Buying your first home can be a daunting experience but if you arm yourself with information you can ensure that buying your first home is a breeze.
1. Think outside the zone
You may have grown up in a certain area and would like to stay around family, but think about your hobbies, work and other places where you spend a lot of time. Is there a more suitable and affordable suburb? Most of us travel for work everyday so it makes more sense to move closer to the places that you travel to more often. Think about access to freeways, public transport, airports (if you are a fly in/fly out worker) and other facilities such as shops, café’s, restaurants and sporting arenas. Draw a circle of a 15km – 20km radius of the places that you travel to more often and investigate those suburbs that fall into that area to check if any of those suburbs are within your budget.
2. Investigate alternate suburbs
Once you have a few suburbs that are within your budget, go for a drive and a walk around them to get a feel for the facilities, access and security of the suburb. How does it present? Does it feel safe? Is there a mix of ages within the suburb? Is there access to public transport? Don’t just check out the suburb on the weekend. Go during the week at different times to investigate how traffic flows, what the noise levels are like and what facilities are open.
3. Thoroughly investigate the costs of buying a new home
By investigating all costs thoroughly you can be confident that your purchase will be completed without any financial stress. Many buyers look at stamp duty but fail to factor in costs such as settlement costs, lender’s mortgage insurance, council rates, water rates, strata levies, bank fees (such as loan application costs and valuation fees) and Landgate registration fees (on your Transfer of Land and Mortgage documents). Think about things such as the costs of building and contents insurance, any renovations or repairs that you may need to make and reports that you may want to obtain once you have found a property. This includes white ant and building inspections. Contact some settlement agents, insurance companies, building inspectors, white ant inspectors, banks and brokers to make a list of fees and charges. Once you have a list of all of these fees you should contact a broker to find out the amount of the loan that you can apply for.
4. Investigate grants and other options
Many buyers focus on the First Home Owner’s Grant and first home owner’s rate of stamp duty but you should also investigate the Real Estate and Business Agents (REBA) First Home Buyer’s Assistance Grant. This is a grant that offers a refund (paid after settlement) of up to $2000.00 and is designed to cover the cost of settlement (including bank fees and settlement fees). Absolutely Settlements can provide you with a fact sheet on the REBA grant so you can see if you fulfil the qualifying criteria and we can assist with completion and submission of the application for. First homebuyers may also wish to investigate the shared equity schemes and loans offered by the Department of Housing and Keystart.
5. Contact a reputable finance broker
A reputable broker should ask a number of questions about your financial position. You must be realistic and honest about your expenses and debt. This allows the broker to gain a realistic idea of your financial position, ascertain the type of loan that is suitable and get a good idea of the loan amount that you are likely to receive and, most importantly be able to repay.
6. Build a relationship with a reputable settlement agent
A good settlement agent can guide you through the process of settlement and can give you some ideas on which conditions that you should include in your Contract. These conditions may be drafted in an effort to save money, by being written in such a way that the seller is responsible for certain payments (such as special levies or repairs) or by protecting you by including clauses about building and white ant inspections.
7. Ask lots of questions
Use professionals as a source of information. An understanding broker, settlement agent or real estate agent will answer any questions that you have. If you have done the research in this article, it will no doubt raise as many questions as it answers. NEVER be afraid to ask questions. This is the first time that you have purchased a property and you will only feel confident if you are armed with information.
8. Have a support crew
It’s just human nature to want support when we are in an uncertain situation. Talk to an older family member or friend about buying a home. Find someone that you trust, whose advice you respect and ask them to come with you when you look for a home. That person should be someone with a balanced view who can look at a property objectively and offer their opinion about things that you may not consider. You will also feel more confident with someone by your side when it comes to making the offer.
9. Make an offer
When you have finally found a property that you think is suitable, stay cool, calm and collected. You still need to do a little more research. Ask to see the Certificate of Title and, where applicable, the Strata Plan. Forward these to your settlement agent so that they can check these documents for encumbrances that may affect you. Find out how long the property has been on the market. If the property has been on the market for a long time it could be for a number of reasons such as the seller’s expectation being too high, repairs that may need to be completed, encumbrances on the Certificate of Title or issues with surrounding noise. Get answers to all of these questions before you make an offer. The offer may go between you and the seller a number of times before the terms are finally agreed upon. This is where your research comes into play. You know how much you can borrow, you know what your costs are going to be, you are confident with the conditions that you want included and know what encumbrances there are and how they affect you. If the price goes beyond your budget ensure that you think very carefully before you consider going beyond the amount that you have set for yourself. If the seller wants conditions excluded, ask why. If in doubt, talk to the professionals that you have built relationships with along the way.
10. Read everything
Your bank, broker and settlement agent will provide you with lots of paperwork. It is vital that you read, sign and return all of the documentation in a timely manner. Before signing anything, you must read and understand what you are signing. Set some time aside to go through the paperwork. Have a pad and pen ready to write down any questions that you have. Have some paper tabs to mark any pages that you need to refer to. If in doubt, don’t sign anything until you have spoken to the party that sent the documentation to you. Settlement may be delayed if your documents are not signed and completed correctly. This delay could result in you being charged additional fees.
REBA Grant Information – commerce.wa.gov.au
Keystart – keystart.com.au
Department of Housing – dhw.wa.gov.au
Department of Treasury and Finance (for First Home Owners Grant) – finance.wa.gov.au