First Home Buyers FAQ’s

Recently in the real estate market we have been seeing an increase in first home buyers entering the property market. While this process is exceptionally exciting, it can also be daunting trying to figure out all the ins and outs. So, we thought we’d dive right in and answer some of those FAQ’s.

  1. THE COSTS

Obviously, the main cost that comes with buying property is the property itself, however there are a few additional costs that will arise.  

  • Valuation of the property – Approx. $200
  • Settlement attendance fee – Approx. $100
  • Mortgage registrations – Approx. $90
  • Application fees for you home loan – Approx. $600
  • Solicitors’ fees – Approx. $1000
  • Building and pest inspection report – Approx. $400
  • Removalist fees – Approx. $1000
  • Lenders Mortgage insurance – Dependent on initial deposit for loan.
  • The first homeowners grant and why should you use it?

The grant differs in each state, but the general design is to assist and encourage home ownership. Each state and territory have different offers and most states have shifted their focus towards new homes.  Before you lodge an application, make sure you do your research into what the grant offers you in your state.

  • The deposit needed for a home loan.

Your deposit has a massive impact on the loan you can receive, your interest rate and other costs that might need to be paid when submitting a small percentage deposit. A rule of thumb is that a 20% deposit is ideal. With a 20% deposit your bank may offer you a better interest rate because there is less risk and as well, you will avoid lenders mortgage insurance because your loan to value ratio is 80% or less.

However, in saying that, some banks are accepting 5% and 10% deposits, but with these lower percentages come an increase of additional costs.

  • How much can you afford.

The deposit is one part of the equation. After you’ve been approved and settlement has gone through, you will still need upkeep the repayments. You want to keep this in mind in the early days of looking for a property. Where do you sit comfortably in repayments?

  • The ways to buy a property

There are a couple of ways to purchase a property, and it is good to have a general idea of each before entering the market.

Private Treaty: This is known as the private sale, and it involves a seller setting an approximate price and invites prospective buyers to submit offers. Through the real estate agent, offers can be presented and potentially negotiated.  Once an offer is accepted there is a cooling off period where certain conditions must be met in order for the sale to go through, such as finance and a building and pest inspection.

Auction: An auction is a public bidding war for a property. An auctioneer conducts the bidding upon the set auction date. When it comes to auctions, the process is very different compared to that of a private treaty, so before you engage make sure you understand the ins and outs of auctions, and what it means when that hammer drops.

Tender: Sale by tender is when prospective buyers submit a proposal to the seller’s tender price. It is similar to a silent auction, where buys are competing against each other through submitted offers, but neither party knows how much the others are offering.

Expression of Interest: This one is pretty much very similar to a private treaty; however, the property price is not always advertised, and you must express your interest by a certain date.

At the end of the day, buying your first home is such an exciting experience. There is a lot of information out there so the best first step is to simply sit down with an agent and discuss your current situation and future.  We wish you all the luck with your new venture, and don’t be too daunted with the process, this is an exciting time and there are people out there to help you.

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