By Amanda Irvin, RAY WHITE LONG JETTY
Finding a complete step–by–step guide to walk you through the first home buying process can be tricky. Here’s a guide to make starting process a little easier.
Do you have savings?
As you begin planning to buy, the first step is to think about how much of a deposit you will need for the cost of your future home.
- It’s good to aim for a 20 per cent deposit otherwise it’s likely you’ll need to pay LMI (Lenders Mortgage Insurance)
- Genuine savings are important – a lender will consider regular savings as money you’ve had in your bank account for at least three months. Lenders typically require five per cent of your deposit to be made up of savings.
Do you know how much you save currently?
Follow these steps to understand your monthly savings capacity:
- Calculate your monthly income
- Calculate your monthly expenses
- Then subtract your expenses from your income to find an average monthly savings amount
- Multiply this by 12 months to determine your annual potential savings amount.
Do you know what price bracket you can afford to buy in?
As you begin thinking about what sort of property you can afford, use a borrowing calculator to determine your borrowing capacity. Visit https://www.loanmarket.com.au/calculators/loan-repayment-calculator
Have you checked your credit score?
Your credit score or credit rating is determined by your repayment and credit enquiry history, to provide a lender with an indication of how reliable a client you are. There are a variety of services which can provide you with your credit score within 10 days. Credit Savvy is one such provider, you can visit their website here: https://www.creditsavvy.com.au/
It’s worth checking your score early in the process, an average Australian credit score is anything between 500–700. Anything less than 500 means it’s worth checking your options with a broker. If you want to know more, or have any questions, the best place to start is contacting a broker. Visit https://www.loanmarket.com.au/brokers to get started.
Have you considered buying with a partner, family or friends?
As house prices have increased over time, it’s now more common than ever to buy with a partner or receive assistance from a family member or friend.
- Sharing the purchase price and fees may mean you’re able to meet the 20 per cent deposit threshold to avoid paying LMI.
- Sharing ongoing costs like loan repayments, maintenance and upkeep, and property management fees (if it’s an investment property).
- Concessions for first home buyers only apply once, so when two first home buyers split the deposit, both home owners forgo these concessions to purchase the one home.
- Complications could arise within relationships over the long term.
RESEARCH THE PROPERTY MARKET
Using your price bracket guide, do you know where you’d be able to buy?
Look at the potential suburbs that are of interest and within your price range and narrow your focus between an apartment, house, townhouse or any other options of interest.
Have you considered your ideal property features?
When comparing properties and their prices, consider key factors like land size, number of bedrooms, bathrooms, car spaces etc. and begin to form a picture in your mind of what sort of property you could realistically purchase within your price bracket.
Do you know your deal breakers?
Understanding your deal breakers will make narrowing your focus even easier. What are the things you couldn’t buy a property without? Filter them into your property search.
Have you looked at the area’s recent comparable sale prices?
Advertised property pricing can be difficult to navigate. One source of truth is local recent sales to give you the best indication of what the property market is doing right now. Contact your local Real Estate agent to receive a free property report of comparable recently sold properties in the area or reach out to a broker.
Have you looked at the surrounding suburbs and their market growth trajectory?
The property market undergoes price variations every year, with some suburbs experiencing faster growth than others. It’s worth requesting a suburb report to better understand the price changes, volume of sales etc. over time.
Do you know if you’re buying an investment property or a place of residence?
Determining whether you’ll live in the property you purchase or buy an investment which you rent out is an important consideration which will help you determine other lifestyle factors and could impact your final decision.
As an investment, you have the option of renting the property to help you cover the mortgage while you live elsewhere. Speak to a property manager about the estimated weekly rent for comparable properties, to set your own expectations before buying.
If you intend on living in the home, consider the personal factors that are important to you that make one home better than another, and allow this to play into your decision when evaluating the properties on the market.
Have you checked the area’s access to shops, transport, schools etc.?
As well as adding value to a property, access to shops, transport, schools and walkability will have an impact on how appealing they are to you personally. For some people, access to particular local services will be more important than others. Consider which are more important to you.
Ray White Long Jetty is a locally owned and operated Central Coast real estate agency located in Long Jetty. With a combined 60+ years of sales and property management experience, we are trusted in our community to have your most important asset nurtured and taken care of. We’re here to help with all your property needs, contact us on 02 4360 4360 or firstname.lastname@example.org
Visit us at raywhitelongjetty.com.au or 1/393 The Entrance Road, Long Jetty NSW.