Understanding Your First Mortgage

By Jessica Darnbrough
You’ve finally decided to take the plunge and buy your first home. Before you even start scouring the real estate advertisements and doing the rounds of property inspections, you need to do some groundwork. How much money can you borrow? What is the best home loan for your needs? 
A good home loan will have consistently competitive rates, flexibility (e.g. the ability to exit or pay off the loan early), low or no application fees, low or no ongoing fees, allow you to make additional repayments, have a redraw or offset facility and be written in easy-to-understand English. If you are unsure about which home loan is best for you, speak at a mortgage broker, such as Mortgage Choice. Around 40 per cent of Australians use a mortgage broker and their services are usually free.
Once you have spoken with your chosen broker and found out how much you can borrow as well as decided on the level of repayments you can comfortably afford, it’s time to go house hunting. 
It’s easy to get carried away by the excitement of purchasing your first home so ensure you research your options and keep some clear priorities in mind. Ask yourself the following questions:
  • Is the property in a good position? 
  • Is it close to public transport, child care, schools and shopping?
  •  Is it in an area that is likely to show good growth over the time you intend to live there? 
  • Does the property need major repairs and, if so, can you afford to have them done?
  •  If you are planning to start a family, is there potential to extend in the future so you won’t need to move house? 

Once you know and are happy with the answers to these questions, you are ready to bid on the home at auction or put an offer in if it’s a private treaty sale. If your bid or offer is accepted, your solicitor or conveyancer will exchange contracts. 

A mortgage is a big deal and when the property settles you will have to start making your mortgage repayments. Certain strategies put in place immediately can save you many thousands of dollars in interest payments over the length of the loan. Here are some easy things you can do to supercharge your mortgage repayments:
  • You can opt for a shorter term loan 
  • Make additional repayments each month
  • Choose to pay fortnightly rather than monthly (thereby adding one additional monthly payment per year) 
Make a lump sum payment whenever you have additional funds on hand
If you stick to these tips, you will find you will own your own home much sooner than you expected. 

Mortgage Choice's head of corporate affairs and company spokesperson. She is passionate about property and helping potential buyers understand the home loan options that are available to them.