With a relatively stable economy, steady interest rates and a glut of properties on the market, there’s never been a better time to buy your first home.
But before you sign up to a 30-year loan commitment, it pays to educate yourself on exactly what’s involved in buying a home.
Do #1: Engage professionals at every step
From getting a home loan to legally transferring the title deeds, buying a property can be a complex and lengthy experience. Don’t try to do it all yourself: it’s worth paying for good advice to ensure you don’t make any costly mistakes. At a minimum, make sure you meet with a qualified finance broker, as they can help to explain the mortgage application process and guide your home loan decisions.
Don’t #1: DIY renos and repairs
Don’t embark on repairs or renovations yourself if you don’t have the skills or expertise to do a professional job. You might pay a little extra to get an expert in, but it will be worth it in the long run. “Proper maintenance and repairs of all the little bits and pieces are just as important as the big things,” adds Alex May, author of Planning Your Perfect Home Renovation. “Investing in maintenance and repairs is not only moneywise; it could be crucial to a future sale.”
Do #2: Find out the costs involved
“Very few property buyers undertake the actual due diligence on what it’s going to cost to buy and hold a property,” adds Fiona Herbert, mortgage consultant with Leap Frog Loansprocess. Many first homebuyers get stung by the elaborate list of expenses they’re up for when purchasing a property. As well as the deposit, you may need to stump up cash for stamp duty, building and pest inspections, loan application fees, legal expenses, valuations and title search fees. Factor in around 5-10% of the purchase price to cover these costs.
Don’t #2: Get emotionally attached
The lead-up process to choosing your first home can be emotional, but you must take the emotion out of it, according to Herbert. “So many people buy a property because their friend told them about it, because they liked the marketing, or because it’s in the next suburb and they drive past it every day,” she says. Don’t get swayed by your emotions: go out and do some proper research to ensure the property – and the asking price – is the right fit for you.
Do #3: Create a thorough budget
You need to make sure you can afford the property now and in the future, so it makes sense to create a thorough budget, so you know exactly how much you can afford. This will also help you to decide whether a fixed or variable mortgage is your best bet: variable rates usually save you money in the long run, but if a stable mortgage repayment is important to you, a fixed product could be ideal. The current 2-year and 3-year deals on offer are quite competitive.
Don’t #3: Rush into anything
Searching for your first home is an exhilarating experience, and it’s easy to get caught up in the excitement of it all. If you make an offer on a property, you’re signing a legally binding contract, so don’t do anything hasty: take your time, do plenty of research, and get your finance sorted before you begin booking viewing inspections with real estate agents. It will make the whole experience much less stressful for everyone involved!