First Time Buyers Guide
So you want to purchase your first home but find yourself thinking “Where do I Start?”
This guide will prepare you for the steps ahead giving you some handy tips to reduce the stress and allow you to enjoy this exciting time.
So where do I start?
Before clicking through pages of online listings or falling in love with your dream home, you need to get through the boring (but very important) bit of understanding your finances. This means you will need to save for a deposit, typically at least 5% of the value of the purchase price (don’t panic just yet as you may qualify for $20,000 towards your deposit from Government Great Start Grant).
Firstly you need to see a lender / mortgage broker. They will assess your credit score and the amount you can qualify for on a loan. They will also discuss your assets (savings), debts and undertake an affordability check. This is where a good broker can really help as they should know what bank and lender will match your situation, they will also help you navigate all the fees and interest rates ensuring you get the best value for money. This is also when you will find out if you pass the first qualifying period for the Government grants.
When you've gotten the best deal you can, get a mortgage pre-approval so you know how much you can afford to borrow. Make sure you are pre-approved, not just pre-qualified. Being pre-approved means the bank/lender has verified your situation and is happy to lend you the set amount based on your current situation. Normally a pre-approval lasts for 90 days, after this you will have to go through it all again (Undergoing this process to many times could affect your credit rating). If you are not really considering buying and just testing the water getting pre-qualified will give you a good guide without effecting anything.
Top Tip: Find a lender or broker you can see in person. This will allow you to ask questions and get a better understanding as they take you through the process. Also make sure you have a backup lender just in case anything changes while you’re looking for your dream home. The last thing you want is for your finances to fall through right at the last minute.
So you have some savings and can get a mortgage now what?
It’s time to start the fun bit, finding that dream first home! By sorting out your financials you now know how much you can borrow, how much deposit you have (including if you qualify for the Great Start Grant).
This is where you get to start searching online and talking to estate agents. Don’t forget if you qualify for the Government grant you will need to ensure the agency lists new properties that qualify. Normally these properties are advertised through Project Marketing companies but can be found in select agencies. A good estate agent will be able to give you a better understanding of how far your budget will stretch and what suburbs you can afford to live in. This will save you hours of trolling the internet as you know where to look and what to look for.
You'll probably have an idea of a preferred location, but keep an open mind! All suburbs have different characteristics and different price points. Being on a set budget you might not be able to afford the area or house style you want. Try not to get stressed and enjoy the experience!
Top Tip: As a general rule of thumb the further you move out from the city the cheaper it should be. If you are planning to undertake a long commute to work try a trial run at the times you would be leaving. This may change your mind on your set location.
Top Tip: Make a list of all the things that are important for your first home so you can tick them off as you look at each property. Don’t forget if you are on a set budget you may have to compromise on certain features or locations. The more properties you view the better idea you get on how far your budget stretch.
So you’ve found a property in an awesome location, how do I buy it?
So you’ve been to view a property a couple of times and have found your perfect first home, but how do you buy it? This is where the estate agent comes in. They will be able to guide you through the process. Don’t forget the estate agent works for the seller, this means they have an obligation to try and get the best value for the property. With this said they also want to ensure the house sells and the fact you have all your finances in place will set you in a strong position for putting in a lower offer.
Normally after a bit of negotiating you both settle on a price. Don’t pop the Champagne just yet as you still have a couple of hurdles to go.
Now it’s time to inform you mortgage broker / lender you have found a property and agreed on a price. They will then be able to submit the paperwork and start the process of obtaining your mortgage. While this is going on you will need to instruct a solicitor or conveyancer. They will act on your behalf to ensure that all monies (deposit and mortgage) are held in a trust account ready to be transferred to the seller’s solicitor. They will oversee the property deeds and contract to ensure you are purchasing the house and items expected. They are there to protect you and ensure all factors are considered ensuring you are getting what you’re paying for.
Top Tip: After your offer has been accepted, undergo a home inspection. A lot of people see this as a waste of money but it can educate you about the house and help you decide if you really want to pay for necessary repairs. You can also leverage your offer depending on the results of the inspection report and make the seller financially responsible for all or some of the repairs.
If you are purchasing at auction, ask for a contract well beforehand. You may want your solicitor or conveyancer to include some special conditions into the contract. For more information on bidding at auctions, ask the estate agent who will be able to talk you through the process.
When your solicitor or conveyancer gives the contract the thumbs up, and you have written loan approval from your lender, it’s safe to pay the deposit (and start getting excited). The contracts between vendor and purchaser can then be formally exchanged. Special circumstances aside, you are now legally required to go ahead with the purchase. If you change your mind at this stage you will face severe penalties, such as the loss of your deposit! Your solicitor or conveyancer will now make final checks on your property.
While settlement is going through, you should start preparing change of address information, obtain removal quotes and arrange for any urgent repairs so you don’t lose your bond money if you rent.
On settlement day, your legal representatives and a representative of your lending authority exchange cheques, sign the mortgage and other documentation. As soon as this is done they will instruct the estate agent to release the keys. Now for the most important bit, it’s time to get the champagne out and start celebrating as from that moment on you are officially a home owner!
Who will you be dealing with?
The money people: these are the banks, credit unions, building societies and specialist lenders. Your mortgage broker will do this bit for you.
The person who will save you from buying a dud. Ignore these professionals at your peril.
They handle the legal side of things and make sure the property that’s about to be yours will actually be yours.
The person selling the property. Normally dealt with by the Real Estate Agent
Real Estate Agent
99% of sales go through them. Just remember they work for the vendor, not you.
These home loan specialists could save you hours of time researching mortgages and save you money.
Here at the The Brisbane Broker we can help guide you through the full process. With in house experts we have years of experience helping first time buyers achieve their goals.
Contact us today on: 0423 269 468 or email: firstname.lastname@example.org
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