Are you ready to take the plunge and buy your first home? It can be a daunting yet exciting proposition, but if you're serious about getting off the rental merry-go-round and buying your home, then follow these expert tips to help get you there!
Complete a personal budget
It‘s critical to get your figures right at the start of the house-hunting process.
“You should complete a personal budget to find out how much you spend each month, and how much you might be able to afford to repay on a loan,” says Smartline Adviser, Linda Clucas.
A mortgage broker or lender will be able to help you calculate what your repayments will be like for differing loan amounts across different loan terms. Most mortgages are spread across 25 to 30 years, and your mortgage payments will vary depending on whether you choose a fixed or variable home loan.
Be prepared for the cost of buying
You’ll need to come up with a deposit, of course, but other costs of buying property can include:
- Mortgage application fees
- Stamp duty
- Lenders Mortgage Insurance (LMI)
- Property valuation fees
- Legal expenses
In general you should expect to spend around 5-10% of the purchase price of the property on these types of buying costs – so on a home costing $250,000, you’ll need to find around $12,500-$25,000 to cover acquisition costs.
Keep in mind that as a first homebuyer, you may be exempt from paying stamp duty, and you may also have access to the $7,000 first homebuyers grant, which can help to offset these expenses.
Set a buying budget
Once you’ve crunched the numbers and factored in the costs of buying, you’ll have a good idea of the price range you can afford to search within.
It’s imperative that you complete points one and two before you even set foot in an open home, so you can set a realistic budget – otherwise, you risk falling in love with a property that you can’t afford.
“There‘s no point in getting your heart set on your dream property and then discovering that the loan payments would be beyond your capacity to repay,” Clucas says.
“When you have some idea of what you might be able to afford, that’s when it‘s time to get a realistic idea of what your money will buy.
Look beyond the pretty presentation
“Sometimes when you first look at properties, it‘s hard to see past the pretty curtains and the nice sofas to the nitty-gritty details,” warns Clucas. “But it‘s no good moving in, only to discover that the curtains were concealing cracked windows and the sofas were covering holes in the floor.”
It‘s important to properly inspect any property you view, making sure you “take a buying checklist along with you to keep you focused on the details,” Clucas says.
If you become seriously interested in a particular house or apartment, you should consider engaging a licenced building inspector to conduct a thorough, professional inspection.