Tips for purchasing your first home.
It’s an exciting time, but don’t let your emotions rule your head.
- Get home-loan pre-approval – and keep in contact with your home loan specialist
Before you even start looking at properties, get pre-approval from your home loan specialist. This will not only give you confidence that you’re looking at the right type of properties, but it will enable you to act quickly when you find your dream home.
Make sure, however, that you keep in regular contact with your mortgage broker, as most pre-approvals only last 90 days. So, if you commit to buying a home based on pre-approval you got six months ago, you could find yourself in trouble.
- Understand the other costs of purchasing a home
There are many other costs to consider when purchasing a home, including stamp duty, conveyancing fees, home inspection reports and perhaps even Lenders Mortgage Insurance (LMI).
Lenders Mortgage Insurance is an additional cost that you may be charged if you borrow more than 80% of the value of the property. But for first home buyers this can sometimes be waived.
Stamp Duty is calculated on the value of the property and differs in each state. Again, first home buyers may have this fee waived, or be charged a concessional amount depending on their circumstances.
If you want to work out the Stamp Duty costs in Victoria please click the link here Stamp Duty
- Stick to your budget
Buying your first home should be a happy experience, not one that leaves you in financial distress. If you stick to your budget you are less
likely to suffer from regret, plus you can continue doing some of the fun things you did before committing to a mortgage.
The best way to avoid overextending is to know exactly where your money goes each month, and what things you know you will still have to pay once you are a homeowner. Obviously rent will no longer be an expense, but it will be replaced by loan repayments. Things you haven’t had to pay as a renter, like building insurance, Council rates and water rates need to factored in.
When it comes time to make an offer, keep your budget in mind and try not to let emotions get in the way, so you don’t go over your budgeted purchase price. You don’t know what might happen in the future so you will be much better off if you are not in a position where you are starting your home ownership journey overstretched financially.
4. Location, location, location
This old adage still holds true today. It can be hard not to let emotions rule your head when inspecting a property you like. There can be a tendency to get caught up in the excitement of imagining yourself living there, or entertaining friends and family.
But this can distract you from thinking about other essential factors that make it a good purchase.
Some things to consider:
- Are there local schools nearby and what is their reputation?
- Is public transport available nearby?
- Does the area have shops, cafes, restaurants nearby, and is this important to you?
- Is the street a major thoroughfare or popular rush hour shortcut?
- What are the homes like around the one you are buying – are they well-kept or run down?
- Is there a major infrastructure or property development near the house, or are there plans for one?
- Make sure you obtain a Building & Pest Inspection
If a house has termites it is often not visible from the exterior. You also don’t know if the building is structurally sound or a previous owner has done some dodgy renovations.
If you obtain a report from a qualified third party, and they outline some issues, you could use this as a bargaining tool to reduce the price. Or you could avoid a horror story by not going through with the purchase if a major issue is identified.
- Government Grants
There are a number of initiatives provided by the Government to help people buy their first home.
Your home lending specialist should be able to provide you with information about what is available, but check out the First Home Owners guide to see what’s available.
If you are eligible for any financial assistance, it could save you thousands of dollars in stamp duty, lenders mortgage insurance and other fees.
- Think with your head, not your heart
It is really easy to let your emotions override your judgement because you fall in the love with a beautifully renovated house, but overlook the fact there is no backyard for the kids to play.
Or you panic and think that if you don’t buy this house, you will never get an opportunity again. Panicking, or falling in love with one aspect of a home can cause you to overlook other things that are not right with the house.
To help overcome this have a list of those things you absolutely need, those things you would like to have and those things you are willing to sacrifice. It can also help to get another person you trust to have a look at the house as they will be looking at it through unbiased eyes.
You don’t want to end up being disappointed with the house once you move in, because you didn’t take the time to look at the good and bad things about the house.