Buying your first home can be daunting – both financially and emotionally. It’s likely to be one of the biggest investments you’ll make, so we have compiled our top 5 tips to guide you.
1. Start saving now
House deposits can take a while to save, so it’s smart to start saving as soon as you can. Save the biggest deposit that you can. This not only demonstrates to your lender that you can exercise enough discipline to accumulate a large amount of savings, but you will also have a buffer of equity in the property from the beginning.
2. Buy below your maximum price
Your bank may suggest you can borrow up to $400,000 in your initial meeting, but it’s much safer to search for a home that is well below your maximum price. Buy a property that you can afford now so that you don’t overstretch yourself. Many people count on a future job promotion to help keep them afloat – but what if that promotion doesn’t come?
3. Allow for extra costs
There are extra costs associated with buying your property. For example; stamp duty, solicitor’s fees and inspection reports, plus lenders mortgage insurance (LMI). These pesky extras can quickly add up if you haven’t accounted for them. Don’t forget, interest rates are at historic low, so be prudent and allow for at least a couple of percent increases over the next few years.
4. Choose between ‘wants’ and ‘needs’
It’s very easy to confuse your ‘wants’ with your ‘needs’, but it’s important to distinguish the two when buying. Take a good look at your salary, debt levels, costs of living and what the repayments would be like for your dream property. Can you afford it? If not, it’s time to prioritise what features are the most important in your new home. Your first home won’t be your last, so it’s ok to compromise!
5. Take advantage of government concessions
When you’re purchasing your first home, every dollar can help. If you live in Queensland, you can take advantage of the New Home Owners Grant, which offers $20,000 towards purchasing or building a new dwelling – this ends in June 2017 so be quick to take advantage. Also, make sure you apply all the concessions on stamp duty.