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First Home Buyer Guide (24 simple steps)

home buyers

Buying your first house can be a daunting process, but with the right information, you’ll be on your way to securing your first home with minimal stress.

To help you through this process we’ve outlined several key steps and considerations, to enable you to enter the market with confidence.

Firstly, is the timing right?

1. Identify the hidden costs that come with homeownership

Upfront costs could take up to 7% or potentially more of the property price and you could be looking at spending an extra few grand on government fees, building inspections, mortgage brokers, conveyancing lawyers and more.

2. Work out how much your repayments would be

Most banks will have an interactive mortgage calculator available on their website where you can input your deposit + property price + mortgage term (eg. 30 years) + interest rate, to find out what your weekly/monthly payments will be.

3. Create a long-term savings scheme

In order to save quicker, it can be a good idea to budget your weekly expenditure. Cancel disused subscriptions (streaming services, magazines etc.), bring your own lunch to work, cycle rather than take public transport, save buying food out for social occasions etc.

Some banking apps even categorise your spending so you can identify where your money is going.

4. Create a term deposit savings account

If you already have savings set aside for your house deposit, consider locking them away for a few months or even years in a term deposit. Shop around to see which bank will give you the best return on your investment.

Once you’ve decided that you’re ready to buy property, you need to:

5. Check whether you have enough for your deposit

The suggested deposit for a property in Australia is 20%, however, you may wish to pay more (if you’ve saved more), or less (special terms apply). If your deposit is less than 20%, you’ll need to apply for Lenders Mortgage Insurance (LMI) which can be paid upfront or concurrently with your home loan. The rate of LMI is calculated after the bank undergoes a value assessment of the property to you wish to purchase and compares the loan to value ratio.

6. Make allowance for stamp duty, government and conveyancing fees

Stamp duty is paid when you purchase property in Australia, however, a first home buyer exemption resulting in a significantly reduced rate can apply if the buyer meets certain requirements.

For example, if you are buying in Victoria, the following will apply:

  •  You enter into a contract of sale to buy your first home on or after 1 July 2017.
  •  Your home has a dutiable value of $600,000 or less to receive the first home buyer duty exemption, $600,001 to $750,000 to receive the first home buyer duty concession.
  •  All the purchasers of the property meet the First Home Owner Grant eligibility criteria, and at least one purchaser satisfies the residency requirement.

– State Revenue Office VictoriaFirst home buyer duty exemption, concession or reduction

Government fees can include: lease transfer, registrations, title searches etc.

Conveyancing fees apply when placing an offer, reading over legal documents and at the settlement stage of the process.

7. Find out whether you’re eligible for a First Home Owner Grant 

You can find out whether you’re eligible for the First Home Owner Grant via the State Revenue Office Victoria website here.

8. Decide on the purpose of your property purchase

Every buyer has a different reason for purchasing property – some for investment purposes, others might be looking for a small apartment close to work, while some would rather a lifestyle block in a family-friendly community. It is important to identify what you’re looking for from the outset to ensure you don’t spend time looking at places that don’t meet your needs. That’s not to say that you shouldn’t look a little further afield than your preferential neighbourhoods (as sometimes areas which border popular suburbs can be significantly cheaper), but future planning is essential.

Beginning the search

9. Explore your options

Begin your engagement with a selection of agents, property search platforms and go out to viewings. Approach the agents with a shopping list of what you’re after – eg. a new, one-bedroom, off-the-plan apartment in central Melbourne with plenty of outdoor space, under $450,000. This will hopefully give them a good understanding of what you’re after so you can view properties better suited to your requirements.

10. Study suburb insights

Do thorough research of the area, by looking up new planning developments proposed for nearby sites. Consider if new buildings could potentially block your view, or whether a proposed entertainment centre could add significant value to your property. Think about the quality of education and amenities nearby and whether there are sufficient, public transport options and supermarkets.

11. Check the sales history and rental yield

Look up the address of the property online, and check the previous sales history of the area. Is the property you’re looking at fairly priced compared to other properties in the area? Has there been an increase in value over the past few years?

It’s also a good idea to ask the agent what the suggested rental yield of the property is (what they would rent it out for). If at some point you needed to rent out your property, would this weekly income cover the mortgage?

12. Ensure that an insurance company will cover the property you’re interested in

There have been issues in the past where owners of coastal properties found it challenging to acquire new insurance following concerns regarding sea levels rising. To avoid any issues down the track, approach an insurance company and find out whether they would cover the property you’re interested in, and what the annual fee would be.

13. Check you can afford the annual rates

Annual council rates can work out to cost as little as $3.50 per day, however, this rate will fluctuate depending on the average valuation trends of an area. Your real estate agent should be able to tell you what the current annual rates would be for the property, which you can then factor into the annual fees of maintaining your new home.

