There are some things you can rush to with impatience in life but buying your first home isn’t one of them. It’s a big commitment, both financially and emotionally. Therefore it’s important to take time to get yourself prepared and arm yourself with as much information as you can to help your home buying decision be one of dreams rather than nightmares.
It seems simple, you find a house you love, it’s got features that make family and friends envious. You cook up a feast in the modern kitchen, entertain guests on the deck and watch your children grow. You buy a place of future memories.
What you don’t take into account when you are walking the rooms of potential homes is the long-term finance, parking, interest accumulation, council rates, stamp duty and school zones.
There are some essential questions you need to answer to lay the foundations for happy home ownership. Before you look at paint swatches and select your new doorbell chime, know the important information:
CAN YOU AFFORD TO BUY YOUR OWN HOME?
If you have been saving, you can probably manage to pay the deposit of your first home without a problem, especially with so many banks offering very low initial down payments, (as low as 8%). The deposit is the one thing most new homebuyers focus on, if you have the deposit, you have the home. There are a pile of associated costs that need to be taken into account.
When buying your first home check out the online loan calculators that are available with the big banks. While most real estate sites will bring up an estimation of your monthly repayments as part of the property information, keep in mind that this calculation assumes you have a 20% deposit. If you do not have a 20% deposit, the monthly repayment may be higher than they quote.
The banking online loan calculators will get into more details and take your exact deposit into account as well as the length of your loan. You can see upfront costs as well as taxes, legal fees, government fees and even insurance in addition to your requested loan. Knowing the full cost of your investment will help you choose a home within your budget.
Land Transfer Duty (or stamp duty) is a cost that can be easily overlooked and can make up the bulk of your upfront costs. If you don’t factor this in you can lose a chunk of your deposit. If you and your partner have never owned a property before you may be eligible for the First Homebuyers Assistance Scheme, which covers the cost (or the majority of the cost) of Land Transfer Duty. You will still need to cover any extended costs outside the allocated amount and pay your own conveyancing, registration and bank fees. While the First Home Buyers Assistance Scheme will not cover any of your home ownership costs, at least it takes care of stamp duty. There are some terms and conditions that vary from state to state so be sure you can meet these before you agree to buy.
CAN YOU COMPROMISE ON YOUR FIRST HOME?
Finding a home in your preferred location at your price might take some work. In most cases, especially in a hot market trend, you can expect to be outbid. You need to know in advance what you are willing to compromise on. Be certain of your maximum spending limit and make a list of the items you cannot do without. Make a list and get specific about your non-negotiables.
It might be the school zone that’s important or having a yard, the number of bedrooms, the property age, off street parking, walk-in wardrobes, proximity to shops or public transport, if it has a swimming pool. The list goes on, what’s important is that it works for you. When you have your must-have list you can see the areas you can be flexible on.
Having a crucial list also means you save time house hunting. You can quickly and easily rule out properties that don’t suit your needs, which saves you legwork on the weekends and helps those times open for inspection times conflict.
ARE YOU EMOTIONALLY EQUIPPED FOR BUYING YOUR FIRST HOME?
While renting has its drawbacks, it does also have some benefits, like being able to move if your neighbours are relentlessly noisy, if you change jobs or if your needs change. While there is limited flexibility when it comes to the colour of the walls, pets and privacy, there are also considerable benefits of not having to worry if there are repairs that need attention, damage due to weather or wear and tear, or fluctuating interest rates. Your landlord is obligated to get all issues fixed professionally and in a timely manner.
As the homeowner, it’s all on you. You need to make sure that you’re prepared to take on the challenges and responsibility of owning your own home, not just for the first months when it’s new and pretty, but for years, possibly even decades.
The way to tell if you are emotionally ready to buy your first home is to know who you are making this decision for. Pressure from your parents or family, thinking that your at that age now, trying to keep up with (or in front of) friends or attempting to live up to your partner’s wishes are all reasons for you to stop and think again.
This is your life and your choice. It’s not for anyone else to tell you to buy a home. You are the one who will be ultimately responsible for living in that home and maintaining it, working to meet those mortgage repayments and, most likely, preparing it for sale in the future.
Really take the time and get to know, without a doubt, that you want to own a property and are willing to do whatever it takes to own your own home, not just tomorrow but in the years to come.
While it is a financial and emotional rollercoaster, when you are armed with determination, commitment and focus, you will embark on an incredible journey that may well be one of the most rewarding experiences of your life.
Peta Stewart – Certified Practicing Conveyancer