Sun. May 22nd, 2022

9 Tips For First Home Buyers

5 min read

A home purchase could be the most expensive decision you make. Here are nine tips to help you get started in the property market.

Examine the upfront costs

  • The purchase cost – If the property is not being paid in full (which most people aren’t), then you will need to borrow money. Lenders often require a deposit of 10% to 20%.
  • Application fee – This usually covers credit checks, property appraisals, and any other admin performed by your lender.
  • Lender’s mortgage insurance – If you have a deposit less than 20%, this one-off payment may be required to your lender. This covers your lender in the event that you are unable to repay your loan. LMI may be required if your loan balance is less than 20%. Some lenders may allow you to add this amount to your mortgage.
  • Government fees – These include stamp duty, mortgage registration and transfer fee, which can vary depending on where you live or where your property is.
  • Legal and conveyancing fees – This includes the costs of your solicitor or real estate conveyancer, who will prepare all necessary paperwork and handle the settlement.
  • Building, pest, and strata inspections Having these services before you purchase could help you identify potential structural problems. A strata report can also be used to determine financial and building maintenance concerns.
  • Moving expenses – These may include hiring professionals or renting a truck.
Learn about the ongoing costs
  • Loan payments – These may be fortnightly or monthly over a loan term of 25-30 years. They will typically cover some of the principal amount borrowed as well as interest.
  • Interest fees – These are the charges you pay to your lender in addition to the principal amount borrowed. You can choose from a fixed or variable interest rate or a combination of both.
  • Other ongoing costs These could include utility bills, council rates, building and contents insurance, strata fees, home improvements, and strata fees.

Find out if there are any black marks on credit reports

Your credit report can show you your credit history and your repayment history. It could impact your ability to obtain a loan approval, particularly if it highlights past financial problems.

Each lender will evaluate your credit file against its own policies. In some cases, they may approve your application while others may reject it or delay further investigation.

Find out how much you can afford

It is important to determine how much money you will have (savings, or other financial assistance), to cover both the ongoing and upfront costs. This includes any financial commitments that you might need to make.

You should consider these things if you are buying a property together with your partner or family member.

It is important to know how much money you can afford and how long you can borrow. Pre-approval is a good idea.

Pre-approval is a good idea for your loan.

Pre-approval is a good idea to know the maximum amount you can borrow. It’s not a guarantee. You’ll need to get formal approval prior to buying and have your deposit ready.

If you are buying your first home at an auction, this might require you to have a bank check ready. If lender’s mortgage insurance is required, your lender will advise you.

Find out more about property locations

These are some things that you might want to think about:

  • Prices for property in the suburbs where you are interested
  • Distinction from family, friends, and work
  • Parking off-street, local schools, shops, and transportation
  • Consider whether you will need to renovate the property and if you have the funds.
  • Potential price growth in your selected suburb
  • Potential developments in your area that could affect the property’s value
  • The local job market
  • Neighbourhood crime rates.

You can get some help by speaking to local agents or looking online for real-estate firms.

Check out what financial assistance might be available

Here are some options for financial assistance that might be worth looking into.

Grant for the First Homeowner

The state government may grant a one-time grant to first home owners who are eligible. To find out what your rights might be, contact your state revenue office.

Concessions on Stamp Duty

Some states and territories offer additional incentives for first-home buyers. These include stamp duty concessions. Find out what is available in your area.

New Home Guarantee

The New Home Guarantee program is an Australian government program that replaces Lenders’ mortgage insurance for anyone who builds or purchases a new property. Participating lenders will only approve your loan application for the guarantee. Please note that guarantee spaces are very limited.

First Home Super Saver Scheme

First home buyer who are eligible can withdraw their voluntary super contributions, up to $30,000 for individuals and $60,000 for couples. These contributions may be used to pay towards a deposit. Learn more about the FHSSS and whether you can withdraw.

Learn about the different types of loans available to you

Home loans may have different interest rates and fees depending on what package you choose.

You can get an idea of the costs by looking at the advertised home loan rates. The interest rate and the comparison rate will be displayed.

The annual interest rate and all ongoing fees will be included in the home loan comparison rate. Low interest rates on home loans can be more costly than those with higher fees. This comparison rate will help you to identify these loans and allow you to compare them more accurately.

You should also consider the possible advantages and disadvantages of different features of the loans that you are considering. Some loans allow you to make additional repayments, withdraw funds, or open an offset account. This could help reduce your interest payments over the long-term.

You can calculate the cost of a home inspection

You may be able to detect serious problems in your home through a home inspection. These issues could end up costing you much more than the inspection.

If you are looking to buy a townhouse, apartment or condo, you can get strata reports that will tell you if the property has been well managed, maintained to a reasonable standard, and is adequately financed.

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