Hoops new home buyers need to jump through

While saving up a deposit can often be a hard enough task for first property owners, there are a number of other considerations to also make, according to Smartline adviser, Miriam Castilla.

Castilla explained that first time buyers should be considering the impacts of home ownership before they are necessarily even 'ready to go'.

She points to the following as criteria first time buyers should be trying to fill.

· A reasonably strong and steady income. Aiming for approximately 20-25% gross per annum of the amount you’ll borrow (e.g. $60,000-$75,000 for someone looking to borrow $300,000). 

· A permanent job or casual job with long-term history. 

· Limited or no personal debts (personal loans, credit cards, hire purchases, etc). 

· Clean credit history. 

· Good savings – aim to save at least 5% of the purchase price. 

· Additional funds to put towards the purchase. These extra funds can come from more savings, family gifts, windfalls, etc. Ideally aim to have a total of at least 12% of the purchase price so fees and charges are also covered.  Extra savings beyond that level will make things even easier.

If the last two steps are not ticked off, a family or security guarantee is likely to be needed. 

“It’s really not unreasonable to start having these discussions [about home ownership] a couple of years before you think you will actually be buying a property so you can, as much as possible, make yourself a ‘model’ first home buyer," said Castilla.

“While the above is a guide for a ‘perfect’ first home buyer, most people won’t be able to tick all these boxes, and that’s quite common".

There are 'work-arounds' for these points, and space to move, often depending on the lender and product that a new buyer looks at attaining.