Tips for buying your first home

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What tips do you have for people starting on their search?

Pay off bad debt first- Do you have credit cards or personal loans? Not only do these hinder your ability to borrow they will also kill your cashflow once you get in the new house. If possible, google the debt snowball method and spend a few months clearing as much bad debt as possible. Remember, it will only get harder to pay off bad debt once you are in your new home.

Buy like an investor- Even though this is your home to live in, buy like you are an investor. It is likely this house will be a stepping block to your dream home and you want to make sure you get the benefit of property price growth when you are living in it. Look for areas with high demand, growing population, infrastructure development, close to city centres and public transport.

Avoid high density apartments– The money with property is in the land, while the actual property depreciates, land values appreciate. Avoid high density apartment living and off the plan apartments.  There is an abundance of supply of these now which is dragging down property prices. Look for single dwelling homes, townhouses, or unit complexes with lower density; max of 6 on a block. These will be the properties in the long run that see your property value grow.


What are the most common mistakes that first-time home buyers make?

Over-spending- There are two things you should look at when buying your first home; what the banks say you can afford or what they’ll let you borrow and what you can actually afford. As a rule of thumb, we say clients should spend no more than 30% of their net income on mortgage repayments. If you are earning $1000 in your bank each week, we would say you can comfortably afford $300pw in repayments without over extending yourself. Just because the banks say you can borrow the money doesn’t mean you should, unless you want to live off 2-minute noodles for the next 30 years that is.

Only paying the minimum repayments– Another tip is to not just make the minimum repayments just because that’s what they set for you. Using the above rule again, if your repayments are less than 30% of your after-tax wage bump them up to pay your mortgage off faster and save you thousands of dollars in interest.

What are some possibly unexpected things that a first-time buyer should plan for?

Finance difficulties– With banks now making it increasingly difficult to lend, avoid any lending issues by seeing a mortgage broker before purchasing and getting a pre-approval in place.

Extra costs– There are always extra costs that come up when buying a new home, from connecting services to buying new furniture, make sure you have a buffer built up and put aside so you aren’t going into your new homeowner journey on the back foot.

Conditions on your offer– Protect yourself when putting in an offer on a house by putting in place conditions with your offer, what this means is if something comes up in the buying process you have the right to withdrawal from the sale. Examples of the common conditions are, condition of finance and pest & build inspection. That means before the sale goes through you have time to organise each of these and make sure you are happy that termites haven’t eaten half the home or you are sure you can get a loan.


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