Buying a home can be daunting. There are so many things to calculate, consider and compare. With a myriad of decisions to be made throughout the entire property buying process, it’s no wonder first home buyers can be unprepared for what lies ahead, and this can be a recipe for financial disaster.
It’s not all doom and gloom though. We’ve compiled a list of things that first home buyers typically overlook and tips on how they can help you prepare for your property purchase.
Check your credit status
Along with your credit card balance, you must also make yourself aware of your credit status. This report can be purchased through credit advisory services. It is a snapshot of your financial history, giving you a timeline of payment activity and any payment defaults that may impact your chances for loan approval. Once you have this information you are better equipped to know your financial standing and your borrowing capacity and what lenders are likely to allow you to borrow.
Do some research on the various loan products that are on the market and get some advice on what you are eligible for. There are many different lenders, all marketing their product in the best possible light, whether it be lowest rate or flexibility. Be sure that your loan suits your lifestyle and income so that it is manageable. Be realistic about your repayments so you don’t get in over your head.
Always check the terms and conditions carefully. The fine print will let you know if the seemingly low rate on offer is temporary and quickly followed by a locked in period at a higher rate.
Be clear about your plans for the ownership of the property. Knowing your credit rating will allow you to determine if it is wise to put the property in your own name, joint names or in a property trust. Making this decision before purchasing a property can save you transfer fees later. Setting up a trust account requires legal guidance and financial advice to make sure this is the right fit for your situation.
Having a loan approved before searching for a property can set some financial parameters to avoid you getting in over your head. You will know your limit and stick to it. Using this as your starting point can help you establish an area that is affordable. A property agent looks on this favourably too as it shows a serious, confident purchaser.
There are a few additional costs when it comes to buying property. Inspection reports, loan application fees, home insurance, mortgage insurance, stamp duty, transfer fees, council rates, moving costs and more. These all add up and are often not included in a first home buyer’s budget. Using online calculator resources can provide estimates of some fees. Being under prepared for these financial costs can result in many sleepless nights. Don’t forget to check if you’re eligible for stamp duty concessions. This could be a great saving.
First home buyers are usually caught in the seemingly never ending cycle of weekend inspections and auctions and they limit their research to this. To know more, you must be willing to dive deeper into the analytics of the immediate area and surrounding suburbs – recent sales reports, infrastructure, proposed planning developments, potential zoning changes and demographic. All this information is available online, most of it free.
Yes, physically getting out into the area and talking to locals is great but it is only one way to do your research. Thorough investigation into an area can uncover some things you may not have known, some favourable and some maybe not so. All of these will impact your decision when buying a home.
Develop a relationship with a real estate agent
If you’re searching in a particular area, it can be handy to have the support of a local real estate agent. They will be able to explain contractual terms, they have excellent local knowledge and if they get to know you, will be able to suggest homes that fit your criteria and budget. These people are in the know and can help guide you through the process.
Building and pest inspection
Buyers are familiar with pest inspections to establish any possible pest related issues. A building inspection focuses on the structural integrity of the home and highlights any problems that may arise, long or short term, so that you can properly prepare for them. They are a wise investment to ensure there are no nasty, post-purchase surprises and can be used to your advantage when negotiating the sale price.
Make concessions for renovating and improving
Don’t be fooled by the lovely looking home. Always leave room in your budget for maintenance. These might be minor touch ups like painting or polishing floors or it could mean major works like plumbing or rewiring old electricals, which can be costly. Arranging a building inspection will give you an idea of the cost involved so you can factor this into your budget.
As you can see there is so much to do and it can be overwhelming, but with effective planning and perseverance the reward will be great – your first home. If putting all these plans in place seems too much to do alone it is worth having an experienced and reliable team of agents, solicitors and accountants to advise and guide you.