Advice For First-Home Buyers

Are you in the market for your first home? If so, congratulations – buying a home is an important milestone in any person's life. However, before you start shopping around, there are a few things you need to know. This blog post will provide some advice for first-time buyers, including how to save money and what to look for when choosing a home. So read on for tips that will help make the process of buying a home easier and less stressful!

First, figure out how much house you can afford. There's no point in looking at houses that are out of your price range. Next, start researching neighbourhoods that fit your budget and lifestyle. Narrowing down your search will help you focus on houses that are actually within your reach. Finally, get pre-approved for a mortgage. This shows sellers that you're serious about buying and gives you an advantage over other buyers who haven't taken this step yet.

Advice for Australians Purchasing Their First Home

It is an exciting time when you buy your first home because you will have the opportunity to create your own little haven away from the rest of the world by painting the walls, hanging pictures, and arranging furniture. This top advice for first-time home buyers has been gathered with the goal of assisting you in acquiring your own home as quickly as possible, taking advantage of the historically low interest rates. In addition, educate yourself on how to save for a down payment, determine how much of a loan you will be able to comfortably pay back, and investigate the various home loan possibilities.

Verify Your Eligibility for a Mortgage

Do some research to make sure that you'll be able to secure a mortgage before you get too excited about purchasing your first home. After that, get in touch with a number of different lenders to receive an estimate of the amount of money you can borrow based on your existing obligations and your current state of finances.

Because of this, you will have a more accurate grasp of what (and where) you are actually able to purchase. Next, use the house loan eligibility calculator to get a clearer idea of where you stand and seek ways to increase your borrowing power. For instance, were you aware that having a high credit card limit can have an effect on your ability to borrow?

It is possible that it might be beneficial for you to consolidate your existing credit cards into a single new card with a reduced interest rate so that you can lower your limits and improve your overall financial condition.

Investigate Your Financial Options

Because the market for home loans is both complex and competitive, it is a good idea to shop around for different home loans to ensure that you are obtaining the best combination of interest rate and other benefits. Mortgages come in a wide variety of forms and can be tailored to meet the requirements of a variety of circumstances thanks to the availability of a number of different loan programmes, including interest-only, investment, and variable-rate options.

For instance, if you're self-employed, you may find that certain banks consider you to be too "high risk," while others are more than happy to give you money. This can be due to the fact that self-employed people face a greater likelihood of experiencing financial difficulties. Selecting the correct the government has developed a variety of grants and incentive programmes that are geared To Boost Your Borrowing Power is a matter of finding the proper programme.

If you currently have certain personal debts, you may find it more difficult to get approved for a house loan, or you may not be able to borrow quite as much as you had hoped to borrow if you do get authorised. Before you apply for a home loan, you should give priority to paying off any substantial and/or unsecured obligations you may have, particularly ones with a high interest rate. Earlier, we suggested that you consolidate your credit card debt; but, if you have many personal loans or vehicle loans, you may also want to consider combining those bills into one single payment.

It is important to remember that secured debts, like those associated with a mortgage, are far more concerning to a lender than unsecured debts, like those associated with credit cards. As a result, you should devise a strategy to pay off the debts with the highest interest rates first.

Buy With Just A 5% Deposit

You may be able to borrow more money if you have a larger down payment on your home loan. This is because many financial institutions, including banks and lenders, are willing to lend you up to 80 percent of the loan amount as long as you have a down payment of at least 20 percent. Even while it is feasible to obtain a loan with a deposit of 5% or 10%, you would have been compelled to pay lenders mortgage insurance in the event that your deposit was less than 20%.

Since the implementation of the First Home Loan Deposit Scheme (FHLDS), which enables qualified first-time homebuyers to purchase a property with as little as a 5% down payment and avoid having to pay for lenders mortgage insurance, this scenario has been turned on its head.

You can see that the FHLDS has the potential to help you buy a property considerably sooner than may be possible if you were to save the whole 10-20% deposit by comparing how much you would need to accumulate in order to buy your first home with a regular 20% deposit, as opposed to saving just a 5% deposit:

Deposit size	$400,000 home	$500,000 home	$600,000 home	$700,000 home
5%	$20,000	$25,000	$30,000	$35,000
10%	$40,000	$50,000	$60,000	$70,000
15%	$60,000	$75,000	$90,000	$105,000
20%	$80,000	$100,000	$120,000	$140,000

Calculate Your Stamp Duty Concessions

Stamp duty is something that must be paid by anyone who purchases real estate in Australia; however, if it is your first time buying a home, you may be able to get a discount or even be exempt from paying it entirely, depending on which state or territory you live in and what kind of property you purchase. These factors have the potential to result in cost reductions of up to tens of thousands of dollars.

