Buying a home is probably one of the biggest financial decisions you have to make. It isn’t like buying a loaf of bread, in which case, quality is synonymous with white, fluffy and fungus-free. If you’re planning to buy a home, especially as a first-time home buyer, you have to do your homework to recognize the standard of quality.
Of course, it’s no easy task. As a first-time home buyer, you’re new to this game, and without sufficient research, you might regret your purchase. After all, it’s not about a couple of dollars – the risks associated with your investment is tantamount to losing your life savings. Don’t panic, hang on, take a step back and consider these important things we’ve listed for a first-time home buyer:
As a first-time home buyer, it’s important to know why you want to buy a home in the first place. Do you want to live in it, or will it be an investment property? This can help determine the kind of loan you apply for and home you buy, depending on your short and long-term plans. It also helps to determine the location to buy the property.
Let us lay this down real straight – money matters. You need to know your budget in order to determine which areas you can afford to buy a house. Don’t forget to consider several incidental costs such as stamp duty, registration fees, conveyancing fees, lender mortgage insurance and bank fees. Since you’re a first-time home buyer, we advise you to consult a finance broker or lender to get a more accurate estimate of associated costs. Cost isn’t the only thing either – you should also know how to obtain a pre-approval of your home loan.
As a first time home buyer, knowing the market is crucial. Do some research on the areas you are targeting, check out auction clearance rates and recent sales, as well as price trends in the area. While your budget dictates the areas you can afford, think about the availability of schools, shopping centre, public transport and other amenities. Your personal circumstances as a first-time home buyer matter a lot while buying a house to live in. For example, if your kids are about to go to university and you don’t have a car yet, you may want to live in a walking distance to university or close from public transport.
Just because your current situation allows you to get a certain amount of home loan doesn’t automatically guarantee that you will still be able to service it in five years’ time. As a first-time home buyer, it’s important to consider future prospects. Is there a possibility that your role at work will change? Are you considering going back to study and reducing your working hours? Does your health condition allow you to work as usual in the future? The last thing you want is to default a loan you took as a first-time home buyer.
Whether you’re a first-time home buyer or a property investor, buying a home is one of the biggest financial transactions. Getting the best possible deal is crucial considering how you are spending thousands of dollars. Don’t worry, if you want to cut a splendid deal as a first-time home buyer, you can use an ace up your sleeve: negotiation. Negotiation is about understanding the market, finding out who can help you and sticking to a budget. For a first-time home buyer, if you negotiate well, you can enjoy saving not only on the purchase price but also on stamp duty and loan interest.
With a huge sum of money and a bucketload of risks involved, it’s only natural for you to be under tremendous pressure. However, this doesn’t have to mean that you hastily buy the first property that’s up for sale. As a first-time home buyer, remain cool, calm and make an informed decision during your purchase process. Don’t worry if you’re unable to purchase one property because there will be many similar properties around the corner which will fit your criteria. So, beware of the fear of missing out – the excitement of an auction could make you panic and jump to a bad decision for a first-time home buyer.
Buying a property is not just about the money you invest. This decision is attached with your emotions, and your lifetime savings as a first-time home buyer. So, ensure that before you sign any contract, the property you are buying is structurally sound. Does it have pests? Or leakage problems? Or does it have poor lighting? As a first-time home buyer, the last thing you want is a pest problem, or a crumbling ceiling.
Old or run-down properties are comparatively cheaper – that’s a given. If you’re planning to buy such a place as a first-time home buyer, make sure that you get the complete idea of renovation costs. This can mean anything from a new kitchen, new bathroom, heating and cooling and some cosmetic fixes. Being a first-time home buyer, you can get the property inspected by a qualified builder or trade persons, and get an estimate of the renovation costs in order to make the property liveable. Once it is purchased, make a note of whether you will have enough funds to renovate the property or not.
After moving into a new house, mortgage is not only cost you have to manage. For a first-time home buyer, there are a lot of ongoing costs you’ll have to manage on top of your repayment. These costs can be Home and Content Insurance, Strata/Body corporate fees, Interest and Bank Fees, Council Rate and other utilities fees such as water electricity and gas. So, as a first-time home buyer, you’ll need to be mentally prepared and have a good plan to accommodate these costs without bearing any financial pressure.
With so many things to consider, getting professional help is highly recommended, especially for a first-time home buyer. There are many experts in the industry, and it is in your best interest to use them for tasks such as property checks, pest checks and any other legal queries. Being a first-time home buyer, doing it alone can prove costly. Avoid nasty surprises down the track by getting the right people to do the appropriate checks for you from the beginning.
If you’re uncertain about how to proceed, we, at Lotus Smart, can help you through the entire process. Lotus Smart is a team of Chartered Accountants committed to delivering high-quality professional services. We are proactive, forward-thinking, result oriented and we work closely with our clients to achieve their financial goals. Our associate Lotus Finance (CRN 432565) can guide first-time home buyers like you through the complex process of acquiring a mortgage. Due to our solid relationship with more than 25 lenders, we can boastfully say that we can easily provide you with information of all the alternatives available to you when it comes to choosing loan.
Disclaimer: This article is generic in nature. All finance and investment decisions should be considered wisely and based on your personal and financial circumstances. Seek proper advice before committing to any course of investment action. This is not deemed as advice.
Lotus Smart and its related employees and contractors accepts no liability or responsibility to any person for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this publication