Before you take the plunge on your first property, make sure you understand that you need more than just the deposit. Here are five important questions to ask before bidding at auction or making an offer. And if you need any help, call us. There’s never any cost to you. (Lender fees and charges may apply).
Why buy?
There are lots of reasons why renting is good. If you’re young and single, studying or living in a location for a short term, there’s probably no point buying. If you’re planning to stay a while, or like the idea of moving to the location later, a purchase is the best way to mark out your plot and lay roots.
Buying a place to live is the ideal for most people. There’s the certainty, the very good chance of long-term capital gain (property tends to increase in value), and the lure of not having to deal with real estate agents into the future! Hammer in a hook. Own a pet. Add a room. Paint a room. For many people, buying is a great way to secure a future and build a life.
Can you compromise?
Decide on the perfect place to live, and when you’d like to move in. Then compromise…
Very few first homebuyers nail their perfect place first off. Usually, people compromise on either location or the size and type of property. It’s great to live close to work, but can you advance your career in the same area after a few years? Couples planning on a family might want a 4-bedroom house, but maybe 2 will do for a while.
Can you save a deposit?
Once you’ve decided where you’d like to live, what you are looking for and the approximate price range, the next step is saving a deposit.
For most first homebuyers, securing the up-front funds is the biggest hurdle. Once in a place, you can re-set your goals. All going well, you’ll pay down your loan, earn a bit more money, and see the value of your place increase. It might work to plan to move and establish your family after a few years. You’ll reduce the pressure to service a big loan while you chart a course to your ideal home.
While some lenders will offer loans if you have less than the standard 20% deposit, being able to show a record of good saving habits will aid in getting your loan approved. The higher the amount you can save, the more loans will be available for you, and the lower the interest rate you’ll need to pay. You’ll also avoid Lender’s Mortgage Insurance (LMI), which is a charge you’d need to pay to your lender if you can’t afford the full deposit. But more about that soon.
Have you calculated extra costs?
Unfortunately, you’re going to need more than just your deposit. There are always a few additional costs you need to cover when buying a property. Stamp duty is a big one, and – depending what state you live it – can be a surprisingly large amount. Some lenders charge loan establishment fees, and you should always engage a solicitor or conveyancer to assist you through the settlement process. That’s another expense.
Then there are utility and rate charges for the new property, home and contents insurance, moving costs, home repairs and the cost of any new furniture you need. It adds up fast.
What does the future hold?
OK, that’s a trick question. We can never know. But that doesn’t mean that planning for the future is impossible.
The most difficult time to pay your mortgage is usually right at the start. As you pay your mortgage down, repayments usually get easier (periods of rising interest rates notwithstanding). For most homeowners, repayments get much easier over the time of a mortgage.
But this is assuming an ideal world. Job loss, relationship breakdown, sudden rate rises and illness can seriously impact the ability to pay your loan.
Unknowns are impossible to plan for, but it is possible to keep the future in mind when you’re setting up a new home loan.
The answers
With so many things to consider, getting professional help is highly recommended. At Mortgage Broker Group, we offer a service that is FREE for you… always.
We will assess your financial situation, discuss your goals, look at property purchase options and help you find the best loan for your situation. We’re committed to helping you land a first home. We also help our clients find the best loan for them, every time.
Contact Mortgage Broker Group today. There’s never any cost to you, and we can help you navigate the complicated home loan environment and get you into your dream home sooner.