Buying your first home is exciting, but it can also be a little scary, especially if you have not considered all issues that you can possibly encounter. Let’s look at some of the most important considerations now.
So your best friend just bought a house, your brother and his wife bought one, and your work mate. They’re constantly talking about their new home and now you’re wondering if you should buy one too.
Before you visit a bank to see if you’re eligible for a home loan, consider your circumstances. Then ask yourself if you’re ready to commit to buying a home. Buying property, especially a home is an ideology known as ‘the great Australian dream’, which is a part of our early education and continues to be drummed into us as we go through life. Therefore, you need to ask yourself if buying a home is more an obligation that you feel you must do or a need that you wish to fulfil? Answering this question honestly will determine your direction.
While this question sounds obvious, many of us don’t consider if we can afford to buy a home before we commit ourselves to the act. So before you go any further, jump online and use a home borrowing calculator. This will allow you to calculate if you can afford to buy a property and will calculate the amount that you can afford to borrow. You also need to work out whether your current income and spending habits will be suited to home buying. If not, then you may need to review these before you commit to buying a home.
Define why you are buying a property by asking yourself what’s your main goal for buying? Is it for you to live in or are you buying it as an investment? Do you plan to buy a home that is in need of improvement, doing the work to bring the property up to date and then selling it for a profit when you’ve finished? Once you’ve decided on your goal, then you can set yourself a budget and start looking for a property to buy.
Once you’ve defined your plan for the property then you can narrow down where you’re buying to. If you’re seeking an investment property for rent, then you need to be searching in areas that are earmarked for development and have an existing or future plan for infrastructure development, such as the building of a shopping centre, parks, cafes and eateries, as well as schools and public transport.
If you’re buying a home to live in then your location should be closer to work, family and friends, this will save you on commuting times. If you’re buying a flipper or renovator’s delight, then you need to search for suburbs that have higher property prices, then find the worst house in the best street, at a good price. Just remember to do this, you need to work out your budget prior to buying to ensure that you’ll make a profit. Otherwise you may over capitalise.
Now that you know what type of property you’re looking for and where, now it’s time to start thinking about saving for your deposit. This is also a good time to start researching property and home loans, if you haven’t begun already. So jump online and visit some real estate and lending sites. This will enable you to understand the costs of borrowing and to establish how much you’ll need to set aside for buying a home.
Application fees and other borrowing charges, such as stamp duty and conveyancing fees, and mortgage title transfer costs also need to be considered, as well as lenders mortgage insurance if you’re borrowing more than 80% of your home’s value. Working out all of your costs before you buy will enable you to budget accordingly.
Once you know approximately how much you need to cover the costs and charges of your home loan and your deposit, and you’re near to your target, then it’s time to think about contacting a mortgage broker. A mortgage broker will take the guess work out of securing your home loan and will work hard to find you the right home loan for your situation. They have the knowledge and expertise to help you understand all the key decisions, negotiate competitive rates on your behalf, and even complete all your paperwork.
A mortgage broker will help you research home loans on the market and select the home loan type you want. The most popular choices are variable, fixed or combination home loans, where you can fix a portion of your home loan and leave the rest variable. Your loan rate may depend on whether you’re buying a home to live-in or if you are intending to lease the property. Gaining home loan pre-approval before you make an offer on a property allows you to know how much a lender is prepared to give you to buy a home. Then once you find the right property, it’s just a matter of making an offer.
Once you’ve been given home loan pre-approval you can then start looking for a home. When you find a property you like, then it’s time to negotiate a price with the agent selling the home. When you make an offer make sure you include ‘subject to finance’ in the contract and disclose any other terms that need to be met before you will buy the property, such as a pest and building inspection. Stipulating these aspects could save you thousands if the home has white ants or is not structurally sound.
Are you thinking of buying a home? Then contact eChoice and find the right home loan for YOU today.