Setting out to buy your first home can be both exciting and daunting. It’s an expensive process and there is a great deal of information with which you need to be equipped. However, it is well worth the work, both for the joy of living in your own home, as well as for the financial security of home investment.
Following these vital five steps for buying property can help streamline the process and enhance the enjoyment of your purchase.
Step 1 – Determine Your Budget
Make a list of your monthly expenditures, excluding rent, and then subtract this from your monthly net income. The amount you have left will give you a clear guide on how much you can afford to repay on a home loan. This is a good time to take a hard look at your expenditures and cut them back where possible. Income and expenditure calculators can assist with this, and a home loan calculator will provide an estimate of mortgage repayments.
Step 2 – Search for a home that suits your lifestyle and your budget
Location is important. Where do you want to live and is the area affordable given your budget? Will it be suitable for your commute to work, for shops and amenities, for schools, and if your family is growing, will the home be suitable two to five years down the track?
Step 3 – Apply for a home loan
It’s essential to research the different home loans available from banks and other lenders. The market is competitive and interest rates and product features between the different providers will vary.
A fixed loan means you have the security of knowing that your repayments won’t change. A variable loan means they will change, which could benefit you if interest rates fall but not if they rise. Loans with redraw facilities are popular as they enable you to repay more than your minimum requirement and then withdraw from that surplus amount if needed.
Shop around for the loan that best suits your current and future needs. Get a pre-approval guarantee if you haven’t already selected your home. You may choose to engage a mortgage broker to help you narrow down your choice of various options.
Step 4 – Be prepared for all the costs involved in making a home purchase
Once you’ve made an offer and it has been accepted, make certain to do your own due diligence on the property before proceeding. Building, pest, electrical and strata inspections are a worthwhile expense as they will alert you to any major concerns, such as faulty wiring or foundation and plumbing problems.
Step 5 – The importance of conveyancing
Conveyancing is the transfer of the property title from one person to another, and all the necessary legal steps from when you sign the contract to when you receive the keys to move in. It is important to consider a professional who will ensure all legal requirements are covered. They will also be able to advise you of additional costs you may not be aware of such as government taxes and fees.
Fees from different conveyancing practitioners will range from low to high. The most important consideration when choosing conveyancing services is that the conveyancers are licensed, experienced, and that they have a deep and accurate knowledge of all aspects of property law and how it applies in your state. You want a strong, clear communicator who has your best interests at heart.