A guide for first home buyers

By Kirsten Friedli

In the Macarthur, we are seeing many more first home buyers entering into the real estate market, taking advantage of good 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
A good 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 formally apply for a home loan.

DUE DILIGENCE
It’s vital to do your due diligence before buying a home. This means inspecting the property in person, 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 serious damage from pests, such as termites, which can potentially cost you tens of thousands of dollars.

BUYING AT AUCTION
Doing your due diligence is essential no matter the method of sale, however, if the home you are interested in is being sold via auction, you will need to carry out and incur the costs of building and pest inspections before the auction – even though you may not be the successful bidder. This is because sales by auction are not subject to the usual conditions of sale – they have no “cooling off” period, and the sale at the auction event is final.

GOVERNMENT GRANTS
In New South Wales, there are a couple of purchase incentives for first home buyers. There is the First Home Owner’s Grant Scheme, that is $10,000.00 towards buying the property (for eligible purchasers), and a First Home Buyers Assistance Scheme, which is an exemption or a reduction on stamp duty costs.

For more information, go to the NSW Revenue Office’s website at www.revenue.nsw.gov.au/grants-schemes/

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 definitely 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. Insuring your home 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.