How to buy/build your first home

Let’s face it, housing affordability is certainly not what it once was, especially in popular metropolitan areas like Sydney. Housing prices across the country have been consistently increasing for decades, with no sign of slowing down.

The path to building or buying your first home is not all bad news, there is still an opportunity for you to get into the housing market early – “where there is a will, there is a way.”


#1 – Be focused, be disciplined, be positive

As will most things in life, if you want to achieve your goal of home ownership, you will need to remain disciplined. Focus and sacrifice, as well as a little bit of compromise will be crucial in remaining set on your long term goal and not caving in to short-term indulgences that may be costly.

Optimism is also important – remind yourself of what you will gain from remaining disciplined in your pursuit of the goal of home ownership, rather than focusing on the sacrifices and compromises you might need to make along the way.


#2 – Smart financial choices

Saving for your first home will require you to make smart financial decisions in order to stay on top of your finances and to build your savings account.

We can’t legally tell you how to build your savings, so it is always a great idea to contact a financial advisor to discuss your finances and how your new home could be made feasible for you financially.

However, we can tell you that it is always beneficial to analyse your current spending habits and see what changes need to be made, as well as seeking financial assistance through government grants, such as the First Home Owner Grant or the First Home Loan Deposit Scheme.

#3 – Loans

Consider getting a pre-approval on your loan

A loan pre-approval is an agreement, in principle, from a lender to lend you a certain amount of money towards the purchase of your home, but they have not proceeded to make a full/final approval.

These are beneficial, as you can know early on in the process what your budget for purchasing a home will be.

Educate yourself on different loan types

Whether you simply want a basic loan package, or one with extra features, home loans and their associated fees and interest rates can vary greatly among lenders.

To better understand costs, it is important to know the following: when a home loan is advertised, you will see two rates displayed – the interest rate and the comparison rate.

The comparison rate is simply the combination of the annual interest rate, as well as most of the upfront and ongoing fees. It is important to always look at the comparison rate among different loans, as some home loans have low interest rates but are riddles with other fees.

Remember, some loans may allow you to make extra repayments, redraw funds, or use an offset account, so it is important to always look into the features of loans you are considering.

#4 – Set a Budget

Know how much you can spend before you start house hunting – a good idea is to get a conditional approval letter from your home loan provider.

Investigate the upfront costs

  • The purchase price
  • Loan application fee
  • Lender’s mortgage insurance (LMI)
  • Government charges (such as stamp duty)
  • Legal costs
  • Building inspections
  • Moving expenses
  • Renovation expenses (if necessary)

Understand the ongoing costs

  • Loan repayments
  • Interest charges
  • Other ongoing expenses, such as utility costs and council rates

#5 – Research Properties

Property Locations

Some things worth considering include:

  • Property prices in the suburbs you are looking at buying into
  • Distance from family, friends, work and other important places
  • Off street parking, local schools and other facilities
  • Whether you will need to renovate the property, and if you have the funds required
  • Potential price growth in your areas of interest
  • Proposed developments that may impact the value of your property

Ask Around

Speak with local real estate agents, as they are equipped with the most important and up-to-date information within your area, from up-and-coming suburbs to important developments, to future price growth and more.

Talk to friends, family and locals. Tell them about your plan to purchase a new home, they may reveal new opportunities or provide you with invaluable information that you can apply to any area of the buying/building process.

#6 – Conduct a home inspection

If you are purchasing a home and not building, home inspections could bring to light some serious issues that may not be obvious to the naked eye, such as termites or electrical faults. The money you spend on an inspection may be only a fraction of what you would spend to fix these problems further down the road.

Additionally, if you’re purchasing a townhouse or apartment, strata reports can give you valuable insight into the property’s maintenance record.


#7 – Other Tips:


Never be afraid to negotiate the price with the seller. Proper negotiation could save you a significant amount of money and it can be much easier than you think.

Worst-case scenario

Before building or buying, another great idea is to consider the likelihood of environmental risks in the area, such as bushfires, flooding, sinking land, or pollution.

Trust your instincts

Remember, no matter how many floor plans or price charts you are equipped with, at the end of the day you have to live in the home you decide to build or buy, so trust your instincts and run with how you feel about the property (within reason, obviously).


#8 – Some things to avoid:

Choosing the wrong home loan 

Remember, there are a plethora of home loan options available, get in touch with a home loan specialist to determine which is best for you.

Being too influenced by your emotions

Focus on factors that will affect your life more than a fancy kitchen or big lounge room, such as whether the property is conveniently located and has the potential for value growth.

When building or buying, it is important to have at least three non-negotiables to help you avoid making an overly emotional decision.

Stretching yourself financially

When building or buying your first home it can be tempting to borrow the absolute maximum you can “afford”, just so that you can have the nicest home possible. However, just remember the long-term financial implications this may have and don’t be tempted to over-extend yourself for the sake of a fancy kitchen.

Underestimating additional costs

There are always additional upfront and ongoing costs when getting into the property market, such as stamp duty, bank fees, legal fees, insurance, interest rates and more.

Remember to include room in your budget to accommodate these extra costs to avoid leaving yourself high and dry on the finances.

There will always be a number of factors to consider when purchasing or building a home, so it is always important to talk to professionals in order to gain the best possible understanding of the processes involved.

If you are looking at building your first home, Daniel Finn Builder can help, contact us today if you want to get the ball rolling on building your first home!

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