Buying your first home

Buying your first home shouldn’t be a scary or intimidating time. It should be a time to embrace new experiences, new challenges, and an opportunity to grow both in knowledge and financially.

​Many people don’t know how to go about it though, or where to even start. So here are 5 important tips to help get you moving in the right direction.

1. Have a Budget

​I’ve already covered this in my first blog. Without putting a budget into place, you’re behind the 8 ball. A budget informs you on what you have coming in, what money is going out, and hopefully what you have left over to go towards your Savings.
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With more focus from lenders on ascertaining your monthly living expenses, it’s more important than ever to be able to know exactly where your money goes each month, and if need be, where you can cut back or make changes.

2. Focus on Your Deposit

With a budget in place that has a surplus after each pay, the next step is to get that deposit together.

As with creating your budget, the deposit and savings you create will depend on how seriously you want to get into the property market.

​As long as your savings are growing, this is a positive. That’s not to say there may be times when stuff happens and this may impact your savings, but continue to focus on growing the savings.

An increasing savings balance shows a Lender you have the ability to make potential loan repayments while maintaining your household budget. As a general rule, you should have 20% of the purchase price, plus the ability to cover any legals and government fees and charges. 20% deposit means not having to pay Lender’s Mortgage Insurance (LMI) to the Bank.

If you have less than 20% of the purchase price in savings, Lender’s Mortgage Insurance (LMI) may be applicable, and this once off premium will be dependent upon 2 factors;

1. How much of the deposit you have.
2. What is the loan amount required.

The lower your Deposit, the higher the LMI premium will be. Similarly, the lower your loan amount is, the lower your LMI will be. LMI can in many cases be added onto the base loan amount, and so in some cases you may not need to pay this from savings, but you will be paying interest on this as it’s added to the overall loan balance.

Your Broker can discuss other options to replace low deposit situations including parental home as additional Security, & Government Grant assistance.

3. Get Pre-Approved

​Once you have the savings together, and you think you’re ready to seriously look at properties, the next thing to do is get pre-approved for finance.

This gives you a solid idea of what property you can afford, and it quickens the overall final formal approval timeframe.

A pre-approval, or Approval-in-Principle, is basically a full loan assessment which takes your credit position, income, liabilities and savings into consideration. It provides an approval of finance generally subject to the new property being acceptable to the Lender.

As most of the loan assessment is already completed, this means you may be able to make an offer on a new property with more attractive finance terms, such as a shorter finance date, over someone else who doesn’t have their finance ready to go... and this may make your offer to the Agent the one to recommend to his client.

4. Location & Homework

So you’ve gotten your pre-approval. Next step is to locate that property. This is where the real hard work happens, as the best way to make money on a property is in the buying stage. Buy low, sell high.

Firstly you need to know where you are going to be living; near the beach, in the country, in a high rise in the city, or in a townhouse in the suburbs.

For your pre-approval you should already have some idea of where you want to be, and this will be based on discussions with your finance broker or bank. But now that you’ve shortlisted an area, you need to hit the internet, and the local Agents, and find out what’s available, and importantly, what property has been selling for.

Once you know this information you will know that the asking price for a potential property is good value, or if the owner is dreaming.

This can mean weeks and weeks of searching, open homes, internet trawling, and many coffees. But in the end it can be the difference between the home you really wanted, or somewhere you just aren’t overly thrilled in.

5. Consider Using a Buyers Agent

A Buyers Agent can be of great help in locating that perfect property. The Buyers Agent acts on your behalf, not the Seller, and not the seller’s Agent.

A Buyers Agent can often save you thousands over what you would have paid. They can also sometimes get information on new to market properties that haven’t been advertised yet.

Importantly, the Buyers Agent can do all that running around and homework that you may simply not have the time for.

I will update my next buying tips soon. As always, information & knowledge is power, so use people who have experience and are trustworthy. Deal with locals, and seek out recommendations from friends.

For any help, advice or information, please call Peter at Taffe Financial Solutions.
Mob: 0431418343 eMail [email protected]