Entering the housing market can seem a daunting task to those who aren’t adequately prepared. Plenty of first home buyers struggle through the process and eventually settle on a property after a lot of unnecessary stress and heartache. Thankfully, there’s several things you can do to prepare yourself to buy your first home with a minimum of hassle.
- Check that you’re able to get a home loan.
Many buyers decide to check whether they are eligible for finance once they’ve signed a contract on a house, when in reality, it should be the first step in the home buying process. A good mortgage broker will be able to tell you whether you’re eligible for a home loan, how much you can afford to borrow and therefore bid on a new property, and which lenders you will want to prioritise in order to get finance approved in time.
- Manage your other debts
Like many first home buyers, you’ll already have some form of debt when you start looking at buying a house. This may be in the form of HECS debt, a car loan, or a credit card. It’s not always essential to clear these debts prior to buying, and whether you have to clear these debts or not will be dependent upon your personal circumstances, including factors such as income, the size of your deposit, and whether your earnings are likely to increase or decrease in the future.
- Learn the true costs involved in purchasing a home
Many first home buyers learn that hard way that there are far more costs involved in buying a home than just the amount listed on the purchase contract. Other costs include stamp duty, conveyancing and other legal costs, removalists, mortgage registration fees and other government charges, as well as lenders fees. These costs add up and need to be accounted for prior to beginning to look at real estate.
- Know how much of a deposit you need
Over time, lenders have generally required that buyers have larger and larger deposits in order to lend them money to complete a home purchase. However, there are still exceptions which make it possible for first home buyers to enter the market without a large deposit, and even with no deposit in some instances. Your mortgage broker will be able to tell you which lenders will lend more against the value of a home, requiring you to have less of a deposit and allowing you to enter the property market sooner.
- Understand the different loan types
There are so many different lenders and types of loans out there, and your individual circumstances will dictate which is most suitable for you. Deciding whether to get a fixed or variable loan is one of the major decisions buyers will have to make in the home buying process. Speak to an expert who can list the pros and cons of all loan types for you, and help you narrow down the best options for your individual needs.
- Know your time-frames
Most standard purchase contracts in QLD are subject to a 14-day finance clause, as well as a 30-day settlement clause. This means is that you, as the buyer, have 14 calendar days in which to secure formal approval for a loan from your lender of choice, and then settlement occurs 30 calendar days after the contract is dated, at which time the home is yours. Many buyers are caught out by these relatively short time-frames, and will miss out on their dream home because a lender isn’t able to formally approve the loan in time. Buyers can also be penalised if they delay settlement due to not having all their paperwork approved and processed by the lender in time. Speak to a mortgage broker BEFORE you sign a contract, to ensure you’re able to get your finance approved in time.
- Seek Advice before buying
You’ll end up using the services of several different parties by the time you’ve bought your home, and its better to get their advice sooner rather than later in the buying process. Make appointments with conveyancers, mortgage brokers, and consider whether a buyers agent may assist you in the buying process. Think about which building and pest company you want to use ahead of time also.
- Take your time
Many home buyers become stressed when they first start looking at properties, feeling that they’re going to miss the boat if they don’t act quickly. Take your time, understand what properties are within your budget, and approach home buying as a learning experience rather than a chore. Most people only offer on a house after having been looking actively for around 3 months or so.