Buying real estate for the first time can be overwhelming – where exactly do you start?
On the surface it seems simple enough – buy a home to live in, located in a neighbourhood you like. However, it isn’t always that straight forward.
Before starting the process, it’s worth asking yourself some key questions:
- Are you buying a home to live in long term?
- Or a ‘starter home’ to kickstart your journey up the property ladder?
- Is it a first-time investment you’re after?
- Or a home that might one day become an investment property?
Whatever the reason you’re getting into the property market, making the right decisions for your personal circumstances early on can put you on the right financial path. A bad buy first purchase can take years to correct, so it pays to know your goals and get the right advice from day one.
Buyers should do their own homework, but there are experts to help you.
Do your due diligence
It is the responsibility of the buyer (no matter how inexperienced) to do their homework.
If you’re buying property for the first time, chances are you’re not a real estate expert – so surround yourself with people who are.
In addition to engaging a building and pest inspector (for houses), or professionals to look over the strata management (for apartments), you’ll also need a trustworthy conveyancer (sometimes known as a conveyancing solicitor) to look into the contract of sale, check property boundaries (or floor plans for apartments), look for easements on the land and calculate rates and taxes.
To do your diligence you should check if the property you are interested in buying is:
- Subject to an owner’s corporation (meaning it is a strata-titled home that will incur regular fees) and if so get a strata report to see how it is being managed
- A Torrens Title home (meaning that it is non strata-titled so all maintenance falls to you) and if so hire a building and pest inspector to check how “healthy” the home is.
- Not in a bushfire or flood prone zone.
- In a residential zone, or mixed use zone that could mean heavy industrial noise or pollution.
- Going to benefit (or suffer) from proposed planning infrastructure.
- Can be connected to all the necessary utility providers.
- Fully approved for all recent building works, or structural renovations.
Get your budget in order
Your first home will no doubt be your most expensive asset so far, and unless you have a wealthy family, or a lottery windfall, then it will take a lot of belt-tightening to buy a home in Sydney.
The obvious ways to start saving include cancelling bought coffees at work to giving up breakfast at the local cafe at the weekends. There are, however, more ways to work on your budget. These include:
- Pay off personal loans and either close down credit cards or reduce their maximum limit.
- Find out your credit score so you know what you look like on paper.
- Get to grips with your current expenditure and rein in any unnecessary spending.
- Put together a savings plan so you have a good track record even before approaching a lender.
The right amenities can add to your lifestyle and also capital growth.
Sort out your finances
Online calculators are a good first step when working out how much you can borrow, but to find out exactly what price bracket you can house hunt in, visit a mortgage broker or talk to a lender directly.
These experts can also advise you on your eligibility for the Federal Government’s First Home Loan Deposit Scheme, which could save you up to $10,000.
Whether you go to a broker or straight to a bank, meeting a professional early on in your journey can help you avoid any financial disappointment. First home buyers who start house hunting before their finances have been put in place can set themselves up for frustration.
Without an official pre-approval from a lender, you could discover late in the game that your borrowing capacity is less than expected, or that “hidden” costs such as stamp duty, mortgage lender’s insurance or conveyancing costs will bite into your savings and price you out of your dream property.
How to buy successfully
Unfortunately there is no crystal ball indicating where the next property hot spots are going to be, but with some careful research into the market, savvy buyers can set themselves up on the right property path.
As well as purchasing property that would suit your lifestyle, consider buying into real estate that would have the greatest mass appeal for future buyers (when you eventually sell) or tenants (if you choose to lease it out).
Be sure to buy where there is solid demand, and not an oversupply of one type of property.
Real estate that typically performs well tends to be located in neighbourhoods that:
- Are in close proximity to public transport.
- Near employment hubs.
- Close to sought-after public schools, hospitals, universities and shopping centres.
- Offer lifestyle attributes like the beach, the bush, a thriving cafe culture.
- Sit next to suburbs that have already experienced price increases (also known as “sister suburbs”).
At Toplace, we have helped many First Home Buyers get into their dream home. To learn more, contact us today.
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