Factor in the First Home Owner Grant

You should also check into whether or not you qualify for the First-Time Homeowner Grant. Again, if you meet the requirements, you may be able to receive a grant that is worth thousands of dollars; however, the actual amount may vary depending on the region in which you live and the kind of property that you purchase. You are only eligible for the First-Time Homebuyer's Grant (FHOG) once, when you buy your very first house. If you later buy another home, even if it's an investment property and you don't take advantage of the grant, you will no longer be eligible for this concession.

Consider Buying New

Because Australia has struggled for a long time with a lack of new housing, the government has instituted a number of grants and incentives to encourage people to build new houses or apartments. These grants and incentives come in the form of financial assistance. The vast majority of grants for first-time homeowners are only available for newly built or off-the-plan residences; therefore, it may be worthwhile to determine whether or not you would be interested in purchasing one of these types of homes.

Crunch Every Other Expense You Have

Even after taking into account all of these substantial grants and incentives, purchasing a property might come with a variety of unanticipated costs, and you don't want to find yourself short. Be sure to include the charges of the removalists, the application and registration fees for the house loan, the legal expenses, and the pest inspection reports in your budget. When added up, the total may be in the several thousand dollar range.

Put Yourself in Position to Succeed

If you've developed feelings for a certain piece of real estate, it's likely that other prospective purchasers have experienced the same thing. Before you start looking for a new home, you should make sure that you have all of the necessary paperwork and a deposit saved up, in addition to getting pre-approved for a mortgage, so that you can give yourself the best chance of being the buyer who is ultimately successful. Because of this, you will be prepared to take immediate action, which puts you in a much better position to negotiate, sign a contract, and seize the opportunity to purchase your dream home when you find it.

Caveat Emptor

Imagine purchasing a vehicle without first checking the mileage or the brakes, and then having the vehicle break down as soon as you get it home. It is quite possible that the purchase of a home will be the single largest item that you will ever make, and as the buyer, it is ultimately your responsibility to ensure that you are receiving a high-quality property in relation to the amount that you are spending.

In order to avoid being trapped with a crumbling, termite-infested tragedy, you should get the building and pest inspected, and you should also be sure to get insurance. If there are any visible repairs that need to be made (and you're good with accepting them), make sure to acquire a price for those repairs and include them in your budget. If the property's fittings and construction are of high quality, give it a careful inspection.

Get Professional Assistance

You can get assistance from professionals with every stage of the process of purchasing a home. Buyers agents are able to assist you throughout the entirety of the property search process, from locating the ideal home to negotiating on the price, whereas a mortgage broker may be able to assist you in navigating the loan market. Buyers agents can help you find the ideal home and negotiate on the price. You should also make it a priority to get a certified conveyancer to carefully review the contract you are about to enter into.

Put Together A Plan For Purchasing A Home

Buying an established home could be the better option for you if you want the convenience of moving into a property that has already been developed, landscaped, and is liveable. When you buy a home that has already been constructed, you get the benefit of moving into an established neighbourhood that has tree-lined streets, footpaths, nearby parks, and, most importantly, places to shop and take public transportation. You might even be considering the purchase of an older house with the intention of making some upgrades to it.

When shopping for a previously owned home, there are a few common cons to look out for, including the following:

• The process of grinding down aged concrete to make it appear more recent
• Using chip bark to cover over abandoned gardens
• Attaching brush screens to shoddy fences with nails.
• Removing powerlines with Photoshop and replacing them with blue skies

If you would like to be able to leave your mark on your home from the very beginning, then you might want to consider building your very own house from the ground up. Picking the block and the neighbourhood, the street and the orientation, the plan and the builder, and then choosing everything from the doorknobs to the paint colours, the pavers to the drapes and everything in between is involved in this process.

Think Very Carefully About The Kinds Of Real Estate That Are Actually Within Your Price Range

Make sure you have a good idea of how much you can afford to spend before you start looking at different neighbourhoods or properties. That does not indicate the maximum amount that you are permitted to borrow; rather, it refers to the maximum amount that you are willing to pay back each month.

