Tag Archives: first home

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.

Get serious about saving for a deposit

Get-serious-about-saving-for-a-deposit

Getting on the property ladder is something that features high on many people’s wish lists, but unless you’ve got a deposit saved up, this could well continue to be a pipe dream.

Whether you’re buying on your own or as a couple, making sure your finances are in check is the best way to have the best possible chance of securing a home loan.

Don’t expect your deposit to build up overnight – here are some ideas for making those little lifestyle changes that can lead to a big difference for your finances.

Set a budget

Budgeting skills are important in everyday life and this is especially the case when it comes to building up a deposit for your home.

Once you’ve got an idea of how much you need to save up you can set to work on putting a budget together that’s going to be easy to stick to.

Make sure you account for all those little extra expenses, including the coffee you regularly enjoy on the way to work and those sneaky drinks after work – they all take their toll on your finances in the long run.

Pay down debts

One aspect of your finances that lenders will look at is how much existing debt you have, which is why it’s so important to pay them down before making a mortgage application.

Pay off those credit cards, loans and anything else they might be able to hold against you. It’ll make the process a whole lot easier!

Set up a separate savings account

There’s just one problem with using your normal account for saving for a deposit – you might be tempted to dip into it now and again!

Having a totally separate account will remove this temptation and, if you play your cards right, you might even be able to find one that offers a decent rate of interest.

Think about extra expenses when buying your first home

Add-up-extra-costs-when-buying-a-homeBuying your first home can be an exciting time, but rather than getting swept away with the thought of decorating the living room and what you’ll do with the garden, it’s important to be cost-aware.

After all, finding the perfect home loan is just the first step. There are various other expenses you’ll incur during the early stages of home ownership you might not even have thought about.

Here are just some of the costs you are likely to face when you make those initial steps onto the property ladder.

Stamp duty

While being a first-time buyer might work in your favour, one of the realities of buying a home in Australia is stamp duty.

You may be eligible for certain concessions in your state or territory, but make sure you have set enough money aside to cover the cost of stamp duty.

Legal fees

Buying a house involves all sorts of legal processes – all of which you’ll be expected to pay for.

Land searches and conveyancing are just two of the costs you will face. Doing a little research will help establish just how much you will be expected to pay.

Moving costs

Unless you’ve got a lot of friends and family with large vehicles at their disposal, it’s more than likely you’ll have to pay out for some kind of moving cost.

Depending on how far you’re relocating, this could run into hundreds of dollars, so factor it into your budget from the outset.

Insurance

Insuring your belongings is important when you move to a new place and this will come at a cost.

Some areas will be more expensive to secure insurance for than others, so do your research and find out how much you’re likely to be paying out.

How much do I need to save for a deposit?

SavingHomeDepositFor many first home buyers, getting their deposit in order is the first challenge to complete.

However, you may be asking yourself, how do I know when I’ve saved enough?

How much is your dream home?

Once you have an idea of the type of home you want to buy and where it will be located, start searching for comparable sales in the area for an idea of how much your home will cost. You can look up property price information online and visit local auctions to get a clearer picture of the current home price landscape.

How much can you borrow?

Chances are you’ll need help from a lender to afford your home. So your next step should be figuring out how much money you can borrow. This could vary from lender to lender, but in order to make sure you have an accurate idea of how much you can actually afford to borrow, calculate how much money you’d be able to devote to mortgage repayments each month.

What is your loan to value ratio (LVR)?

Your LVR is the amount of your home loan divided by the price of your property. Lenders will generally only loan you 80 per cent of the value of your home. However, LVRs of more than 80 per cent are possible to obtain, though these generally come with higher expenses and a requirement for lenders mortgage insurance (LMI).

Keep in mind that LMI will add to the money you need to save on top of your deposit.

In general, it’s a safe bet to plan on saving 20 per cent of the purchase price of your home for a deposit. However, how much 20 per cent will come to depends on the specific home you’re looking to buy.

How to make a small room seem larger

x_0_0_0_14094820_300No one wants to feel cramped in their own home, but a small room with the wrong decor can leave you feeling trapped and surrounded.

