Tag Archives: First Home Buyers

How to help your children up the property ladder

How to help your children up the property ladderFor anyone trying to buy a home in today’s market, recent conditions aren’t particularly accommodating. According to the Housing Industry Association’s Affordability Report, the affordability index dropped by 6.4 per cent over the December quarter. This has pushed the rating to 75.6 (a score of 100 represents a balanced market). A mix of incredible price growth and a supply shortage has helped see to this.

In these circumstances, young first home buyers could find it tough to break into several city’s markets, and are often being priced out of their own region. If your kids are struggling to get a foot on the property ladder, there are a few ways you can lend a hand.

Let’s take a look at how you can do this:

Putting a deposit

CoreLogic’s monthly indices show that the average value of houses across Australia’s five biggest cities was $757,330 by the end of January. In Sydney, Australia’s densest city, this figure was a whopping $993,770. Clearly, buying real estate in Australia is more costly an affair than its ever been, making it a journey just to save for the initial down payment.

If you want to invest into the future of your children, why not give them a one-off cash gift that will go toward a deposit. Not only are you speeding up the saving process for them but keeping them motivated and with their eyes on the prize.

Put your home as collateral

For those picking up a home loan for the first time, lending conditions aren’t usually in their favour from the get-go. With no property of their own to put as collateral should things go south, they present a greater risk toward lenders.

If your child is in this situation, it can help immensely to put yourself forward as a guarantor. This means that you’ll put your own home down as collateral for the mortgage, which can help lower the minimum deposit that they have to commit by quite a bit. It could help them to buy a homeand get a foothold in the market much quicker, as well as keep them motivated.

The great thing is that it won’t cost you a cent, but can fast-track your child’s property journey significantly. However, there are obviously big risks to this. Just make sure they have the income and financial stability to make those repayments or you could, in the worst-case scenario, lose your home. Speak with a financial adviser to see if such an approach is right for you and your young adult.

Why should millennials jump into the investment property market?

Why should millennials jump into the investment property market?In today’s market, there are all sorts of people who seek to buy a home for investment purposes. According to Digital Finance Analytics’ 2015 Household Survey, just under one million households own investment property without building any kind of portfolio, while 178,000 households have a collection of investment properties.

These range from people in their 40s and 50s pondering their retirement strategy, to young professionals trying to get a foot in the market early.

With this in mind, some interesting research has recently turned up on the behaviour of the millennials, which may highlight the need for them to invest into real estate.

Millennial Falcon

People generally branded as millennials are those born sometime between 1980 and 2000, and seem to hold different values and objectives to the generations that came before.

Deloitte’s millennial Survey of 2016 revealed that this group of people tend to be far less attached to traditional career-based goals and more on personal development. Just under half of the millennials surveyed expect to change workplaces within two years. Simultaneously, roughly one in five actually intend to stay with their present employer for more than five years.

So, what does this all mean? As David Hill, chief operating officer from Deloitte Australia, suggested, millennials are more independent and more assertive of what they seek, wanting their work to have purpose beyond turning a profit. They are also unafraid to simply seek employment elsewhere until they find a fulfilling line of work.

Plan B

If you’re a millennial yourself and share this sense of free-spiritedness, you may just benefit from buying real estate for investment purposes. It’s likely that this sense of personal independence may not disappear as the decades roll by, and it’s important to have financial backing in the instance that you choose to drop jobs to pursue another passion.

Investment real estate is a practical solution, providing you with a secondary stream of income when your cash flow is erratic or you simply need extra cash to pay the bills.

Furthermore, having a valuable asset that only really goes up in value over time is a great parachute to pull in time of financial need. CoreLogic RP Data’s most recent Market and Housing Update shows that the median price of Australian property was $600,000 by January – a result of a market that, aside from a few slight dips, have only really trended upwards since 1998. This means that investing early could earn you that sweet pay out later down the line if you want to move in a completely different life direction.

Just get in touch with First National Burnie to see how we can turn those dreams into reality.

How do millennials feel about climbing the property ladder?

How do millennials feel about climbing the property ladder? Generation Y, also known as millennials, are the group of people born between 1980 and the early 2000s. As is often the case with generational groups, millennials have their own set of values and ambitions that differentiate them from their predecessors.

These values frame their world view and influence a range of their financial decisions, running the gamut from travel to buying real estate, and especially their first home. So, how do millennials feel about investing in property and potentially beginning a portfolio by climbing the property ladder?

Enthusiastic

The Domain Consumer Insights Study found that, contrary to popular belief, the average age at which a millennial becomes an investment property owner is 25. This is in stark contrast to baby boomers, who purchased their first home nearly two decades after the age of 25.

