Buying a home is one of the biggest decisions you’ll make in a lifetime, so it’s important that you know all the facts before buying to ensure you get it right.
With almost ten million homes in Australia currently, the process can be quite overwhelming if you’ve never done it before as you’ll need to make hundreds of big and small choices along the way. Plus, the home buying process is filled with various steps and terminology that may be completely new to you. With an average loan size of $342,000 for first homes in Australia, it’s not a decision to rush into ill equipped.
Truevest Finance have curated some useful tips on the best approach to buying your first home to help you get your head around what it takes to take out a mortgage.
When it comes to real estate, there is no such thing as too much research. But where do you start? Before deciding on anything, you have to do your homework. Do some research or meet a broker to discuss what’s involved in buying a home— there is a lot of information to understand in the process of buying and it’s best to know what the requirements are before you begin planning or searching for a home.
Apart from knowing about the process of buying, it’s always best to do some research on the residential market to identify the right suburb and property type for your lifestyle and criteria.
Start by scouting out properties in your preferred suburb and ascertain the median sell price, so you know what kind of price you’re in for and whether it matches your expectations. A quick google will help you find this too. It also pays to discover the rental prices of the area, so if you need to rent out your home for whatever reason, it is a beneficial arrangement that won’t leave you too far out of pocket when repaying a mortgage.
Have a look around online and even go to some open inspections or display homes to better understand the property type and area.
These are just some of the questions you need to answer before buying your first home. Figure out your financial options as this will give you a realistic understanding of what you can actually afford. Truevest can help here!
You also have to understand your borrowing power and what repayments would be realistic for you. It’s a vital part of the process to work out what you can genuinely borrow and afford to pay back on a weekly, monthly and yearly basis. Additionally, you’ll need to decide what type of loan works best for you: a variable rate, fixed rate or interest only. But don’t stress, this is where Truevest Finance can help you. We’ll also be able to advise on how much deposit you’ll need based on the price range you’re looking for.
This step of the process also has the added bonus of gaining pre approval (if you’ve followed the necessary steps) with a lending institution. Having pre approval offers a range of benefits when it comes to buying your house as you’ll know exactly what you can afford to pay, be able to offer a shorter settlement time (which positions you above other potential buyers) and have most of the paperwork done and out of the way.
When you have ascertained what kind of property you’re looking to buy and the corresponding home loan plan, it’s time to begin saving for a deposit.
The best way to get your savings up is to begin a savings plan or budget and sort out any outstanding debt (such as a car loan or hefty credit card debt) as that will make it harder to get a home loan. The more money you’re able to save for a deposit, the more you can borrow when purchasing your home, so you might be that little bit closer to that dream home you’re looking for.
Buying a home may come with several unforeseen costs (such as stamp duty, conveyancer fees, mortgage insurance, building inspection fees etc) that can add up very quickly. However, you may eligible for a First Home Owner Grant (FHOG) or stamp duty concessions and other incentives offered by various state governments to first home buyers. These financial incentives can end up saving you thousands of dollars. Make sure you ask your broker what rebates and grants you might be eligible for.
To avoid being totally overwhelmed and shocked by your first few repayments, understand what you are required to pay and how your mortgage repayments will work. Start by devising a plan of what you currently spend per week, and on what. A mortgage broker will be able to tell you what you’ll pay, when, and what your interest rate is to determine how to best position yourself to pay off both interest and principal. This usually depends on the type of property you are planning to buy – is it an established property, investment property or new build?
A mortgage broker can find the best home finance loan possible for your situation and will do all of the lodgments on your behalf – you don’t need to deal with any banks! A broker has access to a broad range of loan products and lending institutions and can help you source the best option for your situation.
It’s definitely time to get excited – you’re moving in! But before you let the excitement get the better of you, it pays to do research on your new local council, sort out your utility accounts and book a removalist to help you move. Then you can move in and enjoy your new home, stress free!
It’s always best to seek professional advice on what finance option would be best for you. Truevest’s brokers can help answer all your questions!