The combination of historically low-interest rates, which increased their borrowing power; a pause for investor competition for entry-level properties; and government support through programs like the First Home Loan Deposit Scheme which decreased the deposit hurdle for many new entrants, made last year a great year for first home buyers.
Before you sign the dotted line, here are some tips to help you buy your first home.
1. Re Investing
Although the idea of owning your home is appealing, it is also financially attractive to make your first property investment property.
This allows you to move to where you want, but you can’t buy a property as a tenant. It also gives you the chance to invest in property that you can afford.
All costs are now tax-deductible and can be up to 40% less than the price of your home.
Don’t try to run before you can walk.
Many people desire to live in the same type of home as their parents, which took them 30-40 years to build.
Consider it an apartment on a quiet street in a great neighborhood, close to amenities and public transport.
3. Think About The Bank Of Mom And Dad
High property prices make it more difficult to get into the property market. More Australians are reaching out to their parents for financial help.
Because of rising living costs and flat incomes, younger buyers have greater difficulty saving their deposits.
Their parents, on the other hand, have seen significant increases in their home’s value, which has given them ample equity to lend against to help their kids.
4. Learn About The Associated Costs
Too many first home buyers Sydney are too focused on the price of a property, and neglect to consider the other costs associated with homeownership.
First, stamp duty is a tax that can amount to about 5% of the purchase price. Although there are some stamp duty concessions for first-home owners, these come with strict guidelines as well as maximum purchase prices.
Conveyancing is another cost. This refers to the legal fees involved in the transaction, including the transfer of ownership from the seller.
There are also moving expenses to be aware of.
Renters who become homeowners learn all about the costs their landlords used to charge, many of which they probably didn’t know.
These fees include insurances, council rates, and owner’s corporation or body corporate fees if your new house is attached, as well as repair and maintenance.
These expenses can run into the thousands each year, so budget for them every year.
A rising interest rate on your mortgage is another cost of homeownership. If and when this happens, you will need to pay it.
5. Do Not Be Afraid To Seek Advice
Agents prey on first-home buyers by attracting them with clever marketing and then negotiating for an eager customer who is eager to move up the property ladder.
They may have overpaid, paid too much, and bought on the main street before long.
This leads to the first home buyer regretting their decision and wishing that they never bought a property.
6. Fear Of Missing Out
A lot of buyers make mistakes because they fear missing out.
It is possible to fall prey to the pressures of auctions, get bored looking at others, or follow their lead.
Because they are excited about becoming homeowners, they tend to overpay.
7. Long-term thinking is key
Do not purchase the property if you do not want to live there in 20 years.
Do not purchase the property if you don’t need it back within 0-5 years.
Entry and exit costs are too high; mistakes are too costly.