Five things every first-home buyer should know

Ready to take the plunge and buy your first home? These tips should help smooth the way.

Lock in loan pre-approval

Make sure you have an active pre-approval from your lender. It saves you the disappointment when you like a house and want to make an offer, but you can’t sign a contract. According to CommBank, conditional pre-approval is an indication from a lender that you’re eligible to apply for a home loan up to a certain limit.

You don’t have to take out the loan, and the lender isn’t obliged to lend you that amount, but it shows agents and sellers you’re serious about buying and can afford to buy. Make sure you have an active pre-approval before making an offer.

Make Genuine Offers

It won’t play into your favour to make low-ball offers on a property you like. From a negotiation point of view, if you make a low offer, the agent won’t take you seriously. You might even insult the vendor, and they won’t want to deal with you. It’s better to make a reasonable offer based on your research. Put your offer in writing along with any conditions you’d like to add to the sale. Your solicitor, conveyancer or buyers’ advocate can help you prepare the letter of offer so you don’t miss anything important.

Get familiar with all the costs

Everyone who needs a loan to buy their first home is quick to get educated about interest rates and loan repayments, but there are a whole host of other expenses you’ll need to cover when you become a home owner. From lenders mortgage insurance (LMI) to stamp duty, legal fees and home insurance, the costs of buying property can quickly add up. If you’re across these costs upfront, there’s less chance you’ll end up with debt you can’t afford.

Don’t spend to your limit

A lot of people will find out their borrowing capacity and then max it out. the idea is to pay off our mortgage and still live comfortably. At the moment, we are very lucky: there are low interest rates available. New home buyers should budget if they can afford the repayments if interest rates go up 2 points. Other changes include if negative gearing benefits change, job loss, or a tenant stops paying rent.

Get familiar with the help available

Chances are you’re aware of the First Home Owner Grant, a one-off payment for eligible first-home buyers, but did you know you might also be eligible for a stamp duty exemption or discount? You might also be eligible for the First Home Loan Deposit Scheme, which allows first home buyers to purchase a home with a deposit of as little as five per cent without paying LMI, or the First Home Super Saver Scheme, which allows you to save money for your first home inside your super fund.

Five things every first-home buyer should know (domain.com.au)