First times can often be difficult, and as buying your first home is probably the single most important decision you make in your life, it’s the one you don’t want to get wrong. These 7 steps give you a general overview of what you need to know when buying your first home.
1.Do you qualify?
Make sure you can actually qualify for a home loan. Reventon can let you know how much money you can borrow. This will give you a realistic understanding of what type of home you can buy and where you want to live. Generally, the further out of the city, the cheaper it is to purchase, some regional towns and cities may well be affordable options for first home buyers.
2. Which type of loan?
Know what type of loans are available and their differences. Home loans can be complex and competitive. It pays to compare the interest rates so you’re not paying a rate that’s higher than average. There are many loans available: Principle and Interest, Interest only and Investment loans. Reventon can help you with home loans.
3.Sort out your debt
If you’re already in debt you might find it harder to get a home loan approved, or you may not be able to borrow quite as much. Focus on paying off any large debts you may have before you apply for a home loan, especially high-interest debts. Consider combining several debts into one if possible. Some debts such as university HECS debt are less problematic than a credit card debt.
The larger your deposit the more you can borrow. Always apply for loans with the lowest interest rates, but look out for fees. While you maybe able to take out a loan with a 5 or 10% deposit, you will have to pay lenders mortgage insurance (LMI). Generally, a 20% deposit is a reasonable amount and should be enough to avoid paying LMI.
Get your calculator out and start added up all the costs. Obviously you’ll need to meet your repayments, but buying your home has lots of expenses. You’ll need to budget for removalist costs, stamp duty application, registration fees, pest inspection and building reports, insurance and conveyancing. It can be daunting. But as a first home buyer, you could be eligible for the first home owner grant or stamp duty concessions. For example, if you’re buying your first home in NSW and it costs less than $650,000, you won’t have to pay any stamp duty. This saves you thousands of dollars. And if you buy in regional Victoria you may be eligible for a higher first home owners grant than buying in Melbourne. As with all things buying your first home, make sure you do your research.
6. Ensure you have all your paperwork sorted out
If you’ve got your heart set on a particular property, other buyers will probably be keen to snap it up too. Having all your paperwork and deposit organised, along with a pre – approval for your loan will put you in a much better position to buy the home you’ve always wanted.
7. Seek expert advice
As your first home will probably be the biggest investment you’ll ever make, it pays to seek professional guidance.