Ten Tips for Buying Your First Home

Ten Tips for Buying Your First Home

Ten Tips for Buying Your First Home

1. Do your groundwork!

2. Check out a fair number of mortgages from the different lenders. There are some really great first-home-buyer loans available. Some will waive quite a few of the fees and costs associated with the loan. The best way is to contact a mortgage broker. They have access to most of the products on offer by the big banks and will try to find the most suitable home loan for your circumstances.

3. Find out what your borrowing capacity is, and then be realistic about repaying it. Work out what you would be comfortable paying each month. Circumstances change. If you are newly married, how long before you'll start a family and be surviving on one wage? People change jobs, interest rates could go up. Can you manage your mortgage? There are many borrowing calculators online to give you a rough idea of what your borrowing capacity is.

4. Expect to have a deposit of at least 5% of the cost of the property. At this level you'll be required to purchase mortgage insurance, so you'll also need to allow for this. The more deposit you have, the less you'll have to borrow and repay. Some lenders will include the first home buyers grant as part of your deposit/legal fees. Keep in mind that if more than 80% of the value of the property is borrowed you may be required to purchase mortgage insurance.

5. Start a savings plan. You'll need to have a record of savings before any lending authority will give you a mortgage. Put away regular amounts every pay. Any lump sum deposits have to be in the account for six months, so that tax return cheque or money from mum and dad will help boost your balance - but it has to remain untouched for six months.

6. Be organised. Have all necessary documentation ready when you apply for your loan. There are many websites that provide document checklists for this purpose or you can review the information at the Home Loan Advice Centre.

7. Be aware of the fees that you are likely to be charged. You can expect a loan application fee, solicitor's fees, building/home inspection costs, insurance, survey fees, title search fees, mortgage insurance. There are other expenses to consider as well, like moving costs, contents insurance and the connection of power, water, and gas and phone lines when you finally move in.

8. Once you have an idea of how much you can afford to borrow, start looking for your property.

9. Have your loan pre-approved. Your broker or financer will assess you and establish your borrowing capacity, and so you will be taken seriously as a buyer by the real estate agents.

10. Be realistic about what you can afford. Have a budget and stick to it. Don't let emotions get in the way. It's okay to start with a smaller house and get that mansion later on! Real estate is still the best investment for your money.

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