Tips on buying a home
Are you planning on buying a home? Here we look at some important things to remember about buying and financing your property purchase.
When in the market for property, whether you are a first-time home buyer or an experienced real estate investor, you need to assess why you want to make a purchase. Are going to live in it or are you going to rent it out and pay it off. Are you looking for a house or apartment, townhouse or land to build on?
Next, work off a budget, calculate how much you can invest, say a portion of your pre-tax income in loan repayments. You can check for the best deal among various lenders before taking the plunge.
Lenders will agree to lend a percentage of the purchase price, called the loan to value ratio (LVR), and some will insist that borrowers have as much as 20 percent of the purchase price in a deposit. You need to factor in the following costs: legal fees, loan processing fees, government taxes (e.g. stamp duty), property and pest inspection fees, moving costs and insurance. First time home buyers can avail of grants and exemptions on stamp duty.
You should try avail of your loan at the same time or before you start searching for property. Online research will show the best mortgage interest rates, then you may get approval ‘in principle’ for your loan so that if you are buying a home at auction, you can have the money ready ahead of time.
Sources for home loans include banks, credit unions, solicitors, mortgage financers, and building societies. A mortgage broker finds the best lender and the best financing rate for you.
Here are some tips to keep in mind when viewing properties:
- Examine the neighbourhood - This should be the first thing you do when viewing property. Consider the length of time it will take you to travel from your house to your office or nearby establishments (schools, shops, public transportation, etc.), and the safety of the neighbourhood. A beautiful house can go wrong when it's in a poor location, such as beside a train station. You'll also have a hard time trying to sell the house if you do decide to move.
- Don't rely on memory - Take pictures and jot down the items that you particularly liked and didn't like in each house. Your list can help you when you make your decisions later on.
- Do your research on the property market - Before hunting for a house, gather helpful information such as the average selling price for the type of house you want to purchase, market trends, and the actual process of buying a home.