Your monthly budget is significantly more impacted by your home loan repayments, in addition to the costs associated with being a homeowner, than it is by your rental payments.

You should factor in the monthly cost of your mortgage payments while you are planning your budget, and then try to stick to the new budget for at least three months while still setting aside money for home upkeep.

You will be able to avoid your mortgage becoming a burden on your life in this way, which will enable you to direct the course of your life as you see fit.

When you buy a home, there are a number of other up-front expenditures, such as stamp duty, that need to be paid; therefore, you need to make sure that you take all of these expenses into consideration.

After that, submit an application for pre-approval so that you may begin your search for a home with certainty rather than with wishful thinking.

Check The Place Out Thoroughly To Find Any Problems There Might Be

When you have identified a piece of real estate that piques your interest, the next step is to confirm that it does not include any unwelcome and unpleasant surprises. Check for the presence of mould and odours associated with animals. Try knocking on the walls to determine if they have a solid or hollow sound. You never know if there are pests living in the dryer or the dishwasher, so it's best to leave the doors open.

Does the toilet flush in the correct manner? Is the heating and/or the air conditioning operational? Is the chimney cap above the fireplace in good working order? Is there a problem with the water pressure? Do the home appliances function properly? Is there permission for a studio to be built in the backyard from the local council?

Benefit From Government Rebates

Support for first-time buyers is currently at an all-time high thanks to a slew of state and federal government incentives aimed to stimulate the property market. It's possible that the overall government help may be worth more than $50,000 to you, and it all depends on whether you want to buy a home in the city or the suburbs, build a new one or buy one that already exists.

You should check the website of the revenue office of the state government or speak with your mortgage broker to determine whether or not you are qualified for the following:

• Exemptions from stamp duty: For properties with a value up to $600,000, first-time buyers are exempt from paying stamp duty. This results in a savings of approximately $30,000 at that price point. First-time buyers are eligible for lower interest rates on properties priced between $600,000 and $750,000 if they purchase their first home. The most recent state budget included an announcement of broad stamp-duty discounts, which will be beneficial to those with larger budgets as well. These reductions, which are applicable to properties with a value of up to one million dollars and purchased before the 30th of June, exempt fifty percent of the stamp duty on newly constructed homes and twenty-five percent on previously owned residences.

• First Home Owner Grant: People who are planning to buy or build a new home with a value of up to $750,000 may be eligible for a First Home Owner Grant in the amount of $20,000 if the home is located in a regional area of Victoria, or $10,000 if it is located in the city. In order to qualify, the age of the house can't be more than five years old.

• Home Builder Grant: The Home Builder Grant programme has been extended by the federal government until the end of March 2021; however, the grant amount has been lowered. Owner-occupants who meet the requirements can now submit an application for a grant of up to $15,000 to either build a new home with a maximum value of $850,000 or substantially renovate an existing property with a maximum value of $1.5 million. The construction contract needs to be signed by March 31st at the latest.

Be aware, however, that although these incentives provide hopeful first-time home purchasers with a much-needed boost, they have also fueled demand, which may have the effect of driving up prices in the areas that you are considering. In addition, if you are constructing a new home, as opposed to purchasing an existing one, you will need to investigate the possibility of obtaining financing for construction. You will be able to pay for the development in stages as a result of this, which will provide you the financial flexibility to live somewhere else in the interim.

Select a Location

Those who are considering the construction of a new home, particularly in rural or suburban regions, are eligible for the most significant subsidies offered by the government. However, before beginning your hunt for land, it is essential to complete some preliminary study. You could locate a regional block selling for pennies on the dollar, but if it has rural zoning, it might be difficult to obtain financing for the land, especially if you live in a remote place. In addition, there may be particular overlays that restrict what and where you are allowed to construct. For instance, if there is a vegetation overlay, you may not be allowed to cut down or remove any of the protected trees or plants.

It is also vital to give some thought to the premiums for the homeowner's insurance. Your finances may be impacted if you own a home that is situated in an area that is prone to bushfires since the cost of insurance may be higher. Before committing to a specific piece of land, it is a good idea to speak with a mortgage broker about all the repercussions. Additionally, it is a good idea to check out the property's specifics, including zoning, overlays, easements, and price history, with RACV business partner Landchecker.

