Buying your first home is an exciting step in your life, but it also requires a lot of careful planning. You’ll need to save for a deposit, do your research on what you want in a home, arrange your first home loan pre-approval, go to inspections to find your perfect home, negotiate an acceptable price, then go through a number of checks before you can finally become a home owner.
Saving up a deposit
The first step to buying a home is saving for a deposit. As a general rule, you will require at least 5% of the purchase price up front before you are able to buy a home, so decide what price range to aim for and create a savings plan. Also consider fees you may have to pay on top of your home price, including settlement, legal fees and any other government fees and charges which may apply. If you have a deposit of less than 20% you will also have to pay loan mortgage insurance, so you might want to consider saving longer to avoid this.
High interest accounts can help your deposit grow faster, as can First Home Savers accounts, which offer a government contribution each year on top of your own savings. Remember you may also be eligible for the First Home Buyers grant, and do your research to see if you can factor this into your deposit amount.Researching for your first home loan
Once you have your deposit sorted, you’ll need to start organising your first home loan. It’s worth your time to do some preliminary budgeting first, and work out how much you’ll be able to afford in repayments based on your income and living costs.
Mortgage brokers can help in providing advice on the loan to suit you, negotiating deals that might not be available publicly and managing the buying process for you through to the settlement of your contract. It’s best to look for a mortgage broker who comes personally recommended or is well established locally and can help you shop around for the best deal.
Finding your first home
After you’re pre-approved for your first home loan, you can shop around for a home that matches what you want and need within your budget. You might want to consider proximity to schools, transport and the condition of the property when making your choice, as well as the rental prices in the area if you’re thinking of using the property as an investment.
Last-minute checks and documentation
Once you’ve found your ideal home, make sure to get your contract checked by a conveyancer or solicitor. Your solicitor or conveyancer, will in most cases assist you to arrange the property inspections to address any safety concerns and check that any legal and regulatory building requirements are in good order, before you make your final purchase.
You or your solicitor or conveyancer will need to get a licensed builder or surveyor to perform this last check. You may also want to consider conducting a pest inspection, and a strata check if you’re buying an apartment, to make sure there are no major improvements to the building coming up that you might end up paying for.
If your home passes these tests and you are comfortably satisfied with your choice of home, you can then exchange contracts, which is when you need to put down your deposit. Again, your lawyer will need to handle this process, as there are other legal checks to go through during the exchange period, which is about six weeks. A mortgage broker can guide you through what the next steps will be, while explaining any questions you have about the home loan process.
After exchange comes final settlement. Your solicitor or conveyancer may request for you to do one final inspection to ensure everything you expect is as it should be prior to settlement. If everything is in good order, you pay your full purchase amount, and get to open the door to your new home!
Take the first step in finding the right home loan for you with Choice Home Loans.