“The idea of buying an investment property and renting at the same time is now much more commonly accepted, whereas probably 10, 20 years ago you bought your house to have your family in,” explained Jennifer Duke, editor of the Domain Review.

Moreover, the number of millennials who buy multiple properties is on par with older generations. According to the study, 17 per cent of millennials own two or more properties. All of this research implies that millennials are getting on the first rungs of the property ladder fairly early. However, it’s important to note that 26 per cent of millennials don’t fall under this category – they are still living in their parental home.

Apprehensive

While some millennials are embracing purchasing property, there are still a fair amount who have some anxiety regarding the subject. A report compiled by BDO and Co-Op surveyed 18-29 year olds and found that 87 per cent think their generation will never own a home outright.

Yet, 72 per cent of them feel that it’s important to buy a house as soon as they can. In light of this, a whopping 93 per cent of millennials have money saved, according to the report’s findings. This also shows that this group is savvy with savings, with over 65 per cent of them committed to long-term savings goals. This approach has resulted in an average savings per person of more than AU$8,000 or more.

These positive habits might be contributing to why so many of them are in fact ascending the property ladder at fairly young ages.

Common costs for first home buyers

Common costs for first home buyers When you’re buying your first home, there any any number of costs that can slip your mind in the excitement. After you’ve set down that 20 per cent deposit, it can be easy to get carried away and forget about the additional sums that come with setting up and maintaining a home. To help you stay on track and aware of those extra payments, here are some of the most common costs that can sneak by.

Home loan costs

If you’ve been slaving away to save for a deposit, finally getting a hold on of the finance to purchase your home might seem like the end of the road. But the fun doesn’t stop there. Be aware that you’ll also need to make a number of fees for arranging the home loan, such as a settlement charge, service fees and, if you’ve chose a fixed rate mortgage, a tidy sum to lock the rate in place. It’s worth getting some advice on this, especially if you want to set down a repayment schedule.

Legal fees

While it’s important to be across all the legal ins and outs of the sales process, costs for a solicitor or conveyancer can stack up quickly. This isn’t something you’ll want to skimp on, though. They can organise the title transfer, be present during negotiations and help you decipher the contract  – and, in fact, they can make the legalities of the sales journey a whole lot simpler for you!

Taxes

As in love, as with taxes, stamp duties are often commonplace when buying a property. It is a tax on the purchase price of the house and can be a significant proportion in many cases. Each local government typically has their own levy, so investigate what you’ll need to pay when buying your first home. Keep in mind that there’s often a set timeframe in which you’ll need to pay, which is generally before settlement – stay within it and all will be well!

It’s crucial to be prepared when going into your first home purchase. If you’ve got any more questions, your local real estate agent can also inform you on what you’ll need to pay before and after the transaction.

3 reasons to ditch the rental for your own home

x_0_0_0_14100690_300Being a tenant is a reality for most Australians at some point or another in their lives. From the early days of picking flatmates to settling down and finding the perfect apartment or home to rent, you may be a tenant for some time.

However, the time often comes when you wonder whether home ownership is a better option. Sure, you’ll need to take responsibility for regular maintenance and repairs, plus you’ll need to keep on top of your mortgage repayments. That said, the freedom that comes with owning your own home and building up equity in this significant asset can be rewarding.

Buying a home is not a decision to make lightly, so consider all your options carefully and be sure to take a careful analysis of your finances. Here are three reasons why it might be time to ditch the rental.

Use the First Home Owner Grant

Australia’s First Home Owner Grant scheme helps individuals purchase their first property.

It’s a financial incentive that helps mitigate the impact of GST on home ownership, by providing a one-off grant to those who meet the eligibility criteria, explains the federal government.

The amount provided varies from state to state, so have a chat with your local real estate agent or lender about the options available to you.

Benefit from capital growth

You might adore your current suburb, but there’s no harm in investigating nearby suburbs if you’re thinking about buying.

That’s because capital growth projections vary from suburb to suburb, city to city and state to state.

If an area has large-scale infrastructure projects in the pipeline and has experienced favourable capital growth in recent months, it could be a good idea to buy. You could benefit from future capital growth, allowing you to tap into your equity in future years to renovate, upgrade or even buy an investment property. If you’re a tenant, you don’t reap the benefits of capital growth.

Create your ideal home

Sure, you can decorate a rental property with furniture, rugs and colourful vases.

However, painting the walls, renovating the kitchen and sometimes even hanging artwork is a no-no if you’re a tenant rather than a homeowner.

