What First Home Buyers Need To Be Wary Of
Buying your first home is equal parts exciting and daunting. From where you want to live to what features you want, you'll need to do plenty of research. But beyond this, what are some other factors you need to be wary of?
Buying your first home is equal parts exciting and daunting. From where you want to live to what features you want, you’ll need to do plenty of research. But beyond this, what are some other factors you need to be wary of?
To help you through the process here is some advice that will help you prepare for buying your first home, as well as determine the kind of property that works best for you.
Figure out your finances
Before you apply for a home loan, it’s important to get your finances in order. If you’ve got a good savings record and a strong credit rating, banks will be more willing to lend you the money you need to get into the market.
To improve your financial situation, try to clear your debts and close any borrowing accounts. Of course, if this isn’t an option, make sure you stay on schedule with payments to keep your credit rating in good shape.
It’s important that you have proof of income and evidence of regular earnings such as payslips and bank statements. If you’re self-employed, you’ll need to provide documents such as your recent individual and business tax returns.
Staying on top of your finances will not only improve your chances of getting a good loan, it will help you figure out what you can and can’t afford, as well as work out a budget that best suits your situation.
Focus on affordability
In cities such as Sydney and Melbourne, property doesn’t exactly come cheap. For first home buyers, affordability is just as (if not more so) important as any other concern, from location to house price growth.
When you’re first entering the market, chances are that the idea of the classic Australian property with a quarter acre block isn’t financially realistic. But this dream isn’t for everyone – and there are many other options out there.
It’s important to do your research on the market and consider more affordable properties, such as units in apartment developments. Apartments aren’t just often cheaper, they also come with their set of perks altogether.
Think from an investment perspective
Thinking about your first home as an investment can make your buying decisions easier. But this means you’ll have to look beyond personal preference and consider trends that are happening in the market.
For example, inner-city apartment living is becoming increasingly popular. For younger people especially, the convenience of being close to work, social life and attractions is outweighing the need to buy a big house that’s not only expensive but potentially a bad investment.
Steer clear of lemons
While it can be tempting to enter the property market as soon as possible, it’s important that you’re not stuck with an older house or apartment with serious structural problems, such as plumbing and electrical faults, rising damp, or cracking,
If you’re not careful, repair and ongoing maintenance costs can set you back tens of thousands of dollars. From an investment perspective, it’s important to look for character and uniqueness, but sometimes this can be more trouble than it’s worth.
To avoid buying a lemon, make sure you personally inspect each property and hire a professional to help you out. It’s also worth looking into new apartment developments to find a property that isn’t just modern and structurally sound but is also affordable and unique.
Look into government assistance
If you’re considering buying your first property, look into the nationally funded First Home Owner Grant. To find out if you’re eligible, get in touch with your state revenue office and make sure you apply in time.
Depending on where you live, certain state and territory governments also offer extra incentives to first home buyers, such as stamp duty concessions. Knowing what kind of funding you’re eligible for will help you narrow down your research.
Get expert advice
For an investment as big as this one, nothing beats solid professional advice. Before signing on the dotted line, make sure you have a lawyer or conveyancer run their eyes of the contract of sale and title.
Ultimately, your first home buying experience should be a positive one. If you’re ready to leap into the property market, just remember to do your research, consider all your options and take into account the above advice.