1. What’s your borrowing capacity
2. Getting the Formal Approval in your hand
3. Time to pick the location
4. Time to start getting a quote
5. What you want VS what you need
6. The Right Type of Home
7. Lean on your Builder
8. Don’t do it alone
What’s your borrowing capacity
“How much can I borrow” is probably one of the first questions you’ve asked yourself, and there’s no simple answer to this question as it all comes down to your personal financial situation. Lenders will measure your ability to make loan repayments comfortably without putting you in financial hardship. This is called a debt-to-income ratio (DTI) or loan-to-income ratio (LTI).
You’ll also hear this term a lot – loan-to-value ratio (LVR). This describes the amount you need to borrow to buy a particular property. Generally, the lower the LVR the better, as a lower LVR carries less risk.
It also means you’ll have a head start on fully owning your home and have more equity from the get-go (equity is the market value of your property less how much you owe on it).
When your LVR is over 80%, the cost of getting a home loan may increase because you might need to pay for Lenders Mortgage Insurance (LMI). LMI protects the lender if you can’t keep up with your home loan repayments. Even though you’re paying for this insurance, it’s not protecting you. It only protects the lender. So generally, the higher your LVR, the more LMI will cost. But more on LMI coming up.
Getting the Formal Approval in your hand
To help you understand the maximum amount you’ll be able to borrow from a lender, you should ask for an Approval in Principle (also called pre-approval or conditional approval). Generally, it shouldn’t cost you anything and you need to know that it’s no guarantee to getting a home loan. What it does do is give you an idea of how much you can borrow, so you can narrow your house hunting and help with your budgeting.
Once you’ve got an Approval in Principle, it’s valid for 90-days from when it was approved. If it lapses before you’ve signed a contract on a house, you’ll have to re-apply. Make sure you ask your lender or broker about the AIP renewal policy.
Time to pick the location
It’s the million-dollar question for all house hunters, not just first home buyers. How do you choose the right suburb to buy in? There’s no right or wrong answer, but there is a well-tested formula. First, know what you can afford without it affecting your lifestyle too much. You still want to be able to go out occasionally and have a holiday each year! The next is considering ‘the village’ of a suburb – the shops, where you might walk to for a coffee, transport links, hospitals and public transport options.
Even if you’re not considering a family right now, it’s wise to factor in school zones and childcare options, especially with childcare centres experiencing long waiting lists. Another thing to consider is the demographics of a suburb. What’s the unemployment rate like? What will your insurances cost? What will your council rates be?
Lastly, be open! While that blue-chip suburb may not be on the cards right now, a house and land package in a new master-planned community may be very achievable and a good first step on the property ladder.
Time to start getting a quote
Here’s where we come in. With over 28 years in local building experience we can look over you land choice, look at what you need included and get it all to a finished price, meaning there is nothing left for you to do but move in. Our staff have years of construction knowledge and experience in all different types of home builds. Quotes will generally take a few weeks to get right but in that time we will build a relationship with you that lasts long past the end of your completion. Just contact us to make a time to come in for a chat.
What you want VS what you need
Before you jump in, you need to know your non-negotiables and recognise the wants. Remember, every extra feature or room you want adds a cost to your mortgage. You might find it helpful to make a list and ask yourself, do you really need the fifth bedroom and third bathroom, or can it wait for the next home? Identifying the essentials could save you money and stop you wasting time looking at the wrong plan.
Potential resale should also be front of mind. It’s easy to let emotions take over when looking for a home to live in, but be conscious of the location, return, desirability and resale value of the home you’re looking at. Things like a north-facing orientation, great floorplan, size, security, privacy, and of course, scarcity, all add value to your home.
The Right Type of Home
Generally speaking, you’ll have a more restricted budget than other buyers so it’s good to try to remember your first home might not be your forever home. Instead, think about what will suit you for the next 5-7 years. Here’s a few options that our first home buyer clients love:
House and Land: Located in key growth areas in communities throughout Toowoomba and the outer suburbs, our house and land packages are all fixed price so there’s no surprises. Available as a single home with 3-4 bedrooms, they suit couples right through to families.
Homes only: These are low maintenance homes with functional, well thought out floorplans. With anywhere between 3-5 bedrooms, they are spacious, include everything you need to move in and are all at a great price point.
Arden vale Homes can be ready to move into or can be built to lock up only. They’re good for buyers who are leaning towards an established home but still like the idea of something brand new.
Or, simply get inspired by our Gallery! If you’ve got land or are planning on buying land, this could be a great place to start.
Lean on your Builder
Make sure your checking the land before you enter into a Contract. All land should be purchased subject to the “The completion of a satisfactory Soil test result”. We recommend always getting a soil test to ensure your aware of what your buying. Our office can do searches for other things such as Town Planning issues, bushfire locations, noise corridors, Slope stability land areas etc. We have been involved in over 2500 builds and can help to make the process easier for you.
Don’t do it alone
A Builder is never too far away. Tim Waring has been involved in over 1500 builds and has an extensive estimating, construction, engineering and practise knowledge and is always ready to take a phone call or assist. All our staff have a combined 145 years of construction knowledge ensuring your build with us is smooth and pleasurable. Plenty of people are in your situation and have trusted us to guide them through their largest investment. Contact us today to start your journey.
GET IN TOUCH WITH US
17 Long Street, Rangeville Queensland 4350 PO Box 7337 Toowoomba South, Queensland 4350
Monday - Friday 8 AM - 5 PM
332 Ramsay St, Middle Ridge, Toowoomba, Queensland 4350
Open 7 Days 10 AM - 4 PM