Buying a home can be tough, especially for first-home buyers. Banks and lenders often have strict rules to make sure borrowers can handle their mortgage payments, even if the situation gets tough. This extra cushion is called the “high serviceability buffer.” For first-home buyers, it can be intimidating.
But don’t worry! There are smart ways to deal with this challenge and make your dream of owning a home come true. In this article, we’ll share some easy-to-understand strategies to help you navigate the high serviceability buffer. We’ll cover things like budgeting, understanding what lenders want, and finding government programs that can assist you. With these strategies, you can feel more confident about buying your first home and securing a bright future for yourself! Let’s get started.
Strategies for navigating high serviceability buffer
1. Improve Financial Position: The first step that first home buyers need to take is to enhance their financial position by reducing debt, improving their credit scores, and increasing savings. Strengthening their financial profile and enhancing their serviceability assessment will in turn boost their chances of securing a mortgage and ultimately realising their dream of homeownership.
2. Budgeting and Planning: Developing a realistic budget and financial plan can help first-home buyers better manage their expenses, save for a larger deposit, and demonstrate their ability to handle loan repayments effectively.
3. Seek Advice from a Mortgage Broker: Consulting with a mortgage broker who specialises in assisting first-home buyers can provide valuable insights and guidance on navigating the serviceability requirements and identifying suitable loan options. Remember, mortgage brokers are knowledgeable about the different schemes and grants available to first-home buyers. They also offer a wide range of loan products and a panel of banks which can help you find a suitable solution to your situation.
4. Explore Government Assistance: First-home buyers may be eligible for government schemes and grants that can support their entry into the property market. The FHOG for instance provides first-home buyers with a $10,000 grant for purchases up to $600,000 in NSW. The First Home Buyer Assistance Scheme provides stamp duty exemptions and concessions while the Home Guarantee Scheme allows first home buyers to purchase a home with just a 5% deposit without paying loan mortgage insurance.
5. Consider Alternative Lenders: If the first home buyer is not qualified for some of the grants, exemptions and concessions, they can always explore options with non-bank lenders or smaller financial institutions that may have more flexible serviceability criteria.
It’s important for first-home buyers to be aware of the serviceability buffer and take proactive steps to strengthen their financial position, seek professional guidance, and explore all available options to increase their chances of successfully obtaining a home loan.
We’re here to help!
Navigating the challenges of the high serviceability buffer is no small feat, especially when you’re a first-home buyer. Our team at Maverick Finance is dedicated to assisting you every step of the way. We understand the complexities of the loan process and the importance of securing your dream home. Our experienced mortgage brokers can provide personalized guidance, tailored solutions, and access to a wide range of lenders, including those offering government assistance programs. Let us help you overcome the serviceability buffer hurdle and turn your homeownership dreams into reality. Contact us today to get started on your journey towards owning your first home!
Maria Papa is a senior property and finance expert specialising in home loans, investment loans, self-employed loans, alt doc loans, car loans, personal loans and loan protection. She has offices in Sydney, Melbourne and Manila. If you have questions, you can call Maria at 0430 144 008 or email her at mpapa@maverickfinance.com.au.
Disclaimer: Your full financial situation will need to be reviewed prior to acceptance of any offer or product.