If you’ve got a particular idea about the design aesthetic for your home or are a keen on a spot of DIY, you’ll have a lot more freedom to decorate your own house as you please, compared to living in a rental.

3 tips to conquer your first home buyer jitters

3-tips-to-conquer-your-first-home-buyer-jittersFor many people, buying a first home can be a scary thought. After all, you’re taking on a valuable asset with a significant home loan to fund it. You might feel dizzy at the thought of jumping headfirst into a property market with many houses to choose from. Perhaps your palms start to get sweaty when you wonder how to submit a competitive offer. But buying a first home doesn’t always have to be such a nerve-wracking experience – there are many ways you can help yourself to conquer first home buyer jitters.

Do your due diligence

As a property is a significant purchase, it makes sense to perform the proper due diligence before you finalise your purchase. Due diligence involves keeping an eye on market trends, obtaining a professional inspection for any potential purchases and putting in research regarding amenities and neighbourhoods. This will help to calm any fears you may have about the condition of the property or the area before you finally sign the contract of sale.

Get your finance done and dusted

Before you enter the real estate market, it pays to get your finance pre-approved. This will help you find out how much you can borrow so you can search for a home with confidence. Instead of looking for a home while worrying if it’s too expensive, you can have your search parameters set after meeting with a lender. Don’t forget to factor in other costs you may incur in the purchasing process, such as legal fees, loan establishment and stamp duty – otherwise you might find you blow your budget!

Stick with an agent you trust

As a first home buyer, it’s likely you’ll want to have someone you can trust by your side. From submitting your very first offer or working your way through a sea of bids at an auction, it’s important to have someone guide you on your journey. A trustworthy and knowledgeable real estate agent is the best person to help you through this as they have a sound understanding of the market and the jitters first home buyers can have. After that, it’ll be smooth sailing on the path to home ownership.

Saving money when gardening

saving moneyMany people enjoy spending time in their gardens as a way to beautify their home and relax, but gardening can be much more than just a hobby. It can also help you save money.

Cutting down on grocery bills

Who doesn’t love a fresh salad, juicy tomato or extra helping of delicious herbs? By utilising your home’s garden, you can cut out the middleman and grow herbs and vegetables yourself.

Even property owners with limited space can take advantage of a little sun and water by employing containers. These can be placed on balconies and decks if your yard isn’t big enough to contain a veggie patch.

Tomatoes are one of the most popular gardening choices, as they are easy to grow and provide plenty of return. Lettuce, cucumbers, peppers and squash are also popular choices for beginner gardeners looking to cut down on their grocery bills.

In addition to fruits and vegetables, growing herbs can help you spice up your cooking without costing you at the supermarket. Sage, rosemary, mint, thyme, chives, and basil can all easily be grown in containers, raised beds and in the ground.

Saving on water

For more ambitious gardeners who are looking to save on their utility bills when it comes to water usage, there are plenty of tips and tricks that can help both your bank account and Mother Nature.

For instance, native plants require much less water than those that can’t be found in the area in which you live. Additionally, planting things very close together will lessen the space you must cover when watering and allow you to keep thirsty plants happy while spending less.

It’s also a good idea to recycle water. Whether this means unused water from drinking glasses in your home or rainwater collected in a barrel, there are plenty of ways to keep gardens thriving without turning on your hose.

A recent survey conducted by realestateview.com.au has revealed an interesting snapshot of the current state of the market from a buyers perspective. Drawing information from more than 8,000 property seekers, results indicate demand from first home buyers is increasing and Australian’s are still striving for the great Australian home. Read full article

This infographic was brought to you by Realestateview.com.au’

This infographic was brought to you by Realestateview.com.au

First Home Buyers Get a Jump on Spring

With signs that first home buyers are springing into action, even though in most states they are facing reducing government assistance, First National Real Estate offers some helpful advice for those entering the market, saying research is critical.

Given the current buyer’s market, first home buyers need to take the time they need to do the research required to ensure they buy the best property they can for their hard-earned dollars.

The following tips will help maximise chances of success.

When looking for a property set a price range and stick to it and consider location and condition of the property. Is it close to schools, transport and amenities and does it need major repairs?  Have you budgeted for any necessary repairs?

To save a deposit for a property, remember it is all about discipline.  Cater for emergencies and capitalize on all government incentive and assistance programs.  Establish a budget and a timeline and monitor and evaluate as you go, making any necessary adjustments.

For securing finance, do the research and make sure you understand all the options available to you.  And don’t get too attached to one property, there are plenty more on the market.

