Getting rejected for a mortgage won't kill your first home dreams.
If you get knocked back once, try again.
Rejection can sting. When Peter, 40, was rejected on his first home loan application, he saw it as an opportunity to get his finances in order rather than become swallowed by his accumulating debt.
Peter had put some serious thought into buying his first home in 2014.
For the last ten years, he had been paying approximately $1280 a month for a three-bedroom apartment with his partner and two young boys in the NSW town of Armidale.
"Rent isn't overly expensive in Armidale, but the amount we paid in rent over that time is also more than enough for a deposit on a house," says Peter.
"It makes you realise that you could have been in your own place for the whole time."
Homeownership also promised stability and freedom.
"Owning your home means we could have the freedom to do what we want to our place and have something to be proud of."
Peter wasn't getting younger anymore. Something had to change.
It was now 2017, and Peter decided to speak with Karen, a home loans specialist at the Regional Australia Bank branch in Armidale to see if he could purchase his own home.
With $40,000 across two credit cards and two car loans, the numbers were not adding up for Peter to obtain a home loan.
Peter knew his chances were slim, but he just had to know. So he asked his home loans specialist, Karen about what they should do next.
Karen was quick to prepare a plan of attack for Peter. She consolidated the debt of the car loans and credit cards so that Peter was not paying excessive interest across multiple loans. She also helped to set a payment schedule to pay off the loan.
The whole process felt seamless for Peter, who had labelled his ballooning personal debt as his biggest challenge each month. With Karen's help, the debt suddenly felt more manageable.
"Without Karen, we would still be paying off our cars and credit cards. She's done a lot for us. I'm very grateful for that."
"It was a no-brainer to get that debt out of the way first before buying a home," he said.
Peter made additional fortnightly repayments and put any extra money that he made from his job back onto the loan.
Finally, he paid off the whole personal loan within 18 months, which was seven months earlier than anticipated. As a bonus, he had also kickstarted the process of putting aside money for a deposit for a first home.
Encouraged by his progress, Peter decided to apply for a home loan in 2018. He pointed to his additional savings, his long-term rental status and the stable job of 13 years.
As part of the home loan process, Peter found out about his eligibility for the First Home Buyers Grant and stamp duty exemptions. That process influenced his decision about what kind of house they were going to buy.
"Buying a new home is also something for the kids later in life when we finish our time. They can use our home to buy their own home. It's for the stability of our family."
He also asked his mother if he could use her house as equity. As part of the Head Start Family Guarantee, Peter's mother agreed to contribute $15,000 to Peter's home loan.
"Initially we were going to buy our house. We decided to build our house, and we were hoping to use the First Home Buyers Grant as part of our deposit."
Peter settled on a house and land package deal, spread over 1031 square metres of land, nestled in the foothills of Armidale, as the destination for his first home.
Regional Australia Bank approved a home loan of roughly $420,000. The loan also covered additional fixtures for the place, such as air conditioning, curtains and furniture. The approval was a massive surprise for Peter, and he and his partner were proud of their achievement.
"Buying a new home is also something for the kids later in life when we finish our time. They can use our home to buy their own home. It's for the stability of our family."
The new freedom and stability will come with regular mortgage repayments, which were not much more than what he was already paying in rent. Peter's family won't be moving into the property until the next summer as they bring their dream home into life. However, Peter has already started paying off his mortgage while building the house.
His two boys, who played basketball and football in the backyard of their apartment block, can now look forward to a much bigger property to explore. They can also look forward to getting a dog in the future to run around with them.
Peter is quick to credit Karen for helping him achieve his first home dream.
"Without her, we would still be paying off our cars and credit cards. She's done a lot for us. I'm very grateful for that."
As for the first home loan rejection all those years ago? Peter believes that rejection was a turning point in his life in his journey to buy his first home.
"If you don't take that first step to get knocked back, you don't know where you are at. Life is full of knockbacks and kicks in the guts; it's how you take it and deal with it."
