Being a first home buyer can feel overwhelming at the best of times, especially now with one of the hottest markets ever in NSW.
Buying a home is likely the biggest purchase you’ll ever make, so feeling trepidation or nerves around the whole concept is normal. Here at Vision Homes, we live to see people in their dream homes and to make the process as stress-free as possible.
In this blog, we’ll run through some essential tips you need to know as a first-home buyer to set you up for an enjoyable buying or building experience.
1. Start with your budget
Your budget is the most important element to consider before buying a home. Many hidden and upfront costs go into buying a home, far greater than just the cost of the loan itself. Considering how much you can spend, including expenses such as loan repayments, interest charges, strata fees, council costs, utility costs, building and contents insurance, and any potential upgrades or renovations, is important.
The upfront costs of buying a home include the actual purchase price, a deposit of at least 10%, a loan application fee, lenders’ mortgage insurance, government fees, legal and conveyancing fees, building and strata inspections, and moving costs. These can all vary in price, and many can be paid from your home loan, leaving you to save for your deposit. Starting with a realistic idea of how much you can afford to repay your loan every week is a good point to maintain a sustainable budget.
For more information on these fees and more, click here.
2. Timing is everything
Once you have a clear idea of what you can afford and how much you can borrow, the next consideration should be when the right time is to buy. The property market is rich with uncertainty, and it can fluctuate week by week. No one can give 100% certainty for the best timing to buy, and it will ultimately come down to a balance between not acting too quickly and acting quickly enough.
Everyone’s situation is different, so you must understand what is right for you. Consider your employment and education opportunities, what you can realistically afford, your spending habits, and your savings. Don’t let short-term market fluctuations dictate when you buy your home; look for the home that suits you best and can afford it.
3. Be picky with your home loan
Whether you choose to use a mortgage broker or not, it’s important to understand what you’re signing when getting a home loan. Mortgage brokers can help you get the best deal and arrange pre-approval, but they’re not always necessary.
There are two main types of home loans – variable and fixed. Fixed-rate loans will give you a fixed interest rate for up to 5 years, while variable loans will have an interest rate that will change according to current interest rates. Both have their perks and downfalls, and the choice is yours.
If you don’t get approved or if the loan doesn’t feel like the choice with the best interest rates, extra features, or terms – it isn’t the end of your home-buying journey. Tidying up these essential aspects will help with your preapproval and allow you to choose the best home loan for your situation:
- Your credit file and working history
- Any outstanding credit card limits and all necessary debt information
- Consolidation of your bank accounts.
4. Know your ‘Why’
As a first-home buyer, it’s important to understand why you’re hoping to buy and what you want to achieve. Consider the following questions to bring clarity to your decision:
- Why are you buying this property?
- How long do you plan on living there?
- Can you afford to maintain the property?
- Will you be able to sell the property if you want to?
As difficult as it may be, try to remove the emotion from your decision, as it can cloud your judgment and force you to make hasty decisions. Buying your first home will be one of the biggest decisions of your life, so it’s important to find the perfect property for both short- and long-term benefits.
5. Location, location, location
Location is everything, especially when you can buy an empty block of land to build your dream home. The location that you choose can mean long-term financial and lifestyle benefits, truly making this the best decision for your family.
In selecting a location for your home, consider:
- The cost of other properties in the suburbs you’re looking at
- Proximity to family, friends, and employment
- If the local amenities such as schools, shops, and transport suit your needs
- If the property is likely to increase or decrease in value in that region
- Future proposed developments in that area
- What the local crime rates are
When buying a block of land or a home, the aim is not just to have a dream place to live but to consider the potential future of your finances and lifestyle.
6. Be well researched
As a first-home buyer, it is common to feel like you’ve missed the boat or are in an overlooked demographic. Most buyers will have more experience than you with their second or third property, which can put you in a vulnerable position. This makes it even more integral to be well-researched going into your purchase so that you can avoid buying a home with a range of underlying issues that will be impossible to sell down the line.
There are a range of services set up to help you to avoid making these mistakes, including:
- Building and pest reports
- Flooding susceptibility reports
- Suburb and market research through realestate.com.au or domain.com.au
Using these resources, you can be confident that you’re making the best decision and have a leg over even the most experienced buyers.
7. Be ready to make your offer
Whether you’re planning to purchase a home or land at auction or outright in a hot market, it’s integral to have your finances approved and ready to go so that you aren’t making empty offers. Before you place your offer, examine the market with an expert to ensure that your offer will be the winning choice – not too high for your budget but not too low to beat the competition.
8. Access government assistance
As a first-home buyer, you will be eligible for certain government assistance programs to make the financial burden a little bit lighter. These include:
The First Homeowner Grant
This is a tax-effective way to afford your new home, and you may be eligible for up to $10,000.
The First Homeowner Super Saver Scheme
You may be eligible to withdraw super contributions toward your new home of up to $60,000.
New schemes and grants are constantly popping up, particularly for new builds. Our team can talk you through what is available.
9. Consider building from scratch
Buying a block of land in your dream location and performing a knockdown rebuild or build from scratch can be a much more lucrative choice. Doing so has many benefits but will ultimately cost you less in renovations, inspections, and red tape. Savvy first-home buyers can avoid stamp duty into the tens of thousands by building from scratch while getting exactly what they want from their homes.
Building a home is becoming increasingly popular among first-time buyers and young families. Here at Vision Homes, we want to see your dream home come to life and offer full customisation of our plans so that you can have the perfect property right down to the square metre.
If you’re ready to discuss your first home needs with our experienced and friendly team, contact us today. Let us bring your vision to life.