5 questions potential first home buyers should ask themself
As a potential first time entrant into the property market there are number of vital factors to consider before diving in. Here are five tips to help improve your chances of having a robust strategy conducive to your success.
1. Is it the right time in your life?
Acquiring a property can be stressful and time-consuming, so consider whether it is suitable right now. You must factor in sufficient preparation time to properly consider the strategic significance of buying a property to your broader financial goals. This means allowing the time & head space for the relevant due diligence on what the right scenario might look like, and assessing the timing of the purchase against factors such as:
- Will your children need to move school?
- Are there work obligations that could make a move challenging or see your income change?
- Are you planning on having a baby?
2. Am I financially ready?
When considering your financial situation, do you have debts (like HECS, a personal loan or credit card debt) that you’ll need to manage? Perhaps you can consolidate these into your home loan, or set an agenda to pay these out before making the commitment to buy a property (which could be an excellent test for your budget & satisfaction with the proposed repayments). You’ll need to ensure your deposit is big enough to both purchase your new home and cover the costs of buying. Have you got an appropriate risk management strategy in place to cover things such as the proposed repayments or a savings buffer to make up for any economic factors beyond your control?
3. How much money do I need?
While the purchase price of your home will be your biggest cost, there are other expenses to pay. Some other costs include stamp duty (if applicable), homeowner’s insurance, legal fees and removalists (commonly about $5,000, however, this cost can vary widely depending on the complexity of your requirements). If considering a purchase over 80% loan to value ratio, you will probably need to factor in LMI or look at ways to avoid paying it.
4. Can I afford the repayments?
Determine what you can afford by taking your income and deducting regular expenses. Add homeownership expenses, like rates, and allow for some unexpected costs. Once you understand how much you can afford, work out how much you can borrow using an affordability calculator. If you’re considering approaching the purchase as a ‘rentvester’, make sure you understand concepts such as depreciation and negative gearing.
5. Are there any grants, schemes or subsidies that I can access?
The government’s First Home Owner Grant (FHOG) scheme may provide a grant of up to $7,000 (up to $15,000 in Queensland) to first-home owners who meet certain criteria. Depending on which state or territory you’re in, and if you’re building your home, there may also be schemes (for example HomesVic or Buy Assist) , subsidies or tax exemptions available (for example the proposed abolition of stamp duty for first home buyers in Victoria).
It’s worth noting that you must allow time to correspond directly with the relevant state revenue office. Advisers such as solicitors, accountants and credit advisers (mortgage brokers) may be able to help model these grants, schemes, or subsidies in their calculations, however, eligibility for these government assistance programs will need to be confirmed with the relevant state’s departmental authority.
How do I get assistance with getting approved?
The team at Naritas are experts in delivering timely guidance & finance approvals. We have over 100 lenders on our panel & a high quality team of dedicated advisers to steer you efficiently through the approval process.