14. Make sure you can visualise yourself living there

Property is one of the biggest purchases you’ll ever make, so you will want to ensure the house you’re buying ticks all the boxes. Keep looking until you find a place which meets your needs, fits within your budget and is located in an area you’re happy to live in.

Placing an offer

15. Engage a conveyancer or solicitor to read over the offer agreement

Placing an offer is a legally binding process, so it’s important to ensure you’ve read through all the paperwork carefully. By engaging a conveyancing lawyer, you can rest assured that if your offer is accepted, you are far less likely to be sprung with any financial issues or unforeseen terms in future.

16. Decide on your terms of sale and check you agree with the vendor’s

Don’t be afraid to make a cheeky offer, the worst that can happen is that the vendor might make you a counter-offer. Before signing any paperwork, make sure you feel 100% confident in your decision.

17. Go through the Title covenants with a fine-tooth comb

There are many unique covenants that are attached to certain properties, and different rules apply for apartments, off-the-plan new builds, detached dwellings, land and more. Everything from how tall your trees can be, to whether you can paint your front door should be outlined. Ensure you read this carefully as in some cases you can contest certain restrictions.

18. Submit your offer

Many first home buyers will make a ‘conditional offer subject to finance’ – which means they have raised the deposit but still need to secure a home loan. Speak with a financial advisor or mortgage broker about which option is right for you.

“[In Victoria] you can make your offer subject to multiple conditions and if the conditions are not met, you can back out of the sale without a penalty. This offers the purchaser a level of protection that can make a transaction go more smoothly and provide some stress relief.”

– Tony Harrington, Licensed Estate Agent

*While this is the case in Victoria, some states incur a penalty fee which is a percentage of the deposit amount.

Settlement

19. Once your offer has been accepted, check again that you have clearly read, understand and agree with the terms of sale

When it comes to the paperwork required to secure your new home, there can be a lot of jargon. Employing a conveyancing lawyer to read through settlement documentation will give you the confidence that the vendor has provided you with realistic and fair terms of sale. Feel free to raise any questions or concerns you have with your lawyer as they will often have a wealth of experience to draw on from working with hundreds of clients in a similar situation.

20. Apply for your home loan

Firstly, choose between a fixed rate or variable rate.

Fixed rate: Interest rate stays the same for a certain period of time – providing you with certainty and routine payments.

Variable rate: As interest rates fluctuate, so does your repayment rate. Whilst more unpredictable, variable rates can give you the flexibility to pay off your loan sooner.

There are also three ways of paying your loan.

Interest offset account: A transaction account which is linked to your home loan. The money saved in this account can be used to offset interest paid on your mortgage.

Principle + interest loan: Paying both the property and interest at the same time. Repayment rates may seem high, but you’ll pay off your mortgage a lot quicker.

Interest-only loan: Interest-only means less weekly payments but will draw your mortgage term out.

21. Cooling-off period

The ‘cooling-off period’ is approximately 2-5 business days after purchase in which the buyer may back out of the sale.* It gives a bit of leeway for the buyer to undergo further due diligence, and to decide whether they would like to complete the sale. If the buyer reneges on the sale, they will have to pay a small termination fee.

*Speak to your lawyer or real estate agent about whether the cooling-off period applies to your purchase.

22. Complete a final inspection of the property

Before you move in, ensure the property is exactly as described (if buying off-the-plan) – all chattels are included, no damage has been made to the property, any prior arrangements have been delivered (eg. if you requested a window to be fixed, check that this has been done).

23. Acquire home insurance

Sign up your home insurance as soon as your name is on the title. Shop around for the best deal.

24. Thank everyone who has helped you along the process

There are usually a lot of people that lend a hand during the house buying process – send them a thank you note to show your appreciation for their help.

 

Article Source: www.urban.com.au

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Commercial

Three out of four mortgage holders who asked for a rate cut, got one: RateCity

mortgage

While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market

Almost three-quarters of variable borrowers who asked for a rate cut, got one, a new survey has found.

In a RateCity.com.au survey of over 1,000 mortgage holders, of those on a variable rate, 52 per cent haggled with their bank for a lower rate. Over 73 per cent of these people were successful in getting at least one rate cut.

A rate reduction of 0.25 per cent could save the average mortgage holder $1,241 in interest after one year and $3,656 after three years. This is based on a $500,000 loan balance with 25 years remaining.

While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market.

mortgage

Omnia 4-6 Horscroft Place, Moorabbin VIC 3189 

RateCity.com.au home loan database analysis:

  • 49 lenders have cut at least one variable rate in the past two months.
  • 10 lenders have hiked variable rates in that time.
  • The vast majority of variable rate cuts are reserved for new customers, not existing ones.

RateCity research director, Sally Tindall, said while the RBA is not expected to move the cash rate tomorrow, one phone call could potentially save the average variable rate mortgage holder thousands.

