A Guide to Financing your New Home

From the moment you turn the key and take those first steps through your new front door, the feeling of owning your new home is second to none. But the path to home ownership can be overwhelming and if you’re not fully prepared, it can prove to be difficult especially when it comes to finance.

We aim to provide you with essential know-how and proven techniques to ensure you avoid the common difficulties of financing a new property.

Start with a financial health check

A Financial Health Check is really the process of having a good look at where you’re at with your current financial situation.

Every prospective home buyer will benefit from sitting back and seeing where you are at with your finances and most importantly, what you can do to improve your finances.

Sitting back and reflecting on what you are spending your hard earned money on will help you identify where you can SAVE some money, where you can DEPLOY your money and potentially make more money by doing so.

Build a home, not your stress levels

The joy of a new home is clear but it’s important you understand your budget so your financial position remains in good shape after you move in. Our goal is to ensure you enjoy your new home, not stress about paying for it.

At this stage, you need to work out how much you are able and willing to spend – both on land and the overall construction of your new home.

This step is where the team at Mortgage Advice Bureau can assist. They can help you determine the total amount you will be able to borrow. To make the process more manageable, they also work out a pre-approval on your land and construction loan application. This is a key step, so you don’t have to complete the process twice.

Get mortgage ready

So what can you do to get mortgage ready?

When applying for a mortgage, your lender will perform an affordability test on you to see if your finances are in order. This will determine whether you are able to afford the repayments, alongside any other financial commitments you may have, and ultimately make sure you have a mortgage you can afford.

The tests will include a look at your income vs your expenditure, so it’s important that you’re able to show you are capable of keeping your finances in order.

Loans

If you have any outstanding loans, it’s advisable to pay them off before you apply for your mortgage and avoid taking out any more loans in the meantime. However, don’t let that put you off speaking to a mortgage broker as it doesn’t necessarily mean you’re unsuitable for a mortgage.

Keep on top of payments

Pay all your bills on time. This can be anything from a phone bill, to general household utility bills.  This will prove you’re reliable and financially responsible.

Regular savings

If regular savings can be proven on your bank statements, this can be good for a number of reasons.  Not only can it show where the money for your deposit has come from, but it can also prove to your lender that you have the disciple required to repay a mortgage.

Consider your credit rating

The first place to start is to find out how good or bad your credit score is. There are various companies who provide this service. 

Your credit score will provide insights into your credit accounts, including outstanding loans, credit cards and any missed or late payments. Lenders will review this report as part of their decision whether you approve your loan.   

The steps to building a new home: Land purchase

When it comes to building your new home, there are many stages between the initial decision and the day you move in. Before your new home is built, there needs to be land for it to be built on. Therefore, the finance process is different to purchasing an established property, whereby you’ll need a land loan followed by a construction loan. 

Consult a solicitor

Buying land is a rather considerable purchase that will likely involve a lengthy contract.

It's a smart move to find a solicitor that can review any legal documents and make sure everything about the sale goes smoothly.

Put down a deposit

Once your finances are in order, it's time to make the first of a number of payments: a deposit on the land purchase.

Securing the right land for you sets the stage for building your dream home.

Finalise the building contract

Before work on the house begins, you and your builder will sign a fixed price contract. This will give you, your builder and your financier a chance to hammer out details relating to building costs.

At this stage, it is important to make sure that everything you'll want in the project has been covered. After all, a house is more than just a roof and walls. Have you thought about things like flooring, landscaping and fencing? You might want a patio, deck or swimming pool.

Once you're certain that the plans are set for the entire project, it's time to sign the contract and start building! 

Ready to start building

Now that the preliminary work is taken care of, it's time to being construction on your new home!  As the property owner, you can sit back, relax and watch the builders put your dream home together from the ground up.

Mortgage Advice Bureau in partnership with Mirvac, offer you the opportunity for an appointment to discuss your finances and borrowing capacity. 

Their team work to take the stress out of funding your home-building journey. Through a streamlined process that covers all the steps of house construction, they ensure that everything goes as smoothly as possible without unexpected financial hurdles.

To book an appointment to speak to a Mortgage Advice Bureau Finance Specialist, please get in touch with them by clicking here.