Once you have found your property and you are paying the mortgage, make fortnightly payments which could save you thousands in the long run.  And make sure you are prepared for monthly repayments to go up and down in response to rate fluctuations.

The last piece of advice, and the best, is to seek the assistance of an expert who has good local knowledge and has a trustworthy and reliable reputation such as First National Real Estate agents who are renowned for putting their customers first which is why they continue to grow at a time when many others are scaling back.

Seven Habits of Highly Effective Home Buyers

If you find the prospect of buying your first property a little intimidating, don’t worry. Doing some basic research is easier than most people think. It increases your confidence and reduces the chance of making a mistake.

Buying a home is about the biggest financial commitment you’ll ever have to make. However, it’s also going to be an exciting turning point – one that will almost certainly make the most impact on your lifestyle. For many it will be something never done before. Selecting the right home in the right area, organising finance and negotiating the sale – it all sounds a little daunting. Yet it isn’t as complicated as you may think! Turning the home of your dreams into a reality is easier if you’re prepared.

Why seven habits of effective home buyers? Because over the years we’ve seen some traits (habits) the our successful buyers share. What is a “successful buyer”? Let’s just define it as someone who finds the home they want, and gets through the often home buying process without killing themselves, a loved one, the seller, or their real estate agent.

Effective Habit #1: Get pre-approved for a loan

Don’t miss out on a ‘hot’ property, do everything you can to be able to push the ‘GO’ button. It is wise to seek “approval in principle” from your Lender, meaning the Lender has given you approval to borrow up to a certain figure.  This step will save you the grief of looking at homes you can’t afford and put you in a better position to make a serious offer when you do find the right one.

Buying a home is not a task undertaken everyday. It’s important to understand the process of real estate, what you can comfortably afford and the type of loan product best suited to

Choosing the right home loan from the many products available can be daunting. It’s important to understand all the alternatives before making your choice.

It is crucial to work with a good lender throughout the home buying process. Talking to several brokers as well as a finance adviser will definitely help you sort the wheat from the chaff. There are two options available to you when organising finance. You can apply directly to a finance institution or you can use a mortgage broker to help you through the process.

A lending institution will apply a “Qualifying Ratio” which is the percentage of a home buyer’s gross income that can be prudently allocated for debt, based on personal income.

As a general guide, lenders limit the total sum of monthly mortgage principal, interest, tax and insurance payments to 28 per cent of the borrower’s gross monthly income. Furthermore, they may limit the total of all long-term debt payments to 36 per cent of the borrower’s gross monthly income.

Effective Habit #2: Define your must haves, like to haves, and cannot haves

Shopping for a property should be an exciting adventure. If you have a clear picture of what you want and how much you can afford, it can be a fun and rewarding experience.

Face it — when working within a budget, sometimes you have to make some compromises. Knowing what you really need can help narrow your home options and also make decisions easier when it comes to making an offer.

The first step is to decide what kind of home will suit your tastes, your lifestyle and your budget. Start an all-family member housing priority discussion before beginning to look at your options. Determine what you MUST have in a home. Then determine what you would LIKE to have in a home. Talk to your agent about these things. Don’t forget to include what you CAN’T have in a home — that will often be more important than anything else.

Aside from basics such as the suburb, number of bedrooms and price range, there are other important things to consider, depending on your circumstances. Take your time and consider things like proximity to schools, transport and amenities, and the condition of the property. Does it need major repairs?

Don’t know exactly what you must/like/can’t have in a home? That’s OK, it happens ALL the time. Your agent can help you by showing you different homes in your price range with different features to help you get a better understanding of what you’d like in a home.

But at some point you are going to have to make decisions and not wander aimlessly through every home that may possibly fit some undefined set of criteria. That would be a waste of your time, the time of your agent, the home sellers, and everyone else that is involved in a real estate transaction.

Effective Habit #3: Be realistic

Naturally everyone wants to get the most home they can for the least amount of money. Which is, of course, in opposition to the home seller, who wants the most money for their home.

Think about what your expectations are, and work with your agent to see if they are realistic. There’s no point looking for a mansion if you can only afford a cottage. You’re not going to get everything a $300K+ home has to offer for say $160K – it just doesn’t work that way. Once you’ve set your price range, identify the suburbs that have properties in that range – it will save you a lot of legwork. Work closely with your agent, ask them for recent sale prices of similar properties in the area, build that trust and get out there and find that perfect home!

Being realistic also applies to things besides the home itself. Buying a home in a low price bracket and expecting no repairs or maintenance? Good luck with that. Buying a home and thinking if the building inspector finds anything wrong with it (other than major structural problems), I’m not buying the house? Well you might as well stop right now because I can assure your there aren’t any homes where the building inspector finds nothing to report.

