Buying a home

We know that buying a home is one of the most important decisions you’ll make in life and that it can be exciting and daunting at the same time.

An AFG broker can ensure you’re armed with the all the information you need to help you on your way to owning your home.

An AFG broker will do the legwork for you.

They have access to hundreds of loans from a wide variety of lenders and will work with you to find the loan that suits your individual circumstances.

Take a look at our online calculators. This will help give you an idea of the amount you may be able to borrow and what the likely repayments may be.

Once you have an idea of your options, give us a call or email us and we’ll continue the legwork for you and arrange a time to meet to present the right options in detail.

How much money can I borrow?

This amount varies from lender to lender and depends on a number of factors.

Use our borrowing capacity calculator to work out how much you may be able to borrow, and an AFG broker will be happy to give you a more detailed response based on your individual circumstances.

How do I choose the loan that’s right for me?

There are hundreds of different home loan products available, and individual circumstances are all different, contact us today to take a look at your options.

How much do I need for a deposit?

A deposit is usually between 5% – 10% of the value of a property, which you pay when signing a Contract of Sale.

If you can’t organise a deposit in time, your conveyancer/solicitor may be able to arrange a deposit bond until settlement – although you’ll have to pay extra for this. If the deposit requested is 10%, your conveyancer may be able to negotiate this down to 5%.

How much will regular repayments be?

Go to our repayment calculator for an estimate. There are many different factors that influence the type of loan that suits your needs. An AFG broker can help you navigate the many options available

How often do I make home loan repayments – weekly, fortnightly or monthly?

Most lenders offer flexible repayment options to suit your pay cycle.

Aim for weekly or fortnightly repayments, instead of monthly, as you will make more payments in a year, which will shave dollars and time off your loan.

What fees/costs should I budget for?

There are a number of fees involved when buying a property. To avoid any surprises, the list below sets out all of the usual costs:

  • Stamp Duty – This is the big one. All other costs are relatively small by comparison. Stamp duty rates vary between state and territory governments and also depend on the value of the property you buy. You may also have to pay stamp duty on the mortgage itself. To find out your total Stamp Duty charge, visit our Stamp Duty Calculator.
  • Legal/conveyancing fees – Generally around $1,000 – $1500, these fees cover all the legal rigour around your property purchase, including title searches.
  • Building inspection – This should be carried out by a qualified expert, such as a structural engineer, before you purchase the property. Your Contract of Sale should be subject to the building inspection, so if there are any structural problems you have the option to withdraw from the purchase without any significant financial penalties. A building inspection and report can cost up to $1,000, depending on the size of the property. Your conveyancer will usually arrange this inspection, and you will usually pay for it as part of their total invoice at settlement (in addition to the conveyancing fees).
  • Pest inspection – Also to be carried out before purchase to ensure the property is free of problems, such as white ants. Your Contract of Sale should be subject to the pest inspection, so if any unwanted crawlies are found you may have the option to withdraw from the purchase without any significant financial penalties. Allow up to $500 depending on the size of the property. Your real estate agent or conveyancer may arrange this inspection, and you will usually pay for it as part of their total invoice at settlement (in addition to the conveyancing fees).
  • Lender costs – Most lenders charge establishment fees to help cover the costs of their own valuation as well as administration fees. Your AFG broker can let you know what your lender charges but allow about $600 to $800.
  • Moving costs – Don’t forget to factor in the cost of a removalist if you plan on using one.
  • Mortgage Insurance costs – If you borrow more than 80% of the purchase price of the property, you’ll also need to pay Lender Mortgage Insurance. You may also choose to take out Mortgage Protection Insurance. If you buy a strata title, regular strata fees are payable.
    Ongoing costs – You will need to include council and water rates along with regular loan repayments. It is important to also take out building insurance and contents insurance. Your lender will probably require a minimum sum insured for the building to cover the loan, but make sure you actually take out enough building insurance to cover what it would cost if you had to rebuild. Likewise, make sure you have enough contents cover should you need to replace everything if the worst happens. AFG provides both home building and contents insurance.

Speak with your AFG broker to obtain an estimate.

Becoming a first home buyer

Buying your first home is exciting, but it’s a big step to take and one that comes with many questions and decisions. The first big question is how much you can borrow and what your likely repayments will be.

