08 Sep 3 Tips for Buying Your First Home
Buying your first home can be both an exciting and stressful experience.
While getting out of renting and into a home of your own is often the goal of most young couples and new families, it’s important to know what’s involved and how much it’s going to cost.
Here are three things to know, before buying your first home.
Know your budget
Being able to afford a home is more than just being able to save for a deposit. On the surface how much a bank will lend you and what you have in your bank account are the two key figures that most people think about. However, there are a range of hidden costs that you need to contemplate before starting your property search.
The highest cost homebuyers typically face is stamp duty. For first home buyers, it’s often possible to be exempt from stamp duty. Stamp duty is a state-based tax, so it’s important to check if you’re going to be required to pay it or if you qualify for an exemption.
Another large cost is Lenders Mortgage Insurance (LMI), which is an upfront premium that you have to pay if you’re borrowing more than 80% of the value of the property. These days there are Government schemes in place that can assist you with paying LMI as well as other types of finance such as guarantor loans that can help. Speak to your mortgage in Melbourne for more information.
Once you’ve purchased your property, when the time comes to settle, you might also have other costs to think about. You will likely have to pay strata fees, council and water rates on a pro-rata basis. There’s also insurance to think about on top of costs for conveyancing and any inspection fees.
These expenses can add up quickly, so make a budget and be prepared for those additional costs.
Understand the property’s value
Most people aren’t always very good at knowing what a property might be worth, by virtue of the fact that they rarely ever need to do it. With most homeowners only buying a new property every 10 years at best, it can be hard to determine what a property is worth. Especially if this is your first time.
The first place to start when working out how much you should pay for a property is by comparing recent sales in the same location. Look for sales that have taken place in the past six months, for properties of a similar type, size and age. If the features aren’t quite comparable, you can make adjustments up and down for things like pools, car parks, or apartment features.
Price guides are not always accurate, as some agents do not know what a property is worth. While some like to market them on the lower side to entice competition and interest.
It’s also important to remember that prices can change a lot in the space of just a few months when markets are moving higher or lower, so it’s important to look at the most recent sales data you can.
You can also talk to other real estate agents who have just sold comparable properties to find out what sort of interest there was and how the campaign went.
Just remember, the sales agent on your property of interest works for the vendor, so their goal is always going to be to get the highest possible price for their client.
When you’re trying to work out prices and a budget, the very best place to start is by getting a pre-approval in place from a lender. You do this by working with your mortgage broker in Melbourne and having them compare your options.
When pre-approved, you’ll know exactly what type of budget you’re working with, what your extra costs are likely to be and what locations you’re then going to be able to purchase in.
When you have an upper limit on your budget, it can also make negotiating for a property easier because you know how much you can pay.
If you are working with a mortgage broker and have a pre-approval in place, the homebuying experience doesn’t need to be stressful or daunting.
Are you currently in the market for a new property? Get a clear understanding of how much that property might be worth with our free property report.