Are you a first home buyer?
Buying a first home
As a first home buyer, you may be eligible for one of the First Home Buyers Grants, which is equivalent to a tax free grant of $15,000 on new property plus stamp duty on new purchasers up to $550,000 then sliding scale to $650,000 which is the cut off for the grant.
First Home Buyers Grants
As a first home buyer, you may be eligible for one of the First Home Buyers Grants, which is equivalent to a tax-free grant of $7,000.
Dependent upon where you live in Australia you can apply or find out more information about the First Home Owners Grant from the following websites:
Can I afford it?
Before you start the home buying process naturally you’ll need to work out just how much you can afford. This will be shaped by a number of factors, including how much you earn, or, if you are buying together with other people, how much their income is. You also need to take into account your monthly spending on other commitments like loans etc. To get a mortgage you’ll need to do a budget that accurately set out your assets and liabilities.
It’s important to be realistic with your budget. Once you have deducted your total expenses from your income you’ll gain an idea of how much you can afford towards repaying a mortgage.
Use our handy mortgage borrowing power calculator to give you a rough guide as to how much you can borrow.
Other expenses must also be factored into the equation when purchasing a home such as stamp duty rate and mortgage duty rate. These amounts will reduce the amount you can spend on buying a house and vary from state to state.
Use our handy stamp duty calculator to help you calculate your stamp duty.
In most cases a deposit of 10 percent of the price of the property is required by the vendor to show your intention to purchase a property. However, this may vary. Ask your real estate agent if in doubt. Deposit bonds, issued by insurance companies to provide a guarantee to the vendor that the deposit will be paid, may also be used.
Once you’ve worked out your financial situation and have an idea on how much you can borrow, you can then start looking for your home. Deciding what area you’d like to live in and what kind of property you want to buy are key considerations. For more tips on buying your home see our guide 10 steps to help make buying easier.
Getting a Mortgage
If you’re over 18 and have a regular income to meet loan repayments most financial institutions can offer home loans that will enable you to purchase the property of your choice whether it’s a house, unit, townhouse or house and land package.
There are many types of home loans so it’s important to do your research as to which will suit you best.
Of course the more often you make mortgage repayments, the lower the interest cost will be and the sooner your home loan will be repaid (however, this will depend on the terms of your particular mortgage product and whether additional or lump sum repayments are also allowed).
Fixed interest home loans generally are not as flexible as the variable type and carry charges for early repayment. Your mortgage repayments are determined by the amount borrowed, the term of your home loan, frequency of the repayment and the interest rate (although you will need to review the terms of your particular mortgage).
Use our mortgage repayment calculator to ascertain the amount of your mortgage repayments based on different criteria (interest rates, mortgage duration etc).
Hunting for your ideal property can be a daunting task unless you are well prepared. To help save time and expense, narrow down your options to the area and type of property you’re after.
Taking along a property inspection checklist with you is a good idea. The list might include things like the size of the property, condition, size and number of rooms, council zoning requirements, neighbourhood facilities etc.
So you’ve seen the property you’d like to purchase. What next? There are many considerations to be taken into account at this stage, including liaising with your home loan provider to make sure your finances are in order, the real estate agent selling the property and your solicitor/conveyancer.
The most commonly used process for property changing hands is via private treaty. Here, a real estate agent, or the owner themselves, sets an asking price. The property is put on the market and a buyer is sought. The price is often negotiable.
Making an Offer
To make an offer, speak to the real estate agent handling the property. They will then liaise with the owners of the property. Usually there will be some price negotiation involved but when agreement is mutual, a contract of sale is signed by both the vendor and the purchaser. This is termed ‘exchanging contracts’ and is the time when you place your deposit.
Sale by public auction is preferred in a buoyant market or in the following situations:
- properties in the top fifty suburbs
- there is more than one qualified buyer as the increased competition will lead to competitive bidding and hopefully an increased sale price
- the property is unique and therefore hard to value
- the vendor nominates a specified auction date.
Tip: If a vendor is considering selling by auction it is advisable to do extensive research as a skilled auctioneer can significantly enhance the sale price. An increasing number of properties these days are sold by auction. In some areas you are required to register with the agent selling the property before you are permitted to bid so check this first. Once the auction starts, you must display your bidder number each time you make a bid.
If bidding does not reach the owner’s reserve price the property is not sold, or “passed in.” The highest bidder then has first opportunity to negotiate with the seller and the agent.
If your bid is successful you will be required to sign the contract and pay a deposit then and there, usually 10 percent. Remember to take along means of payment.
There is no cooling off period on a sale contract exchanged within 24 hours of the auction.
Once contracts have been exchanged conveyancing is the next step in the buying process. This is usually achieved via a solicitor, a conveyancer or by yourself, the purchaser, using a conveyancing kit.
The last step of the process of buying your new home is finally to move into it. Congratulations on your purchase! Please don’t hesitate to contact us if there is anything we can help you with.