That’s where an AFG broker comes in. Your broker is there to do all the legwork for you. An AFG broker will be able to compare home loans across over 800 products available from Australia’s leading lending institutions.

And because you’re a first home buyer, you may be eligible for a first home buyer grant. This is a grant available to Australian citizens or permanent residents who wish to buy or build their first home, which will be their principal place of residence within 12 months of settlement.  As grant conditions vary from state to state, contact an AFG broker to find out how much grant money you could receive.

Spend a few moments checking out our clever online calculators, the latest industry news to keep two steps ahead, and explore our range of home hints and tips. Then just get in touch with us. We look forward to walking you through your available options.

How much money can I borrow?

We’re all unique when it comes to our finances and borrowing needs. Get an idea of how much you could borrow and what your likely repayments would be with our online calculators. An AFG broker will then help determine the next steps on your road to owning your own home.

How do I choose the loan that’s right for me?

Loan types and loan features will give you a good idea of the main options available, but because there are hundreds of different home loan products available, and individual circumstances are all different, contact us today to take a look at your options.

How much do I need for a deposit?

A deposit is usually between 5% – 10% of the value of a property, which you pay when signing a Contract of Sale. If you can’t organise a deposit in time, your conveyancer/solicitor may be able to arrange a deposit bond until settlement – although you’ll have to pay extra for this. If the deposit requested is 10%, your conveyancer may be able to negotiate this down to 5%.

How much will regular repayments be?

Go to our Repayment Calculator for an overall idea of what your likely repayments may be, but because there are so many different loans available, some with lower introductory rates, an AFG broker can help you navigate your options.

How often do I make home loan repayments – weekly, fortnightly or monthly?

Most lenders offer flexible repayment options to suit your pay cycle. Aim for weekly or fortnightly repayments, instead of monthly, as you will make more payments in a year, which will save dollars and time off of your loan.

What is the First Home Owner Grant and can I get one?

This is a grant available to Australian citizens or permanent residents who wish to buy or build their first home, which will be their principal place of residence within 12 months of settlement. As grant conditions vary from state to state, contact an AFG broker to find out how much grant money you could receive.

What fees/costs should I budget for?

There are a number of fees involved when buying a property. To avoid any surprises, the list below sets out all of the usual costs:

  • Stamp Duty – This is the big one. All other costs are relatively small by comparison. Stamp duty rates vary between state and territory governments and also depend on the value of the property you buy. You may also have to pay stamp duty on the mortgage itself. To find out your total Stamp Duty charge, visit our Stamp Duty Calculator.
  • Legal/conveyancing fees – Generally around $1,000 – $1500, these fees cover all the legal rigour around your property purchase, including title searches.
  • Building inspection – This should be carried out by a qualified expert, such as a structural engineer before you purchase the property. Your Contract of Sale should be subject to the building inspection, so if there are any structural problems you have the option to withdraw from the purchase without any significant financial penalties. A building inspection and report can cost up to $1,000, depending on the size of the property. Your conveyancer will usually arrange this inspection, and you will usually pay for it as part of their total invoice at settlement (in addition to the conveyancing fees).
  • Pest inspection – Also to be carried out before purchase to ensure the property is free of problems, such as white ants. Your Contract of Sale should be subject to the pest inspection, so if any unwanted crawlies are found you may have the option to withdraw from the purchase without any significant financial penalties. Allow up to $500 depending on the size of the property. Your real estate agent or conveyancer may arrange this inspection, and you will usually pay for it as part of their total invoice at settlement (in addition to the conveyancing fees).
  • Lender costs – Most lenders charge establishment fees to help cover the costs of their own valuation as well as administration fees. Your AFG broker can let you know what your lender charges but allow about $600 to $800.
  • Moving costs – Don’t forget to factor in the cost of a removalist if you plan on using one.
  • Mortgage Insurance costs – If you borrow more than 80% of the purchase price of the property, you’ll also need to pay Lender Mortgage Insurance. You may also choose to take out Mortgage Protection Insurance. If you buy a strata title, regular strata fees are payable.
  • Ongoing costs – You will need to include council and water rates along with regular loan repayments. It is important to also take out building insurance and contents insurance. Your lender will probably require a minimum sum insured for the building to cover the loan, but make sure you actually take out enough building insurance to cover what it would cost if you had to rebuild. Likewise, make sure you have enough contents cover should you need to replace everything if the worst happens. AFG provides both home building and contents insurance. Speak with your AFG broker to obtain an estimate.

