10 Things A First Home Buyer Should Know

First Home Buyer - KeysBeing a first home buyer is daunting, there are so many moving pieces and because you’ve never done it before it’s like you’re walking around in the dark wondering what is going to trip you up.

There are so many things to do as a first home buyer, research, attending open homes, getting your finances sorted, negotiating deals and that is just the beginning.

To help first home buyers in NSW, we’ve put together a list of the 10 things first home buyers wish they knew before buying their first house. Hopefully, this list will help you get an idea of what the process is and how to navigate this complex task to ensure a smooth purchase.

1. Spending and Saving

It’s so important to get your finances sorted. In the days where smashed avocado is touted as the reason many millennials can’t afford their first home, it’s time to say goodbye to all those luxuries/unnecessary expenses – unless you’ve found a way to grow money trees.

Here are a few tips for first home buyers on how to get on track:

  1. Track your spending for a month, this will help to get an idea of what you can afford in terms of mortgage repayments.
  2. Categories your spending, identify your necessities (rent, food, bills), and what are extras (Netflix subscription, online shopping binges, spa treatments). This will help to work out where you can cut down outgoings to make sure you can afford your repayments.

First Home Buyer - Growing Money2. To Invest or Own and Occupy?

Are you going to buy and rent out, or treat this purchase as your first home to live in? This is something to decide early on in the journey of finding your first property to purchase. Depending on what you chose, your home-buying process, from loans and interest rates as well as government support and tax will be impacted.

3. Financing

There are some essential things to consider when buying your first home:

  1. Loan types: are you going to choose fixed or variable, or a combination of the two?
  2. Interest rates: the interest rates will be determined by your decision on loan type.
  3. Government grants and stamp duty: investigate what you are entitled to from the government. Every little bit helps!
  4. Tax: understand what homeownership will mean for your taxable income now that you will have a rather sizable asset.
  5. Type of property: if you are looking to rent out the property then think about what potential tenants want, and make sure what you are researching will be desirable and easy to rent out.

4. Property Finance for beginners.

As I mentioned earlier there are so many moving pieces involved in buying a property, and when you’ve never done it before it makes it all that more confusing! Kind of like learning a new language. Below we’ve compiled a list of some things you need to think about to ensure you arm yourself with the knowledge you need when talking to finance specialists, mortgage brokers and banks.

  1. Make sure you have the deposit
  2. Get approved for the loan
  3. Don’t forget stamp duty
  4. Property inspection reports
  5. Moving quotes

5. Mortgage brokers.

Don’t settle for any mortgage lender, one trap for new home buyers is that they don’t shop around and lock in finance with the first mortgage lender/broker. Make sure you get the best advice, talk to family and friends about who they went with and would recommend. Here are a couple of tips for researching mortgage brokers:

  1. Speak to banks and mortgage brokers directly
  2. Review the offering including the fees and fine print
  3. Compare all the options
  4. Pre-approval usually lasts for 3 months, make sure you check in with your lender if this has passed to make sure nothing has changed in terms of what you can borrow.
  5. Make sure you are always on the lookout for better deals!

If you need some assistance feel free to give us a call on 02 4284 8536 as we can recommend local mortgage brokers to speak with.

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6. Don’t fall in love with the house.

Your first auction or negotiation will be a rollercoaster of emotions. You’ll be so excited when you find ‘The One’ but that can quickly lead to disappointment when you’re outbid at auction or an offer isn’t accepted. Try not to start planning where furniture can go, or how you will style your first unborn child’s nursery – wait until you have the house! And here are some words of wisdom:

  1. The market is highly competitive, especially for first home buyers and it is very rare to win the first auction you bid at.
  2. Set realistic boundaries to keep yourself in check, and save yourself from a lifetime of 2-minute noodles.
  3. Don’t go alone, take a friend, family member or partner – it’s good to have someone you trust to keep you in check.
  4. And if you do fall in love, only to be heartbroken – remember there will be more fish in the sea coming your way. Join our Private Buyers Group to see properties before they go on the market.

7. Have a checklist.

We all have a wish list, pool, spa, ocean views from Thirroul, but as a first home buyer you need to be realistic about your budget. Make a checklist that is ranked in order of importance, and keep on track with these tips:

  1. Non-negotiables, the number of bedrooms and bathrooms, accessibility, parking, yard size, etc.
  2. Get an idea of what is easy to change and what isn’t, walls can easily be painted but bathrooms and kitchens are much more costly to renovate.
  3. Think about your lifestyle, keep these in mind when inspecting houses. If you like sitting in the sun, make sure the houses you are interested in get sun!

8. Due diligence.

A property may look great on the surface, whether you are a first home buyer or not you need to make sure you cross your T’s and dot your I’s. Get a building and pest inspection, this will ensure that the house or apartment is structurally sound and that the drainage and plumbing are all in order, among other things. A few tips:

  1. There will always be a few problems.
  2. The minor problems can be used as leverage when it comes to negotiating.
  3. The major problems you’ll need to seriously think about how costly and time-consuming they will be to fix.
  4. In NSW the buyer has to pay for the pest and building inspections and they are around $500 a pop so include this in your budgeting.
  5. Always work with experienced professionals who have your interests at heart and not your vendors.

9. Negotiating.

Negotiating is probably the most difficult aspect of buying your first home but it is one of the most important to ensure you get the home you want. Get your game face on early and start negotiations from the first inspection. Remember everything is open to negotiation from the price, to the settlement period, to fixtures and fittings!

It’s important to ask lots of questions about the home you are wanting to buy like what appliances are included (e.g. dryers, dishwashers). As well as why the owners are selling and how long the property has been on the market. Use this information to your advantage, and if you aren’t a confident negotiator then get someone who is to make sure you get the best deal, this can either be a family member or friend that you trust, or you can utilise a Buyers Agent who has experience in the industry and negotiating.

10. Patience.

You can’t go into this task thinking you’ll buy a property in a couple of months. It takes time getting the finances sorted, researching, inspecting, and negotiating, so brace yourself! From weeks to months, the journey is different for everyone buying their first home so be patient.

  1. Take the time you need to find the right property – don’t rush! It’s not every day you spend half a million dollars.
  2. Know what your needs and budgets are, and stick to it. You don’t want to overextend yourself and be struggling to re-pay your mortgage.
  3. Be flexible in your search. We can’t all afford a three-bedroom home in Thirroul with ocean views and a backyard big enough for the family Christmas do.

If you are feeling overwhelmed buying your first home you aren’t alone, feel free to chat to one of our experienced agents at your next molenaar + mcneice open home or you can call us on 02 4284 8536.

Helpful Links for First Home Buyers

Housing NSW – Guide to Purchasing Your Home (PDF)

Money Smart – Helpful tools and resources for budgeting and calculating what you can spend.

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