Buying your first home is a big deal, but before you pop the champagne and sign away the next thirty years of your life, it’s worth heeding some advice from the professionals.
It’s all about how much dosh you can actually spend. Real Estate Institute of WA President Hayden Grove says this is the time to get a professional onboard.
“You need to have your limits set pretty early, so speak with your bank or mortgage broker that will give you a clear idea of what your borrowing capacity is,” Grove advises.
Yanti Sujatna of Bellcourt Property Group agrees and says you can put yourself in an even better position with pre-approved finance in place.
“I have seen many first home buyers put offers on properties when they have not yet applied for financial approval,” Sujatna says. “Buyers end up cancelling or missing out on properties when they discover they can’t afford what they thought or that it will take longer than they had allowed for in the contract terms.”
Once your finance is sorted, it’s time to decide whether you’ll buy an existing property or land to build on. Grove says this is where people are often tripped up due to the current First Home Buyer’s grant system.
“The First Home Buyer’s grants favour buying land and building a house, as opposed to buying something that’s established which is twofold,” Grove explains. “Firstly, there’s a $10,000 grant for first home buyers when they’re buying something new. If they’re buying something established, they get nothing. The other side of the grant system is that there is a stamp duty rebate for first home buyers up to a purchase price of $430,000.”
Grove suggests first home buyers carefully consider what their priorities are before purchasing, as what seems like a great deal initially may prove problematic down the track.
“The drawback for those building is the property might be worth less when you’re ready to sell. Also, first home buyers are just buying more land around you, so unless you’re planning on staying there an awfully long time, you’re just contributing to supply in that area and devaluing the established market,” Grove says. “A lot of first home buyers will be better served by buying closer to where they work and socialise, closer to their family and friends and buying somewhere that’s perhaps not the prettiest place but will give them a great start, good lifestyle opportunity and a pathway to building up their wealth through property.”
Once you’ve identified which location suits best, Sujatna says it’s time to do some serious research. Here are her steps to ensuring you get the right house for the right price.
Once you’ve determined where you’d like to live, it’s time to start looking at properties. Here’s where emotions can get the better of us, when we really like the look of a place which might turn out to be unsuitable. Sujatna recommends carefully considering the following factors as you review each home.
1. Think about how long this property is likely to be your home and what your lifestyle requirements are going to be during that time. For example, it may just be a stepping stone to your next property so only needs to cater for a couple or if you are planning to have a family there, plan for sufficient bedrooms and living areas.
2. If you purchase an investment property, it is critical to think about the demographic of potential future tenants and what they require in a property.
3. Make sure the security features such as alarm systems, automatic secure garage doors, security doors at the front and rear of the property, and good window locks are sound.
4. If small children will be living in the property, consider other safety issues such as compliant windows and curtain blinds, compliant pool fencing, secure front garden and play areas, baths that are not too deep but large enough for young children to use etc.
Once you’ve found the perfect house and are ready to start paying off that loan, Grove gives one final tip to getting ahead.
“Try to pay off more than the bare minimum; even $20 extra per week on your principal and interest loan makes an enormous difference,” Grove says. “It can save you thousands of dollars in your interest repayments at the end of the loan. If you do that from the beginning, you won’t miss it.”
Happy house hunting, first home buyers. You’ve got this.
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