Buying your first home is an important milestone, including savings, careful decision-making, and thoughtful planning efforts. What are the first and biggest obstacles for most homebuyers? Save the deposit. Depending on where you are in Australia, it can take up to eight years to keep up with rising home prices and save enough. In other words, you can save even more. There are a few things to consider when you are ready to buy your first home.
1. Determine how much you can spend
A mortgage is quite likely to be the biggest debt you’ll ever have, which is why it’s so important to buy right. Deciding how much you have to spend – or more correctly, how much you can afford – will be a major factor in determining the size of your deposit.
Most lenders require a deposit of at least 10 to 20 per cent of the purchase price. That can be made up of your own savings, Government grants, and cash gifts from family or friends. To get an idea of how much you could afford to spend on a first home, use our home loan repayment calculator here. And for an estimation of how much you could possibly borrow, use this borrowing power calculator.
2. Check your credit report
Your credit report is an online record of your credit spending and repayment history. Every time you apply for credit, spend using credit, or make a repayment on a loan, utility bill or credit card debt, your credit score is calculated. Lenders use your credit score to determine how likely you are to default. And when you apply for a home loan, that will be one of the first things lenders will check.
If your credit report isn’t as healthy as you’d like it to be, there are some steps you can take to repair it. Check out this blog we wrote earlier this year about repairing your credit report from a poor score back to a good score.
3. Understand the costs
When it comes to buying a first home, many first home buyers are surprised at the extra, unexpected costs they incur. Not only do you need to consider the purchase price and how much your repayments will be each fortnight or month, but there are also a few other costs you’ll need to factor in to your house buying budget.
- Loan fees
- Lenders’ Mortgage Insurance
- Stamp duty
- Legal fees
- Building inspections
- Moving costs
4. Choose the right location
Location, location, location! That’s right, where you buy is often more important than what you buy. To help you decide on the right location, here are some questions to ask:
- How much are properties selling for in the area?
- How far will you be from family, friends or work?
- How developed is the infrastructure in terms of roads, public transport and nearby shops or schools?
- Is there potential for price growth in the area?
- What other developments are in progress or planned?
- What is the crime rate like?
Use online sources, talk to the local real estate company, and research as much as possible before deciding on location.
5. Check if you’re eligible for financial assistance
As a first home buyer, you may be eligible for Government financial assistance. Along with the Family Home Guarantee, which aims to help single parents buy a home with a two per cent deposit, the New Homes Guarantee program is being expanded to further support eligible first home buyers build or buy a new home with as little as five per cent deposit.
Under the First Home Super Saver Scheme, the amount that first home buyers will be able to access is also increasing. From 1 July 2022, eligible home buyers will be able to access up to $50,000 of their intentionally saved funds to use towards the purchase of a first home, up from the current $30,000. All of which go a long way to helping more first home buyers into their own first homes.
To find out more about buying a first home, accessing Government funding, or getting help from parents or family to buy a first home, talk to a Team Member now! We’ve have already helped hundreds of first home buyers into their own home, and we’d love to help you too.
Contact our office with any questions, concerns or ideas. No Question is too small.