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Buying or building your first home is so many things – it’s exciting, it’s overwhelming, it’s scary, it’s a dream come true for many even. If you’re thinking of buying your own place, it’s normal to feel a little overwhelmed. After all, it is the single biggest purchase you are likely to make in your lifetime.
Besides the sheer pride of owning a home of your very own, getting into your own home will help you achieve financial security and stability. Ensuring that your hard earned money is contributing to your own net worth (not someone else’s). Although it may seem like a daunting process, there are things that you can do to prepare and plan for the journey to home ownership that will make it more enjoyable and less overwhelming.
In an effort to remove some stress from the equation, here are a few tips from the experts.
Recommended to DO as a first home buyer
As with any significant milestone in life, the more you know, the better equipped you will be to make a well rounded choice. The situation is no different for first home buyers (first home builders) – it will do you well to research and plan appropriately. Having a clear direction will help give you a sense of what the end result should be and roughly what it will cost (in both time and money).
Do your due diligence and research your options – not just on specific properties, but also on every aspect along the journey. These are just some of the factors you will need to consider or at least have some knowledge about before even thinking of approaching builders, real estate agents and lenders;
- Research the current state of the property market
- Get an idea of your current financial position – credit history, any debt you may have, your savings
- Research all options in terms of lenders and gain a basic understanding of the types of home loans available to you
- Research potential (and surrounding) locations to gauge the lifestyle and convenience factors should you buy of build there
- Look into the pros and cons of either buying existing or building a new home (for your specific needs and circumstances)
This is an important first step (dare I say THE most important step) in the home-buying process. Before you even considering visiting open houses or contacting building contractors, make sure that you have the backing of a lender that is willing to help you make your dream a reality.
You don’t want to be in a position where you start house-hunting or looking at home builders only get your heart set on a home you can’t afford. Getting pre-approval is also a great way to get a snapshot of your current financial standing, going through this process can bring to light problems with your credit history that you don’t know about.
Getting pre-approval for a loan is not mandatory but it is quite a valuable step in the home buying process. A loan pre-approval means that a lender has agreed, in principle, to lend you an amount of money towards the purchase of your home.
When a lender pre-approves you for a loan, they will do so for a specific amount, this allows you as the home buyer to focus your house hunting on the properties you can actually afford.
Getting a home loan pre-approval gives potential home buyers a realistic budget to work with.
To note: While it is beneficial to have a pre-approval before you make an offer on a property, you need to be cautious about how the number of pre approvals you apply for. Reason being that each time you submit a pre-approval application, the lender will run a credit check. Each time a credit check is done, an enquiry is left on your file. Having too many enquiries can negatively impact your credit score. So, it is advisable to only apply with the lender you intend to go with – hence the importance of conducting adequate research (mentioned earlier).
It isn’t always going to be easy to not let your excitement and emotion creep in during your first home journey, however, emotion is the last thing that you’d want driving your decision making when it comes to your biggest financial investment.
The golden rule for sound financial management is to always stay true to your budget. When it comes to buying (or building) a home, one important deciding factor is your lifestyle, and what it requires from a cost perspective.
The mistake that many first home buyers make is to only consider their “budget” as being for the purchase or building of their new home. Just because a bank approves you for a certain amount, does not mean that you should spend it all.
Don’t fall into this trap – yes the physical cost of your home will be the biggest financial outlay BUT you need to be mindful that while you are paying off your home loan – life still goes on and you still need to afford to go about your normal life whilst making your repayments.
Good financial practice is to give yourself an adequate financial buffer for unexpected costs as well as financial security longer term. Be sure not to stretch yourself too thin
NOT to do as a first home buyer
A big mistake that many first home buyers make is to underestimate the increase in expenses that come with owning your own home. When going from renting to owning, the increase in costs may become apparent in two stages;
Stage 1 – the home buying/or building process
Purchasing a home is not merely paying for the price of the home, there are additional costs that this process will incur. These additional costs include but are not limited to;
For buying a home
• Loan application fees
• Conveyancing and legal fees
• Mortgage registration fees
• Building and pest inspection fees
• Stamp duty (depending on the price of the property)
• Lender’s mortgage Insurance (if applicable)
For building a home
• Loan application fees
• Mortgage registration fees
• Costs to prepare land (depending on where you choose to buy and
what builder you choose)
• Stamp duty (depending on the price of the property)
• Lender’s mortgage Insurance (if applicable)
When building with experienced home builders like Valcon Homes, our team will walk you through the entire process, giving you clarity and peace of mind.
Stage 2– Over the life of your home
For many first home buyers, when making the leap from renting to owning your first home, the actual home purchased or built will be bigger than the home they may have been renting, with this bigger home comes increased costs – utilities, insurance and ongoing maintenance
Once your have conducted your research and have saved an adequate down payment, the next step is to find a reasonably priced property and secure an appropriate home loan. A good idea is to look for a home loan option that;
- Gives you flexibility and
- Will cost you less over the life of your loan.
Quite possibly the biggest mistake that many first home buyers make is to get a rate quoted by only one lender. As overwhelming as the home loan process can be, it pays to shop around and could save you thousands over the life of your loan.
To note: Be sure that when approaching multiple lenders you ask for quotes only, and then apply for a loan with only ONE lender once you’ve reviewed the quotes. If you remember from the note above regarding applications for approval – having multiple loan applications submitted can negatively impact your credit score.
It is not uncommon to experience a range of emotions when you buy or build your first home. But don’t get swept up in the emotion, this is ultimately your biggest financial investment and is the one time where you need to be at your most sensible.
- Be open to options that may not have been your ideal (especially if it makes financial sense and is not going to negatively impact your lifestyle)
- Don’t let emotion cloud your judgement – this may result in you missing any significant red flags with the home itself and also with your budget.
- Enlist the help of a professional to guide you through the process and maintain objectivity and ensure that the best decisions are made to get you the perfect home and also ensuring a sound investment.
The good news
You can stop renting and get into your own home sooner with Valcon Homes – our first home buyer’s solution gives you the opportunity to enter the property market and build something of your very own.
We want to get you home sooner!
$2K is all you need to pay now to get on your way to home ownership coupled with;
- 6-months rental history with a real estate agency
- A good credit history
- You qualify for the First Home Owners Grant
- You are able to fund the 5% balance of the purchase price and costs associated with purchase.
*Eligibility criteria. Terms and conditions, credit and lending criteria apply.
There’s no better time than now to own! Contact our First Home Build Specialists and we’ll be in touch and have you on your way to owning your first home sooner than you thought.
