Buying your first home can be exciting! There’s no better feeling that investing in your future. When done right, a new home purchase can be a wonderful way to provide for your family and increase your financial worth. New buyers must learn how the market works and what they need to do to get through the process. If you’re a first time home buyer, there are a few things you should know before you apply for a mortgage.
Start Your Home Hunt with Pre-approval
Every new home buyer should go through the loan pre-approval process before doing anything else. This allows you to get in touch with a lender, provide your information and determine how much you can afford to spend. It helps you put your finances in perspective, so you have a realistic expectation when you look at properties. Pre-approval tells real estate agents and sellers that you are serious about moving forward with a purchase.
Take Advantage of the First Home Buyers Grant
The Australian government offers a grant to first home buyers that can add up to $15,000 or even $20,000 to put towards the purchase. To be eligible, candidates must be at least 18 years old and have never owned a home before. If you and the property you plan to buy or build on qualifies, make sure you apply to help offset the cost of your investment.
Be Prepared to Pay the Stamp Duty Tax
Don’t let the Stamp Duty tax catch your bank account unaware. This is often overlooked when buying your first home; that is until you try to complete the sale. A Stamp Duty tax must be paid on settlement and usually costs 2% to 3% of the sale price. Amounts will vary, so make sure you know how much will be required before you agree to buy.
Lender’s Mortgage Insurance
You may be required to pay for LMI or Lender’s Mortgage Insurance. This is usually required if you are borrowing more than 80% of the home’s value. If you want to avoid this additional fee, try coming up with a bigger deposit. A higher deposit amount may remove the LMI requirement.
Contract of Sale Review
Your contract of sale must be reviewed by a qualified conveyancer or solicitor before you make an offer on the property. This is an important step when buying your first home because it ensures that the contract is in good order before you commit. Try to obtain a copy of the contract of sale as soon as possible, so you can get it reviewed right away.
Buying Your First Home the Right Way
Buying your first home isn’t just a big financial commitment, it’s also a big time and energy commitment. You must learn about the ins and outs of real estate and complete the necessary tasks as you work through each step. Make sure you do it the right way by getting help from an expert. Contact Seajay Mortgage Brokers to learn more about financing your first home.