Things to know to buy your first home

 

 Are you thinking about buying your first home but you don’t know where to start or what to do? Do you need a help? I can give you some simple tips to start your first house hunting. 

I really sounded like a real estate agent, didn’t I? Don’t worry. Neither I am an agent nor I work for the property industry. Therefore I have to make clear that my tips are from my live experiences not from a professional background. Quite often, I find that professional advices are too difficult to understand (for me) and their statistics are unclear to figure out what actually they meant. So, I would like to share my personal experiences and some simple tips with people who are planning on buying their first property. 

 

 

I have bought 4 properties and sold 3 of them since I came to Australia (12.5 years). It wouldn’t be considered as exclusive experiences for the professionals but I believe that as an ordinary person, I have had bit of understandings about properties to talk about. I am also currently helping my sisters to buy their first home and looking for an investment property for my husband and myself. While I am searching for a suitable property for my sisters and helping them out for the preparation of purchasing property, I have realised again that it is not a simple mission for the first home buyers who have lack of knowledge about property markets and the actual process of purchasing properties. So, I hope my experiences and tips can be a little help for the people who intend to buy their first HOME. 

There are two major pieces  you need to consider when you decide to purchase your first property. First one is finding the right property for you and second is how to buy the property (process) that you wish to buy. I will write about them in two blogs as it could be too long to read (I don’t want you to get bored J). So, let’s start with how to find the right one.

 

1.      Find out how much you can afford : When you are ready for the house hunting, the first thing you have to certainly know is your budget. You need to find out how much you can afford to buy your first property. Go onto web sites that shows the comparisons of current interest rates in order to find the best deal for you. I highly recommend  using Canstar  http://www.canstar.com.au/interest-rate-comparison/ as it was easy to see the comparison rates between mortgagers. Little differences of interest rates can make very big differences over the years so choosing the right mortgage is very important. When you find out the right one for you, you can contact a bank or mortgage broker to learn actual figures you can borrow. I strongly recommend you to have at least 20% of deposit to avoid extra expense called ‘Mortgage Insurance’ on the top of the mortgage. Remember that you also need to pay stamp duty and fees for lawyer. The less you borrow the better you will be so don’t rely on how much you can borrow (Mortgagers will be always happy to lend as much as they can to get more profit for them (not you)) . How much you can afford to pay is more important. I will try to talk more about this in my next blog.

 

2.      Keep your budget : Now you know how much you can borrow and how much you can pay for your first home so you can start looking for properties. When you start going for inspections, you will soon realise that always better ones and more expensive ones attract more of your attention. We all want to have newer, bigger and  better renovated properties but don’t forget that you need to pay more for them (Often far more than necessary as they attract other buyers to compete with you). Stay in your budget and don’t over stretch your limit. Buying a house (having a mortgage) is a huge commitment in our life. If you buy a house that is over your limit, it can give you a short term satisfactory but you will need to carry on the financial burden for a very, very long time.
 

3.      Don’t fall in love with a property : You need to be rational and realistic to buy the right house which can offer you warm and comfy nest at the present and also future growth. Many property professions said that we make money on properties when buying not selling and I couldn’t agree more. If you overpaid for a property when you buy because you love it, how can you expect capital growth in future. When you fall in love with a property, your mind is not clear enough to find out the real value of the property so you are likely to pay more than necessary. Of course, you will live in the place so you must like the house but don’t be too emotional about the beautifications of the property. As long as the property has got a potential to get improved, you can change it as you like in future so try to find a real value of the property instead of being emotionally attached to a well presented property.

 

4.      Inspect as many places as possible : I know sometimes it can be frustrating to go to inspections to find a right house but take it as your homework. You need to see as many places as possible to find the right one. You can be lucky to find the one fairly soon but sometimes it can take you quite long time to find the place which is suitable for you so, be patient. Try to enjoy looking at properties and comparing the value of each property. If you see more, you will know better about the real value of properties in current market and you will become clearer about what you can purchase with your budget.

 

5.      Location! Location! Location! : “Worst house in a best street!” Apparently, location is a very important point to check when you buy a house. Try to avoid buying a house in a busy road or street as it is very stressful to live and also you never can get good price when you want to sell. Try to buy a property in a good location such as quite surrounding, less units, close to the beaches and close to local shopping areas etc... However, unfortunately the property prices in the good locations will disappoint you a lot as they are far higher than you can afford. I can suggest you to look around suburbs close to the well-known suburbs which is still not recognised as a good one but there is potential to grow.

 

6.      First one, not last one : Many first home buyers easily make a mistake by paying more for a bigger and more expensive property as they think they will live in the property for good. Nothing is permanent so don’t think the first property will be your last one to buy. Be conservative and be aware of your capacity. Take your first property as a first step (not the last one) so be more careful in choosing and buying so you can make a next step easier when you are ready.

 

7.      Look for a potential : When you inspect properties, try to look for a potential which can make the property better in future. A sunroom can be used as a kids room or a study and internal laundry can be an extra toilet or shower. Well shaped living room can be set up as a temporary room. Therefore, don’t look at the only present outlook and try to see the potential which can add value on the property in future.

 

8.      Listen but don’t believe everything : When you are in house hunting business, you can have opportunities to talk with real estate agents. Certainly, they have more knowledge and experiences in property market so listen carefully what they talk/advise  but remember that they are working for sellers not for you, buyer. Therefore the information can be less favourable for buyers. Listen carefully for educating yourself but decision should be made by your own judgement. Also try to get useful information from them as much as you can. Strata levy (if there is any), Council levy, outgoings, any prospective issues regarding the building, current rent (just in case) etc…. When you know more, you are in the better position to buy the right property.

 

9.      Be patient and wait : At the moment, property market is extremely heated up by buyers so it looks like buyers are competing with each other. Therefore property prices are heading up and up unreasonably. If market is too hot, you can hardly get a good value property. Be patient and wait. There are always ups and downs.  You don’t need to fight with other buyers to increase property prices and overpay. None of you can be a winner but only vendors when the market is thriving. As I mentioned earlier, buying a house is a BIG commitment so you need to know how to wait in order to grab the right chance.  

 

I hope my tips do make sense to you and help to get your head around. Buying a house can be difficult as you need to start limiting your expenses to pay off the mortgage (for a very long period)  but owning your own home is indescribably rewarding.

 

Good luck for your house hunting!