Purchasing your first home can be both an exciting and daunting experience at the same time. On one hand you are purchasing the first home that is truly yours and something that will hopefully become an investment over the years. On the other hand, is the scary thought of jumping into hundreds of thousands of dollars’ worth of debt and paying it off over the next thirty years! Rest assured that we have all been there and we all have to start somewhere. Here are some tips to help you through the first home buying process that will hopefully make it smoother, less stressful and less intimidating.
Tip One: Budget
The very first thing you need to do is plan your first home purchase. By this we mean you need to work out what you can comfortably afford to repay and how much deposit you have to put towards the purchase. This will ensure that you don’t end up borrowing more than you can afford without sacrificing your lifestyle. Remember to allow for future events (such as starting a family) as well.
Tip Two: Seek Advice
Once you’ve worked out what you are comfortable paying it is time to speak to a finance professional to find out exactly how much you can afford to borrow from a lender’s perspective. This can mean speaking with your bank directly, however this will limit your loan options to one lender. A good mortgage broker will be able to offer you a range of options from various different lenders that they have access to. This can sometimes result in you being able to borrow more than you originally thought or may result in a more competitive home loan.
Tip Three: Deposit
The “standard” 20% deposit is no longer a requirement to purchasing a property. The minimum deposit for most lenders is 5% of the purchase price. You will still need some extra money on top of this to cover legal and transfer costs and depending on the state you are in, you may still have to pay stamp duty on top as well. The good news is that some lenders will take your state’s first home owners’ grant into consideration for some of your deposit.
Tip Four: Be Patient!
Purchasing a home is rarely a simple and easy task and a first home is always the most difficult. Be prepared for the lender to ask for lots of information and documents from you. It may seem like a lot of effort at first but remember that they are lending you hundreds of thousands of dollars so they need to ensure that you will be able to make the repayments. The process from your initial enquiry to finding a property to obtaining approval to settlement can take anywhere from a couple of weeks through to a couple of months so prepare to be patient.
Purchasing your first home is often a difficult and confusing process but it can also be potentially very rewarding, both emotionally and financially.