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Deciding to buy your first home is an exciting time, but are you confused about how to go about it? You’re not alone. That’s why we’ve put together these five steps for getting into your first home.
Understand your finances
Understanding the numbers is an essential first step to homeownership.
- Budget – Yes, it may sound boring, but a budget can help you understand your spending and set you up with solid saving behaviours that will help you now and in the future.
- Credit score – Potential lenders will be looking at your credit score. You can access your credit report by contacting a credit reporting agency. It’s free, and you’ll have it within ten days.
- Deposit – Did you know it takes the average first home buyer 4.6 years to save a 20% deposit? While 20% seems a lot, the bigger your deposit, the better . But, as a minimum, you should aim for 5% of the purchase price plus additional costs.
- Additional costs – If you haven’t done your homework, the additional costs that come with buying a house may come as a shock. They include:
- legal fees
- stamp duty
- mortgage registration and transfer
- building and pest inspections
- Grants and concessions – Most Australian states and territories have grants or concessions (or both) for first home buyers. You might also be eligible for the First Home Loan Deposit Scheme (FHLDS)
Get it right from the start with professional help.
Apply for pre-approval
Loan pre-approval means you already know what you can afford to borrow. You don’t spend time looking at properties you can’t afford, and it puts you in a strong negotiating position because you can act quickly and decisively.
Once all the paperwork is done, you can focus on finding your home. And when you’ve decided, the bank only needs to confirm its suitability as security and you’re ready to go.
- Useful reading: Home loan pre-approval: how much should I ask for?
Research and house hunt
Now you’ve got all your ducks in a row; the real fun stuff can begin!
- Keep your budget in mind. Don’t look in areas you know you can’t afford. After all, this is your first home, not necessarily your forever home.
- Look at suburbs that fit the lifestyle you have and the lifestyle you want.
- Walk around the suburbs and visit at different times of the day.
- Take notes when you visit open homes and don’t let home styling distract you.
- Does it have the infrastructure you need now and in the future?
- Look for similar properties in the area and their sold price.
- Consider your work commute. Do you need access to public transport?
- Is it a flood area? How will this affect your insurances?
- Do you want to move right in or are you on the lookout for a renovator’s delight?
Sign the contract and seek formal approval
You’ve discovered your dream home. You should be doing your own research and finding out everything you can about the property from the real estate agent. At the same guard against not giving away too much about your home buying intentions. You don’t want to give the agent an advantage in sale negotiations by knowing your budget or that you have fallen in love with this property.
Once you’re 100% sure this is the home for you, it’s time to negotiate. Your research of the local property market will help you determine a fair value and give you a starting point for your negotiations. Once you’ve negotiated a final price, contact your bank for formal approval.
- Useful reading: This is why ‘subject to finance’ is important
Arrive at settlement
This is when you need to hand it over to the experts. All paperwork should be final and complete because settlement is really just the formal exchange of documents. Your solicitor or conveyancer will attend settlement on your behalf.
And then…congratulations you’re now a property owner!
Your Yellow Brick Road mortgage broker will contact you about a month after settlement to ensure your home loan is working properly and payments are set up correctly.
When it comes to buying your first home, a little bit of planning goes a long way. We can help you take the very first step. Get in touch with one of our mortgage brokers today.