Buying your first home is bound to bring about an array of different emotions. Hopefully the strongest emotions are excitement and feelings of optimism, but chances are you’ll also be feeling a little bit nervous and have creeping senses of self-doubt.
Both sides are perfectly normal and ultimately necessary – a bit of nerves will help ensure you’re cautious and help you make the right decisions. In the same breath, having some knowledge under your belt and not going in blind will definitely help with the process – here are some things everyone should know before looking to buy their first home.
Don’t Rush the Process
Being ready to start putting in offers is not going to happen overnight – or, at least, you’d be the exception to the rule if it did. The road to becoming a home owner is often a long one and will likely be full of ups and downs. Jumping into a purchase too soon is a sure fire way to find yourself with regrets later down the line. First, you’ll need to build or source your deposit. With the state of the housing market and prices on rentals this could be a time consuming endeavour.
Once the decision is made to take the plunge and look to buy, many people find themselves anxious to get their deposit sorted and eagerly start a very restrictive savings plan. In our endeavour to save as much as possible, as fast as possible we tend to feel we need to cut out all luxuries from our lives in the pursuit of that illusive deposit. Unless you’re under a time restriction (not a self-imposed one) there really is no rush, remember to enjoy your life in the present as much as possible as you never know what the future holds.
Similarly, when you do get to shopping around for your dream home, try not to rush this process either. It’s very easy to get caught up in the competitive nature of the real estate market, to get drawn in by certain things you love about a particular property, but take the time to shop around, view a few different options before even thinking about dipping your toes. By the time you’re ready to commit, you’ll have a solid idea of what you of your red flags and non-negotiables.
Investigate the Costs & Know your Budget
After you’ve got your deposit saved and you’re ready to start viewing with an intent to buy, it’s time to really iron out your budget. There may be many costs associated with buying a property that you’ve never heard of or haven’t considered.
First things first, find yourself a reliable mortgage advisor. They will be able to take your financial situation and give you advise on what you’re going to be able to afford.
They can also take responsibility for securing you a mortgage in principal – essentially a quote for what you can borrow and at what rates/prices. Ideally your advisor will specialise in first time buyers or at least have some experience with them. This way they are more likely to be patient with you and ready to go into detail and guide you through the process of securing your mortgage. As they take commissions on your mortgage (these are paid by the provider), this should not be an extra cost but a way to drill down on your financial position ahead of making the buy.
Before you can make any offers, you’re going to need to enlist a solicitor. It will be their job to liaise with the real estate, submit any offers on your behalf and handle all the paperwork associated with the purchase. The cost of this service can vary but should not be overlooked. It can depend on the value of your new home and should be factored into your budget before you look to buy.
Once you’ve found an ideal home and you decide you want to put in an offer, it’ll be time to get yourself a home report. An expert will conduct any reports and inspections on the property to protect you from any issues that may not be visible to the untrained eye. It can feel like just another cost, but the last thing you need after buying your dream home is to discover your google searches for ‘house designs Melbourne’ now becomes ‘house builders Melbourne’ and you’re out of pocket trying to repair issues you weren’t aware of. This part can be daunting, and it’s hard to know what is reasonable damage and what will set you back. It’s always advisable to ask for further details on any areas you’re unsure of and not to get caught up in the excitement.
Finally, another area of a first time buy budget that is often over looked is the costs associated with moving/decorating. Many will look at the savings they’ve accumulated, subtract an expected cost for the home report and solicitor fees and attribute the rest to what they can afford for the deposit. This portion of your budget may be required to be a little more flexible. You should account for the cost of moving your existing belongings to the new home of course, but you should also be ready to forfeit some of this money for sprucing up your new home before you move in.
Ideally, we would all like to walk into a property that is ready to go and requires no work, but without a sizeable budget, this isn’t often the case. You’ll find that properties that are a bit of a ‘fixer-up’ will not only be slightly undervalued for their location and size but will also be less popular to developers who can swoop in a bid insane amounts. As such, you should be prepared to be required to do a bit of DIY upon moving in. A lick of fresh paint, some new carpets or a coat of your favourite deck stain or wood stain (decking oil, black japan stain etc). These costs are often hard to predict, but should 100% be factored in when you begin to view with the intent to buy.