Don’t wait for the perfect market conditions – they will never appear and you’ll miss out on significant capital growth. Just be realistic. It will greatly reduce your stress levels.

Effective Habit #4: Be flexible

As a home buyer, it is important to be flexible. Unless you are having a home built to your exact specifications, it’s very unlikely that you will find the absolutely perfect home for you. Maybe you find a home that has everything except the perfect kind of flooring, colours, kitchen, whatever. If you have some flexibility built into your must haves and likes, you will find the entire process much less painful.

Don’t be tempted to make a very low offer in an attempt to grab a bargain as others may also be making offers and you could miss out. If you really want the property make sure your offer is realistic. The more attractive you can make your offer in terms of price and conditions, the more likely your offer will be accepted.

Effective Habit #5: Understand the home buying process

You don’t need to understand every step of the home buying process — that is your agent’s job. But the more you do understand, the less stressful and mystifying the process will be. Buying a home is a stressful event. Anything you can do to reduce that stress will go a long way not just toward saving your sanity but in helping ensure the transaction moves to settlement.

So, you have found a place you’d love to call home? Once you’ve considered other comparable nearby properties, take a deep breath and make an offer – IN WRITING!

There are two ways to do this:

Unconditional offer:

An unconditional offer is when you offer an amount to buy the house as listed (with or without drapes, fixtures, etc.) without adding or negotiating any other conditions.

Conditional offer:

A conditional offer is when you offer to buy the property only if certain conditions are accepted by the vendor. These must be listed on the Contract of Sale. For example, your offer may be conditional on arranging finance. If finance cannot be arranged within a certain period of time, the offer becomes void. For your own protection, you should nominate a specific lender as your source of finance. Leaving out a nominated lender or having open-ended finance conditions on your Contract of Sale may force you to take up finance at substantially higher rates, perhaps shorter terms, and from a lender you would not prefer to deal with. Another condition might be an extension of the settlement period. If the seller does not accept the conditions, further negotiation may take place or the offer may simply be declined.

Also be aware that if making an offer, never assume that your agent or the property owner will come back and forth to you – and you should take the approach that your first offer may be the only opportunity you get to obtain the property. A willing seller may not wish to wait around and may accept a reasonable offer from another buyer.

Do not be afraid to ask your agent questions. Lots of questions. Be advised that everyone in the process tends to toss about terms and jargon that only those dealing with real estate on a daily basis understand. Sometimes we forget we’re speaking in a different language. Don’t be shy. If there’s a term you don’t understand, ask.

Effective Habit #6: Be responsible

When you are looking at potential homes, be responsible and respectful that you are in someone else’s home. It’s OK to look in their cupboards, to flick light switches, to turn on the stove. But be responsible and leave the home in exactly the same condition you found it in.

Much of this habit really boils down to two things: 1) use common sense; and 2) treat others how you expect to be treated.

As a home buyer, you are going to have to work with a lot of different people in order to make sure your transaction progresses and ultimately settle.  Once an offer has been negotiated you’ll pay the deposit to the real estate agent who places it in a trust account. This is also the time when you should

  • Organise your solicitor/conveyancer
  • Arrange the balance of the purchase price—that is finalise the finance and sign the mortgage documents.
  • Organise any inspections
  • Insure the property

Effective Habit #7: Have fun!

We already mentioned that buying a home is a big step – both financially and emotionally. Take a look around at lists of “life’s most stressful events” and you’ll see things like taking on new debt, financial change, moving — that’s buying a house. You are about to enter into one of the single largest financial transactions of your life. Stress is a given.

But buying a home is also an exciting time! There isn’t a law that requires you to mope around, dreading every moment. There’s nothing wrong with having fun during the process. Hopefully you are working with an agent that you enjoy working with. That doesn’t mean you all need to participate in group hugs or go camping together. But it’s OK to laugh, to enjoy yourself, to have a little fun in the process.

The Bottom Line

Buying a home doesn’t have to be torture. If you understand the process, work with the right people and try to have a little fun along the way there is no question that you can find a great home and get to move into your new home. Think about the habits shown here, do a little online research, have open dialogs with your agent and lender and you too can make it through a home purchase.

Preparation is the key. Understand your rights and have everything in place. And no, applying seven habits, or even one hundred habits is going to ensure you have a successful home buying experience. Nothing can guarantee that. But you can certainly increase the likelihood of a less stressful and successful transaction by applying some of the habits listed here along with advice from your solicitor/conveyance and your agent.