Getting expert advice on buying your first home can make all the difference. It can help you avoid unnecessary stress and overwhelm.
It’s easy to get swept away by the excitement of owning your own place. You daydream and save all the ideas you come across.
Perhaps you’re envisioning a backyard for your kids to play in, a place to build equity over time, or the freedom to paint your walls any colour you desire.
But, at the end of the day, you might wonder, “Can I really afford this?” or “What should I be looking for in my first home?”
It’s not just about the monthly mortgage payment; you also need to think about property taxes, the potential for future interest rate fluctuations, and how well your new home fits your lifestyle.
To turn your dream into reality, you’ll need a clear plan, and someone who can give you real and helpful advice on buying your first home.
Let’s break down the initial steps to put you on a solid path towards homeownership so you can confidently navigate the home buying process, avoid common pitfalls, and find your dream home.
Getting Loan-Ready
Securing the right financing is the first tip to buying your first home.
It’s more than just getting approved for a loan—it’s about finding the best terms and interest rates that fit your budget.
The stronger your financial position, the smoother this process will be.
Become loan-ready and set yourself up for success in buying your dream space. Here are 3 home buying tips to purchasing your first home.
1. Smart Saving Strategies
The bigger your deposit, the smaller your loan and monthly repayments will be. It’s also a strong signal to lenders that you’re financially responsible and serious about buying a house.
Here’s how you can prepare your deposit money:
Set Your Sights on a Goal
Start by calculating how much you’ll need for a deposit. Aim for at least 20% of the property’s purchase price.
The best advice for first time home buyers is this: avoid lender’s mortgage insurance (LMI).
Here are 3 reasons:
– It is expensive and will add hundreds or even thousands of dollars to your monthly mortgage.
– It limits your borrowing power, reducing the amount of money you can loan to buy your dream house.
– Refinancing your mortgage will be difficult, forcing you to pay for LMI again.
A lender’s mortgage insurance protects the lender – not the borrower – in the event that the borrower defaults on their mortgage.
It is typically required when the borrower makes a down payment less than 20% of the purchase price of the home.
Once you know your target deposit amount, break it down into monthly or weekly savings goals to make it feel more achievable.
Track your progress to stay motivated and adjust your plan as needed.
Smart Savings Strategies
Analyse your spending habits and identify areas where you can trim back.
Consider dining out less, cancelling unused subscriptions, or negotiating better deals on bills like your phone or internet.
Boost Your Income
Alongside cutting back, explore ways to increase your earnings. Can you pick up extra shifts at work, freelance on the side, or sell items you no longer need?
Every little bit extra goes towards your dream home.
Remember: Even small amounts of money saved consistently add up over time. Be patient, stay focused on your goal, and celebrate milestones along the way.
With dedication and smart strategies, you’ll be well on your way to securing that dream deposit.
2. Mortgage Know-How
Mortgages can seem complex, but understanding the basics empowers you to make informed decisions. Choosing the right one can save you thousands over the life of your loan.
Here are the best tips for first time home buyers:
Fixed vs. Variable Mortgages
The two main types of mortgages are fixed-rate and variable-rate:
- Fixed-Rate Mortgages:
Your interest rate stays the same for a set period (e.g., 2, 3, or 5 years). This provides predictability, as your repayments remain consistent.
If you happen to buy a home at the time when interest rates are low, you’ll be able to afford more and keep your payments low.
However, if you buy when the interest rates are high, you’ll spend more money on your loan even if the rate drops.
- Variable-Rate Mortgages:
Your interest rate fluctuates with the market. While your repayments might be lower initially, they can increase if interest rates rise.
However, you could also benefit from rate cuts.
Variable-rate mortgages are less predictable and unless you have a high, consistent, and stable income, may not be the best choice for first home buyers.
Consider your risk tolerance and financial goals when deciding.
A fixed-rate mortgage might be the better option if you prefer stability, consistency, and only worry about ‘when’ payments happen, not ‘when, how much, and why’.
Or, a variable-rate mortgage could be better if you’re comfortable with uncertainty and want to take advantage of possibly repaying lower than the initial amount in the future.
Finding the Perfect Loan Offer for You
Don’t settle for the first loan offer you receive. Take the time to compare options from different lenders, including banks, credit unions, and online providers.
Look beyond interest rates and consider features like repayment flexibility, offset accounts, and redraw facilities.
Pro Tip:
Using a mortgage broker can be helpful. They have access to a wider range of loan products and can guide you through the application process.
Understanding mortgage basics and comparing offers allows you to secure the best loan for your needs and potentially save thousands on interest over time.
However, if you don’t know any mortgage broker you can trust, work with a reliable real estate agent like us at Beere Property.
We have connections with the right people who can help you get through this process.
3. Government Programs for Financial Assistance
Don’t miss out on potential help from the government. They are a few programs designed to make homeownership more accessible for first-timers.
These programs can significantly reduce your upfront costs and ease the financial burden of buying your first home.
