Getting the keys to your very first home is exciting. But there’s also a lot of things that come with making what’s probably the biggest purchase of your life.
Thankfully, there’s plenty of help out there to ensure you make this commitment with all the information you need. In this article, we’ve collected five of the best tips for first home buyers to help you secure the home of our dreams without getting in over your head.
Get Your Finances in Order
Before approaching a lender or viewing properties, make sure you have your finances in order. The better your financial situation, the more options you’ll have when it comes to getting a loan.
Begin by tackling any debts you have. Pay off all that you can and close the accounts. For long-term debts, ensure you stay on schedule with repayments. Also, factor these into your future financial plans to make sure you can comfortably manage them while repaying your home loan.
Next, focus on saving up a decent deposit for your home. With a larger deposit, you’ll be able to borrow more money and apply for loans with lower interest rates. Although you can take out a home loan with a 5 or 10% deposit, doing so will likely require you to pay Lenders Mortgage Insurance, which can add up to thousands. A deposit of 20% or more saves on this cost and gives you more security when it comes to your home loan.
Research All Your Home Loan Options
Securing your loan is a crucial part of buying your first home and shouldn’t be taken lightly.
To ensure you get the best loan for your needs, take the time to research all your options. This includes looking into different lenders, fixed and variable loans, interest rates, repayment schedules and more.
If you’re finding it hard to decide between all the options available, consider contacting a mortgage broker who can help you make sense of it all.
Stick to Your Budget
Many first home buyers end up in stressful situations after paying more than they budgeted for. So you don’t make this mistake, create a realistic budget and stick to it. It helps to be across all your income and expenditures and be realistic about how much you can comfortably repay.
When setting your budget, don’t forget to factor in additional costs. While you may believe that a $60,000 loan and $600,000 home loan allows you to purchase a $660,000 house, the reality is that there are other costs to consider. These include stamp duty, inspections, Lenders Mortgage Insurance, and solicitors’ fees, just to name a few. If you’re buying a new home, you may be able to take advantage of incentives that can save you thousands.
When it comes time to buy, don’t give into temptation. No matter how much lenders offer you or how nice that house is, stick to your budget. You’ll never know what financial strains might happen in the future, so be sure to play it safe.
Get a Building Inspection
If you’re buying an existing property, get a building inspection done before you buy. Although this process may come at a cost, it’s a worthwhile investment. As well as identifying any issues, such as structural faults, water damage or infestations, building and pest inspections can also give you more bargaining power with the seller. So, if you still want a property despite its flaws, you can use it to help negotiate the price.
Take Advantage of First Home Buyer Benefits
As a first home buyer, you’ll often be able to take advantage of benefits and incentives that other buyers can’t. This can give you an edge when it comes to negotiating and buying.
In Victoria, if you’re a first-time buyer purchasing a new home for $750,000 or less, you may be eligible for the First Home Owners Grant (FHOG). For homes in regional Victoria, this is a grant of up to $20,000. For those in cities, it’s a grant up to $10,000.
You may also be eligible to receive stamp duty concessions. If your home has a dutiable value of $600,000 or less, you will be exempt from paying stamp duty. If your home is valued between $600,001 and $750,000, your concession will be calculated on a sliding scale.
To find out more about the benefits available to you, visit Victoria’s State Revenue Office website or your appropriate state government website.
With a deposit saved and armed with the information you need to find the right property and loan for you, you’ll be in an ideal position to buy your first home. However, there’s one more thing to remember: Before signing your contract of sale, be sure to have it looked over by a solicitor or conveyancer. Seeking independent expert advice will help ensure you understand the agreement and become a happy homeowner.
From there, it’s time to pick up your keys and step into your very own home.
View Bank Homes creates beautiful homes for first home buyers and other property purchasers in Melbourne. See our upcoming developments here.