First-time home buyers, have you got all the information you need to make the right decision on what will arguably be the most important purchase of your life? With so much to think about when buying a first home, making sure you have not forgotten to consider anything vital is always a challenge. To ensure you are as prepared for your first home purchase as possible, take a look at these eight essential tips.
Why Start Saving Now?
It’s never too early to start saving for a deposit. The more available cash you have to spend on your property, the easier it becomes to end up with the home you want.
As well as saving for a deposit, it is also important to keep your level of debt to a minimum. Servicing debt uses up income that could otherwise service a mortgage. In general, a mortgage should take up no more than 32% of your income.
Remember that you will also need to set some savings aside, in case of unexpected events that may require emergency funding.
Why Look at Different Financial Products?
Mortgages (also known as home loans), are available in a wide range of formats. Products available include:
- Traditional mortgages
- Variable-rate mortgages
- Closed mortgages
- Capped rate mortgages
- Convertible mortgages
- Open mortgages
There are also opportunities to take on customized mortgages that are geared to your individual circumstances.
Why Check for Other Sources of Funding?
Depending on your individual circumstances, you could be eligible for FREE money to put towards your first home!
Being a first-time buyer puts you in an enviable position when it comes to obtaining additional sources of money to put towards your new home. The government’s first-home buyer incentive scheme, for example. Provided you meet the necessary criteria, this can be a good way to obtain additional funding that can enhance your purchasing power.
In addition, if you can access the incentive scheme, it can potentially widen the choice of properties available to you.
There are also a number of helpful online resources that offer impartial advice on how best to finance your new home.
Other options to consider include borrowing from family members or buying a property with friends. Opting for a co-ownership arrangement could increase your purchasing power. It may also reduce the amount of capital you’ll need to save before you can consider a property purchase.
Although any type of co-ownership requires careful consideration as well as a suitable type of legal document in place to formalize the arrangement, for many first-time buyers it’s an excellent solution.
Why Finalize Your Budget?
Once you are clear on what money is going to be available for your first home purchase, it’s time to finalize the budget. Remember that it’s not just the initial purchase price of the property to consider, there are also a number of other costs that need to be factored into your final budget figure. These include:
- The costs of purchase, including legal support, surveys, escrow services and removal costs.
- Monthly mortgage repayments.
- On-going service charges related to the property.
- Money to pay for the upkeep of your property.
- Money for long-term improvements and larger maintenance projects.
How much can you afford? It can be discouraging to find that your salary won’t stretch as far as the home you want to own. However, sacrificing a huge part of your income just to pay the mortgage can very quickly make homeownership a burden rather than a point of pride.
It’s better to buy a modest home now and look at purchasing your “dream home” in a few years.
Use our mortgage calculator to work out how much borrowing you can afford.
When you have decided on your budget, stick with it! Particularly when you start viewing properties, it’s all too easy to let emotion get in the way of common sense. A good start is to tell your real estate agent your budget and let them recommend the properties that offer the best value for your resources.
Why use a Good Estate Agent?
The right estate agent is one who is always prepared to go the extra mile to ensure you end up with the property that’s right for you.
As Richard Fleming says, “I’ll be happy to prepare the paperwork and go through it with you before submitting it. Remember, the seller may reject or counter your offer, so even at this late date, avoid setting your heart on the home you hope to own. You’ll probably have to write a deposit check to the seller’s broker that proves the seriousness of your offer.”
Why Get all Necessary Surveys Completed?
We recommend that you get all the necessary inspections done. A home inspector will check for signs of harmful materials like asbestos, lead paint, and mold. They will also check for evidence of pests, faulty wiring, and leaks. This is a crucial part of the home purchase.
Not getting an inspection done means that you could be stuck in a home with a bad case of black mold and no recourse other than to pay for its removal. Inspections will cost a few hundred dollars, but again, this is more than worth it in the end.
For older properties, you may wish to consider specialist surveys, such as an asbestos survey, an electrical survey and/or a drain inspection. If the results of the surveys show that something is amiss, the information can be used to assist in potentially negotiating for a reduced purchase price.
Remember that once you’ve purchased the property, you’ll inherit any problems and defects that go with it. For this reason, it’s important to find out as much as you can about the condition of the house before you go ahead with buying it.
Even before you engage a professional to complete a home inspection, there are a number of checks you can complete yourself when you take a tour through the property. Some of these include:
- Check the kitchen and bathroom for signs of water leaks (discolouration or warping, for example).
- In the kitchen, check that the extractor fan works correctly.
- Check kitchen surfaces, cupboards and drawers for cracks, chips, difficulty in opening or any other faults.
- Check walls for cracks, unevenness, mold, and signs of damp.
- Check floors for unevenness and “give”, which could be a sign of instability.
- Check for the smell of damp, particularly in the basement.
- Do the doors and windows open and shut easily? Stiff doors may be a sign that the property has subsided over the years.
- Check that the sinks, baths, showers, and toilets have a good flow of water and drain away swiftly.
- Check the attic for signs of damp and/or structural damage.
- Ceilings – look for flaking plaster and/or discoloration.
- Is the roof-line straight?
- Are there any mossy areas on the roof (which may be indicative of damp).
- What sort of condition is the brickwork in?
- Are there any tiles missing on the roof?
- What sort of condition is the guttering in?
If you spot anything amiss during your visit to the property, make a note of it so that the professional home inspector can take a closer look as part of their inspection.
Why Accept Home-buying Takes Time?
Frustrating though it may be at times, the reality is that home-buying can take many months to complete. Given the importance of the purchase, it is essential to ensure each part of the process is completed correctly and thoroughly. Cutting corners can leave you out-of-pocket, or with a home that is not suitable for your requirements.
Taking the time to choose your new home wisely and having the patience to deal with the inevitable delays and issues that the purchasing process will entail, ultimately results in a better long-term outcome.
Richard Fleming is skilled at solving many of the problems that would-be purchasers experience. This means the purchasing process proceeds smoothly and as quickly as possible.
Why Use Your First Home Buyer Advantage?
Being a first home buyer puts you in a strong market position, which you can capitalize on. Unlike current homeowners, you won’t have a property to sell, meaning the sale can be completed rapidly.
It also means that you know how much money you have got available from the outset. In contrast, existing homeowners will not know how much they have available to buy a fresh property until their existing one has been sold.
These advantages make first-time buyers an attractive proposition to sellers. By capitalizing on this advantage, it is often possible to get a property for less than you might think, simply because the sellers want to sell quickly.
Richard Fleming provides a seasoned, professional, and friendly estate agent service that is ideal for first-time buyers. He has a strategic alliance within his team that offers legal services, mortgage services, home inspection, property appraisal, and real property reports.