As a first-time homebuyer, you might want to consider several things when buying a home in Australia. However, it is essential to remember that you’re doing this for the long run. A new home buying journey can be overwhelming and complex, but you can take measures to ensure the process progresses as smoothly as possible.
For first home buyers, buying your first home doesn’t have to be overwhelming. With a bit of help from professionals, you can obtain the knowledge and resources needed for the purchase quickly and easily.
Therefore, it might be a good idea to seek professional advice, do some research and your own due diligence in this process. We have listed some of the important points to work on and get help with before buying your first home. Home ownership does come with cost and the more you know about it earlier, the better you are prepared before committing. The following might be helpful if you don’t know where to begin.
Calculate your budget and your affordability:
Before jumping into your purchase commitment, it is important to set a budget and work out on how much you should be saving to meet your purchase deposit goals. Budget planning is different for each individual and therefore everyone could customise this as per their own priorities and need. A simple budget tracker can help you with your saving goals. A link to a budget tracker is: https://moneysmart.gov.au/budgeting/budget-planner
The earlier you start, the sooner you get to your goals. And the higher the savings the better you will be positioned in front of the lenders as well. Please work out as per your own financial goals, priorities and situation.
Know the cost of purchase:
Apart from your deposit contribution (usually ranges from 5%-20% of the purchase price) there are various other expenses that you should factor in. Some of the most common expenses are :
- Conveyancing fees
- Stamp duty (check if you qualify for a concession or waiver with the office of state revenue as per the state you live in)
- Building and Pest Inspection
- Lenders mortgage Insurance (LMI): This usually applies if you have less than a 20 per cent deposit. This is usually a one-off, non-refundable premium paid by borrowers, either upfront or added to the home loan. Your accredited home loan adviser will provide you with the cost and the details.
- Additional costs can include council rates, strata fees, moving costs, utilities and insurances.
Talk to a home loan adviser:
Of many things to consider, it is essential to at least know your home loan borrowing capacity before committing on a contract for sale. A home loan adviser can help you with this. Working on your borrowing capacity will pre-position you with your repayments and your home purchase price.
Gain pre-approval from a suitable lender:
Get pre-approval of your budgeted home loan to have a peace of mind before committing on a contract. This involves completing an application and providing lenders with your financial information so they can decide on your borrowing status and ability to service the loan.
Property Search :
Many first home buyers might have a strict budget stepping in the property ladder. If you are on a strict budget, you might want to draw a fine line in between ‘What are your wants? and What are your needs?’ Start your property search by making a checklist of all the features your home must have, including the number of bedrooms, bathrooms and parking spots, as well as the features that are nice to have, such as a north-facing aspect, an en suite, or a big kitchen, garage or yard.
Properties can be an existing dwelling or off the plan units, Land & House packages. They all have their respective pros and cons. You may do your own research or if you are time poor, you may even like to seek some professional help and guidance.
Making offer and Contracts:
Once you find your suitable First home, you might be asked to make an offer to the vendor usually with an completed Expression Of Interest (EOI) and a holding deposit.
The contracts are then prepared and soon be issued to you for signing following the EOI acceptance by the vendors. At this stage it is crucial that you seek legal advice from your conveyancing representative regarding the contracts and the conditions. This is when your conveyancer/solicitor can help you with the contracts review process before you sign on the contracts. Doing so also gives you a peace of mind since you will be aware of your and the vendors contractual obligations.
Your Home Insurance:
When the contracts are exchanged now it’s time to look for a suitable home and content insurance. Taking an Insurance policy is crucial because your obligation with the property might even begin from the date the contract is signed in some cases. In other cases the insurance policies are taken before the settlement and handed over. Knowing which of the above is applicable to you is very important. Please ask your legal representative (usually your conveyancer/solicitor).
Unconditional home loan approval:
Once the contracts are exchanged (signed by both buyers and the vendor), the process of applying for the unconditional home loan approval application begins with your lender. Please make sure you let your home loan adviser know about the contracts as soon as you sign them since the contracts allow a limited timeframe to obtain loan approval and time is of essence with the settlement due date. Upon getting unconditional approval from your lender you will soon proceed towards the settlement of your purchase contract.
Pre settlement building and Pest Inspection:
One of the conditions on the contract might be sending a pre settlement building and Pest Inspector that represents you. This is when you nominate an inspector and get the inspection done. If the condition of the house is not as per the standard contractual presentation, you might have rights to terminate the contract or ask for negotiations. Please check your rights with your conveyancer/solicitor. On the other side, if things are looking great a handover date is mutually agreed by both parties following the settlement. Please note Building & Pest inspection does come with a cost however this might give you a peace of mind.
Hand over and happy days:
Upon completion of the purchase contract settlement, it’s time to take the hand over of the property. The selling agent usually runs through all the necessary hand over processes. S/he usually guides you through the property and its contents. If the handover is for a new build then the building site supervisor or construction manager might as well run through all the details and make you aware of the warranties that comes with the new build.
A handover pack is provided to you which will have all the information regarding but not limited to termite cover, home, appliances and fixtures warranties, Build warranty, point of contact should a claim is required in the near future and so on. It’s usually best if the handover can be requested on site so that you go through each corner of the house with the agent or the site supervisor.
You have now been handed over with your home keys. Which means it is the time to create beautiful memories and cherish beautiful moments in your home sweet home.
Disclaimer: This article and its contents are general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your own needs, and where appropriate, seek professional advice from an accredited adviser. Ribesh Paudel, ARS mates property group and it’s team members disclaims all liability resulting from any views or any information posted. We recommend you seek appropriate independent professional advice as per your personal situation before entering into any commitment based on these views. You should not only rely on these views.