Buying Your First Home? Here are 5 Things You Should Definitely Know

February 24, 2021

With the current official cash rate lingering at a rock-bottom 0.10%, there isn’t a better time to buy your dream home. 

But before you invest in your first home, here are five important things you should absolutely know. 

1. Is this the Right Time to Buy: Quick Fact Check

House prices have been continuously dropping ever since the coronavirus pandemic has hit Australia. Predictions are around that “property prices will drop in the foreseeable future.” However, that does not indicate buying your first home will be easier or whether this is the right time to do it.

Most homebuyers are apprehensive about the housing market and their finances amid the COVID-19 outbreak, while some have even postponed their plans to buy a new home. 

According to a study by Gateway Bank, two-thirds of first home buyers (FHBs) have abandoned or delayed their plans to buy a property. 

Around half of the FHBs have tapped into their deposit savings amid the pandemic and paying for their daily expenses is regarded as one of the top priorities for them now. 

Furthermore, 16% of high-potential home buyers have already spent a major portion of their deposits during COVID-19. 

“As more people are being forced to spend their deposit savings on basic living expenses, the prospect of buying a property is now even more elusive,” 
says the CEO of Gateway Bank – Lexi Airey. 

On the happier side, Australia’s housing market is seeing a downturn and property prices would continue to decline over the next two years. In this hope, the dream of buying your first home remains alive for many FHBs.

But it is also important to consider whether your “income is steady and you’re confident about your future earnings,” says Eliza Owen, the Head of Research at CoreLogic.       

Are you monetarily stable for home loan repayments? Use a budget planner to determine how much you can realistically afford based on your current income, expenses, and future financial prospects. 

These are some important factors you should take into consideration to decide whether you should buy a home now or wait for your financial conditions to be better in the future.

2. Do Not Forget the “Other Costs” in Purchasing a Home 

When you are buying your first home, it is not surprising that you will consider only mortgage repayments when planning the budget. However, there are extra costs that may create budgetary mayhem when not taken into consideration.

Make sure you take the following costs into account during budget planning: 

  • Stamp duty 
  • Council rates 
  • Loan fees 
  • Lenders Mortgage Insurance or any additional insurance 
  • Building inspections 
  • Conveyancing 

By factoring in these additional expenses, you will never face last-minute surprises when signing on the dotted lines.

You can click here to read more about the other cost that comes into play during your home buying process. 

3. Research About the Property Before Buying 

You are never too prepared when buying your new home! Make sure you know research in-depth about the property you plan to purchase. And the location is the #1 factor you should consider here. Most FHBs tend to buy homes in remote locations to have affordable prices.

But when it comes to the long-term value of the property and conveniences, location plays an integral role. 

Things like transportation, school zoning, access to amenities, future building plans, and neighbourhood must be taken into consideration.

Additionally, look into factors like the history of recent sale prices, suburb profiles, and future investment opportunities. 

You should also inquire about how old the property is and why the owner is selling it. Are there any health or safety hazards associated with the property? Also, check the property’s past insurance claims. 

4. Determine Which Loan to Choose

Your choice of home loan also plays an integral role in buying your first home. Finding a home loan with good value can help you save hundreds and thousands of dollars in the long term.

Look for a mortgage loan that offers the lowest variable interest rates on the market. At the same time, you should also consider the loan tenure and monthly repayment amount. 

Compare home loan offers from different providers and make an informed decision. You can also consider having a pre-approved loan if you are eligible for one.

This will give you better borrowing power and put you in a competitive position when purchasing your first home. 

5. Are There any Repair or Renovation Costs Involved? 

You have been fantasising about that dream house and possibly want to buy it now that it is on sale. But before signing the contract, get the property thoroughly inspected to know what repair or renovation work you need to do. 

Changing the paint colour or fixing minor cosmetic issues is okay, but making major changes to baths and kitchen can prove to be expensive.

So, keep this factor in mind before buying. Buying your first home is an enjoyable experience.

Hopefully, the above tips will help you make the best value for your once-in-a-life opportunity.         

Soho is your expert team in Australian real estate, offering an innovative platform for effortless property searches. With deep insights into buying, renting, and market trends, we guide you to make informed decisions, whether it's your first home or exploring new suburbs.
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Our AI match engine will match you with over 150,000+ properties and you can swipe away or shortlist easily. Making your home buying journey faster and easier.