negotiate competitive finance from our wide range of lenders and present you with the best options for your needs.

STEP6:DOCUMENTSIGN-OFFWe’ll meet again to explain your loan in full and providing you’re comfortable with everything, run you through which

STEP 3: APPLICATION PREPARATIONOnce you’ve chosen a lender, we do all of the legwork for you, preparing the application and gathering any other necessary documentation.

STEP 7: SETTLEMENTWe liaise with your conveyancer and/or solicitor to organise a settlement date with the lender.

STEP4:PRE-APPROVALIt’s time to look for that perfect home! Keep in mind that pre-approval is subject to the property found.

STEP 8: POST SETTLEMENT We’re with you from start to finish and are here to help you with anything else you need along the way such as refinancing and

Finding that home loan that suited us was

easy because Loan Gallery did it all for us.

A deposit is the first step to your dream homeRemember, most lenders will require a deposit of 5% (minimum) of the total loan amount.Saving for a deposit starts with good money habits. Good money habits start with an honest assessment of all of your costs and easy ways you can start saving cash. Think:

Next stepsSet up a direct deposit from your wage into a separate savings account with no debit/credit card access. From there, watch your cash stash grow effortlessly and you’ll soon see how small sacrifices really add up over time.

What you need to know about Lender’s Mortgage Insurance (LMI)LMI is a one-off insurance payment you’ll need to cover if your loan amount is more than 80% of the property value. This insurance protects the lender for loans considered a higher financial risk. Choose to pay LMI upfront or capitalise it so that you can borrow your LMI costs at the same time as your loan and pay it off gradually. Your Loan Finance Gallery broker will be able to explain all of the ins and outs of LMI.

Forget about unexpected surprisesWe will ensure you’re aware of all of the costs involved in buying your first home — from the deposit all the way through to stamp duty and conveyancing or legal fees. That’s what we’re here for!

Reducingthosedailycoffeeruns.

Swapping a night out at the movies foranightinwithNetflixorYouTube.

Cooking up a storm in the kitchen instead of buying meals out.

Minimising these unnecessary costs will leave you with daily cash savings.

One of our Loan Gallery Finance experts will look at your finances and work alongside you to ensure your application is a breeze from start to finish.

What are lenders really looking for?Here is a sneak peek at the average lenders wish list.

What lenders look for in borrowers:

The ability to show their capacity to repay the loan amount

They are aware of their credit rating and are looking to improve it

No unnecessary financial commitments

A strong savings history They have a safety net to draw from for rainy days

They’re not applying with too many lenders all at once

They’ve secured stable employment Full disclosure meaning the lender is aware of all necessary information

Your dedicated Loan Gallery Finance broker will work with you to answer any questions you have and to ensure your borrower profile is as strong as possible.

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We don’t work for the banks: we

work for you.

How to get a loan even if the bank has said noDon’t get disheartened if you’ve already applied for a loan and have been knocked back. As a first home buyer, you’re likely to need more help navigating your way through the sheer number of choices.

Every lender uses its own set of policies and criteria when assessing applications. Our Loan Gallery finance experts have access to this information and will use their experience and knowledge to determine which lender best suits your circumstances.

We know the current market inside out. We don’t work for the banks: we work for you. And there’s no extra cost to you. We are paid by a lender for helping you find a loan.

Understanding the amount you can affordLet’s talk about your borrowing potential.

Your dream home may not be within your financial reach right now. It’s all about looking at the bigger picture and a number of key factors such as:

• Total household income.

• All of your household expenses.

• Whatyoucanrealisticallyaffordtopayin loan repayments.

Sure, a mortgage calculator is a handy tool and a good place to start. Keep in mind that we won’t simply punch your numbers into a calculator; we take into account your personal circumstances when assessing your borrowing potential.

Tips for finding that perfect home for youBeing aware of your borrowing potential allows you to understand what type of home you can buy and where you can afford to live. For many people, buying their first home comes with certain compromises. At the end of the day, you need to weigh up what’s most important to you and then work within your budget from there. For example, you may choose to be closer to public transport as opposed to having a garden. As a first home buyer, it’s likely you’ll be looking at buying in the outer suburbs or even regional

Important questions to ask yourself:

• Would you prefer to get to work as quickly as possible or is a longer commutetimenoissue?

• Do you have kids or are you looking to startafamilysoon?

• What vital services do you need close toyou?Thinkschools,daycareand so on.

