Kathryn Lee - 14 Jan, 2019

First Home Buyer Checklist

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There’s nothing more exciting than buying your first home, especially since state governments have made changes to their first home buying policy. But, before you rush out and buy a home because it just got more affordable, it’s also important for you to consider several factors. Want to know the best part? These aspects ensure that you’re buying a home that suits your needs and your budget. So, let’s look at recent government policy changes that effect first home buyers and the top factors you need to consider before buying with our first home buyer checklist.

First Home Buyer Activity Surges

Here’s the deal: The New South Wales and Victorian governments changed first home buyer legislation in July 2017, which reduced stamp duty costs. Since then, the number of first home buyer approvals increased significantly says the Australian Bureau of Statistics (ABS).

Recently released ABS data shows that first home buyer commitments increased to 18.0% in November 2017, up from 17.6% in October. The value of housing finance over the month rose by 2.3% to $33.5 billion, with owner-occupied housing up 2.7% and investor lending up 1.5%.

The number of first home buyer approvals rose by more than 60% in New South Wales and rose by 50% in Victoria after these states introduced stamp duty discounts. However, data also notes that this increase in activity is also pushing up prices at the lower end of the market in these regions.


First Home Buyer Factor #1 – Price

When it comes to buying a home the price of the property needs to match your budget. You don’t want to stretch your finances to their limit and leave yourself little or nothing to cover unexpected costs. Therefore, to find the ideal property for you, we suggest following a step-by-step plan to calculate what you can afford. Here’s the low down:

Step #1 – Research the Market

Start your property search by making a list of your home requirements – location, number of bedrooms and bathrooms, parking, and property type. Then start looking at homes online with these aspects. Next, narrow down your search by looking at suburb profiles, sold property and current listings. Write down a list of suburbs that have affordable properties with your needed features. Many people will look to buy close to work so that they reduce their commuting time. However, if you find these suburbs unaffordable, then look at neighbouring suburbs or suburbs that are further out, with excellent public transport. Often, these suburbs will offer you everything you need, and more, at a price you can afford. Making a compromise will allow you to buy a home and get into the market. You can always sell this property later and move closer to work, once you’ve built-up equity in your home.But, it gets better: If you don’t feel confident doing your own research, then contact a mortgage broker. Many brokers offer property and suburb reports, plus they help you make sense of the market and your home loan options.

Step #2 – Establish Your Borrowing Level

Once you have a sound understanding of the market and what you’re looking for in a home, then it’s time to work out how much you can afford to borrow. This situation represents the perfect opportunity to use an online borrowing calculator. To calculate your borrowing power, you’ll need to know how much you earn, your expenses, including monthly living costs, and your credit card limits. Alternatively, your broker can also assist you to determine how much you can borrow.

What's my borrowing power if I earn $ per year?

Step #3 – Calculate Repayments

After you’ve determined how much you can borrow, then you need to establish whether your repayments are affordable. Look at monthly, fortnightly, and weekly repayments. Then consider what your cost will be if rates rise by 2%. You also need to budget for other costs, such as utilities, groceries, any other loan repayments, and future council rates. Plus, it’s important to put funds aside for unexpected expenses – a buffer. This strategy will reduce any financial stress and leave you feeling confident that you can manage any situation that arises.

What is my mortgage repayment?



Step #4 – Work Out Costs

The costs of buying a home include stamp duty, conveyancing fees, pest and building inspections, utility and council transfers, as well as moving costs. These fees can add up to ten-of-thousands in extra costs, so you need to factor these into your buying expenses. Otherwise, you may find it difficult to come up with the required money.

Step #5 – Explore the First Home Owners Grant (FHOG)

Many first home buyers are eligible for a grant. However, the size of this grant depends on the state where you’re buying, and this state’s first home buying policy. For instance, some first home buyer grants may only apply to new homes up to a certain value. To find out more about the grant, visit the first home owner grant website. Of course, a broker can also assist you with the grant, if you’re unsure.

Step #6 – Attend Auctions

Another excellent way to familiarise yourself with an area and the housing market, is to attend auctions. By visiting auctions, you build up your confidence dealing with real estate agents and you get a sounder understanding of the home buying process.


First Home Buyer Factor #2 – Lifestyle

We all have a way of living that we enjoy. So, if you’re a foodie who enjoys eating out, then search for suburbs that have many cafes and restaurants. Alternatively, you may be an avid bike rider who thrives in the outdoors. If this is the case, then look for suburbs with bike trails and parklands.

If you’re someone who likes doing a range of activities, then you may even like to write down what you enjoy doing and then rank these in order of preference. Thus, by ranking your activities in order, you’ll make these a priority. You can then go in search of properties that match these preferences.


First Home Buyer Factor #3 – Schools

Schools, regardless of whether you have children or not, add value to a home. For instance, a recent study found that a quality school with a good reputation can add up to 3.6% to a property’s value. Buying close to a school also means if your plans change in the future and you have children or want to rent the property out, then this will make your location ideal.

First Home Buyer Factor #4 – Crime

Crime is a factor that many of us don’t think about, and yet it can have a huge impact on our lifestyle. Plus, it can also make it harder for you to sell a property later. Therefore, before you look at buying in a certain area, make sure you review the crime statistics. To do this, visit the police site for the state where you’re buying a home. You can also search through local newspapers for break-in data.

You may also want to visit the area and have a look yourself. Typically, areas with lots of graffiti, black tyre marks on the roads and signs of property vandalism, indicate that the area may have a higher crime rate.

Lastly, ask friends and family, as well as work colleagues, about the suburbs that you have listed. Often acquaintances know more about areas, especially if they’ve lived in the region longer than you.


First Home Buyer Factor #5 – Transport & Infrastructure

Commuting to and from work can consume time, plus it can cost more by car. So, some people choose to use public transport to cut down on costs and stress when travelling to and from work. In fact, according to research, most Australians live within 15.6 kilometres of their workplace.

To explore the transport and infrastructure in an area, look at existing transport by researching train and bus routes in the area. It’s also a good idea to visit the local council and review what plans are in place for future work. For example, Kemps Creek in west Sydney realised capital gains of 166% due to the announcement of the Badgerys Creek airport development.

Often suburbs that have little or no infrastructure may have plans in place for future development in under 10-years. If these types of plans are in place, then by buying now, you’ll get yourself a property for far less. Then after the development has occurred, you can expect to see a sizeable gain in the price of your home. This method is the ideal way to make your money work for you as your return on investment realises quickly.

Do you want a home loan for under 4%? If you said yes, then contact eChoice. Our brokers have access to 100’s of home loan products. So, we’ll find the right mortgage for you.
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