Considering Buying your first home?????

Buying your first home is exciting, but it’s important to think with your head and not just your heart. If you’re considering taking the leap the first step is working out how much you can afford. This depends partly on how much deposit you have saved up. You’ll probably need at least 5% percent to 10 percent. If you’re entitled to the First Home Owner Grant, there’s another $7000 you can add to your budget. See www.firsthome.gov.au for details. Also consider how much you can afford in terms of monthly repayments – the general rule of thumb is 30% of your monthly before-tax income.
As well as the cost of the actual home you need to think about all the extra costs. Stamp duty will account for a huge chunk but as a first home buyer you may be eligible for a concession. Check with your local office of state revenue. If you’re borrowing more than 80 percent of the value of the home you’ll also need to budget for lenders mortgage insurance. This protects the lender, not you, if you have trouble repaying the debt. Other expenses include legal fees, inspection fees and borrowing costs.
It’s a great idea to approach a lender or mortgage broker to get pre-approval for a loan. Having your finances sorted before starting the search will mean you know exactly how much money you have to play with. And make sure you’re as thorough about choosing your loan as you are about choosing your home. The next step is choosing the location. Think about suburbs that suit your lifestyle, are close to work, the amenities you need and being near your friends and family. You may have to compromise – your first home might not be in your dream location.
A wishlist of the features you want is a good idea. Think about things like how many rooms you need, do you need a big backyard, a property where you can add value, or something perfect as is.
Then it’s time to start the hunt. The internet and sites like www.domain.com.au and www.realestate.com.au are a great starting point. Knowing what’s out there and inspecting as many properties as possible is the best way to get a good idea of how much you should pay. Suburb reports from companies like RP Data are handy.
If you find a property you really like, a building and pest inspection is a must. It will set you back a few hundred dollars but it could save you from buying a dud. If the inspection reports come up clear and you are keen to buy the property, you should get your solicitor to review the contract before making an offer. That way you can ensure there are no nasty surprises lurking in there.
Once your solicitor gives you the thumbs up you can consider making an offer. Make sure you don’t go in with your highest offer first because it gives you no room to move.
Don’t let on how much you want the place – try to play it cool so they don’t milk you for more money.
If your offer is accepted you’ll need to sign the contract. Even after you’ve signed the contract you may have a short cooling-off period but you may lose a small amount if you change your mind.
This cooling-off period generally doesn’t apply if you bought the property at auction (see buying at auction at right).
For more on property, check out the June issue of Money magazine, out now!

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