Fortunately, there are plenty of easy ways to make even small spaces feel open and expansive.

Keep it light

Common wisdom goes that light colours should always be used in small spaces. Think cream and sky blue, and avoid blacks and dark reds.

Also, try to keep your colour scheme matching throughout the room, as clashing colours can draw attention to how small the space truly is.

Avoid clutter

Clutter can make even a large room feel small (and messy). For this reason, it’s especially important to keep small spaces spare and clean in order to provide the illusion of space. This means avoiding excessive furniture and generally keeping things tidy.

Make use of storage

Small rooms can only handle so much furniture, so it’s a good idea to focus on pieces that can double up. Perhaps a couch that can fold out into a bed? A desk that has plenty of pull out drawers for keeping important documents? There are many stylish ways to make the most of the space in a small room.

Think vertical

Even a small room can be given the illusion of space if you make design choices that draw the eyes upward. A fancy lighting fixture or splash of colour on the ceiling will draw focus upward and away from encroaching walls.

Accentuate windows

There’s a great big world outside, so if a small room has windows, make sure to accentuate them. Don’t worry about covering up windows with drapes; instead try to draw attention to the outside and design around the windows to make them a focal point.

Tips on hanging art in your home

First-National_Hanging-ArtPutting up pictures and paintings may seem as simple as hammering in a nail and setting the frame on it, but anyone who’s ever seen a hideous display in a friend or family member’s home knows there’s more science to it than that.

While everyone is different, there are some general tips and tricks you should keep in mind when hanging art.

Keep it level

From photographs to pastels, art is meant to be seen. That means it’s important to hang it at eye level. It’s typically a good idea to have the centre of the artwork be about 1 and a half metres from the ground.

Also makes sure that the work is hanging properly. A crooked painting can ruin the entire atmosphere of a room. And heaven forbid you hang it upside down!

Think big picture

Unless you have your own private gallery at home, you’ll need to make sure your art fits with the rest of your possessions – namely your furniture.

Art should enhance your home decor, not clash with or take away from it. Keep this in mind when it comes to art placement, as well as the colour of frames and the works themselves.

Safety in numbers

While you don’t want to overwhelm the senses, it’s a good idea to remember how art can work in groups.

For instance, say you want to hang a painting above your sofa. While your first inclination may be to centre it directly above the furniture, unless the artwork in question is the right size, it could throw off the look of the room. If it’s too big it will dwarf the sofa, and if it’s too small it just won’t look right compared to a big piece of furniture.

In these cases, opting for three or four paintings artfully hung may be better than a single piece.

Preparing your home for the rainy season

First-National-Real-Estate_Prepare-home-for-rainy-seasonWith autumn comes a change in rainfall patterns, and we certainly hope this means rain for our drought stricken farmers. However, it also means that it’s time for homeowners to get prepared. Autumn and winter can bring wet winds, but a little planning can go a long way to keeping homes comfortable and dry.

More importantly, preparation can make a home safer and prevent costly damage.

Get your roof ready

Roofs are perhaps the most important part of the home to prepare for the rainy season. Nothing ruins the atmosphere of a warm and toasty house faster than a leaky roof.

Search for cracks and missing tiles to make sure you’re not exposed to any moisture leaks.

Gage your gutters

While you’re checking your roof, it’s a good idea to inspect your gutters, as well. Gutters filled up with leaves or other materials will have difficulty draining. Giving them a thorough cleaning will prevent water from backing up.

Keep cold air out

Doors and windows that aren’t properly sealed will allow hot air to escape and cold air to enter your domicile. Even worse, this could lead you to become very reliant on a heating system that will cost you more in utility bills.

Inspect the seals around doors and windows to make sure they’re nice and tight.

Watch out for trees

A big tree can provide much-needed shade in the summer, but it can also be a potential hazard if a storm knocks it down. Inspect the trees on your property to see what kind of shape they’re in and clear any dead or troublesome overhanging branches that could find their way down on your roof.

Be smart with water

Plants need water to grow, but an over-abundance can kill them. Take your automatic sprinkler system into account as the rainy season approaches, and consider lowering the water level in your pool so it doesn’t overflow.

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.