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Top tips for first homebuyers

Posted by Paul Wilson

Being a first homebuyer is equal parts exciting and nerve-wracking. It takes time, research and patience to find your first home and to ensure all your ducks are in a row when it comes time to sign the contract.

First time buyers can be caught unawares by the numerous items to check off the list when purchasing a first home.

To ensure you don’t get caught out, here are our top tips for first homebuyers: 

Your deposit and lender’s mortgage insurance

When saving for your first home, the bigger the deposit the better.

A deposit of 20 per cent of the purchase price is ideal, but in most cases is not possible.

Many banks will accept a deposit less than 20 per cent but you will be required to pay lender’s mortgage insurance - and the bank could charge you a higher interest rate.

But in the same breath, if the market is growing, it may be better to simply get into the market with a smaller deposit than wait and see an opportunity pass you by.

The lender’s mortgage insurance, in most cases, can be added onto your loan. What amount can be added to the loan balance will depend on your financier.

It’s best to speak with your mortgage broker about the right approach for your situation.

Funds to cover extra costs

Many first homebuyers are caught unawares by the extra costs of obtaining a home such as solicitors’ fees, building and pest inspection and bank valuation.

Make sure you factor these costs in when looking for a place and saving for your deposit.

Be aware of the stamp duty regulations for the State you’re buying in

Stamp duty regulations vary from state to state so make sure you are aware of the requirements in the state you are buying.

In some states, first homebuyers don’t have to pay stamp duty on properties under a certain price but in others, first homebuyers have to pay stamp duty on any property that isn’t a new build.

Stamp duty is a significant up front cost so make sure you factor this cost in on top of your deposit.

Check if you are eligible for the First Home Owner Grant

The most appropriate time to apply for the First Home Owner Grant is at the same time you apply for your loan.

You can lodge a grant application through most lenders if they are an authorised agent.

There are additional requirements in the way of supporting documents when you are going to lodge this application. Each application for the grant/concession is per property, not per person.

Should you be unsuccessful in your first property choice, either through finance or building and pest inspection, you will have to lodge this again.

Check to see if you are eligible for the First Home Owner Grant, it can be very helpful in securing your first home.

Make sure the bank product matches what you want

Banks often advertise special interest rates but before falling hook, line and sinker, make sure you check that the bank product matches your circumstances and your needs.

It’s a good idea to enlist the help of a mortgage broker to help you find the right home loan for what you want.

A mortgage broker can show you the ropes and talk you through all your options.

Another alternative to consider is if you would be financially better off to rent, providing you divert your funds into an investment property.

It would be worth considering how this could fast track your wealth creation strategy.

If you’re looking to purchase your first home or refinance your current loan, get in touch. Call Kelby on 1800 600 890.

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