Its My Home : 2016
7 IT’S MY HOME 1DETERMINE YOUR BUDGET First, you must decide how much you can afford to spend – keeping in mind all of the additional costs associated with buying a home. The largest of these is stamp duty, which varies by state and is generally charged as a percentage of the purchase price. In some cases, this cost may be partially offset by First Home Owner Grants (FHOGs) intended to encourage first homebuyers to enter the property market. FHOGs also vary from state-to- state and have changed recently to put focus on new-home building rather than established properties. If you are a first homebuyer buying an established house in New South Wales for $500,000, you would pay stamp duty of $17,990 and not be eligible for a FHOG. But if you paid the same for a newly-built property there is no stamp duty and you may be eligible for a FHOG of up to $10,000. Various concessions are available for first homebuyers depending on where they buy and the type of property they buy. For example, South Australia is offering a partial stamp duty concession on purchases of new off-the-plan apartments until June 2016. 2RESEARCH THE MARKET Once you’ve set your budget and chosen your ideal property, it is important to research the market in the area in which it is located. When you are considering an area, look at amenities like public transport, educational facilities and shopping centres. Geographical factors should also be considered such as distance to the CBD and any infrastructure that will affect noise levels or the aspect of the property, like substations or large electricity towers. Websites that will help with research include realestate.com.au and domain.com.au. You could also build a relationship with real estate agents in the area so they can let you know of properties that are coming up before they are advertised. If finding the right property is proving difficult, you might consider using a buyer’s agent who can do all the house hunting for you, will work to your budget and negotiate on your behalf. Unlike a real estate agent who works for the vendor, a buyer’s agent works solely for the buyer. 3CHOOSETHERIGHT HOME LOAN AND GET PRE-APPROVAL While searching for your dream home or investment property it’s a good idea to get pre-approval for your loan from your lender or mortgage broker. You will need to provide employment details including income and expenses, assets and liabilities, and some personal details. Mortgage brokers may be able to offer you a range of loan products from various lenders, so they can be a good option for a first homebuyer. Usually pre-approvals will be valid for 90 days, however this can vary from lender to lender. As with any financial decision, it’s wise to shop around for the best deal. One important consideration when deciding how much to borrow is the size of your deposit. Most banks and financial institutions generally require you to have a 20 per cent deposit. This means that on a property worth $500,000 you will need to have saved at least $100,000 – plus enough to cover stamp duty and any legal and moving costs. There are other options available if you don’t have a 20 per cent deposit. Lenders Mortgage Insurance (LMI) is one way of getting into homeownership with a deposit as low as five per cent. Rather than having to save a $100,000 deposit on a $500,000 property, you may be able to purchase with a deposit Pictures:Shutterstock.