This is a video that shows why you should have a building and pest inspection before you buy your first home. First home buyers often find buying a home a very daunting experience as there are some extremely difficult decisions that you will have to make. By getting a building and pest inspection before you buy you will make sure that your purchase the right home.
First Home Buyers Should Always Have A Building And Pest Inspection Before Settlement
Tips For First Home Buyers
1. To get startedThe first thing to do is a budget. This will tell you where all of your money is going, what you can save and if you can cut back any spending. Doing your budget will also help you to work out what you can afford as well as what you need and want. You can search online for a budget planner.
Setting your goals
How much can you really afford? What price should you be aiming for? You should answer these kinds of questions so you can figure out your budget. This will prevent you from wasting your time shopping for a home that is out of your price range. A general rule for mortgage repayments is that they shouldn’t be more than 30 percent of your income before tax. You can use our borrowing power calculator to help see how much you will be able to borrow. Any debt that you have currently will reduce the amount that you will be able to borrow for your home.
Controlling your debt
You may need to make some changes to your budget. If you do need to make changes then now will be the time to do it. This may mean consolidating some of your debts. There is no point for you to be saving really hard for a home deposit if you are being charged a really high rate for your personal loan that you are paying off. You can compare loans with this personal loan tool from RateCity.com.au.
Working your money
You could try to maximise your savings by removing them from any low-interest accounts that you have them in. You are better off depositing your money in higher interest saving accounts that will offer a better return. If you have more time to invest before you need your deposit you could consider a managed fund.
Checking your credit rating
Make sure that you have a good credit rating before you approach a lender. You will be much better off by ensuring there are no nasty surprises in your credit history. It would be devastating to be refused a loan because of a small debt that you had fixed up years before.You can obtain a copy of your credit history by contacting Baycorp on (02) 9464 6000 or by visit the website www.mycreditfile.com.au. If you happen to find something in your credit history make sure you discuss it with your lender so they are aware of it from the start.
Doing your homework
You should do your homework to ensure you get the best possible home loan at the right price. You can you the find a home loan tool to help you with this. You will find that the state of the market varies between property types and suburbs. It will also depend on what type of property are you looking for, whether it is for a house, unit or townhouse? You should limit your search to a few suburbs and consider the location and features that you want.
Get your entitlements
You can see if you qualify for the federal government’s $7000 First Home Owner’s Grant. Go to www.firsthome.gov.au to see if you are eligible. You should also check your office of state revenue to see if there are any state bonuses being offered.
Buy the home but think about whether you should live in it
There are some great entitlements available to those you buy a home and don’t live in it. This is because investment properties have a range of tax benefits associated with them. You can save money by negative gearing the property which allows you to make a tax claim on the difference between the rent you receive and other expenses such as interest, maintenance and rates. If you live with your parents or rent free this can be a massive boost for your financial situation.2. Cost of buying a house
The fees involved
The following table is a guide of the fees and expenses you will face when buying your first home. There are far more expenses than just the deposit that you will have to save for and pay in the process of buying your home. Here is a list of the most common fees and charges that you should budget for. You should use this only as a guide as the costs will differ in each state. Some of these fees also depend of the amount of money that you are borrowing and the price of the property.
|Lenders Fees||Approximate Cost|
|Application feeApplication fee generally includes settlement and search fees.||$600|
|Valuation feeMajor lenders normally include this cost in their application fee.||$250|
|Monthly service fee||$10|
|Mortgage insurance$1500–$3000 The amount depends on the purchase price and the amount you borrow. It protects the lender only and is normally charged if you borrow more than 80 percent of the purchase price.||$1500-$3000|
|Government Fees||Approximate Cost|
|Stamp duty on mortgage loanThis is calculated on the loan amount. In this case, we’ve assumed a $180,000 loan in NSW. Rates differ depending on which state you live in. Not applicable to Vic, NT and ACT.Use this stamp duty calculator to get the exact amount.||$661|
|Stamp Duty on property purchaseThis is calculated on the purchase price. In this case we’ve assumed a market price of $200,000 in NSW. Duty differs in some states. Concessions to first-home buyers applicable in most states. (See below.)||$5490 (owner-occupied)|
|Land transfer registrationSliding scale which depends on the price of the property. In this case, it’s calculated on $180,000 in NSW.||$77.25|
|Mortgage registrationFee is normally collected by lender.||$77.25|
|Other Fees||Approximate Cost|
|Solicitor and conveyancing fees||$500-$2,000|
|Search and enquiry fees||$200-$400|
|Agency and sundriesIncludes settlement fee and disbursements fees.||$100-$150|
|Home building insurance||$200-$500|
You should go through a home loan checklist when you apply for a loan and make sure that you are aware of all of the relevant fees and charges.3. Ways to buyHere are two main ways you can buy a house, unit or townhouse.
i. Private treaty
A private treaty is where you negotiate the purchase of a property directly with the seller or the real estate agent that represents the seller.What to watch out for:
- Make sure you are aware of the price of similar properties in the area where you are buying. A helpful website for this is realestate.com.au.
- Never forget that the seller’s agent is acting only for the benefit of the seller.
- If you are looking to buy in an area that you are not very familiar with you might want to hire a buyers’ agent.
- Even after you have signed the contract you will normally have a cooling-off period. You should take full advantage of this.
An auction is where a number of people gather either at the property being sold or an auction room and make bids for the property they would like to buy. You may have to pre-register to make bids. Registration to bid is in place to help eliminate dummy bidding. Auctions can be quite intimidating for those who haven’t been to one before. It is worth going to some auctions to see how they work before you wish to make bids on a property.Important points to watch:
- Have a lawyer look over the contract of sale before the auction.
- Always remember the real estate agent is acting for the seller and not you.
- Don’t allow the auction to get you carried away. You should set an absolute limit to your bidding and make sure you stick to it. There will always be other properties.
- You will have to have a cheque with you (personal or bank) to pay for the 5 to 10 percent deposit which is required on the day of the auction if you are successful.
Make sure that before you buy your lawyer carefully goes over the contract.Important points to watch:
- Check the compliance of the property with the local council, especially any extensions.
- Check the inclusions of the house you expect to remain, such as the stove, the blinds and light fittings. Make sure they are itemised in the contract. If they are not listed in the contract they will probably be removed.
- Check the terms of the settlement and maks sure that when you have to pay the balance and take possession is as you have agreed.
Other Resources for First Home Buyers:
Building and Pest Inspection Resources: