A step by step guide to buying a home

Great! You’ve saved a deposit for a new home and now the house hunting can begin, right? Hold your horses. Have you got your finance sorted? Before you hit the open house trails this weekend, make sure you’re schooled up on how this whole home-loan thing works.

  1. Know your borrowing capacity and your loan serviceability.

Sounds a bit complicated – but stay with us here. That ‘finance-speak’? It simply means: the amount you can borrow and the amount you can afford to repay. To find this out, you can do some basic calculations yourself on the Federal Government’s Money Smart website (moneysmart.com.au) or for a more detailed analysis, book an appointment with a Home Finance Manager from The Capricornian. We will calculate how much you can afford to borrow and how much you can repay each month/fortnight based on your income, expenses, other debts, assets and deposit size. We’ll be able to provide you with a figure for the maximum purchase price you’re likely to be approved for. This is what most people recognize as ‘pre-approval’. However, you should understand that pre-approval is an in-principle agreement only and many factors will come into play before final approval is granted. More on that later.

2. Find a property at a price that you can afford.

Now that you’ve spoken to a Home Finance Manager from The Capricornian and you know your borrowing capacity – you can start scrolling through those real estate listings! But don’t forget – just because you CAN borrow that much, doesn’t mean you SHOULD. If you’ll be just as happy in a home that you can purchase for way less – yay for you! There’s a lot to be said for not having to live your life payday to payday. Things like smashed avo Sundays or sneaky trips to Bali with the crew (post Covid-19 of course) – those are the kind of things that make life worth living, right?! Now is a good time to have those important conversations about what you really want in a home and in life.

3. Formal application.

When you’ve found the house, made an offer, signed the contract and it’s been accepted by the seller, it’s time to come back and see us at The Capricornian to get your home loan! We can usually see you within 48 hours – there’s no waiting weeks for an appointment like at some other banks. We should have most of your details from your first visit, but if not, here’s a detailed list of what to bring to your loan appointment and a more detailed explainer on what happens behind the scenes between the application appointment and formal approval.

4. Formal loan approval> Sale becomes unconditional > Settlement day.

If all goes to plan, your loan can be approved by The Capricornian in as little as 72 hours from the time of your formal application. We’ll notify you and your solicitor when it’s a done deal. From here, it’s over to your solicitor/conveyancer to advise you on any other conditions on your contract of sale and when the sale will become ‘unconditional’. From there, they’ll guide you towards settlement day when the loan is funded and you can officially take ownership of your new home! Woo hoo!

Buying a home is an exciting and sometimes stressful experience. Home ownership can be one of the biggest financial goals you’ll set for yourself and your family. That goal doesn’t end on move in day. If you want to know more about how to pay your home off sooner, The Capricornian can help you along the way. We got this!

The Capricornian Ltd ABN 54 087 650 940, Australian Financial Services License / Australian credit licence 246780.

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