First Home Buyer Grants
These are cash grants you don’t have to repay, potentially worth thousands of dollars. Eligibility requirements vary, often depending on the property’s price and your income.
It usually ranges from $10,000 to $30,000, depending on which state you are in or circumstances.
In New South Wales, the First Home Buyer Grant is a maximum of $10,000 and conditions may apply.
Here’s what nsw.gov.au says about how to qualify for the first home buyers grant:
“If you purchase a newly built house, townhouse, apartment, unit or similar the purchase price must not exceed $600,000.
If you purchase vacant land and sign a building contract with a builder then we add the value of the vacant land plus the value of the comprehensive home building contract plus the cost of any building variations done together. The total combined cost must not exceed $750,000.
If you purchase a home which was substantially renovated by the seller, the purchase price must not exceed $600,000.
You may be eligible for the grant if:
- Most of the home was removed or replaced
- The seller, builder or a tenant has not lived in the home prior to, during or after renovations
- It is the first time the home has been sold since completion of renovations.
This means the first sale of a property will not be a new home if the person who built it lived in it, leased it out or used it for short-term accommodation.
The First Home Owner Grant may be paid in addition to other exemptions or concessions for eligible homebuyers.”
Stamp Duty Concessions
Stamp duty is a tax you pay when purchasing a property. Depending on your location and the property value, you might qualify for a discount or even a full exemption.
It is a discount or exemption from stamp duty that is offered to certain groups of people, such as first-time home buyers.
The amount of the concession varies depending on the state or territory in which you are buying your first house and the value of the property.
As for a first-time home buyer in NSW, you can be qualified if the property you want to buy costs $800,000 to $1 Million.
It can provide you a significant financial benefit, because it can reduce the upfront cost of buying a property, making it more affordable.
In some cases, it can even be enough to cover the entire cost of stamp duty.
Other Assistance Programs
Keep an eye out for other government programs, such as shared equity programs or low-deposit loan options that could help you achieve your homeownership goal sooner.
Examples are:
- Shared Equity Schemes:
These allow you to share ownership of your home with the government or a private lender.
This can make it easier to enter the market with a smaller deposit, as you’re not borrowing the full purchase price.
- Low-Deposit Loan Options:
Some government-backed schemes help first-time buyers secure loans with lower deposits, even as low as 5%.
This can potentially eliminate the need for lender’s mortgage insurance (LMI).
- Additional State/Territory Programs:
Explore programs specific to your location.
For example, New South Wales offers the First Home Buyer Choice, which allows you to opt for an annual property tax instead of paying a hefty upfront stamp duty.
The Property Search
Now comes the exciting part – the search for your perfect home. This involves more than just looking at photos online.
It’s about understanding your priorities, finding a location that aligns with your lifestyle, and doing your due diligence to ensure you’re investing in a property that’s right for you.
Here are the key steps of your property search:
Your Ideal Neighbourhood
Choosing the right neighbourhood is about finding the lifestyle you envision and the community that surrounds you.
Lifestyle Factors
- Commute:
Do you need to be close to work or public transportation? Factor in traffic patterns and travel times to ensure your daily commute is manageable.
- Schools:
If you have children or plan to in the future, school quality should be a top priority
Research school districts surrounding your desired suburbs and explore options like public, private, or religious schools.
- Amenities:
Consider your hobbies and interests. Do you want to be near parks, shops, restaurants, or entertainment venues? Proximity to medical facilities and essential services is also crucial.
Prioritising Within Your Budget
While it’s tempting to dream big, be realistic about your budget. It’s unlikely you’ll find a home that ticks every box on your wishlist.
Prioritise your must-haves and be willing to compromise on less essential features.
Remember, you can always make improvements or add personal touches to your home over time.
Tips for Finding Your Ideal Neighbourhood
- Explore Different Areas:
Take time to visit potential neighbourhoods at different times of the day and week to get a feel for the atmosphere.
- Talk to Locals:
Ask friends, family, or online forums about their experiences living in certain areas.
- Consider Future Plans:
Think about how your needs might change in the next few years. Will you need more space? Is access to public transport important?
- Check Crime Rates and Safety:
Do your research on safety statistics to ensure you feel comfortable in your chosen neighbourhood.
Inspections And Assessments
While falling in love with a beautiful house facade or a spacious kitchen is easy, it’s crucial to look beneath the surface before buying a property.
This is where inspections and assessments come into play.
Thorough inspections and assessments offer vital insights into a property’s true condition, potentially saving you from expensive repairs or unpleasant surprises down the road.
Building Inspections
You should always meticulously examine the property’s structure, foundation, roof, plumbing, electrical systems, and more. If you can’t do it yourself, hire a property inspector.
They’ll identify any existing problems or potential issues that may arise in the future. Think of it as a health check for your potential home.
Pest Inspections
These specialised inspections focus on identifying any signs of pest infestation, such as termites, borers, or rodents.
These pests can cause significant damage to a property’s structure, so it’s important to be aware of any existing or potential problems.
