The start of a new year is the time when many of us are looking to make a change. And with record-low interest rates holding firm, and predictions of the current market slow down continuing throughout 2019, it’s a good time to be a home buyer.
Whether you’re moving up the property ladder or just starting out, follow our comprehensive 12-step guide to buying your next property to kickstart your property search.
- Lifestyle Litmus Test
Ask yourself some ground zero questions. E.g., what’s your long-term job security? How large is your family? Will it expand? How long do you intend to live in your new home? Your answers will steer you in the right direction and help you decide if the time is right to buy and what you should be looking for.
- What’s Your Budget?
Work out what you can honestly afford. A good accountant or financial advisor can help you here. Don’t forget to add the up front costs you’ll have to pay, such as inspections, broker or lender fees, stamp duty, etc. And always keep a financial buffer to handle unforeseen costs.
Put together your deposit. Raising 20% of the purchase price is ideal but it’s not always viable. Remember, the lower your deposit, the more you’ll end up paying for Lenders Mortgage Insurance.
- Good Loan Hunting
Do your research on the different types of home loans available, e.g. a variable, fixed or split. When calculating interest rates, weigh up the best option over the lifespan of your loan, not just the short term. It pays to shop around to find the best deal.
- Help for Hire
A finance or mortgage broker can shop around for a loan on your behalf. A broker is useful if you’re less experienced, wanting to invest, or you have a unique financial situation. But there are commissions involved which might influence your broker’s choice, so be attentive when enlisting a third party.
- (Desperately) Seeking Pre-approval
Get a pre-approval or conditional approval for your loan. This is when your bank or lender has determined you’ll likely be able to repay them. Pre-approval helps you get financed more swiftly, and lets you bid at auctions or make offers subject to finance.
Keep in mind, any pre-approval is provisional, and you’ll need to lodge a final application and meet any additional conditions before receiving your loan.
NB: Pre-approvals typically last between 3-6 months, so check the expiry date.
- Know Your Deals and Duties
Find out what financial concessions might be available to you as a buyer.
Do you qualify for the First Home Owner Grant? In NSW, the government has abolished stamp duty on new and existing homes valued up to $650,000; and from July 2019 NSW stamp duty thresholds will be nominally reduced. Work out your stamp duty payments and any concessions using a calculator.
- Location, Location, Location
An old rule of thumb is to always buy in the best location you can afford. A home in the right location should meet your current needs as well as your future goals. Proximity to work, transportation and amenities are considerations. Do a neighbourhood search and comparison and keep abreast of property market news and trends, including recent sale prices.
And if you’re seeking an investment property, don’t forget to factor in rental demand in your chosen suburb.
- Make a List
Compile a ‘must-have’ checklist to narrow your search. Garden or balcony? Open plan or multiple rooms? Garage, high ceilings, storage? Renovation potential or ready to move in? Catalogue these in terms of their importance to help keep your search on track.
If you intend to build on or extend your property down the road, check out the strata by-laws, or any council and building regulations which may impact your plans.
And remember: no matter what your budget is, there will always be something to compromise on.
- Talk to the Professionals
A good real estate agent has valuable local expertise, and fine-tuned instincts on the true market value of a property. They can also assist in showing you properties that may be off-market, negotiating with the seller, or bidding at an auction.
- Buyer Beware
Once you’ve shortlisted a property, ensure the building is sound. Arrange for an inspection to uncover any structural damage or pest invasions, to avoid any unpleasant surprises down the road.
- Pick a Number – and Stick to It!
Stick to your budget. Staying within your agreed loan amount can prove challenging in the heat of a bidding war or at auction.
If the property goes to auction and you’re a first-time bidder, take some ‘test runs’ to familiarise yourself with the process. If your offer is accepted, and the reserve price met, you cannot withdraw.
But if it’s a private sale, you’ll be given a cooling off period of 30-90 days, and you’re not legally bound until you’ve signed the contract.
- Tying Up Red Tape
Engage a solicitor or conveyancer to handle your paperwork. They’ll prepare and lodge the contract for sale, arrange for the payment of the deposit, and perform other legal and administrative tasks to ensure you have a smooth settlement.
Talk to a member of our team to learn more about buying your next property.