Always do your homework when looking for that property. Look into planned infrastructure such as public transport, shopping centres and schools. If you discover that property values in a suburb have skyrocketed recently, find out why and consider whether neighbouring areas may

7 common mortgage types explained

Think mortgages are all about interest rates and fees? Think again.Low rates aren’t everything when it comes to mortgages. The best mortgage for you will depend on your personal circumstances. Your dedicated Loan Gallery Finance broker will work with you to determine the best option for you and explain the different types in more detail.

Here’s a rundown of the main types of loans:

1. VariableInterest rates go up and down depending on factors such as the official cash rate, market conditions and each lender’s decision making. Your repayments will adjust up and down accordingly.

2. FixedInterest rates are fixed for between one to five years so even when rates change, your repayments stay the same. Of course, that also means if interest rates drop, you don’t reap the rewards.

3. Split rateOne part of your loan is variable, the other is fixed. Gain the benefits of an interest rate drop while enjoying peace of mind in knowing you’re protected from an interest rate hike.

4. Interest onlyThis loan type gives you a bit of breathing space as it allows you to temporarily pay the interest cost only. In other words, your repayments will only cover the interest on the total amount borrowed. So the amount borrowed won’t reduce during this set period of time. Your Loan Finance Gallery broker will be able to explain all of the pros and cons of an interest only loan.

5. Line of creditYou can pay into and withdraw from this account providing you keep up with the required repayments. You can even have your income paid into this account to help with paying the mortgage sooner but keep in mind that the interest rates are usually a little higher.

6. Honeymoon periodsDesigned for first home buyers, enjoy a lower interest rate for the first six to 12 months before the rate returns to the standard variable rate.

7. Low docIf you’re self-employed, this mortgage type may be ideal as it requires less documentation or proof of income. That said, it does usually come with higher interest rates and/or requires a larger deposit.

Borrowing from the bank of mum and dadGetting onto the property ladder can be tough. So should you consider borrowing from your family to increase your borrowing capacity?

Depending on your individual circumstances, you may be able to get into your first home faster by getting a family member onboard, through a gift or family guarantee. This may be a great way of increasing your deposit so that you can avoid Lender’s Mortgage Insurance.

Sure, teaming up with family members to buy a property can reduce the financial burden, while helping you to afford a higher value property. Before entering into any kind of agreement, ensure each party understands their financial and legal obligations. You don’t want a property to cause a wedge between you and your loved ones.

It’s also important to consider what will happen if things don’t go to plan. For example:

• One person/couple not being able to cover their share of the mortgage for some reason. • One person/couple wanting to sell or move out sooner than expected.

We all need a little help sometimes

How it may work if this is the right fit for your family

A family member may be able to use the equity in their own home to guarantee part of your loan. It’s important that the guarantor understands that if you fail to make a payment, the bank may look towards the guarantor to pay the guaranteed part of your loan. As always, it’s vital for all parties involved to seek professional advice from a financial planner and lawyer prior to entering any such arrangement.

Renting out your first homeYou don’t have to live in your first property.

Yes, we said it: rent-investing is becoming more and more popular as it allows people to live where they want, while buying an investment property in a more affordable location. This sees you getting onto the property ladder sooner.

There are a number of important factors to keep in mind when rent-investing:

• You need to choose a property based on financial merit, not on your emotions. You won’t be living in the property anyway. • Are you looking for capital gain over time or high rental yields right away? And then there’s positive and negative gearing:

Positive gearing: the rent exceeds the cost of the mortgage and upkeep to give you a profit.

Negative gearing: the rental income is less than the cost of owning and managing the property, which may create a tax deduction.

It’s important to seek legal and financial advice before rent-investing. That way, you’ll be fully informed about how renting and taking on an investment property will impact your finances and tax obligations.

Getting onto the property ladder doesn’t have to be difficult.

Are you eligible for the First Home Owners Grant or any other incentives? There are a number of incentives that give first home owners a helping hand.

The First Home Owners Grant (FHOG) usually applies to apartments and houses up to a certain value. Exact thresholds vary depending on the type of dwelling and by state or territory. As the savings can be substantial, it definitely pays to do your homework and research your eligibility.

For more information about the FHOG visit: www.firsthome.gov.auDon’t forget to check if your state or territory offers stamp duty exemptions or concessions for first homebuyers.

Our Loan Gallery Finance experts are here to make buying your first home easyRemember, we’re in your corner and are with you every step of the way. Reach out to talk to one of our experts today.

Get the personalised advice you need.

03 9495 5000Building 4, 60-70 Mahoneys Road Thomastown VIC 3074

www.loangallery.com.au

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Building 4, 60-70 Mahoneys Road, Thomastown, VIC, 3074 AustraliaP: +61 3 9495 5000 | F: +61 3 9495 5099

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