No matter what stage of your life you are in, buying your first home can be a terrifying task.
But you’ve reached a point where you’re either tired of wasting money on rent or sick of living with mum and dad. So, what do you do now?
Create a budget
Saving for a deposit is the first step in buying your first home. Using a budget planner will help you calculate how much you can afford to save each month without compromising your lifestyle.
Firstly, write down your monthly income and then account for all of your expenses. This will give you a good idea of how much you are spending each month, and how much you have to put towards a mortgage.
Always allow yourself a buffer for unexpected changes, such as interest rate changes.
Set your goals
While you’re saving, work out how much you can borrow for a home loan to set your goals.
A couple of things to remember:
- The general rule of thumb is that repayments shouldn’t equal more than 35 per cent of your gross income per month
- Make a list of your future expenses – children, the possibility of job loss/interest rates rising and falling
- The loan amount will determine your monthly mortgage repayment, so don’t overreach. The bigger your deposit compared to the loan amount, the smaller your repayments will be.
Understand the costs
Understanding the costs of buying a home early in the process will ensure you have enough saved and aren’t left with unexpected bills down the track.
Consider additional costs such as Stamp Duty, legal costs, registration fees, conveyancer fees, inspections and moving costs. In general terms, these costs calculate to be approximately 5% of the purchase price of your home.
Beware of ‘phantom costs’ these are generated by unexpected fees and repairs, home insurance, life insurance, mortgage repayments insurance and service charges.
You may also be eligible for benefits such as the First Home Owners Grant. People buying their first home can be eligible for a grant of up to $15,000. The property needs to be a new build and not previously lived in up to the value of $575,000 or less.
The more organised and prepared you are at this early stage, the more confident you’ll feel when you apply for a home loan and look for your first home.
- Find a good conveyancer to support you through the process for purchasing for first home (a conveyancer helps with the settlement and title transfer process by ensuring their client is meeting all legal requirements and the client’s rights are protected)
- Find a good mortgage broker to help you find the right loan for your situation
- Rid yourself of excess debt and make your home loan your top priority
- Find out what grants you are eligible to receive (if any).
Start your search
Now you know how much you can afford and you know the costs associated – now the fun part can begin.
Set up alerts on apps such as realestate.com.au or domain.com.au, these are useful tools to use to filter through the many properties on the market.
Make sure you know your ‘deal breakers’, for example only one bathroom in what may become a family home.
Remember, don’t rush! There is no need to dive into the purchase of a property, take your time as this might be one of the biggest investments you ever make.
Contact our Finance Team# for more information on buying your first home on 1300 764 200 or email.
# Hood Sweeney Finance Pty Ltd Credit Licence 391396 ABN 12 113 454 014
This advice is general advice only and has been prepared without taking account of your objectives, financial situation or needs; and because of that you should, before acting on the advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs.