House prices, for the first time in over a year, are bouncing back.
According to data from CoreLogic, the combined value of Australian housing reached $10 trillion at the end of August 2023, a fact attributed in part to rising overseas migration combined with a low stock of available properties.
Coupled with interest rates remaining on hold for the third month in a row, many first home buyers are feeling renewed pressure to get into the market sooner rather than later – but Pepper Money CEO Mario Rehayem cautions that pressure doesn’t always yield cool-headed decisions when it comes to property, pointing to research from the lender’s Money Mindset Report that showed 53 per cent of respondents admitted to having taken the first loan approval option they were offered.
“The research reveals some interesting insights, highlighting the importance that understanding your options can play in giving you confidence that you have found the solution that suits your individual circumstances, needs and priorities,” says Rehayem.
“It also shines a light on the role that rushing to a decision can play in creating financial regret further down the track. Aussies clearly get that it’s in their best interest to explore options, but many admit to not doing their due diligence when it comes to selecting a loan option. This report shows that time pressure, anxiety and the fear of rejection are clearly playing a pivotal role in causing Australians to not fully understand their options before making big financial decisions.”
Get a handle on hidden debts
The pre pre-approval stage can be the most important part of any first home loan application. The usual advice – consolidating messy debts, tightening the purse strings and making sure you have a good savings history – still applies, but having a firm handle on your credit score, and what kind of prospect you represent to a lender, is crucial.
There are three reporting agencies in Australia that can provide you with a free credit report. These are:
“Different agencies can hold various information,” cautions Obu Ramaraj, CEO and Senior Finance Broker of mortgage brokerage firm Smart Money Solutions and author of Smart Women, Smart Home Loans.
“So you may have a credit report with more than one agency.”
You’re eligible to access your credit report free of charge every three months, or if you’ve been refused credit within the past 90 days. You can also access a free report if your report has been changed or updated.
Know your grants
With the Federal Government increasing the number of allocations for the First Home Buyers Grant (FHBG) earlier this year, as well as some state-by-state changes, understanding how you can use the assistance available to you in order to achieve your home ownership dreams is a big step in the right direction.
For example, in NSW the First Homeowners Grant offers eligible borrowers up to $10,000 towards the purchase of a brand new home that nobody has lived in, while the First Home Buyer Assistance Scheme can offer a complete or partial exemption from stamp duty. In Queensland, eligible buyers can get up to $15,000 towards buying or building an eligible, brand-new home.
Don’t face the bank-dance on your own
Dipping your toe in the muddy waters of mortgage applications for the first time can be an intimidating experience, but it really doesn’t have to be.
“More than ever, against the backdrop of rising costs of living and often shifting goalposts when it comes to securing finance, borrowers should have an expert like a broker in their corner to help them understand all the different lenders and loan alternatives available
without all the stress,” says Rehayem.
“There is a golden opportunity for Australians to connect with mortgage brokers, who can offer a clear understanding of the different lenders and loan alternatives available that meet each individual’s needs and secure the right option for their circumstances.”
