When buying your first home, it feels as though there’s a mountain of information to learn. So where do you start? To provide first home buyers with reliable information on how to purchase their first property, we put together a panel of local professionals for our First Home Buyer Seminar. These were their top five tips for a successful purchase.
1. Don’t be afraid to ask for help
If you aren’t sure where to start when buying your first home, take comfort in the fact that you aren’t the first person who has ever purchased property. Thankfully, there are a number of professionals in Brisbane who can give you reliable advice and help you to make decisions that are in your best interest.
On your team, you should have a real estate agent and lawyer who you can trust. Speaking to a mortgage broker will also help you to understand your finance options and choose a home loan that’s right for you.
2. Know your legal rights
Don’t understand what’s written in your contract? Make sure you have a lawyer read over it before you sign anything. A lawyer will be able to identify any issues with the contract so that you don’t sign something you may regret. As part of your negotiation process, you can request to have extra conditions inserted into the contract before you sign it, and your lawyer will also be able to assist with this.
After you sign a contract, you then have a cooling-off period of five days. In this time, you can choose to withdraw from a contract and the seller will be obligated to refund your deposit within 14 days. Be aware that if you cancel a contract during this period, the seller is entitled to take a penalty of up to 0.25% of the property’s purchase price from your deposit.
3. Take advantage of concessions and grants
In addition to the First Home Owners’ Grant, first home buyers in Queensland are also entitled to a concession on transfer duty (also known as stamp duty) for properties valued at less than $500,000. If you are using a mortgage broker, they will be able to help you to prepare your application for the First Home Owners’ Grant, if you are eligible.
4. Get the right advice on applying for a home loan
Every time your application for a home loan is rejected, this is recorded on your credit history, which can make it harder to be approved by other lenders. Rather than finding yourself in this situation, make sure you get the right advice before you apply for a home loan.
One common problem that first home buyers face is having too much debt against their name. This often comes in the form of credit cards, which banks consider as a debt – no matter how responsible you are with your card. That means if you have a credit card with a limit of $20,000, this will be treated like any other debt such as a car or personal loan. To avoid this issue, cancel some of your credit cards and have your limit reduced before applying for a home loan.
How you save for your deposit is another thing to be aware of. A lender will want to see at least three months of savings in your account when processing your application. That means that if you have been asking a family member or a partner to take care of your money for you, a lender won’t be able to use this as your savings history, so make sure you keep any savings in your own account.
5. Be aware of all the costs of purchasing property
There are some costs of purchasing property that many first home buyers aren’t aware of, so ensure you understand how being a home owner will impact your financial stability. In addition to the upfront expenses of purchasing a home, you will also need to pay for ongoing costs such as rates and maintenance. Make sure you account for any future expenses as part of this process, such as school fees for your children.
Discuss your budget with your lender or mortgage broker and they will be able to tell you how much you can borrow. They will also help you to find a loan that best suits your situation. Home loan features such as offset accounts allow you to set money aside for your major expenses and reduce the amount of the interest you pay on your loan at the same time.
Thank you to our speakers, Sharon Palmer from RAMS Mount Gravatt, Andrew Scriven from Colliers International and Susan Zhang at Accuro Legal. To be notified about future seminars, complete the form at the bottom of this page to be added to our mailing list.