Buying a home is a big step – one of the biggest steps most people will take. For first time buyers, it can be even more daunting, with so much to arrange, so much to remember, and so many choices to make – without the benefit of experience to help them on their way. So to make that process just a little bit easier, we have created this first home owners’ guide.
First home owners’ checklist
The first step is to make sure you have the following bases covered before you start looking for a property:
- A good deposit: While some lenders accept deposits of 5% or 10%, try to aim for a deposit of around 20% of the property price. This will give you a better start, by making your monthly repayments more affordable, and the overall interest you pay on your home loan lower.
- A credible financial history: If you prove yourself to have a good employment record, a history of regular savings, and a good credit history, it will be much easier to get a good home loan.
- Additional savings: While it might seem difficult enough to save for a deposit, try to build up additional savings to cover the incidentals, for example, if your home loan rates increase.
First home owner assistance
As a first home owner, you may be eligible for government assistance. Visit the First Home Owner Grant website to check your eligibility.
Creating a budget
Before you start looking for home loans, it’s important to work out how much you can afford. This includes how much you can afford to borrow overall, how long you want the home loan to last, and how much you can afford to repay each month.
To do this, create a household budget to work out how much you can afford to pay back each month. Then take your deposit, your first home owner assistance (if applicable), and work out how much you can afford to borrow overall.
This process can be made much easier using calculators, such as a Budget Calculator and a Home Loan Calculator. Be sure to take into account other all related costs, such as stamp duty, legal fees, home and contents insurance, rates and utilities, and repairs.
Stamp duty is one of the biggest upfront costs to cover when buying a home. Stamp duty varies according to state, so use the appropriate stamp duty calculator to work out how much you will pay in stamp duty when buying a property in your home state.
Finding a lender
Your relationship with your lender will be an important one. Your home loan is likely to last 20-30 years, so it’s a good idea to find a lender and a home loan that suits you! Try speaking to your bank to see what they can offer, and compare home loans online. Research all your options and read all the small print in full.
Using a mortgage broker
A mortgage broker can make the process of buying a home much easier – especially for first home owners. A mortgage broker can help you work out what you need from your home loan, and then look for home loans that would suit you. Once you have decided on a home loan, the mortgage broker can negotiate with the lender on your behalf, and then make sure your application is correct.
Finding a property
With everything else sorted out, it’s time to find a property. Think about affordability, proximity to public transport and amenities, and the condition of the property. Once you have found a property you are interested in, arrange for building and pest inspections. Before you sign, have the contract checked by a conveyancer or solicitor. Again, a mortgage broker can help with this process.
Lend Me – Car & Home Loan Brokers – Perth, Western Australia