10 Things To Consider When Buying Your First Home

So you're ready to buy your very first home, look at you go. With a very grown-up decision comes a lot of grown-up responsibilities, some of which you may not have considered prior to this point.

Lifehacker is teaming up with BPAY to make all stages of your financial life a little bit easier.

If you're truly ready to take the property plunge, here are 10 things you should know.

#1 Do you have a 20% deposit?

While it's possible to get a loan without one, a 20 per cent deposit or more will give you greater loan options and probably wipe out the requirement for Lender’s Mortgage Insurance. Save as much as you can.

#2 Shop around for a loan

Consider factors like fixed vs variable interest rates, additional costs, weekly repayment amount, and everything else.

#3 Think ahead when choosing a place

Consider what you want out of a house and any plans you have for the future. If you're thinking about having kids, you'll wanna make sure the place you buy has enough room and is appropriate for raising them. You'll also need to consider schools in the area and things like how hard it's going to be to get to work in the mornings.

#4 Do a lot of research into the area

Amenities are important, but you'll also want to look into things like what your neighbours might be like. For example, moving into an area with a lot of young sharehouses may mean a greater chance of frequent parties in the area.

If you can, have a chat with a few people in the area and get their take on what it's like to live there. If you don't have a garage or a permanent spot to park, you'll wanna ensure that there's enough street parking.

#5 Check the property like a maniac

When looking at a potential home, be sure to check absolutely everything you can. In particular, be on the lookout for mould, cracks, and other defects to make sure you won't be hit with repair or renovation costs when you move in. If you can, get a property report and go through it with a lawyer.

You should also be wary of any extra costs. If you're buying a unit, for example, you'll probably have to pay quarterly strata fees. This point also extends to any extra costs associated with your home loan, so, you know, think hard about every single thing before you sign your life away. If any extra bills come up, pay them easily with BPAY.

#6 Look into the First Home Owner Grant in your state

You might be eligible for a government grant if you meet the criteria, which will be a big help when it comes time to start laying some actual money down.

The conditions differ from state to state, but there's a handy resource right here if you're keen to know more.

#7 Get ready to live that budget life

This goes without saying, but be prepared to stick to a pretty strict budget for a little while to ensure your finances are in check. Hell, if you've managed to save up the hefty deposit, you're probably already acutely aware of this.

#8 Be realistic

High repayments can really make your life difficult.

What I'm saying is, don't sell out too much of your lifestyle for a house, because you'll eventually regret it.

#9 Take your utilities into consideration

This can be a little tricky, but try and have an idea of what utilities might cost you in your new home. Will you need to fork out for a more expensive internet connection in the area? Are you moving somewhere which requires a lot of heating or cooling? Are you gonna be using a lot of power for whatever reason?

It's also a really good idea to set up automatic or scheduled payments to avoid late fees on those bills because unexpected costs can throw your entire budget out of whack. You can schedule your bills in your online banking with BPAY, which is convenient because it's also an easy way to pay your bills anyway.

#10 You might have to look outside of where you actually want to live

Depending on how much money you can get from the bank, you may have to expand your scope a little further than you initially intended, particularly if you live in Sydney or Melbourne.

I know, it's a bummer, but think of it as a stepping stone on the way to your dream home.

I know there's a lot to digest before embarking on the journey to your very first home, but it's worth taking your time with it all. Think hard about the decisions you make and examine all the costs as close as you can because it could save you a lot of money.

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Comments

    A few things to consider with the 20% rule.

    Firstly, you dont actually NEED 20%. You can get away with less, there are just extra costs if you do. Like the Lenders Mortgage Insurance the point mentions. But when you're talking about a $600k property, the LMI is relatively small compared to the loan, and may be worth paying just to get that foot in the door.

    Secondly, other amounts can count towards your deposit. If you're getting close to your goal amount, see if the lender will consider a good rental record. There are some that will include your rental payments over a certain time as part of your deposit. You may also find that the First Home Owners Grant and Stamp Duty Exemption count as well. So ask about them.

    Thirdly, Government rules change around all this at various times. In January 2020 for example, there is a new Govt scheme coming in called the First Home Loan Deposit Scheme. In short, it lowers what you need to put into a deposit to 5%, and guarantees the rest.

    I hope Lifehacker does a story on it once its up and running, because it could be a much faster way to get into the market if it works as it should. 20% of a $600k property is a huge amount with the prices constantly going up to counter any progress while 5% is relatively easy to get to. $30k is still a lot, but its manageable.

    End of the day, ask questions of a broker and see where you stand. The hardest thing for me was making that first move and going into a lender.

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