4 Things To Consider Before Buying Your First Home
Buying your first home is a super big deal. After what may seem like an eternity of budgeting, saving and sacrifices, you finally get to the point where you reckon you have enough cash in the bank to start the process of applying for a home loan, and finding a property to drop a deposit on.
Once you’re at this point first of all, congrats. You’ve made many of the necessary steps towards owning a home. But have you checked all the boxes and thought about everything there is to consider before searching for that property you’re soon to call your home? There are some less obvious steps and strategies to home ownership that can make buying a property that much easier.
Before heading to inspections to look for your dream home, it’s important to know what’s attainable – including potentially compromising on location. Here are a few useful considerations for anyone considering purchasing their first home.
#1 Consider compromising (for now)
In a perfect world (and property market) your first home might be a sprawling estate with ornate ceilings and a pool. Or maybe it’s a converted warehouse apartment in a popular suburb. However, unless you’ve won the lottery or are just an absolute baller, breaking into the property market is going to mean making some sacrifices, especially in terms of location.
As it turns out, millennials are willing to compromise. In September of 2017, Westpac surveyed more than 1000 Aussie homeowners and first homebuyers and found they’re not as focussed on buying a home that’s in a trendy area, or close to work, as they once were.
Head of Home Ownership for Westpac Group, Andy Wright, adds, “Attitudinal shifts among first-home buyers towards home ownership suggest we may see more people looking to buy in areas that they hadn’t previously considered, with many previously thought ‘essential’ features now just ‘nice-to-have’.”
The report showed that these qualities decreased in the ranking of “essential features” when buying a home by 83% and 48% respectively, compared to 2016. The report also shows that first homebuyers are increasingly looking at what is inside a property as desirable – such as modern kitchens or bathrooms.
#2 Consider it an investment
Even though you may not score the home that ticks every single one of your boxes, it’s not necessarily a bad thing – think of it as an investment.
“People are buying what may not be their ideal home initially, but are using it as motivation to buy another property later in life,” Taj Singh, co-founder of First Home Buyers Australia (FHBA) told The Cusp. The FHBA is an organisation which has made helping first home buyers purchase property their purpose. “Whether that’s upgrading or purchasing a new home and then turning their existing home into an investment”.
Compromising on your absolute ideal home will mean it’s easier to find something that’s within your budget. This means you can still invest now, and it will open up your opportunities when you’re older, potentially allowing you to upgrade and will extend your options later in life. You may even end up with that ideal home.
#3 Consider the perks
Many first homebuyers are eligible for a First Home Owner Grant, but there are conditions. This scheme was introduced in 2000 to offset the effect of the GST on home ownership. Under the arrangement, a one-off grant is payable to first homeowners who fit the eligibility criteria.
“The first homeowner grant varies in each state,” says Singh. “These grants are only applicable to brand new homes apart from townhouses. The key criterion is the property must not have been lived in before.”
Now while that might seem a bit unfair, it does assist first homebuyers who are looking at popular home and land packages. In NSW, first homebuyers are eligible for a grant of $10,000, which can be used as part of their deposit – a real leg-up when looking to buy a home.
#4 Consider your budget. Are all costs accounted for?
If you’re gearing up to buy a home, chances are you’re pretty bloody good at budgeting. But have you considered all of the costs?
“You should set aside between three and five thousand dollars in addition,” says Singh, saying it’s better to be prepared than shocked by unexpected costs. “This will cover things like building and pest inspections, conveyancing, government title fees, and anything else that may arise, like council rates and water rates.”
It’s stuff like this too which, if not sorted out initially, can become a huge cost later on. For example, Singh says building and pest inspections should set you back between $250 and $400 on average, but if not done can potentially cost tens of thousands of dollars in the future.
This is just the beginning. To learn more about buying your first home, check out these 13 hacks for buying your first property.
Before you start searching real-estate sites, it’s important to speak to an expert and sort out your borrowing capacity. Buying property is a big thing but it’s made easier with the right advice and support. Chat to a Westpac specialist about home loans and your next steps towards property ownership.