8 Tips & Tricks to Help Get You into the Property Market ASAP
Follow these top first home buyer tips to enter the property market sooner.
Buying your first home may seem harder than ever. But there are a number of tips and tricks you can easily follow to get a head start on the property ladder.
Familiarise Yourself with Different Types of Loans
A mortgage is likely to be one of the biggest debts you’ll ever take on. Make sure you do your research as there is an extensive range of lenders and home loan options available. Home loans can vary greatly in terms of interest rates and fees – the comparison rate is the best way to compare home loans accurately. Remember that this is a long-term debt so even minor differences in the interest rate, upfront and ongoing fees can add up over time. Find a home loan with the flexibility, loan term and the features that best suit you. Be realistic about what you can afford; if interest rates rise your loan repayments are likely to go up too.
Sort out Your Debts
Your credit rating will determine whether or not you qualify for a home loan. Each lender will assess your credit report against their own policies, so it is worth understanding the details of your personal credit beforehand. If you have a credit card, HECS debt, car loan, mobile phone plan or utility bills, lenders will be able to uncover any black marks on your report. Managing your debts upfront can make a significant different to what you pay in the long run.
Set Your Limit
Most first home buyers are fixated solely on the purchase price of a property. Be sure to consider all the other costs involved in owning a home, including stamp duty, legal fees, insurances, council rates, body corporate and moving costs. These can add up to thousands of dollars annually, which you will need to factor into your overall budget.
Buy with just 5% Deposit
While it is recommended to save a deposit of roughly 20 per cent, it is possible to purchase with much less. The First Home Loan Deposit Scheme (FHLDS) is an Australian Government initiative aimed at supporting first home buyers to build or purchase a new home sooner. You may be eligible to pay as little as five per cent deposit, with the government guaranteeing up to 15 per cent of the purchase price. It has just been announced that this will be 25 per cent in Victoria. There are a number of lenders across Australia participating in the scheme. Head to the FHLDS website for more details.
Think about ‘Rentvesting’
Many first home buyers are choosing to invest in affordable property, while renting in their desired location. This is known as ‘rentvesting’ and allows you to have the lifestyle you want while building a property portfolio for the future. You will be able to enter the property market sooner by purchasing in a cheaper neighbourhood and claim tax deductions on your investment.
Use Your Super to Boost Savings
Under the government’s First Home Super Saver Scheme, eligible first home buyers can contribute up to $15,000 per financial year to an Australian super fund. These voluntary contributions can be withdrawn along with the associated earning and used toward the purchase of a first home. Essentially you are able to build a deposit within your super fund, while potentially reducing the tax you pay. Voluntary super contributions include salary sacrifice contributions, after-tax super contributions or tax-deductible super contributions.
Consider Buyer Off The Plan
Buying off the plan means buying a property that has yet to be built. There are a number of benefits to first home buyers, including greater flexibility and more time to save money. In some instances, there may be purchase price discounts if you get in early, and there’s often potential for the property to increase in value during the course of construction. Make sure you spend some time researching the developer and builder, ensuring they have a good track record, and seek advice from a lawyer or conveyancer before signing the contract.
Understand the Grants Available to You
State and federal government incentives are providing first-home buyers with unprecedented support to enter the housing market. These include stamp-duty waivers and the First Home Owner Grant. Check out the state government revenue office website or talk to a mortgage broker to see if you are eligible. Remember you will need to live in the property for at least a year before renting it out.
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