It’s not a new concept that buying your first home can be one of the most stressful and overwhelming times in your life. Juggling numbers, attending open homes, applying for loans and putting in offers are just a few of the steps first time home buyers need to follow for a successful transaction.
This step by step guide will outline everything you need to know when you start the process of buying your first home.
1. Write a Checklist
Having a checklist of what your dream home looks like is a beneficial way of letting your agent know exactly what you’re after. Do you want a house or an apartment? Do you want something new, renovated or a fixer-upper? Maybe you want extra bedrooms to expand your family, space to let your furbabies roam free or a shed so you can set up that man-cave you’ve been dreaming of. Write a list and become familiar with the things that you want out of your first home. Make a list of suburbs you could see yourself living in,research what is available, attend open homes in those areas and visualise your dream space.
2. How Much Do I Need For a Deposit?
Generally a deposit of 20% is what is aimed for but in different circumstances you may only need as little as 5%. Keep in mind that generally, if your deposit amount is less than 20% of the property value you may need to pay Lenders’ Mortgage Insurance (LMI); it’s usually a one-off payment made by the borrower at the time of loan settlement. There are many helpful home loan calculators online that can help you get a general idea of the amount you should be aiming for.
3 . Organise your Finances
This is a huge step when looking at buying your first home. Look over your finances and notice any unnecessary spending, opt to bring your lunch to work instead of buying takeaway, or make your morning coffee at home. A savings plan is a great way to kick start your deposit goal amount. Pay down your debts, as any personal loans or credit card debt can decrease your chance of getting the lowest interest rate and your desired loan amount. When looking at potential homes make sure to research any fees you might not have thought of; these include strata fees, council rates, maintenance costs, home insurance premiums and utilities.
4. Research Home Loans
When applying for a loan, especially as a first time buyer, there are two types of approval you will come across; conditional approval and unconditional approval. Conditional approval means that a lender has agreed to lend you money towards the purchase of your home but hasn’t proceeded to full or final approval. Unconditional approval means that a lender has formally assessed all your paperwork and decided to offer you a home loan. Typically, loans have an expiry date of around three months. Loans are one of the more complex steps to completing your purchase, if you are struggling to understand how to move forward Ray White Aspley have access to leading mortgage brokers via our Loan Market service to assist in answering any questions you might have.
5. Make an Offer
When you make an offer through a private sale, you usually sign a contract stating ‘subject to finance’, inspections and settlement dates. Your agent will assist you in this process to understand any questions you may have when making an offer on a home.
5. Offer Accepted!
Once the offer is accepted and all inspections have been finalised and cleared, you can speak with your lender to gain full approval for your loan.
Settlement is when it’s time to finally celebrate, in this process you will need to contact a conveyancer.A conveyancer will manage the transfer documents to ensure the property is rightfully and legally transferred into your name. This includes preparing all the documents you need to sign the home into your name. They will then review your contract conditions from a legal standpoint and advise you if there are any special conditions above the standard or general conditions of sale. Your conveyancer will also coordinate a settlement time between you and the seller where the property is officially signed over to you.
Congratulations, you just purchased your first home! You can start moving in and making your place feel like home.