Tips for Buyers

Top 5 Tips for First Home Buyers

Buying your first home can be daunting – both financially and emotionally.   It’s likely to be one of the biggest investments you’ll make, so the team at Higgins have compiled their top 5 tips to guide you.

Start Saving now!

House deposits can take a while to save, so it’s smart to start saving as soon as you can.     Save the biggest deposit that you can.  This not only demonstrates to your lender that you can exercise enough discipline to accumulate a large amount of savings, but you will also have a buffer of equity in the property from the beginning.

Buy below your maximum price

Your bank may suggest you can borrow up to $400K in your initial meeting, but it’s much safer to search for a home that is well below your maximum price.  Buy a property that you can afford now so that you don’t overstretch yourself.   Many people count on a future job promotion to help keep them afloat – but what if that promotion doesn’t come?

Allow for extra costs

There are extra costs associated with buying a property. Not only is there stamp duty, legal representative fees and inspection report fees to consider, but if you choose to borrow over 80% of the value of the property, you’ll be faced with lenders mortgage insurance (LMI).  LMI isn’t actually for you – it’s for the lender, but you’re the one that has to pay for it.    These extras quickly add up and are a burden if you haven’t accounted for them.

Don’t forget that interest rates are at historic lows – so be prudent and allow for at least a couple of percent increase over the next few years.

Choose between “wants” and “needs”

It’s very easy to confuse your”wants” with your “needs”, however it’s important to distinquish the two when buying.  Do you really need that brand new 4 bedroom house in that particular suburb, or is it something you want?      Ensure you take a good look and compare you salary, debt levels, costs of living and what repayments would be like if you purchased the dream property.    Could you really afford it?  Comfortably?      If not it’s time to priortise what features are the most imortant in your new home.   Your first home won’t be your last, so it’s ok to compromise.

Take advantage of government concessions

When you’re purchasing your first home, every dollar can help.      Ensure you take advantage of any state or local government concessions or incentives on offer.

Due diligence

Read and seek out as much information as you can, regarding budgeting, lending institutions other than the big 4, as there is lots of new information out there,  which could help get you on your way.