What you need to know before buying your first home

What you need to know before buying your first home

If you had a roadmap for life, buying your first property would fall somewhere around getting married and having your first child. You spend hours upon hours researching up on the first two, so it only makes sense to do a bit of homework on this one, too.

If you’re anything like the average Aussie, you can’t wait to crack into the property market and buy your first home.

And not without reason. Property in this country is not just a home. It’s a secure, long-term investment with clear financial returns.

But before you dive head-first into the property market, it pays to do a bit of due diligence.

Here’s a checklist of what you should always consider before making one of the biggest financial decisions of your life.

First-home-buyer’s grants

Depending on your circumstances, and what state you’re looking to buy property in, you may be eligible for one of the following first home buyer’s grants:

Queensland and South Australia offer $15,000 to first-timers buying or building a new home under certain value limits.

NSW, Victoria, Tasmania and Western Australia offer a $10,000 grant for the purchase or construction of new homes (maximum value limits apply). Also a $20,000 First Home Owner Grant is available to applicants in regional Victoria.

ACT offers grant of $7,000, while the Northern Territory makes $26,000 available to eligible applicants.

Stamp duty concessions

Stamp duty, which is a tax that is levied on documents, is one of the biggest upfront costs when buying property. Fortunately for first home buyers, many states offer a partial or full concession:

NSW: Exemptions offered on new homes valued up to $650,000, and concessions for homes valued between $650,000 and $800,000.

Victoria: Exemptions on new or established homes valued below $600,000, while homes priced between $600,000 and $750,000 also offer stamp duty concessions.

Queensland: Offers a stamp duty concession of $8,750 for homes up to $504,999.99. For homes between $505,000 to $549,999.99, concessions of ranging between $7,875 and $875 apply.

WA: Exemptions and concessions are available when purchasing homes valued at less than $530,000 and vacant land less than $400,000.

NT: Offers a full stamp duty concession to first home owners on the initial $500,000 value of the home, which equates to stamp duty savings of up to $23,928.60.

ACT: A flat $20 fee for properties priced $455,000 or less. An extra $13.60 for each $100 increment for homes up to $585,000.

Tasmania and SA: No first home buyer concessions

Allow for interest rate rises

You may have seen in the news recently that The Reserve Bank kept official interest rates on hold at a record low of 1.5% the longest run since the bank’s independence.

There’s only one way for them to go from here: and that’s up.

In fact, Reserve Bank of Australia governor Philip Lowe is already urging borrowers to prepare for interest rates to be lifted as the economy improves.

“The last increase in the cash rate was more than seven years ago, so an increase will come as a shock to some people,” Dr Lowe told an audience in Perth on Wednesday.

We have a handy calculator that can help you determine how much a potential interest rate rise will cost you. Also, it may also be worth considering locking in the interest rate while you can.

Location, location, location!

When you buy your first home, you may want to make sure it’s in an area that will yield strong rental returns… So make sure you do your research.

Also, an investment property is only a good investment if it delivers you a return, so when selecting a place to buy, you need to be confident it will increase in value.

Research the neighbourhood to get an understanding of current price trends, and to see what’s on the cards – roadworks, public transport changes, business or residential developments – which could affect its value in the future.

The type of property

Sure, it’s nice to picture yourself in a giant four bedroom inner suburban home, but you need to be realistic when it comes to your mortgage repayments – especially with interest rates tipped to rise.

Try and live within your means for your first home and then leverage off it later.

If that means considering a smaller inner city apartment, or a modest home in the outer suburbs, at least you’ll be able to afford your repayments if things get tight.

Lifestyle considerations

While it’s nice to crack into the property market, you don’t want it to come at the expense of literally everything else in your life.

When you’re crunching the mortgage sums, sure, make sacrifices, but ensure you still have enough to live comfortably.

We have a budget planner that can assist you in this area.

You also need to be sure you have enough money left over to reach your other important short and medium-term financial goals, such as paying off a personal loan or investing in education.

Compare different mortgage options

An investment property brings various potential tax implications so it makes sense to shop around for a mortgage that minimises your tax obligations, and maximises your capacity to achieve other life goals.

All too often people simply go to the bank they have their savings account with, and get ripped off in the process.

This is where we come in.

We have an in-depth knowledge of the lending options that will be available to you, and will act as a middleman on your behalf when dealing with potential lenders.

We won’t stop until we’re confident that we’ve secured a great loan that best fits your needs.

Still unsure?

Taking the leap into the world of property investment can be daunting, particularly if it’s your first time.

If you’re still not sure about what you need to consider before signing the paper work, come and have a chat with us.

We’re happy to talk you through your options to help ensure your investment pays off.

Get your ducks in a row: how to make a timely deposit

Get your ducks in a row: how to make a timely deposit

So you’ve finally found the property of your dreams and you can’t stand the thought of someone else moving in? Don’t let a payment oversight get in the way.

One of the most common questions we get asked is when and how to make the deposits on a new property.

And for good reason.

If it’s your first time, you’re probably nervous about locking down that property, so you don’t want a payment mishap getting in the way.

The process varies slightly from state-to-state and in private sales vs auctions, but below we’ll step you through the general process.

Payment one: a holding deposit

You’ve scrimped, you’ve scraped, and you’ve finally saved enough to buy a home. Great! Now you’ve got to work out to who, and when, the deposit is paid.

In private sales, once you’ve made a verbal offer on a property that’s been verbally accepted, the real estate agent may ask you to pay a holding deposit to show you’re committed to your word.

This figure can be between a few hundred dollars to around 1% of the purchase price. It is not an additional cost – it’s simply an advance.

