New Homes vs. Established Homes - tips for First Home Buyers
Mon Jul 15 00:00:00 AEST 2013
There are lots of incentives for first home buyers to buy a new home, but does it really save you money? Choice Home Loans has put together this guide on the benefits of new versus established homes to help you make the right decision for your circumstances.
Buying a new home
The main benefit of buying a new home is that you get government help towards your first home loan deposit. The First Home Buyer’s grant now entitles you to $10,000 if you are buying a newly built home, and many state governments have their own schemes that provide a further top-up - it’s a good idea to consult a mortgage broker about this, as they will be aware of the grants you can apply for in your home state. You could also be entitled to stamp duty relief if you buy a new home.
If you’re planning on building your own home, you can also customise it to your own specifications. Some developers will also allow you to do this if you are buying off the plan. This way, everything is just the way you want it when you move in, and you won’t have to worry about expensive renovations down the track. You may also save money in the long run by paying less maintenance costs in a new home.
However, new homes often have higher purchase prices than existing ones, so you may find that even with government assistance; you are paying more for your home and having to take out a higher loan. It’s a good idea to check through your numbers before you buy, using home loan calculators like Choice Home Loans 'What Can I Afford to Borrow?’ calculator.
You are also restricted in your location when buying a new home. New developments tend to be quite far outside the city where there is more available land, and the new builds that do occasionally pop up in the city will be very expensive. So depending on the type of area you like to live in, a new home may not be right for you.
Buying an existing home
Buying an existing property means all aspects of the home are ready to go, and you won’t be waiting around for building to finish. You can also more accurately judge whether you’re overpaying, and whether your property will hold its value in years to come, by looking at the buying history of the building or neighbourhood.
You will also most likely pay a lower price than a new home buyer, meaning your home loan repayments will be less. This will allow you less financial strain and more freedom with your spending from month to month, as well as a greater reserve of emergency cash in case of interest rate rises.
But existing homes will generally appreciate in value less than new ones. Because new homes generally have more modern fittings, they’re more likely to appeal to the next generation of buyers than older properties. You may have to renovate to get an existing property to the same level, which will be costly.
Existing homes may also require more maintenance costs. As well as issues with plumbing or wiring that may come up with older properties, you may also find that your home is less energy efficient, so you could be paying higher bills than a new home owner.
If you’re thinking of buying a new home, a Choice Home Loans mortgage broker can talk you through the decision. As a dedicated home loan specialist, a Choice broker is perfectly positioned to give you advice on the value of both new and existing home purchases, and assist you in choosing the right home for your budget.
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This article is written to provide a summary and general overview of the subject matter covered for your information only. Every effort has been made to ensure the information in the articles is current, accurate and reliable. This article has been prepared without taking into account your objectives, personal circumstances, financial situation or needs. You should consider whether it is appropriate for your circumstances. You should seek your own independent legal, financial and taxation advice before acting or relying on any of the content contained in the articles and review any relevant Product Disclosure Statement (PDS), Terms and Conditions (T&C) or Financial Services Guide (FSG).