5 things first-home buyers need to know
Before you decide to purchase your first property there are several things to consider, including your current personal circumstances and financial status. Workout the deposit you need and the purchase costs for your first home.
1. Think about why you want to buy a home
How long are you planning to live in it? This can help determine the kind of loan you apply for and home you buy, depending on your short and long-term plans. Make sure you are transparent about your long-term plans before you apply for finance as this will be crucial to your loan recommendation.
2. Research potential properties and loans
Knowing the market is important, so do some research on the areas you are targeting, check out auction clearance rates and recent sales, as well as price trends in the area. Once you are aware of what you are looking for and the approximate price, the next step is saving a deposit.
While some lenders will offer loans if you have saved less than the usual 20 per cent deposit, being able to show a record of good saving habits will aid in getting your loan approved.
Then, when you talk to your Mortgage Broker about applying for pre-approval on the right type of loan, ask for their help to work out the required deposit size and what you can afford in terms of repayments.
3. Factor in other costs involved
Depending on the property, there can be several additional costs, so ask your Mortgage Broker to give you an estimate of the purchase costs. This can include, but isn’t limited to, stamp duty, loan establishment fees, legal and conveyance services, utilities, property insurance, maintenance, and lenders mortgage insurance. Some of the adjustments are specific to the property you’re buying and will be confirmed by your conveyancer closer to settlement but we should be able to give a close figure of how much you will need for settlement.
4. Think about your future
Just because your current situation allows you to get a home loan, that doesn’t automatically guarantee that you will still be able to service it in five years’ time. Is there a possibility your role at work will change? Are you considering going back to study and reducing your working hours? Make sure you can afford your repayments if rates increase and that you have some funds put aside for the rainy days.
5. Get professional help
With so many things to consider, getting professional help is highly recommended. There are many experts in the industry, and it is in your best interest to use them for tasks such as property checks, pest checks and any other legal queries. Going it alone can prove costly. Avoid nasty surprises down the track by getting the right people to do the appropriate checks for you from the beginning.
As a first home buyer, you may be eligible for LMI waivers, stamp duty concessions, guarantee schemes, grants, etc. Your Mortgage Broker will be able to guide you through all these options to make sure you make the most of these offers available at the time of your application.
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Contact us for expert advice about buying your first home.