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Many people dream of owning their first home, whether it's their first apartment when moving out of their parent's place, a townhouse with their partner, or because they're ready to expand their family and need more space with a house in the suburbs.
The process of buying property may seem daunting, and feel tough to know how to get started. You may have questions like: how much do I need to save? What is Lenders Mortgage Insurance (LMI) and do I need it? Am I entitled to any first home buyer grants?
First off, well done for doing your research! Going forward, we're here to help navigate the process on becoming a first home buyer.
It's good to understand why you want to buy a home instead of renting. Do your research and think about the pros and cons and what would suit your needs. Take a look at the types of locations, the types of properties, the costs involved and if the property matches your needs.
When you rent property you're really only occupying the space. You may not be able to do the basics like hang picture frames with screws or paint the walls. As well, your rental payments are only going towards the rent. On the other hand, you have the flexibility to move out at the end of the lease or may have the luxury of not being responsible if there's a major problem, like an electrical fault or burst pipe. Your landlord may need to sort this out and cover the costs.
When you own your home it's your responsibility – you may need to cover the costs of any potential problems like burst pipes or damage. Although, as a home owner, it's yours. Want green and purple walls? Go for it! Want to hang plants from the ceiling? Why not! You really can make that house your home.
Looking to buy your first home may feel like you're dealing with a whole other language! Loan to Value Ratio (LVR), LMI, strata, titles, stamp duty? What do all of these mean, and do they even apply you?
When you buy a property you'll need to enlist the help of a licensed conveyancer or solicitor. They will help translate what's involved so you understand what you're actually signing up for. They will also act on your behalf to review or negotiate your contracts; to provide you with legal advice; and to just be there to help you with any further information.
You can refer to our handy glossary of terms or you can always reach out to one of our home loan managers who will help answer any questions you may have. And don't forget, it's your first time buying a home, so don't be afraid to ask questions. We're here to help.
When it comes to buying your first home there may be additional costs other than just the deposit to factor in. It's a great idea to look at your overall budget and factor in items like LMI, stamp duty, and conveyancer fees.
These costs will vary, and in some situations may not even apply to you. For example, LMI is an insurance that a lender may require you to take out if you can't provide a 20% deposit of the value of the property you wish to purchase or, if you are ever in a position where you're unable to make your repayments or default on your loan. This will ensure any loss to the lender will be covered by your LMI.
You can use online tools like Money Smart for tips on how you can keep your repayments on track. It's important to know that if circumstances change and you feel you are unable to make your repayments, speak to your lender first to see what options and help are available.
What about stamp duty? Stamp duty is a tax that is charged when you purchase your property. Costs can vary between states and in some cases, depending on the value of the sale, may not even apply. So do your research and see if this is something you need to include in your budget. You can use the HSBC Stamp Duty Calculator to give you a better understanding on how much you should potentially set aside.
Doing your research can really pay off, so take a look and see what type of government assistance is out there and what you may be entitled to. You may be eligible for a first home owner grant or other savings schemes, which can help you become a first home owner sooner.
Doing your research can really pay off, so take a look and see what type of government assistance is out there and what you may be entitled to. You may be eligible for a first home owner grant or other savings schemes, which can help you become a home owner sooner.
Here are 5 things to know about the process of becoming a first home buyer:
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