With the drop in interest rates and falling house prices, now could be the time to take advantage of the slumping property market and purchase your first property. But, while these lower prices may make it easier for you to enter the market, it also means more buyers than sellers and an influx of competition within an already competitive price bracket. So, what should you be doing as a first home buyer in this climate?
Create a budget
To make sure you�re ready for this big step, create a monthly budget to see where your expenses are sitting. This is a great tool to keep with you throughout the house-hunting process so that all of your information is in a single, easy to find place.
These uncertain times have left many with inconsistent hours and even no jobs at all. Ensure your income is steady and you are confident in your future earnings before you make any big financial commitments.
Get acquainted with hidden costs
With your monthly budget in mind, it pays to research into the hidden costs that are excluded from a house�s purchase price. Other costs such as loan application fees, stamp duty, body corporate, building and pest inspections, lenders mortgage insurance and moving fees should all be considered when deciding on a property budget as they can impact the price bracket you may be looking in.
Gain pre-approval
Loan pre-approval occurs when a lender agrees to lend you a specified amount of money towards the purchase of your home but hasn�t proceeded to final approval because you havent yet purchased something. It is effectively the bank saying, yes we like you and your financial position, now you need to find a property that we also like.
The pre-approval process allows you to understand your maximum available funds to assist in the search and negotiation of your first home, while offering more confidence if you decide to go to auction.
Having pre-approval arranged when you begin looking at houses will give you an accurate idea of what type of properties you can afford. Pre-approval is also essential to remain ahead of the pack during this competitive time. If another buyer offers more than you but doesn�t have the bank�s approval to back their finances, it could be the difference between the seller choosing your offer over theirs even if yours is lower.
New grants available
Under the new home builder scheme, the Australian Government is offering $25,000 cash grants for all new home builds and renovations.
To qualify for the renovation grant you will need to spend $150,000 or more on a renovation while meeting an income test. Keep in mind swimming pools and tennis court projects are not included.
Additionally, for new home purchasers, you�ll have to enter into a new contract between June 4th and December 31st 2020 to be eligible.
You may also be eligible for the below options:
- A $10,000 First Home Owner Grant is available when you buy or build your first new home in the state.
- A $20,000 First Home Owner Grant is available for new homes built in regional Victoria, for contracts signed from July 1, 2017 to June 30, 2021.
To be eligible for the FHOG in Victoria your first home purchase must be valued at $750,000 or less, be the first sale of the property as residential premises and less than five years old.
During this process, keep in mind that everyone�s circumstances are different. There�s no one-size-fits-all answer on whether right now is a good time to buy a home. With their access to current information, your finance broker is an essential asset and can work with your preferences and budget to find the best home loan option for you.
This is an exciting time and you need the right person on your side that has your best interests in mind. Get in contact with us at SFE loans to discuss your needs. We can talk you through any questions or concerns you might have on your journey as a first home buyer and are happy to take the time to talk you through each step to ensure you�re making the best decision for your financial future.
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