Buying a new home is extremely exciting, but it’s also something that needs to be approached with a level head to ensure you’re making the right decision. Your aim is to end up with a home you love at a price you can afford, without any buyer’s remorse after you move in.
With that in mind, here are our five key steps to take before making a final decision on a property.
1. Make sure you know what you're getting yourself into
When buying a property, once you have ‘settled’ the sale there’s no going back. This can be a scary thought on such a large purchase, so it’s important to know what you’re buying and are aware of any potential issues.
- Building report - more properly called a ‘pre-purchase property inspection report’, the building report should make clear any significant problems such as rising damp, poor wiring etc. Building reports can be useful when negotiating a lower price if repair work is needed.
- Pest inspection - while a building inspection may highlight visual damage caused by termites or other pests, it generally won't detail whether any pests are currently present. A pest inspection can save a lot of expensive post-purchase headaches.
- Strata report - apartments, units or townhouses are usually part of a ‘body corporate’ which handles management and maintenance. A Strata Inspection Report provides details on the body corporate including the cost of the quarterly levies, whether there are any current or proposed ‘Special Levies’ (additional contributions to cover building defects or major building work) and inform you of your voting rights, etc.
2. Check out the neighbourhood
Your new property will be part of a neighbourhood, and how you feel about the local area can have a huge impact on whether it feels like a home or not. It’s important to consider whether the neighbourhood is somewhere you’ll be happy living. A great first step is to take a walk around the area, check out the local coffee shop and get a sense of the people there. You may even feel brave enough to ask a few of them what’s good and bad about being a local.
Questions to consider when assessing whether a neighbourhood is right for you could be:
- How have house prices changed recently? If yes, up, down? And why have they changed?
- What are the amenities like? Is there a local shop, cafe, gym, etc. to make living there convenient?
- What are the schools like? Even if you don’t have a family now, if you are putting down roots in an area then it can be a good idea to check.
- How good are public transport links, and what would your commute to work be like?
- If you live in a flood-prone area, check the ‘flood maps’ at the local Council to see whether the property has been flooded in the past.
- Is the road a popular shortcut?
3. Make sure you're on board with what the future holds
As well as making sure that any home you buy is going to be suitable for your future plans, it’s important to understand what is going to happen in the local area too.
It’s a good idea to check whether there are any major infrastructure plans which could affect your new home. After all, you probably wouldn’t want to move into your dream home and the find out that a major freeway is going to be built just behind your back fence. Your local council will have all major infrastructure plans on file for you to review.
Your council will also be able to tell you about the zoning for your area and whether there are any developments planned. Again, it’s worth checking for upcoming projects to see whether they affect how you feel about the area.
4. Make sure you can really afford it
Once you have your budget finalised, it’s tempting to put the maximum you can afford into real estate websites to see what’s out there.
But the purchase price is just one of the costs involved in buying a property, and the others can all add up significantly.
- Stamp duty - stamp duty will depend on the value of the house and can be affected by factors including first home buyer benefits and concessions. It also varies widely from state to state. Most State/Territory Revenue departments have a calculator on their website to help purchasers estimate their stamp duty. Some State/Territory governments also charge a transfer or lodgement fee, in addition to stamp duty.
- Conveyancing fees - these are for a licensed conveyancer (often, but not always a lawyer or solicitor) to look after the paperwork around the sale.
- Mortgage insurance - usually only required if you don’t have a 20% deposit, lenders mortgage insurance protects your lender in the event that you default on your home loan and there is a ‘shortfall’. A shortfall happens when the proceeds from the sale of your home are not enough to cover the outstanding amount you owe to your lender.
- Building insurance - building insurance is generally a requirement if you have a mortgage. It covers your residential property from natural disasters such as fire and flood. Premiums will depend on where the house is located and its value.
- Moving costs - this will depend on how much is being moved and how far you are moving. It’s a good idea to get quotes from a few different companies and to review customer reviews online.
- Strata fees - quarterly fees can really add up, especially if your unit block has amenities like a gym, pool and lift. Fees can vary significantly, so it’s very important to order a strata report to ensure you factor in all potential fees.
- Ongoing mortgage repayment costs - lastly, it’s important to remember that when you buy another $50,000 worth of house, you're not just paying an extra $50,000; you're paying an extra $50,000 plus interest over the lifetime of the loan. Our mortgage calculator is a great way to understand how different loan amounts will affect your monthly repayments to see which best fit your circumstances.
5. Seek out a good value home loan
There are a range of different home loan types, each with their own features, benefits and drawbacks. Fixed rate loans can give you a measure of certainty while variable loans are more flexible. Split loans may give you the best of both worlds.
Our most popular home loan is our award-winning ‘Low Cost Home Loan’ which offers an impressive interest rate, no upfront or bank fees and features including 100% offset account, a redraw facility and unlimited extra repayments.
Send us an enquiry to find out about our flexible home loan options or call us for more information and a no-obligation chat.
Published February 2020