If you’re on the hunt for your first property, you’re likely receiving plenty of “advice” from friends, family members and colleagues, which only ever ends in information overload.
IT’s more important to go into your home purchase with a firm understanding of what you need, can afford, and want in your home. Armed with a few basics and these important tips, you’ll be able to keep your eye on the prize while you buy your new home.
Consider how your budget will look into the future
Most home loans are based on a 30-year term, so it’s important to think about what your budget will look like as your circumstances change (which they will).
Work with a financial adviser, who can help you create a picture of your future and any buffer you’ll need down the track. That way, you have a concrete purchasing price to aim for and security knowing you’ll be ok if interest rates change or your family grows.
Do your home loan homework
From variable to fixed term, interest rate to comparison rate, the home loan market is a complex beast and you will benefit from doing your research. The best place to start is with an independent mortgage broker, who can determine your borrowing power and a huge selection of lenders’ offerings for you.
Ask questions about the lenders offer and hidden fees, but it’s also ok to ask lenders for a better deal. The lending industry a competitive market, so they might come to the party to secure your business.
Once you have committed, making changes or switching lenders can be costly so ask all of your questions before you sign.
Your deposit amount can have a huge impact long term
The maths is simple: the bigger your deposit, the better off you will be, so it’s a good idea to save, save, save as much as you can before you buy. This is why a bigger deposit helps you out:
- The larger your deposit, the more borrowing power you’ll have, and more flexibility in your borrowing gives you more options in the housing market.
- A bigger deposit means a smaller mortgage, which is thousands of dollars saved in interest fees over the course of the loan.
- Finally, if you can save a deposit of 20%, you won’t need Lenders Mortgage Insurance (LMI), which will save thousands. The Government is currently helping to reduce this cost via the First Home Loan Deposit Scheme, but this initiative won’t last forever.
Of course, if you can’t get together a large deposit, don’t fear: a mortgage broker and financial advisor will be able to work out your borrowing power with a smaller payment up front. There are government grants available to help you, which we’ll unpack in a moment.
Be aware of your credit history
If you have a history of overdue bills or large debts, it’ll likely show up in your credit history check and may affect your loan approval or how much you can borrow.
Before applying for a loan, pay down or consolidate any large debts (outside of a HECS debt, which has less of an impact) and make sure everything is up to date. An accountant or financial advisor can help you through the process and make you look good for lenders.
There are several financial incentives currently on offer
Right now, there are a number of generous government incentives on offer, so it’s a great time to buy.
The biggest is the HomeBuilders grant at $25k for new builds, and the well-known First Home Owner grant gives $15k towards buying or building new.
The First Home Loan Deposit Scheme sees the government guarantee up to 15% of a 20% home loan deposit, which means Lenders Mortgage Insurance may not apply.
Finally, the Stamp Duty Concession may save you extra if your house and land package totals less than $550k.
Beware lenders with large estimates
Lenders will tell you your maximum limit, and your repayments on this amount will not take into account additional expenses such as insurances, rates, stamp duty and conveyancing to name a few. When these are added to your existing expenses (car costs, groceries, gym memberships etc) it is easy for things to become unaffordable.
The bottom line is, just because a bank says you can, doesn’t mean you should! How you live in your new home is just as important, so find a home that fits your budget and still lets you enjoy a great lifestyle.
There’s always a professional who can help
If you ever find yourself bewildered or overwhelmed, find a professional who can help you gain clarity.
Buying agents can help you find a home, financial advisors can help you organise a plan your money, and mortgage brokers assist with securing your loan. Conveyers oversee contract reviews and regulatory obligations.
If you are building new, a property group can streamline the process, offering guidance with everything from land sales and choosing a floor plan to suit your block (or a block to suit your home) through to builders, construction and finishes, appliances and fittings. Upon completion, this same team will assist with the paperwork for you to access your relevant government incentives.
Consider the community, not just the house
Chat to local residents, drive the streets, visit at different times of day and review the town plan. Learn about the current amenities as well as any major planned changes or infrastructure to avoid disappointment down the track.
New estates are a great choice for first home buyers because the facilities and your home will be brand new, meaning less maintenance cost and a better lifestyle.
Building new gives you more choices, and can save you money too
A new build is a fresh slate and a chance to get exactly what you want. It’s also a great way to reduce your impact on the environment and your wallet.
By working with the natural breeze, shade and sunlight on your block, you can reduce the need for costly heating and cooling. Energy efficient new appliances mean lower bills and a more sustainable home, and you’ll benefit from lower maintenance and repair costs.
