Home buying is almost a national pastime in Australia: reading about it, saving for it and moaning about it, until one day some of us lucky ones get to actually do it! You may still be deciding if this is the right choice for you, so read below for some of the factors to consider before you make you way into the land of mortgages.
If you’re looking to buy an existing house, you will probably face competition from other buyers, especially in popular neighbourhoods. The benefit of buying into established areas is that a house will typically retain its value and increase over time. Signs that a neighbourhood is particularly promising is infrastructure such as public transport access, decent local shops and services, reputable schools and adequate public parks or greenery. Up and coming neighbourhoods can offer better value for money, but can be less convenient as infrastructure catches up, or in some unfortunate cases, never takes off. In an auction scenario, you may try to see if you can make a pre-offer, meaning you can snap it up before it goes under the hammer.
If you want to build a new house and have little to no experience, many people opt to purchase a house and land package in Geelong or Melbourne. For a fixed price you will get a new home of your choice built on your own block of land, and many designs are even highly customisable. The house and land package will be sold to you off the plan, meaning that you sign and finalise a contract before the physical property has been constructed. Besides convenience, in the current market many people find once their build has been completed in a few years time that their house is worth more than what they originally paid for it. However, be aware that if increased supply outweighs demand, this may not always be the case. If you can, buy a house and land package that mainly consists of owner occupiers or long term investors and it will provide some protection from this issue.
Once you have decided what type of house you want to purchase you’ll need to get your finances in order. Check your eligibility for concessions such as the first home buyer’s grant and reduction of stamp duty. Then confirm how much you will have available for your deposit. The benefit of deciding to buy now even if you are short some of the required 20% deposit is that you will have entered the market, which may be too expensive for you by the time you have saved enough. Unfortunately if you do not have enough of a deposit you’ll have to pay Lender’s Mortgage Insurance (LMI) on top of your loan, which is not refundable. If you lack the funds but don’t want to endure LMI, you can have someone who owns property act as a guarantor for you. It’s a pretty big favour, so typically only close family is permitted to be one.