These days, owning your own home is no easy feat. You need to save for a deposit, get the right loan and find the perfect home. By following the simple steps below, you can move from being a 'home dreamer' to 'home owner' and enjoy the rewards of owning your own home.
STEP 1: Confirm Applicable Government Grant
There are several rebates available for first home buyers from the state and federal governments.
They have called this the First Home Owner Grant. The biggest windfall for you as a First Home Buyer is the Federal Government's First Home Owner Grant scheme (FHOG). The scheme was introduced in July, 2000, by the Federal Government and involves a tax-free grant of at least $7,000 to first home buyers. In some states is is as much as $10,000. To find out more information on FHOG's and eligibility you can speak to your State Revenue Office.
The FHOG is usually processed by the lender and made available to the solicitors at settlement for your purchase. If it is not processed by the lender, you can apply for the FHOG after settlement and the money will be paid to you within 6 weeks.
STEP 2: Hunting for a Home Loan
As a potential borrower in the market, you need to educate yourself about the different home loans which are available from all the lenders. There are many options, so it's important to be aware of what the differences are – more often than not the best loan is not the one with the lowest interest rate, but the one with the best overall structure – so ask a lot of questions and be clear on the options!
STEP 3: Get a Pre-Approval
Having found the best possible deal, it's time for you to apply for a Pre-Approval.
A Pre-Approval will confirm how much you can borrow based on your income, liabilities, savings and family situation.
Make sure you have all the necessary documents ready for your financial consultant, such as Payslips, Savings Statements and copies of your ID.
A Pre-Approval gives you:
- The security of knowing exactly how much you can borrow
- More bargaining power with sellers
- A faster approval process once you have found your property
STEP 4: Finding Your Home
Now that you know your borrowing power, it's time to determine how much 'home' it's likely to buy you and in which suburbs you can afford to live. The real estate section in newspapers, the Internet (www.realestate.com.au), local papers and real estate agents are all useful sources of pricing information.
Once you have settled on an area, you should tell a few real estate agents what you are looking for so that they can put their 'feelers' out for you. Remember, real estate agents are employed by the vendor, so make sure you do your own research as well.
STEP 5: Don't Forget Building Inspections
Anyone buying a home should have it inspected for faults. Make sure the property you buy isn't a dud – and there are plenty out there, especially in cities where housing stock can be very old and run down.
There are number of different inspections to be made depending on the type of property, including:
- Building Inspections;
- Pest Inspections;
- Electrical Inspections;
- Strata Inspections; and,
- A Land/Property Survey
At the very least you should be obtaining a building inspection. These inspections are likely to cost anywhere between $200 and $600 each. Don't baulk at the cost. It is vital that you find out about any hidden nasties like damp, shifting foundations, faulty wiring and plumbing. Then you can factor in the cost of repairs to the purchase price or decide to drop the deal altogether.
STEP 6: Making an Offer
After your inspections, if you're still satisfied with the property, it's time to make your next move. While it is important to be cautious in approaching price negotiations, don't be too inflexible. After all, you want this property. The last thing you want is someone beating your best bid by a few hundred dollars, knowing that the property is worth much more.
The most common way to buy property is by sale through a real estate agent. If a property isn't going to auction, you are saved from the stress of auction day, but are then faced with the daunting question of how much should you offer?
If a home price tag says $250,000, this may not be how much the vendor really wants. Many agents say that it's usually wise to make a lower offer within 5 per cent of the asking price, although this percentage can increase in a slow market.
Once your offer is accepted and you've accepted the sale contract, it's time to pay the deposit. This is typically given to the real estate agent, who holds it on behalf of the vendor in a special trust account until the sale is finalised.
STEP 7: Legal Legwork
You will need to arrange conveyancing, which is the transfer of property title from one person to another.
Most people employ a solicitor or conveyancing expert. The services of conveyancing specialists cost between $500 – $1,500. Conveyancing fees cover all the costs of the transfer of property, except for stamp duty, and most conveyancing firms will give you a free quote.
STEP 8: Settlement at Last
Settlement day is the day that your settlement agent meets with the vendor to swap your cheque with their title of ownership. Government departments need to be notified of the change in ownership, and this is typically taken care of by your solicitor or conveyancer.
You should have the building insured at the time of settlement.
Congratulations, you are now the proud owner of your new home and you're on your way to building your 'Property Portfolio' . Buying your first home is a major achievement and it involves time and effort.
Want to know more?
Chat to one of our Money Coaches today for a no obligation strategy session for your personal finances – what have you got to lose? Call 1800 882 981 or click the button below to email us.