So you’ve been saving hard for a few years and you finally feel ready to start seriously looking to buy your first home. But where do you start? Buying a property will be the biggest purchase you ever make, but a little homework can get you closer to the home you want. This check list will get you thinking about where to start, things to double check and which questions to ask.
1. Choosing a home loan
This is probably as big a decision as the house itself. There are bank lenders, non-bank lenders, fixed rates, variable rates, no-deposit loans and the list goes on. It’s pretty confusing. A lot of new home buyers find a mortgage broker can be really helpful in breaking through the confusion and determining which loan will work best for you, but if you have time and patience on your hands you can do a lot of research yourself.
2. Choosing the right area to buy in
This will depend on your individual taste but there are some guidelines which can help. Think about where you want to live and how much you have to spend. If you can’ t afford to buy in the location you really want, try to think about the characteristics of the area you like, write them down (cafes, schools, beach etc.) and do some research. You may find that there is another area that can offer these things at a more affordable price.
3. House or apartment?
You will probably have a fair idea already of which one will suit your lifestyle. However, there are a few things that may give you pause for thought, however. If you are looking to buy an apartment you may be able to purchase a brand new property and this can impact how much you receive from the federal government’s First Home Owner’s Grant. On the flip side an apartment will have ongoing strata costs and also does not allow for future building extension the way a house can. If you are really keen on a new property you could consider moving to a less city-central location as you would have a good chance of finding newer places in outer suburbs.
4. Set your budget
You may know how much you can afford in terms of monthly repayments, as a general guide you should not be contributing more than 30% of your monthly before-tax income to your mortgage, but there are other costs. Another really important point here is that banks will calculate your ability to repay up to 2% above the current rate in case of an interest rate rise. You need to be aware of this “buffer” as it could affect your ability to secure finance. Initial costs that you need to budget for include loan application fees, building inspection fees, mortgage insurance, stamp duty, solicitor fees and more.
5. Take your time
Don’t make an offer on the first cute place you see with a sunny courtyard. Other than the house you need to think about all of the factors, like who your neighbours will be, if there is good access to public transport, if there is a lot of traffic or plane noise. A good way to get a sense of the property you are seriously considering is to go back and visit it at different times on different days. You may find it is quiet all week but the community centre down the road starts making noise at 8am every Saturday. Spend some time near the property and list any concerns that arise from this, and then compare it against all the things you like about the property.