Questions & Answers - First Home Buyer

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Not having a credit rating does not prevent you from obtaining a new home loan. A home loan provider will focus more on your ability to repay the loan based on three key factors.

1. Your current employment situation 2. Your current level of debt & income 3. The amount of money you are able to put into your home purchase.

A home loan provider will want to see that you are in stable employment before they will lend to you. Generally, they will have required you to complete your probationary period which is a potential hurdle for you but even if you are on probation this will not exclude you borrowing for all home loan providers. The home loan provider will also do an income and expenses calculation to ensure you can repay the new loan comfortably.

Finally, the more money you are able to put into the home reduces the risk to the home loan provider. Once you have more than 20% equity in your home it is generally easier to borrow money and issues like being on probation and returning from overseas become less of an issue.

Best of luck

Thank you for your question.

It is an exciting time to purchase your first property and it is great to see you have such a significant deposit. It is a great benefit when looking to borrow money in today environment.

If we look at your scenario purely based on income a number of lenders unfortunately will not take it into consideration. There are a few and that’s why you should look to engage a home loan professional to help you guide you through the process.

It you are in a position to seek work then it will help your cause if you have been employed for 6 months or more. Developing a track record of earning income combined with the deposit will tremendously enhance your ability to obtain a home loan.

We would advise you speak to a qualified home loan manager to understand your options more clearly – you certainly deserve an opportunity.

Best of luck

Thank you for your question.

To be honest, this is a fairly unusual scenario that you may find difficult to achieve.

There are a few things that a home loan provider would need to consider in reviewing and assessing such a loan application.

Firstly, you are correct, as your parents are the owners of the land on which you build the home they would need to be on your loan as well. This means that the home loan provider would effectively be secured by two homes on the one title.

These types of loans are traditionally difficult to obtain finance on as the provider will view this as a unique property with a difficult resale value, so even if they agreed to take this as security they would do so at a reduced amount to reduce their risk.

However, the biggest issue you are likely to face is the lack of a direct benefit to your parents by coming on to the loan. Essentially, the credit laws would say that your parents are going on to a mortgage for a property that they are taken on significant risk (would have to repay the loan if something happened to you and you could not pay) and will receive no real financial benefits (they are not living in the home).

While we are not saying you will not be able to achieve all of the above, based on our experience we can advise you it will be difficult and you may have to put a lot of work into finding a suitable home loan provider who can help you.

We suggest you identify an appropriate professional home loan manager to help you through the process of finding a home loan provider.

Best of luck

Thank you for your question.

Firstly, well done on saving such a large deposit.

In regards to obtaining a home loan it will really depend on what is listed on your credit report. If you still have defaults, court judgements, etc listed then it will be difficult to obtain a standard home loan and may have to consider options such as non confirming lenders.

If you do have defaults, judgements, etc on your credit report you can find out when these will be lifted by contacting Veda Advantage direct on 1300 762 207 or visit http://www.vedaadvantage.com/ .

If the listings have sometime to go then you can also consider services of Credit Repair company which can assess your file and see if they can have any of the listings removed. These companies do charge a fee for this service.

If you credit report is clean then you should be in a good position to obtain a home loan. Make sure you contact of professional home loan manager to help you through the process.

Good luck in purchasing your home.

Thank you for your question.

When borrowing money to buy property, the home loan provider will require all title holders to be on the mortgage and the loan, regardless of the percentage of property owned.

Everything you have mentioned is possible however it will come down to the specific lending criteria of a home loan provider as to whether the loan can be structured to meet your requirements.

It would be great to discuss your situation in more detail with you to give you more tailored advice so if you would like to click on the "talk to a home loan expert" button we can put someone in touch with you to see what can be done to help you.

Otherwise, best of luck with your home loan goals.

Thank you for your question.

There is nothing stopping you buying a property that is currently owned by tenants in common as any potential issues would lie with the current owners of the property.

For the property to be sold to you all of the tenants in common on the title of the property have to agree to sell you the property.

There are three main ways to dissolve the tenancy in common.

1. One or more co-tenants can always buy out the others.

2. The property can be sold and the proceeds distributed equitably among the owners.

3. A partition action can be filed. This involves going to court and asking to sell the property under court order and distribute the proceeds among the owners.

In most cases this will not be an issue as the property will be on the market advertised for sale so the process would be invisible to you and you would receive clear title at settlement.

We hope this helps.

This is an excellent question and is evident of the important and value of dealing with an experienced home loan manager.

Whilst the calculation may technically be correct, there are a number of reasons that the scenario put forward may not be so practical.

Firstly, the number of home loan providers offering 100% home loans is almost non existent and any qualification criteria would be extremely strict and the interest rate may not be as competitive.

Secondly, if you borrow more than 80% of the value of the property (in this case $280,000), you will be required to pay Lenders Mortgage Insurance.

The mortgage insurance premium could be as low as $1,100 (if you borrow 81%) or as high as $15,000 (if you are able to borrow around 97%%).

If you have sufficient funds to cover a 20% deposit, our recommendation would be to use the 20% as the cost of Mortgage Insurance would outweigh any potential savings via the lower deposit / higher offset balance.

Best of luck

Thank you for your question.

If you took out a loan to build a home on your parents property and you had to use the same property to secure the loan, your parents would also need to be borrowers on the loan.

A home loan provider cannot provide a mortgage using someone’s property without their consent, meaning they have to be on the loan as well. This would mean that your parents would also be liable to repay the mortgage.

If you own another property separate to your parents, you could take out a mortgage over this property and use the funds from this loan to build a home on your parent’s property.

That way the home loan provider is secured by a property only owned by you and your parents do not have to be involved at all. However, this would also depend on whether your parents are already repaying a mortgage over their property as they would need their providers consent to allow changes to the property.

As you can see there are a number of different things to consider in this scenario but the key points are that a home loan provider has to protect the rights of property title holders and also ensure they are getting the true and correct security.

Best of luck

Thank you for your question.

Congratulations on saving such a large deposit. It is a great advantage when entering into the home loan market, but unfortunately does not give you an automatic approval of a home loan.

A home loan provider is required by law to conduct a full assessment of your credit worthiness, including whether you can afford to repay the loan based on your income and debt level, your previous and current credit history as well as the type of property you’re buying.

Once your deposit is at least 20% the risk to a home loan provider substantially decreases.

While they will still credit assess your loan application in the same way as someone with a smaller deposit you will not be required to pay a lenders mortgage insurance premium and they can be slightly more flexible with their lending criteria.

For example, if you have a small payment default with a phone company and only had a 5 to 10% deposit, it is unlikely your home loan would be approved. With a 20% deposit and a reasonable explanation of why the default occurred, you would have a stronger chance of approval.

Essentially, as you’re providing such a good deposit a home loan provider will have a higher degree of comfort with your character and the increased likelihood you’re your loan will be repaid without difficulty.