A guide for first home buyers

By Kirsten Friedli

In the Macarthur, we are seeing a lot of first home buyers in our local real estate market, taking advantage of reasonable prices, low-interest rates, and the government’s first home buyer incentives.

If you are looking to buy your first home, there is quite a bit to consider. To make things easier, we’ve put together a list of items you should review before purchasing.

BUDGET
An excellent place to start is to draw up a budget of what you can realistically afford, factoring-in any additional expenses to homeownership (covered below under Additional Costs). Once you’ve drafted a personal budget, the next step is to talk to a mortgage broker about the best home loan on the market for you. Pre-approval makes the lending process a lot easier when it comes time to apply for a home loan formally.

DUE DILIGENCE
It’s vital to do your due diligence before buying a home. This means inspecting the property, and ensuring the proper building and pest inspections are carried out. Building and pest inspections do incur a cost; however, they ensure there is no structural damage or other issues such as termites, which can potentially cost you tens of thousands of dollars.

GOVERNMENT GRANTS
In New South Wales, there are several incentives for first home buyers including, First Home Buyers Assistance Scheme for new or existing homes, which is an exemption or a reduction on stamp duty costs. There is also the First Home Owner’s Grant for those buying new homes. HomeBuilder for eligible owner-occupiers who are building or renovating; and the First Home Loan Deposit Scheme to help first home buyers avoid having to pay Lender’s Mortgage Insurance. See the following links for more information:

NSW’s Revenue grant and schemes information:
https://www.revenue.nsw.gov.au/grants-schemes

HomeBuilder information:
https://treasury.gov.au/coronavirus/homebuilder

First Home Loan Deposit Scheme information:
https://www.nhfic.gov.au/what-we-do/fhlds/

ADDITIONAL COSTS
Apart from a home deposit and the ongoing cost of mortgage repayments, there are other costs you should be aware of before buying your first home:

Lawyers/conveyancing fees. It is a good idea to have a solicitor or conveyancer look over the contract of sale and mortgage documents before signing a sale agreement. Fees can vary.

Building and pest inspections costs. As mentioned, it’s worth investing in a one-off building and pest inspection before signing a contract, or as part of a condition of sale to ensure your potential home is structurally sound and pest free.

Home and contents insurance. Remember that home insurance is an essential part of the home-buying process. Having your home insured is something that needs to be organised and ready-to-take-effect as soon as you settle on your property, not necessarily the date you move in. So, make sure you look at your options and choose the premium that best covers your needs and budget.

Stamp duty. Stamp duty can be a considerable cost to factor-in when buying your first home. The amount of stamp duty you’ll pay is dependent on the state you’re buying the property in. Some states, like NSW, have first home buyer concessions or exemptions on stamp duty. Stamp duty can also be borrowed as part of your home loan.

At Harcourts The Property People we have many properties for sale suited to first home buyers. Visit www.propertypeople.net.au, or contact our office on 4628 7444.