Buying a home is likely to be one of the biggest financial decisions you will make in your life. To help you through this process we have provided some tips to help you get your head around the idea of buying your first home.
1. Don’t underestimate the costs of purchasing a property
When saving for your deposit, ensure you take into account more than just the purchase price of the property. Inspection reports, Lenders Mortgage Insurance (LMI), solicitors’ costs and stamp duty are just a few of the additional costs in buying a home. And don’t forget that Pinterest-perfect garden, driveway and home furnishings are just some of the extra costs when building your first home.
2. Saving for a deposit
The best way of doing it is to setup a plan, budget and save 20% of the cost of the property, but realistically many first home buyers are not going to have that.
If you can save the 20% deposit + Stamp duty and avoid LMI that is the ideal deposit amount. Most first home buyers will have to pay LMI however this should not stop you from buying a property.
So, you’ve only saved a 10% deposit and your dream property is on the market should you go for it? Getting the extra 10% of the property’s value could take another 3-4 years depending on your situation, and what’s going to happen to property prices in that time?
Take advantage of first home owner concessions or first home options such as the Select Encompass Family Helper Loan option which can help you avoid LMI by using the equity in your parents property.
3. Before committing to buy, do your homework.
Do your own research to find out if your target suburb has potential? There are tools available to find median property prices, average people looking for property in that suburb vs number of properties for sale. We at Select Encompass can also get some of this information for you if you require.
Be very clear about what matters to you such as access to public transport, schools, shopping hubs, eateries and if animal friendly. Grab a coffee and live like a local in your new suburb, talk to your potential neighbours and get a feel for the people and the area. Be willing to consider surrounding suburbs and shortlist those that deliver on your needs.
4. Find the home loan that is right for you
Just because a home loan has a lower interest rate doesn’t mean it’s the home loan that is right for you. Many financial institutions will charge extra for making additional repayments, performing redraws or accessing an offset. It is also important to read the fine print for hidden fees or costs, always look at the comparison rate when considering a home loan.
A Home Loan is a long-term relationship, so having a lender who is friendly, understands your situation and treats you with respect and not like a number goes a long way.
5. Get your pre-approval
Getting a pre-approval gives you the confidence to go property shopping. You can attend open homes and auctions knowing much of the paperwork is already done and finances have been approved.