Pool Your Resources

Individually, saving might be challenging, which is why some people who are interested in purchasing their first house band together to increase their chances of success. Imagine that you have a brother or a close friend who is similarly interested in entering the real estate market and is in a position to give an equal amount to the down payment and the monthly mortgage payment. If this is the case, you should give some thought to combining your resources in order to increase your capacity to take out loans.

There is the possibility of falling into traps with these arrangements; therefore, it is essential to obtain professional legal and financial advice at the outset and reach an agreement on the particulars, such as what will occur if one party is unable to keep up with their portion of the mortgage repayments or wants to sell out early.

You may be able to buy the property under a joint tenancy agreement, in which the joint owners act as a single entity and manage the property together; alternatively, you may establish a 'tenants in common' arrangement, in which each individual owns a proportionate share, which they can sell if they find it necessary to do so. Your decision will depend on the specifics of your situation.

Investigate The Neighbourhood. Then Conduct Additional Research

When it comes to purchasing real estate, there is no such thing as being overly knowledgeable, so you should take your time to learn as much as you can about the neighbourhoods that you have determined to have potential for growth.

You Have It Much Tougher Than Your Parents Did

Baby boomers will remember the days when they had to be frugal and save money in order to put down a deposit on a property. And that very well could have been the case for their journey.

On the other hand, it didn't take an average of 11 years like it does today for a worker making the median full-time salary (about $80,000) to save up a 20% deposit on the median home value ($666,000), assuming a savings rate of 15% of gross income. This is based on the assumption that the savings rate was the same. It just didn't.

Keep Fighting It Out!

The fact that the house you want might have been purchased for an average of around 20 percentage points less at this time last year is certainly a difficult pill to chew. But things are how they are. And until there is a crash in the real estate market, which absolutely no one is forecasting, it will only get worse.

Modify Your Hopes

While you have been steadfastly adhering to your conception of how much a piece of real estate ought to be worth, everyone else has been out there getting themselves into debt up to their eyes and driving up prices.

I'm not saying it's right. I'm not trying to be argumentative or anything; I'm simply trying to point out that your protesting the unfairness of everything by yourself is not going to improve things that much.

Lower Prices Are to Your Advantage

Lower interest rates make it more difficult to put money aside for a deposit, but they raise the amount that lending institutions are ready to provide you as a loan. Why? Because when interest charges go down, you have more room in your budget to make the payments on a larger loan, which means that you can take out a bigger loan. It's possible that you won't believe how much money the banks are ready to lend you.

Talk to Lenders at an Early Stage

When I decided it was time to seek a home loan, I went to my local high street and literally strolled into three different bank locations, where I spent a couple of hours speaking with the loan officers working there. They will ask for a preliminary estimate of both your income and your monthly living expenses and will typically provide you with a ballpark figure indicating the size of the loan that you would be able to service.

During this lockout, there are also a number of home-loan consultants conducting zoom sessions. Because of the potential impact on your credit history, you should take care to ensure that this is merely an exploratory dialogue and not a formal application for credit on your part.

Maintain a Spending Log

When you initially start talking to a lender or broker, the first thing they will do is grill you with questions to which you don't know the answers. How much do you typically pay each month on your power bill? Haircuts? Entertainment? Food? Going out to eat? By finding this out in advance, you can have a jump start on the competition. And make savings everywhere you can.

Investigate the FHSSS

These days, putting your money in the bank won't get you very far in terms of returns. It is difficult to resist the allure of looking at shares, but the market's volatility can make matters complicated.

The First Home Super Saver Scheme is one possibility to consider. Under this plan, you can contribute money to your superannuation at a reduced tax rate of 15%, and then subsequently withdraw up to $50,000 of that money to use towards the purchase of your first home. Although there are eligibility requirements and withdrawal restrictions, I would look into it if I were to start over.

Considering Your Deposit

Although putting down a full twenty percent of the purchase price of your first house would be ideal, doing so is not required. I contributed roughly fifteen percent of the total. It is not unheard of for major banks to take deposits of ten percent, although smaller players frequently accept deposits of a lower percentage.

Be aware, though, that if you don't have the entire 20 percent down payment, you'll be subject to paying something called Lenders Mortgage Insurance (LMI), which may cost as much as $10,000. You have the option of adding the cost to the total amount that you are borrowing.

Investigate applying for participation in the First Home Loan Deposit Scheme offered by the government if your annual income is lower than the established minimum. Even though it only covers the cost of your LMI on loans with deposits as little as 5%, it has a limited number of available spots, and not all lenders are able to provide it.