Whether you’re just starting out on your home-buying journey or well advanced with your savings and plans, there will always be times when things feel confusing or even overwhelming.
Research shows that this confusion can hold people back from getting their dream home, and while saving for your deposit is not an easy task, leading mortgage broker Aussie has found more than 7 in 10 first home buyers want to take advantage of the property market right now – they just don’t know how.
Specifically, many first home buyers aren’t clear on the range of options available to them, including the latest government schemes and grants which could help them accelerate their property purchase.
With 5 in 6 first home buyers wanting more guidance on the best way to reach their home ownership goals, Aussie Chief Customer Officer, David Smith, lays out the 10 things that could help make buying your first home a reality.
1. Start saving early
Knowing how much you need to save for a home deposit can feel overwhelming, especially if you haven’t decided what you’re looking for yet. But one thing is clear: setting a savings goal early can make all the difference. It may seem obvious, but the sooner you start the higher your chances of putting yourself in a better position in the future.
“Staying motivated to save can be one of the hardest parts, so try to set realistic goals to build up your savings bit by bit,” says David. “This could be achieved by setting an amount to put aside each month – these small, regular wins can help you stay driven to reach your ultimate goal.
“Having consistency in savings is also important to show lenders that you may be a good candidate for a loan, so it’s something to get in the habit with sooner rather than later.”
2. Save time by writing a list of what you will and won’t compromise on
Searching for your dream home is a journey – and often a lengthy one. Before anything else, write down what you absolutely need from your future home versus what your ‘nice to haves’ are. By having that clearly in mind first, it can help ease the process and save a lot of time.
“Consider what aspects of a home you won’t negotiate on, like how many bedrooms you need, the location or whether you want some kind of outside space or backyard,” says David. “Then consider the things that you would be happy to compromise on, like if you really need a walk-in robe or a second garage if it will cost you more or mean you can’t buy in the location you want to.”
Asking these questions will help you set a criteria, which in turn will help you understand what type of home you want and how much you need to save. This will also enable you to have informative conversations with an expert who can help guide you on the path to achieving your goal.
3. Do your research
“There is more information available at our fingertips than ever before, but finding what you need to know can be challenging – you may have more options to help you get into the property market than you think,” says David. “Recent research shows that 85% of first home buyers do not even know what the First Home Loan Deposit Scheme is and how it enables first home buyers to take out a home loan with as little as 5% deposit. It’s important to take time to do your research or speak to a mortgage broker to see if you may be eligible for schemes like this to support you with achieving your first home.”
Be sure to research the latest Government schemes and look into whether you are eligible to apply for one of the 10,000 new applicant places available under the First Home Loan Deposit Scheme from 1 July 2020, before spaces run out. First home buyers may also be eligible to access other state government grants or incentives to run in parallel.
4. Be realistic
Buying your first home is exciting, but it’s important to work out how much you can afford to spend before you start house shopping. Tailoring your search according to what you have the capacity to afford will help avoid any disappointment.
“Over half (58%) of first home buyers feel negatively about navigating the mortgage market by themselves, it can often feel confusing and overly complex with a potential minefield of additional costs which you may not have accounted for in savings,” says David. “Things like council rates, strata fees and insurance are really important to keep in mind. Getting help from experts can help you get familiar with relevant costs and considerations for your local area, not to mention helping work through your personal circumstances to help you get a good deal that suits you.”
Seeking advice from an expert who gets to know your circumstances and is local to your area can help you understand what additional costs you may need to consider, helping you know how much of an extra buffer you may want to save so you don’t get caught out.
5. Say goodbye to confusing mortgage mumbo jumbo to find the right deal for you
Buying a home can be an overwhelming process, and there is plenty of lingo that can be hard to get your head around. Not only that, buying a home is likely to be one of the biggest financial decisions of your life, so you want to make sure you’re doing the right things so you can get a good deal.
A popular way to wave goodbye to any confusion is to seek expert guidance to help support you through your journey. With 67% of first home buyers intending to enlist the help of a mortgage broker, says David, most recognise the value of a broker – they can take the hassle and complexity out of the process to find a good home loan deal for you.
6. Take advantage of low interest rates now
With so many different interest rates on the market, it’s hard to know if you are getting a good deal. There are many important factors to consider when looking for a home loan, and the interest rate is one of them.
“Right now is an optimal time for first home buyers to lock in a good interest rate to buy your first home, with record low rates,” says David. “A home loan is generally a long-term financial commitment and even a small difference in interest can stack up over time.
“Buying your first home often comes with a long standing mortgage that you sign up for, so now might be a good time to make the most of the property and home loan market, if you can, to access low rates that could save you money in the long-term.”
7. Get some piece of mind with a pre-approved loan
“Buying your first home can be one of the biggest decisions of your life, so it’s understandable to seek reassurance when you’re ready to look at homes you would consider putting an offer in for,” says David. “Getting pre-approval for a loan can help ease your mind and is beneficial in many ways. It gives you a clear indication of the amount of money you can borrow so you can better determine the price of homes you should be searching for.”
Another benefit of having a pre-approval, says David, is the peace of mind of knowing that when you find that perfect home, you can make an offer that you can afford. Mortgage brokers can help with the pre-approval process, putting in the groundwork to give you a smoother process all the way through from your loan approval to walking into your new home.
8. Make the most of inspections
Checking out houses can be fun and exciting, and if you want to buy an existing property, making the most of open inspections is a must. Photos will never do justice to seeing a property in person, and inspections allow you to gauge what kind of shape a home is in and if it’s really right for you.
“Take photos, open cupboards, turn lights on, and try taps,” says David. “It is also a good idea to walk around the area in daylight and nighttime. Being thorough in your inspection can avoid the headache of performing possible future repairs.”
If you are choosing to build instead, frequenting open houses can also give you an idea of how you may want your house to feel.
“A bonus with looking to build right now is the HomeBuilder Grant that gives those building a house access to $25,000,” says David. “This grant compliments existing grants for first home buyers like stamp duty concessions and the First Home Loan Deposit Scheme.”
9. Buy a home for tomorrow
It is important to keep in mind that the home you buy may very well be your home for many years to come. With all the effort, persistence and control needed to save, research, and locate a house, it’s important you are buying something you won’t outgrow too soon.
“Ask important questions to help avoid being too led by emotion when making a decision,” says David. “If you want to raise a family in this home, do you need to be near any specific schools? Do you have a spare room to be able to host out of town family and friends?
“Speaking to a mortgage broker can also help you identify locations or types of homes that will increase in value over time so you can not only find a home that you’ll love but one that can grow your investment in the long term.”
10. Make sure you can still enjoy a great lifestyle after regular mortgage repayments
“Buying your first home is a big deal and should be celebrated,” says David, “but the purchase of your first home does not mean you should sacrifice your lifestyle to make regular repayments.
“Taking all the necessary steps to know what you can afford, finding a good interest rate and finding the right loan that’s best for you, should make the whole process much easier – leaving you to be able to sit back and relax, enjoying the things you love to do while being a proud first home owner.”