We’ve had a chat to brand new first home owners, Shae (25) and Daniel (26) to find out more about their experience buying their first home, with the help of a mortgage broker.
In Boronia, 32km southeast of Melbourne's CBD, the couple found their future home; a three bedroom - one bathroom property, situated on a generous corner block. In great condition (albeit needing some styling love), the house came complete with a recently renovated kitchen and a well-manicured backyard.
Get to know Shae, Daniel, and their furry friend Murphy (an adorable Bernese Mountain Dog puppy, 10 weeks) as they settle into their very first home together.
Q: From the moment you decided to start saving for your first home, how long was it until you unlocked your doors for the first time?
Shae: It was about 18 months of hardcore saving.
Daniel: We came back from an overseas holiday with absolutely nothing, so we were starting from scratch. We set ourselves a weekly savings goal, and stuck to it.
Murphy: Woof. (Spoiler alert: Murphy's responses didn't vary too much from question to question.)
Q: Did you look at a lot of houses before you settled on the right one?
Daniel: Surprisingly not! You hear lots of people say that they had to look for ages before finding a house, but literally the third place we looked at we ended up buying.
Shae: Everything sort of fell into place! We were looking around the Boronia and Ferntree Gully areas, and while we may have slightly preferred Ferntree Gully, this place was just too good to pass up.
Q: How did you determine what you could afford/did you have to settle for less than you’d hoped?
Daniel: It was the complete opposite actually! We went to the mortgage broker initially to see if we would be able to borrow $500k, because we really had no idea, and he told us that based on our income and savings, we could probably be approved for up to $620k!
Shae: This encouraged us a lot as we knew we were on the right track and could start looking for houses. We just needed to get that gage and have a clear goal. We didn't want to push that limit so we tried to stay around the $500 - $550k mark, but it was comforting knowing that we had a buffer.
Murphy: *Chases tennis ball around lounge room *
Q: Did you end up staying within your budget?
Shae: We ended up spending $560k, which is what we felt was our absolute maximum - we couldn't have spent a dollar more without hugely impacting and limiting our social lives.
Q: Did you have to make any sacrifices in order to save for and afford your house?
Daniel: I think we did it the right way because we went on a holiday first, and then came back and saved hard.
Shae: Doing it that way we were able to have our fun, but when we came back we were like 'time for business, let's work, let's save everything we possibly can'. We weren't saving for anything else, it was purely for the house.
Q: Do you agree with the view that it is becoming almost impossible for hopeful first home buyers to break into the market?
Daniel: For renters, it would be quite hard. We were lucky as we were able to stay with our parents and pay minimal board and bills, and just put all of that extra cash towards the house. If you are willing to work hard and stick to a budget, then its definitely possible to break into the market.
Shae: If you have the opportunity to live with your parents, and possibly get anything for free - then make the most of it. It truly makes such a difference. Its quite funny because when we were saving, we were putting away $1000 per week - no excuses. Now that we have a mortgage, we actually pay heaps less! So while the saving was really hard at the start it taught us really good habits and how to live on less, and we have been able to relax and enjoy our lives a lot more now that we have our own home, which is quite ironic.
Q: Why did you decide to use a mortgage broker to help you find a home loan?
Daniel: It was pure chance really. My brother is a real estate agent and my good friend is a mortgage broker so it was just convenient to go to him, and we are so glad we did. He sat us down and told us absolutely everything we needed to know.
Shae: As a first home buyer, when you just have no idea what anyone is talking about, it is so helpful to have an expert talk you through it step by step. Especially as we knew him on a personal level, I could literally call him up whenever I wanted and say 'Jake, what does this mean! Break down the costs for me! Send me more information!" which I did all the time. It was awesome having someone who knew exactly what the banks were talking about, and exactly what they wanted from us.
Q: What was the best part about using a mortgage broker?
Daniel: All of the above! And also the options they give you. We didn't use one of the Big 4 banks; we went with ME Bank, and we probably wouldn't have known about them if it wasn't for having a broker.
Shae: Our LVR was very high at just over 95%, so not many banks would lend to first home buyers at that ratio. Our broker was so helpful in letting us know which bank would be best for us, and surprisingly we actually got a really good interest rate too.
Q: After using a mortgage broker to finance your own home, would you recommend this method to friends and family?
Shae: Definitely. They give you so many more options, and guide you through the loan process. We would have had absolutely no idea what to do if we attempted to apply for a loan without any assistance.
Murphy: *Wags tail in agreement *
Q: What was the longest, most tedious part of the loan process?
Daniel: Because our LVR was so high, the bank dealt with our loan application with much more scrutiny. We had to supply so many documents and checks, and it extended the process so much.
Shae: It took forever! To get final approval, it took almost a month. We didn't have pre-approval; we put in an offer that was subject to finance, and we had a two week window to lock in the purchase, but the bank took way longer than that - we were lucky that the sellers were willing to extend! The bank was just so backlogged with applications. Our broker did his part really well, dealing with all parties and getting us time extensions and keeping us in the loop, but the bank made it so stressful.
Q: What was your favorite part of the loan process?
Shae: Finding out that we got approved! Definitely. It was that awful feeling of telling our family that we'd bought a house, but having to wait 3 weeks until we could tell the world while we waited for unconditional approval. When we eventually found out, it was amazing.
Daniel: I also loved the first consultation when our broker told us how much we could borrow. It really motivated us and put things in perspective.
Murphy: *I'm going to put my head on my paws and look super cute and sad, and hope that they start paying me some attention *
Q: If you could give potential first home buyers any advice, what would it be?
Daniel: Have a steady job! As simple as it sounds, it is the most important thing.
Shae: For sure. We are so lucky that we both have steady jobs and have never had to worry about this. We've always had a reliable source of income. I have changed jobs during this time, but I would never have left one until I had something concrete lined up.
Daniel: The other piece of advice is to just save as hard as you can. Set a goal and make sure you stick to it. You can still have a life while you are doing it, but savings should always come first.
If you're thinking about entering the property market, make sure you don't do it alone! Contact My Local Broker, and let one of our financial experts guide you through this new, exciting chapter.