One of the most significant investments you’ll ever make is purchasing a home for the first time. It may also be the most difficult. Many first-time homebuyers are intimidated by the sheer number of options available to them.
Here are five essential questions that first-time homebuyers need to ask before buying their first home.
1. Where Do I Want to Settle Down?
Homebuyers should consider their long-term goals when deciding where they wish to live, not only in the present. To verify whether the neighbourhood you’ve chosen is within your price range, look out for comparable houses in the area and talk to a real estate agent about recent auction results.
Searching a few railway stations away from your current location may help you locate something that fits your budget.
Rent-vesting, where you live in a rental property in your desired neighbourhood and invest in a property to rent out in a less-expensive suburb or regional centre, is a common strategy for first-time homeowners.
2. How Much Am I Able to Spend?
While many first-time homebuyers dream of a magnificent house, budget is generally the most pressing problem when deciding on a property. To establish how much you can afford to borrow, your bank or non-bank lender will take into account the amount of your deposit as well.
It is up to the lender to choose how much they will offer you, depending on the amount of money you can afford to pay back each month on your mortgage. A home loan calculator, available from most major lenders, will help you estimate your monthly payment.
3. Is There Any Kind of Planning Limitation on This Property?
As soon as you’ve narrowed down your search to a few potential homes, it’s essential to do your research. However, even the most beautiful-looking property may be hampered by stringent planning restrictions, which might limit your capacity to make repairs and reduce the property’s resale value in the future.
4. What Are Other Expenditures Not Readily Apparent?
Stamp duty is a tax that you will be required to pay when purchasing a house. It is typically estimated at 5% of the purchase price of the home. On the other hand, first-time homebuyers in Victoria might be free from stamp duty if the property is valued at less than $600,000.
Legal expenses (up to $2000), property or building inspections ($400 to $500, although optional), landscaping and fencing (when constructing), and fixing the flaws that might arise when purchasing an existing house should be taken into account.
5. For What Reason Is the Merchant Selling at This Time?
In the real estate market, knowledge is power. Understanding why the seller is selling the house you have your eye on and how soon they need to sell it might save you a lot of money. If the seller has already purchased a new home, they may be desperate to sell as soon as possible and so unwilling to hold out for a higher price in the short term.
Similarly, if the property is part of a dead estate or if there is a divorce involved, the seller may be anxious to get the property off the market as soon as possible. The vendor may request a long settlement term on the transaction if they are still in the market for a new residence.
Purchasing a home for the first time may be intimidating for some people, mainly if they take out a home loan to pay for deposits. Fortunately, everyone has a fighting chance of obtaining their ideal house, provided they prepare all of the necessary documentation to demonstrate solid payment habits and debt-free credit history before beginning the application process.
They may even boost their prospects if they carefully consider all of their alternatives, pay off all of their previous obligations, and seek a concession. Maintain a good attitude, focus on searching for a new home, and find a lender that would give you the best deals available.
If you’re looking for assistance as a first-time homebuyer in Australia, FinanceCorp is at your service. All of the Finance Managers at FinanceCorp are fully qualified, trained, and experienced mortgage professionals who live and breathe finance. Contact us today!