“Variable rates are at record lows, however, most of these deals are reserved for new customers, not existing ones, unless you specifically ask,” she said.

“A lot of people think a handful of basis points won’t make much of a difference, but if the discount is permanent, then the savings can potentially run into the thousands in just a few years.”

 

Article Source: www.urban.com.au

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Brisbane

Mirvac Picks Up Rejected Brunswick Site

Mirvac

Mirvac has snapped up the site of a rejected mixed-use development from JWLand with plans to expand its residential pipeline in inner Melbourne.

The 6496sq m site overlooking Princes Park includes an old hotel and several dilapidated buildings at 699 Park Street, Brunswick with frontages on Sydney and Brunswick roads.

The ASX-listed property group has yet to disclose the purchase price, and would not confirm reports they had paid about $40 million for the site.

JWLand acquired the site for $30 million and planned to commence construction on the site in late 2017.

But those plans were rejected by the Victorian Civil and Administrative Tribunal, including the demolition of a heritage building to construct 255 apartments, retail space and a child care centre.

Mirvac

▲ The plans for JWLand were rejected by VCAT included multiple buildings along Park Road, Brunswick. 

Mirvac already has plans to build around 200 apartments on the site.

Mirvac head of residential Stuart Penklis said the development would enhance and celebrate the location, as well as being sensitive to the surrounding properties and amenity.

“The current plans see the building at various heights stepping back from Park Street to minimise any impact on Princes Park and maximising the spectacular vistas for residents, but we are still in the process of finalising the scheme,” Penklis said.

“Mirvac is in the early visioning stage for Park Street, with the current scheme looking to yield approximately 200 apartment residences in a range of configurations to appeal to a broad selection of purchasers.

“We have recently seen a trend towards oversized apartments and amalgamations which could see this number change.”

Mirvac plans to launch Park Street in mid-2022, with construction anticipated to commence in late 2022.

Park Street joins Mirvac’s $1.4-billion Victorian apartment portfolio that includes Phoenix, Folia, and Forme in Doncaster; The Eastbourne in East Melbourne; and Yarra’s Edge in Melbourne citywhere planning for tower nine is under way.

 

Article Source: www.theurbandeveloper.com

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Brisbane

Brisbane running out of land for new homes, with less than 3 years’ supply

new homes

Brisbane will run out of available land to build new homes in less than three years – and Noosa has just one year – as a housing crisis grips the state.

The startling projection was revealed via documents released as part of Queensland budget estimates hearings, but Deputy Premier Steven Miles argued that almost 50,000 residential lots were in the process of being unlocked in south-east Queensland following the October 2020 state election.

Under state government rules, all local government areas should have four years’ worth of approved lots – land that is ready to go to market.

But Brisbane has just 2.9 years of approved lot supply, Noosa has 1.1 years, the Gold and Sunshine coasts 1.9 years each, Redland 2.9 years, and Moreton Bay 3.2 years.

But Mr Miles said almost 50,000 residential lots were in the process of being unlocked following the 2020 state election.

“Our strong health response to the COVID-19 pandemic has created a spike in interstate migration which has put pressure on land supply across the state,” he said.

“While COVID has certainly spurred an increase in interstate migration, we would expect to see further increases over the coming years in the lead-up to the 2032 Olympic and Paralympic Games.”

Mr Miles said the majority of the state’s councils had up to 30 years of lot supplies.

In other areas, Bundaberg has 14.9 years, Cairns eight, Gympie 9.6, Ipswich 7.3, Rockhampton 16.2, and Toowoomba 6.1.

Some areas have extremely high rates, with Banana reporting 354 years of supply, Gladstone almost 249 years, and Isaac 363.

Mr Miles said in response to population growth linked to people moving to Queensland from interstate – a boom in new residents not experienced in almost two decades – he established the Growth Areas Team in March 2021.

“The GAT focuses on land supply in south-east Queensland to ensure we can keep up with expected population growth, and the demand for housing and infrastructure development that comes with it,” he said.

Mr Miles said the government had identified Caboolture West as a pilot site for a future growth area program providing 3000 extra homes, while it had also provided $15 million for a wastewater treatment plant to pave the way for up to 5000 extra homes in Southern Redland Bay.

The years of supply are calculated based on uncompleted lot approval and lot certification data prepared by the Queensland Government Statistician’s Office using information provided by councils.

The latest figures come as there are 47,036 people on the state’s social housing register – a 70 per cent increase in just three years – and as rental vacancy rates hit 10-year lows and property prices soar.

According to a report released last year, south-east Queensland needs an extra 31,979 dwellings each year to keep up with demand.

LNP housing spokesman Tim Mander said more land needed to be made available.

“And we need to build the roads, water and sewerage to support it,” he said.

“We must build the infrastructure that protects the lifestyle of the people who live here and that gives opportunities for our kids to get into the market.”

 

Article Source: www.brisbanetimes.com.au

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