Buying your first home can be an exciting, yet sometimes intimidating process. Therefore, it can be useful to seek professional help in the process. At McElwaine Estate Agents, we’re a team of experienced real estate agents who are passionate about property and happy to offer advice to first home buyers. Therefore, we’ve put together a first home buyers guide to help you out.
How to buy your first house
How much money should I save before buying my first house?
This will depend on a number of factors including the price of the property you’re looking at buying, your income and whether you want to pay mortgage insurance or not. Some experts suggest that you save 20% of your annual income before purchasing your first home, while many banks and developers will accept a deposit of just 5% of the property (with guarantors).
Should you build or buy your first home?
It is personal preference. On one hand, new homes appreciate faster than an existing house; however, they usually cost more per square foot to build than an existing house. There are often government grants and incentive programs to help first time buyers build new as well.
1. Set your Budget
Determining your budget can take some time; but you cannot begin looking for a home until this is set. To begin, have a clear idea of your total monthly income and expenses. Your monthly income is your after-tax income combined with any other income from assets you own after buying a home. Subtract your monthly expenditure (not including current rent) from your monthly income and this is what you can afford to repay on your loan each month.
2. Know what you can borrow
Now that you know your budget, you can determine how much money you can borrow. You can do this by using online calculators; however, it can be useful to visit a mortgage broker to get the most accurate idea of how much you can borrow.
3. Get a home loan
The next financial step is to shop around for a home loan while educating yourself about the different loans available, interest rates and product features. During the shopping stage, it’s important to remember that you’ll need proof of income such as recent tax returns, savings history, pay slips and other documents.
4. Know the loan market
The home loan market can be competitive; therefore, it’s important to shop around to find a deal that’s perfect for you. Whether you prioritise a lower interest rate, frequent flyer points or other value adds – if you know the market, you’ll be more likely to secure a good deal.
5. Finance approval
When you’ve found a deal you’re happy with, it’s time to apply for the home loan. This includes gathering certain documentation, attending an interview and finally, getting approval.
6. Finding a property
With approval, you can now begin to look for your home! Contact the team at McElwaine Estate Agents so that we can assist you in searching for a home, bringing properties to you before they hit the market.
7. Building and Pest
Any home that you’re buying must be inspected for faults to make sure you’re not buying a dud. This often includes a building and pest inspection, electrical inspection, strata inspection and a land and property survey.
8. Make an offer
Once you’ve found a home you like within your budget, you can make an offer on the property. Depending on how the property is being sold, you can make a private offer, deposit bond, contract or bidding at an auction.
If your offer has been accepted, the next step is to have a conveyancing lawyer look at your contract before you sign anything to ensure there’s no legal surprises when you’ve settled.
Once you’ve signed the contract, you’ll need to wait some time while checks are made on the property. This can be a nerve-racking time, especially because this is when, if at all, vendors can have second thoughts. During this time, the property is “under-contract”
Settlement day is when you finally receive the keys to your property, and you are officially the new owner. Congratulations!