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Entering the property market for the first time can be daunting and confusing. If you’re not careful you can make some costly mistakes. But if you get into the market as soon as you can, you will reap the long-term benefits.
Here is a brief guide for buying your first home in the new year.
Finding a home
Consider these things when house hunting:
- Cost: What can I afford?
- Size: Is there room for family growth?
- Lifestyle: is it close to all the amenities I need, and does it support my lifestyle?
- Investment strategy: is it in a good location and will the value of this property grow if I decide to sell in the future?
It’s not easy to find a property that fits all of your criteria, so you should be clear on what you’re willing to compromise on and what your priorities are. But don’t be discouraged, new properties are constantly coming on to the market and if you’re patient, you might just find a property that meets all your criteria.
Hiring a Buyer’s agent can help you identify good quality properties and acquire them at the right price. They are professionals and are experts in researching the property market.
Buying a home
Private sale
Private sales are more relaxed than auctions, and are less risky. There’s room for negotiation and you’re less likely to over-pay for a property. You might have to compete with another buyer, but it will be far less stressful.
Off the plan homes
Buying off the plan can be a good idea for first home buyers, because they are often cheaper than existing houses. Many people are put off by not being able to see the house, but as long as you study the plans carefully and communicate with the developer, you shouldn’t have any problems.
Auction
Auctions can be intense and properties generally sell above their advertised price. If you’ve never bid at an auction before, it can be quite daunting. It might be worth hiring a buyer’s agent who can attend an auction on your behalf and give you the best chance of success.
Budget
Your budget will determine where you can buy, and what kind of property. You should always consider:
• Your income and current saving capacity
• Interest rates
• Plans for future costs and investments.
Costs
Apart from the cost of the house, there are a number of fees you should be aware of when buying a property.
• Conveyancing and legal fees
• Loan application and yearly fees
• GST
• Stamp duty
• Inspection fees
• Moving costs
On-going cost of owning a property include:
• Insurance
• Loan repayment
• Utility bills
• Council rates
First home buyers are entitled to a grant from the government to help with the deposit.
Inspecting a property
You should always inspect a property before buying, provided you’re not buying off the plan. It’s also worth paying a professional property and pest inspector to save you having to fork out more money for repairs and fumigation in the future.
Before the bank gives you a loan, they will require you to get a property valuation. They have their own valuers, but it can be useful to find a valuer to give you a personal valuation and so you can challenge the bank if they give you an unfavourable valuation.
Borrowing money
Saving the initial 20% deposit for a home is usually the hardest part of buying your first home. But the more money you can put down initially will give you a lower LVR (loan to value ratio) which will decrease the ongoing costs of your loan, and prevent you from being required to have lender’s mortgage insurance, a cost which should be avoided.
Conclusion
Don’t allow the daunting nature of buying a home from stopping you entering the property market. If you follow the right steps, get the right advice, and stick to your budget, you will be successful and find a house you can enjoy for years to come.