You’re finally ready to purchase your first home – exciting times! On the downside, you’re getting advice and opinions from every person you know (and some you probably don’t), whether you have asked for it or not.
Entering the world of real estate for the first time can be completely overwhelming and confusing, so we thought we would pull it back and list our top five things you should consider when purchasing as a first home buyer.
Run the numbers
The first step in purchasing a property is working how much you can afford to spend. When establishing a budget figure, look at:
– What your annual income is?
– How much you can save for a deposit?
– How much you can afford in repayments?
– How much your current living expenses are?
Using online mortgage calculators can be a good place to start to get a rough idea on how much you could possibly borrow and what your mortgage repayments would be.
You should also think about the current shape of your bank accounts. Do you have any debt hanging around? Lenders will look at your credit file when assessing whether they should lend you money and that credit card you defaulted on could come back to haunt you. Lenders will also want to see that you have been able to save similar amounts, consistently, without you dipping into those funds often.
You will also need to take into account the additional costs that come with buying a property, most of which need to be paid up front such as stamp duty, loan fees, legal fees, settlement fees, property insurance and mortgage insurance.
Know your market
Work out the suburbs that you ideally would like to buy in and what you might actually be looking for in a property. Once you have established these two things, start following the market prices for your areas – see how much properties are selling for and how quickly they are being purchased.
It might be that the area you want is out of your price range right now, but a suburb close by is more suited.
Not all lenders are equal
You don’t need to get your home loan through one of the ‘Big Banks’. Talk to the local Branch Manager of your current bank but then go and see a Broker or two.
Brokers work with many different banks and lending institutions and therefore have an ability to be able to get you competitive interest rates and low fees. They also do a lot of the ringing and running around for you. They are usually paid a commission from the Lender which means you do not need to budget for their costs.
Perhaps the single most important aspect of buying a home is to fully understand what to expect throughout the buying process. Your Solicitor and Real Estate Agent and even your Bank and/or Broker should work together to guide and educate you through this process. As a First Home Buyer, you may also be eligible for various Stamp Duty exemptions or reductions which your Solicitor will also be able to provide you advice on. If you are unsure about something, ask a question!
Your Agent and Solicitor will also generally be able to put you in contact with other trusted professionals such as pest and building inspectors which can help you avoid nasty surprises before it’s too late.
This is an incredibly exciting time for you. If you do your research, know your limits and surround yourself with professionals that can provide you with sound advice your stress levels should be minimised and you will always have the amazing memory of picking up your keys and walking through the front door of your very own home for the first time.
Happy House Hunting!