Looking to buy your first home? Don’t get left with your paddle by your side when the auction hammer comes down. Our Lending Manager Ryan Morgan-Jones reveals some simple tips to have you owning sooner.
Buying your first home is one of the few life experiences that can be both exhilarating and terrifying at the same time. If you’re like most Australians, by the time you start thinking about entering the property market, you begin to realise just how little you know about it. It’s never too late to start learning though, and it’s important that you do seek the right advice.
First home buyers represent the minority of purchases in the property market at the moment. According to recent ABS data, an increase in investment activity is resulting in a rise in property prices meaning some first home buyers are finding it difficult to gain a foothold. First home buyers in NSW in September of 2013 made up 6.8% of new housing loan commitments compared to the 34.0% peak of May 2009.
These figures should drive first home buyers to be more savvy when looking to buy their slice of the Australian dream. Rather than being disheartened, first home buyers should be seeking out bargains, starting to look-out for the next up-and-coming suburb or land release, and doing everything they can so they can act with confidence when the time comes to buy.
So when you decide the time is nearing for you to own your first home, here are some things to consider so that the process can be more exhilarating, and less terrifying…
- Know your borrowing power – The majority of us will need to take out a loan to buy our first home. Before you start visiting open houses, get an idea of what you will be able to borrow based on your income and savings. Once you know this, you will have a more realistic of the type of price range you should be looking in. It’s important to find a responsible lender who will only let you borrow an amount that both parties are confident will be repaid. The Greater has a range of handy calculators to help, including Borrowing Power.
- Start Saving – Generally, it is recommended you have between 5-10% of the purchase price of the property in savings before applying for a loan. So once you start looking at a price range based on your borrowing power, calculate how much you should save as a deposit. It is also good advice not to just aim for the deposit amount, but to save more than you think you may need for things like stamp duty or LMI. A great idea when saving your deposit is to use a High Interest Savings Account, such as The Greater’s Bonus Saver.
- Speak to a lender – Once you have saved your deposit, it’s a good idea to speak to a lender to discuss your details. As a first home buyer, you may be eligible for Government Assistance, for which your lender can help you apply. You may also want to discuss getting the right loan to suit your needs, whether variable or fixed rate. And so that you can confidently make an offer when the right property comes along, you can get pre-approved for the amount which suits your price range.
- Legal considerations – Don’t forget to think about the legal process of buying your home. Have you considered a solicitor or conveyancer to examine the contract? Will you need to use a Deposit Bond if borrowing more than 90% of the purchase price of the home? If buying a house rather than a unit, have you organised your home insurance as required prior to settlement? It is important not to overlook these considerations, so speak to your estate agent or lender if you are unsure at any stage.
Once you have the proper knowledge, you can stop worrying and start getting excited about the prospect of buying your own home.
To check out The Greater’s full First Homebuyer's Guide with even more helpful advice, click here.
If you would like to ask any further questions about buying your first home, why not make an enquiry with The Greater today and see how we can Make Life Greater.
Are you saving to but your first home in 2014? Do you have any tips for fellow savers? Feel free to share them in the comments below!