Construction loans

Building your own house can be a wonderful and fun experience – but it can also be a long and expensive process. However, most people cannot afford to pay for the cost of home construction up front, and getting a mortgage can be tricky.

After all, you’re asking a bank or a mortgage lender to give you money for something that doesn’t even exist yet.

A standard mortgage loan is not going to cut it – but you may be eligible for a special type of loan known as a construction loan.

Banks and mortgage lenders are often leery of construction loans for many reasons. One major issue is that you need to place a lot of trust in the builder. The bank or lender is lending money for something that is to be constructed, with the assumption that it will have a certain value when it is finished.

If things go wrong – for instance, if the builder does a poor job or if property values fall – then it could turn out that the bank has made a bad investment and that the property isn’t worth as much as the loan.

To try to protect themselves from this problematic outcome, banks often impose strict qualifying requirements for a construction loan. These usually include the following provisions:

  1. A qualified builder must be involved. A qualified builder is a licensed general contractor with an established reputation for building quality homes. This means that you may have an especially hard time finding an institution to finance your project if you are intending to act as your own general contractor, or if you are involved in an owner/builder situation.
  2. The lender needs detailed specifications. This includes floor plans, as well as details about the materials that are going to be used in the home. Builders often put together a comprehensive list of all details (sometimes called the “blue book”); details generally include everything from ceiling heights to the type of home insulation to be used.
  3. The home value must be estimated by an appraiser. Although it can seem difficult to appraise something that doesn’t exist, the lender must have an appraiser consider the blue book and specs of the house, as well as the value of the land that the home is being built on. These calculations are then compared to other similar houses with similar locations, similar features, and similar size. These other houses are called “comps,” and an appraised value is determined based on the comps.
  4. You will need to put down a large down payment. Typically, 20% is the minimum you need to put down for a construction loan – some lenders require as much as 25% down. This ensures that you are invested in the project and won’t just walk away if things go wrong. This also protects the bank or lender in case the house doesn’t turn out to be worth as much as they expected.

Providing that you meet all these criteria and have good credit, you should be able to qualify for a construction loan. Generally, lenders also require information regarding your income (to be sure you can afford the mortgage payments) and your current home, just as they would with any type of standard mortgage loan.

AFG Mortgage Index – December Quarter 2016

Tale of two seaboards

AFG (ASX: AFG) has today released the AFG Mortgage Index for the final quarter of the calendar year 2016. The data shows year on year growth in lodgement volume for the company of 9.9%.

AFG Chief Operating Officer David Bailey explained the results. “2016 saw the eastern seaboard lead the way with Victoria recording an increase of 23% for the year. After a number of years of lacklustre activity it has been encouraging to see Queensland record 18% growth across the twelve months. Continued growth was also evident in NSW with a 10% increase in lodgements for the year.

“The remainder of the country tells a different story,” said Mr Bailey. “South Australia remained flat across 2016 and the tough time experienced by the WA economy was evident with a 16% drop for the year. The Northern Territory also showed a drop of 18% across the year.

“A recent increase to the First Home Owners Grant and a relaxation in eligibility requirements for Keystart lending is clearly an attempt by the WA state government to help lift the housing market and stimulate the construction sector in that state.

Loan to Value ratio (LVR) remained relatively consistent across the twelve month period at 69%. “The national LVR for the final quarter of 2016 was 0.7% lower than the same period in 2015, which is good news as this means owner equity has improved. Historically the national LVR has been sitting within the 69% range across 2015 and 2016,” said Mr Bailey.

As highlighted in the most recent AFG Competition Index, non-major lenders have been taking market share from the majors. “The major banks dropped market share across all sectors of the market in the final quarter of 2016,” said Mr Bailey.

“Many lenders have been increasing fixed and variable interest rates and have tightened lending to investors. This has encouraged consumers to examine their own situation and we are seeing many pick up the phone to their mortgage broker to determine if their loan is still the most appropriate for their circumstances.

“We expect this trend to continue into the new calendar year as an increasing number of consumers recognise that a mortgage broker is in the unique position of being able to provide a comprehensive view of the alternatives available across lenders and products,” he concluded.

Download full report: AFG – Mortgage Index – December 2016