Why Inspections Are Essential
- Uncover Hidden Defects:
Many issues, like structural problems, faulty wiring, or termite damage, aren’t visible to the untrained eye.
Inspectors have the expertise to spot these problems and assess their severity.
- Informed Decision-Making:
Armed with the inspection report, you can confidently decide whether to proceed with the purchase or negotiate the price based on necessary repairs.
Or you can choose to walk away if the issues are too significant or not worth the risk.
- Protect Your Investment:
A thorough inspection protects your investment by ensuring you’re not buying a money pit disguised as a dream home.
- Peace of Mind:
Knowing your potential home has been thoroughly examined provides peace of mind and confidence in your decision.
A home inspection is a crucial step in the home buying process. A few hundred dollars spent on inspections could save you thousands in the long run.
It’s an investment in your future and the security of your home.
Getting the best price
Another best piece of advice on buying your first home is that you should learn how to negotiate. This involves getting your dream house at a reasonable price.
Negotiate until both you and the seller aim to reach an agreement that satisfies everyone.
Knowledge is Power
Before you dive into negotiations, arm yourself with information.
Research recent sales of similar properties in the area. This gives you a realistic idea of the property’s market value and helps you formulate a fair and reasonable offer.
Crafting Your Initial Offer
Your initial offer shouldn’t be your final price. It’s a starting point for negotiation.
Offer slightly below what you’re willing to pay, leaving room for negotiation. However, don’t lowball the seller too much, as this could jeopardise the negotiation process.
Know When to Walk Away
Not every negotiation ends in a deal. If the seller is unreasonable or the price exceeds your budget, don’t be afraid to walk away. There are plenty of other homes out there.
Counteroffer
Be prepared for the seller to counter your initial offer. Respond with a reasonable counter offer based on your research and budget.
Don’t get emotional, and remember to stay focused on your goal of finding a home that meets your needs and budget.
Negotiation Tips
Negotiating can be daunting, but with preparation and confidence, you can secure the best possible price for your future home.
- Speak clearly and confidently about your offer.
- Maintain a professional and respectful demeanour throughout the negotiation.
- Back up your offer with market data and your assessment of the property’s condition.
- If the negotiation isn’t going your way, don’t hesitate to walk away and explore other options.
- If you have concerns about the property, consider making a conditional offer that depends on a satisfactory building and pest inspection.
Purchasing Your Home
Now that you’ve found your dream home and negotiated a fair price, the last piece of advice on buying your first home is to make it official and ensure a smooth turnover.
This final stage involves legal processes, logistics, and the thrill of finally moving into your new space.
Finalising Your Purchase
While this stage might seem a bit daunting, it’s actually quite straightforward with the right guidance.
Contract Signing
Buying a home involves a fair amount of paperwork, but don’t let it intimidate you. However, don’t sign the contract until the following is done:
- Pay The Lock-In Deposit Amount:
This marks the formal agreement between you and the seller.
In NSW, it’s typical to pay a 0.25% deposit to the seller.
It is like an agreement between you and the seller not to offer the property to anyone else until everything, such as the inspection is done.
- Building and Pest Inspection (if applicable):
Get these inspections done. If the results are satisfactory, you can proceed with the purchase and signing the contract.
If not, you might have the option to renegotiate or withdraw your offer.
- Loan Approval:
Your lender will finalise your loan approval and provide a formal loan offer. Review the terms carefully before signing.
Benefits of Hiring a Real Estate Expert
Buying your first home can feel overwhelming. It can be tricky finding trusty advice on buying your first home.
Partner with seasoned real estate professionals who can transform your experience from overwhelming to exciting.
If you’re a first time home owner, real estate agents will give you the best tips. They will guide you through the complexities of property listings, negotiations, inspections, and paperwork.
They have the expertise and market knowledge to streamline the entire process, ensuring you make informed decisions every step of the way.
Why Choose Beere Property as Your Guide?
As a reputable real estate agency in Sydney, us at Beere Property have a proven track record of helping first-time homebuyers like you achieve their dreams.
Our team of dedicated professionals understands the unique challenges faced by first-time buyers and is committed to providing personalised support and guidance throughout the entire journey.
Here’s how we can make your homebuying experience smoother and more rewarding:
- Market Expertise:
We have in-depth knowledge of local market trends, neighbourhoods, and property values, ensuring you’re well-informed and make sound investment decisions.
- Personalised Service:
We tailor our approach to your specific needs and budget, ensuring you find a home that truly reflects your lifestyle and aspirations.
- Negotiation Power:
Our experienced negotiators work tirelessly to secure the best possible price for your dream home, potentially saving you thousands of dollars.
- Seamless Process:
We handle the complexities of the purchase process, from inspections and appraisals to contracts and settlements, ensuring a smooth and stress-free experience.
With Beere Property by your side, you can get legit advice on buying your first home, knowing you have a trusted partner who has your best interests at heart.
Ready to own your first home? Book an appraisal with Beere Property today and let our agents guide you towards your dream home.