Buying your first home is undoubtedly an exciting experience. Home ownership signifies a major milestone in life and the accomplishment of a long-term goal for many people. That being said, buying a home can also be stressful. From getting your finances in order to acquiring the right house conveyancing services, there are quite a few things that you need to be aware of.
First-Time Home Buyers Tips
Fortunately, we have gathered all the top tips you need to know when buying a home for the first time. Read on to make the process of owning your dream home an easier and more manageable one.
Look for a house that is within your budget
There are several ways that you could go about searching for your first home. You could organize your search via suburb, neighborhood, or even by the type of property – perhaps you prefer having a house over an apartment, for instance.
However, you will find that the most practical way of looking for the right home will be according to your budget. There are a range of calculators available online that can help you calculate what your affordability range should be, based on your income and other factors.
Save up for the deposit
The deposit for a home is one of the largest upfront costs of purchasing a home, but also one of the most important. The bigger your deposit is, the more comfortable your home loan lender will be about your ability to responsibly pay off your mortgage.
The general advice is to aim for a deposit of at least 20% of the value of your chosen property, so that you can avoid having to pay for lenders mortgage insurance. However, do not be overly discouraged if you cannot afford to scrape together that much, especially if you are making a purchase in a more expensive city – you should still aim to save up as much as you can.
Pay off all your existing debts
There are several reasons why you should try to pay off as much of your debt as you can before buying your first home. For starters, clearing your debt will help you achieve a better credit score, which will make your application for a home loan more favourable in the eyes of the lender. The less pre-existing debts you have under your name, the more likely it is that you will be able to borrow a higher amount, too.
Besides that, it will be much easier to service your mortgage repayments on your new home if you are not also struggling to pay off other past debts. When choosing which debts to tackle first, focus on those that incur high interest such as credit card debt, and consider combining several debts into one if you can.
Do your home loan research
There is no one-size-fits-all approach when it comes to home loans. The home loan market is complex and competitive, which means it is up to you to do the research and find out what your options are.
To make an informed decision, you have to be aware of the different types of home loans available to you and how they impact your finances – how do the interest rates work? What are the accompanying fees? Could you get a better deal with another mortgage provider instead? While it may be tough sorting out all the different pieces of information, know that being able to choose between different loans and providers actually puts you at the advantage here.
Factor in all the additional expenses
It is not just the deposit and mortgage repayments that you will have to think about when it comes to financing your first home. When calculating how much you can afford, do not forget to factor in all the additional expenses of purchasing a property. These include stamp duty, which can average around 3-5% of the purchase price, as well as application fees, conveyancing costs, and pest inspection reports to name a few. And of course, you will need to factor in the cost of buying new furniture and actually moving in, too.
Hopefully, all these tips will help you become a smarter and more informed home buyer. With all this newfound knowledge in hand, you are now a few steps closer to purchasing your first home!