Buying your first home is an amazing experience.
Few other life events are so exciting, so empowering and so liberating, yet still so daunting. You wouldn't be the first to feel overwhelmed.
We've all been there...
Fortunately, you're not on your own. At Savills, we don't just stop at finding you the perfect home. If you like, we can also guide you through the entire process of making it your own – from recommending qualified, experienced financial advisors to choosing a solicitor, right through to collecting the keys.
So if you need some help during the buying process – even if it's not what your average real estate usually does – please don't hesitate to ask.
In the meantime, here's some general buyer guidance that should give you some peace of mind, as you embark on your first home purchase.
Know Your Borrowing Capacity
In an ideal world, this should be your first step. Know what you can afford, so you don't waste time (and risk disappointment) researching and inspecting homes that turn out to be beyond your means. Your bank will determine your borrowing capacity, based on criteria such as income, credit history and employment history.
TIP: Tinker with a borrowing power calculator before you talk to the bank.
Get Pre-Approval
Be ready to pounce! Even if you haven't found a property yet, get pre-approval for the amount you want to borrow. Pre-approval means your bank is approving your loan 'in principle'. So when you finally do find your dream home, you can make a confident offer immediately, rather than watching it slip away while the bank sorts through the paperwork.
Do You Really Need the Deposit?
'The deposit' is the amount of money (of your own) that your lender requires you to have, before they'll lend you the rest of the purchase price. The banks consider this deposit a form of 'insurance' on the amount they're lending you. Traditionally, deposits were around 10-20%, but in recent years, low-deposit and no-deposit home loans have appeared. You can even get a loan for the entire purchase price plus associated costs.
IMPORTANT: While these low- and no-deposit options may be appealing (and, for some people, worthwhile), they're not without risks. Some or all of the following conditions* may apply.
- higher interest rates
- additional fees, including a 'risk fee'
- additional security required for the loan, for example, your car
- use of deposit bonds
- in some cases, more stringent credit assessment
Conditions quoted from FIDO website – www.fido.gov.au.
Allow for Fees & Charges
Most buyers are unaware of all the costs associated with buying a home. Even people buying their third and fourth homes don't remember everything. So don't feel concerned if you're not sure what you're up for. In fact, it's incredibly important that you know how much extra you're going to shell out in fees and charges. Only then will you be sure what you can really afford.
In addition to your deposit, you'll probably be liable for Bank Application Fees, Lender's Mortgage Insurance, Transfer Stamp Duty, Mortgage Stamp Duty, Mortgage Registration Fee, Building/Pest Inspection Reports, Valuation Fees, Conveyancing/Solicitor Fees, Insurance, and Rates.
You should budget around 5-7% of the purchase price, on top of your deposit, to cover these costs.
Take Advantage of The First Home Buyer's Grant
To help first home buyers into the market, the Australian Federal Government offers a one-off, tax-free grant, called the First home Buyer's Grant. It's available to all first home buyers who meet certain eligibility criteria.
Individual State and Territory Governments also offer additional grants and duty concessions to first home buyers.
More questions? Call your local Savills executive now.