Beware, however, that this holding deposit doesn’t lock down the home. It confirms your intent but another player can still come along and enter the game.

A holding deposit is also not compulsory. So if the seller asks, and you don’t feel inclined, you don’t have to cough up the dough.

If your offer is accepted and contracts are drawn up, the holding deposit is considered part of the full deposit that you’re required to pay.

Be sure to get a written receipt from the real estate agent which states they will refund the money to you if the seller decides to accept another offer – which can, and does, happen.

Private sale deposit

Now it’s time to move onto the full deposit.

In a private sale, once the contracts are signed and exchanged, you generally must pay the seller’s real estate agent a 10% deposit, unless the contract has specified a different amount (which can be around 5%).

The agent then generally keeps the deposit in a trust account until the settlement.

Now, these contracts can take a few days to exchange and sign off, which gives you time to organise how to pay the deposit with the seller’s real estate agent.

During this time, speak with them to arrange a payment method that best suits you both. Options generally include a personal cheque, counter cheque, electronic funds transfer or deposit bond.

Auction deposit

Boom. The hammer comes down and the property’s yours. Well, ok, not just yet.

If you’ve put your hand up for the winning bid, it’s usually expected that you pay a 10% deposit on the day of the auction (once again, it can be as low as 5%).

But hang on, banks are usually closed on the weekends. So how are you going to stump up the cash?

This is where it’s important to plan ahead, and where we can help make sure it all runs smoothly.

Options include writing a personal cheque on the auction day. Or getting a counter cheque from a branch before the weekend auction. Deposit bonds are also an option.

Regardless, it’s always important to check before the auction as to what options are available for paying the deposit.

But what about the deposit on my loan?

The deposit you pay the seller’s agent will count towards your finance application deposit.

For example, say you’ve told the lender you’ll be making a $50,000 home-loan deposit.

Then, when the contracts are exchanged, the seller’s agent only asks for a $25,000 deposit.

The good news is you’ve paid half. The bad news is the lender still requires the remaining $25,000 of the deposit.

Final word

So that’s the general timeline for when it comes to paying deposits on a home.

On a related note, it’s very important to ensure your finance has been pre-approved nice and early before the auction.

And as you know, that’s our bread and butter.

We can help you obtain a home loan with a great interest rate, with fees and features that best suit your personal circumstances and budget.

If you’d like to find out more, get in touch with us today.



Don’t get tripped up by these scams

Don’t get tripped up by these scams

They say a fool and their money are easily parted. But with how sophisticated scams are becoming nowadays, it’s no longer just fools who are being duped. Here’s how to spot a scam in the digital day and age.

Australians lost $91 million to scammers last year alone. That’s about $250,000 every day.

With that in mind, now’s a better time than ever to look at some of the more sophisticated scams that are parting Australians with their hard earned money.

Loan scams

There is no shortage of scammers out there offering fake loans, especially in Australia where people are just itching to crack into the property market.

In recent years scammers have got this down to a fine art – victims are provided with authentic-looking fake loan contracts with Australian credit licence numbers belonging to unrelated businesses.

Scammers also pretend they’re in Australia with re-routed phone numbers.

They then tell the victims they must pay insurance or fees of up to $5400 upfront into an Australian bank account.

However, legitimate lenders who are authorised under Australian credit laws will generally not request that fees are paid upfront because establishment costs are usually included in the loan and repaid over time.

So, if you ever receive a call or email along these lines, take it with a very large grain of salt.

Better yet, ask us to look into it. We’ll be able to tell if it’s a legitimate looking loan or not.

Remote access scams

This involves scammers trying to convince you that you have a computer or internet problem and that you need to buy new software to fix the problem.

The scammer will usually phone you and pretend to be a staff member from Telstra, the NBN or Microsoft. The caller is usually very persistent and may become abusive.

If you receive one of these calls simply hang up. Companies such as Telstra and the NBN don’t request credit card details over the phone to fix computer or telephone problems.

Identity theft

Identity thieves are after anything that contains your personal information. And not just through tech-savvy hacking. One of the most common gateways to identity theft is mail theft.

Here are five simple ways you can prevent identity theft:

  1. Don’t take the bait. Scam artists ‘phish’ for victims by pretending to be reputable businesses or government agencies. Never give out personal information if you did not initiate contact.
  2. Be mysterious. Don’t overshare personal information on social media.
  3. Don’t use simple passwords. Use a mix of letters, numbers, and symbols.
  4. Shop with caution. Check out a website before entering your credit card and personal information.
  5. Pay attention to your statements. If bills stop arriving in the mail, call your bank – someone may have changed your contact information to cover their tracks.

Threats to life, arrest or other

Threats to life, arrest or other ultimatums usually involve the scammer demanding you to pay money that you supposedly owe, and threatening you if you don’t comply.

And there’s been a large spike in the amount of money scammed in recent months according to Scamwatch.

Scammers often impersonate government officials and target the elderly and newly arrived migrants.

If someone targets you with this scam, the government’s Scamwatch website advises that you do not respond to texts or emails. The scammers will only escalate their intimidation and attempts to get your money.

If you receive a phone call from someone threatening you and asking you to pay a fee, simply hang up and don’t respond.

And of course, if you’re worried about your safety, contact the police.

Final tips

Scammers often use psychological tricks to part with your money. Some may offer you a gift or help so that you feel obligated to return the favour.

They also know that most people find it hard to say no to friends, so they’ll try and build a strong rapport with you.

If you ever have suspicions that you’re getting scammed, don’t hesitate to get in touch. We’d be more than happy to look into the situation to help you protect your wealth.