Are you thinking about buying your first home, but aren’t sure where to begin? Before you jump in at the deep end, take a bit of time to be sure you have all your bases covered.
Here is a quick guide to making the first home buying process a little easier:
Understand your costs
It’s common for many first home buyers to look closely at the purchase price of a property they want to buy and then calculate how much deposit they need to save. However, there are also a range of other costs associated with buying a property that you will need to take into account. These can include:
- Stamp Duty: the amount of stamp duty you pay is calculated based on the purchase price of your property. In some cases, you may be eligible for a partial concession on the stamp duty amount, so it pays to do your research
- Transfer Fees: the Land Titles Office may charge a transfer fee to transfer ownership of the property title from the vendor’s name into your name. Again, the amount you pay may be calculated based on the purchase price of the property
- Conveyancing Costs: your conveyancer is the person who will legally handle the transaction between you, the vendor, your lender, and the Land Titles Office to help you settle your new home. You will need to pay your conveyancer’s fees and costs
- Lender’s Mortgage Insurance: If you’re borrowing more than 80% of the property value, your bank will apply a Lender’s Mortgage Insurance (LMI) premium to your total costs. The amount of LMI you pay will depend on the size of your deposit and which underwriter your bank uses.
- Bank and Other Government Charges: your bank may charge some fees associated with your loan, including loan settlement fees and mortgage registration fees.
Check your borrowing capacity
The amount of money you can borrow may vary between banks. They all have their own policies and lending criteria to calculate the maximum amount you can borrow, so it pays to discuss your options with a good mortgage broker.
When you have a clearer understanding of how much you can borrow, you’re in a better position to work out how much deposit you need to save and what your approximate fees and costs will be on your estimated purchase price. You’ll also know roughly how much you’ll pay on your loan repayments, so you can start putting together your budget.
Work out your deposit amount
Once you know how much you can borrow, you can determine how much you need to save to cover your deposit amount. You may also need to add additional funds to your total deposit amount to cover any other costs and fees associated with buying your first home.
Create a budget
When you have a clear idea of how much deposit you need to save, it’s time to get your savings plan together. Spend a bit of time working out your budget. Make a list of your income and all of your expenses. Then work out how much you can comfortably afford to save each pay once your bills and living expenses are paid for.
If you haven’t already, shop around for a savings account that pays you interest on your balance. There are plenty of different savings accounts available, so choose one that suits your personal situation and start putting money away regularly.
Apply for pre-approval
Before you head out house hunting, take the time to apply for a pre-approval from your chosen bank. The bank will assess your income and expenses and issue a conditional approval that lets you shop with a bit more confidence for your first home.
We know with so many options available that choosing a home loan can be daunting. When the time comes, don’t feel like you have to do it on your own.
Call Nieuvision today 1300 832 554 and ask how we can help make the first home buying process smoother for you.
Finance & Property Consultant
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Disclaimer: We recommend that you seek independent financial and taxation advice before acting on any information in our articles and newsletters. They contain general information only and have been prepared without taking into account your personal objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. Interest rates are subject to change without notice. Lenders terms, conditions, fees & charges apply.