While owning a first home comes with the perks of stability, investment and well, a lot of excitement; it is also the single biggest financial commitment most people will make in a lifetime. So, before you take the plunge, it’s important to be prepared and well researched.
Here are top 5 things first home buyers should know so that you can tackle the process with as much ‘Zen’ as possible.
To secure your first home, if you haven’t already, it is vital you start saving now. If you were to save $500 a week, it would still take you a couple of years to afford a deposit on a home, especially if you are looking to buy in any of Australia’s capital cities. Aiming to save a deposit of around 20 percent can benefit you in many ways: There will be less money you need to borrow, access to a wider pool of lenders, it will assist in demonstrating to the lender that you are financially disciplined and you can avoid paying Lenders Mortgage Insurance.
Determine how much you can reasonably borrow
It’s important to be reasonable in your expectations when taking out a home loan. To determine what is reasonably possible, consider the various home loan fees; such as stamp duty, legal fees or lender costs. Then assess your lifestyle, such as your current income and expenses, as well as any future lifestyle changes you may envision that could affect your earning potential. Also make sure you can afford any increases in interest rates. It is also important to ensure, once you do reach the auction stage, that your finance approval is confirmed, as you may run into some serious trouble if you buy a home without this.
Consider the First Home Owner Grant (FHOG)
It’s worth looking into the First Home Owner’s Grant offered by the various State Governments. The FHOG comes as a one-off payment to assist First Home Buyers get into the property market. As you would agree, when you’re buying a home every dollar counts, so click here to see if you are eligible or would like more information about the incentive.
Conduct market research &
consider the future value of the property
Chances are you’re not going to stay in your first home forever, so it’s an excellent idea to ensure you are making an investment in an area that has potential growth opportunity. For example, this may be the neighbouring suburbs to the “hot-spots”, as they will provide a cheaper entry point yet will grow in value in years to come and therefore increase your return on investment. Also consider amenities such as public transport access, local schools, and nearby access to shops, which will add value to your home if you do decide to sell it.
Undertake property inspections
If you are lucky and find a house that’s looking like it could be the one, before you get too excited, it’s important to conduct thorough property inspections to ensure the home you are buying does not present any future problems. Firstly, undertake a personal check as you wander through the property on open day. Keep an eye out for red flags, such as sagging ceilings and mould, and look under sinks to check the condition of the plumbing, check light switches and the state of floorboards. If you are still interested, it’s worth spending the extra on a professional building inspection, which will check for any structural defects, such as unsafe renovations, roof damages, and cracks inside the walls to name a few. Inspections will prevent “unforeseen” issues popping up later down the track, and may also help you negotiate a lower price with the owner.