If you are just commencing on the home-buyer journey, you are probably not completely sure about where to start or what to look for in your prospective new affordable home. Despite being one of the essentials of life, along with food, water and clothing, learning how to "buy a home" is not something we are taught at school. Television programs about 'dream homes' or expensive renovations are not of great assistance when you are getting to the first rung on the home-buyer ladder.
You might be buying your first home as a single person after being part of a couple or looking after your family. The same steps apply to your home-buyer journey although you might have a different perspective on where and what that perfect home might be.
This is a very brief summary of the essentials of buying your affordable home.
1.Save your deposit and obtain a loan pre-approval so you know what you can spend
Step one is the most difficult part, particularly now that house prices have jumped to stratospheric levels in capital cities. You may need to do extra shifts at work, share a home with a friend or family, or simplify your lifestyle so that those extra dollars go into your savings account each week.
There are also Federal Government incentives to save such as the First Home Loan Deposit Scheme . Look up the details of that if you are a first home buyer. Otherwise look for opportunities to put your money away safely with a competitive interest rate.
When it comes to lenders, you may wish to find a lender who will look at borrowers who are not double-income couples or employees. To discuss what lender might look at your capacity to borrow, contact affordhome.com.au for a free discussion.
Getting an idea of what your borrowing capacity is will save time further down the track when you find a good property.
2. Work out the best place to live for your employment, skills, needs and lifestyle
One of the positive outcomes of the COVID19 pandemic was the movement towards 'working from home' as a viable and acceptable option for many employees. Regional areas around Australia within driving distance of capital cities suddenly became a lot more attractive as lifestyle destinations. This has had an impact on regional property prices, however there are still plenty of bargains to be found outside capital cities.
You may decide to move to a country town or regional centre such as the Gold Coast, Gladstone, Orange or Ballarat in order to purchase a home and find new employment. When you apply for a home loan, the lender will want to know your capacity to repay. If you are looking for advice about which regional towns have employment available to suit your skills and experience, talk to us at affordhome.com.au and we can direct you to areas where there is suitable employment available.
The Federal Government is providing extra support for purchasing in a regional area with the Regional First Home Buyer Support Scheme set to become available in January 2023 if you have lived in a regional area for at least 12 months.
You may also need to consider whether there are medical services, schools or other personal services or sporting facilities available in a prospective new home town.
3. Identify where the best affordable suburb is in your chosen town or city.
Once you have decided where you would like to live, choosing an affordable suburb which is close to the services and amenities you like to use is the next step. Location, location, location are the criteria underpinning good real estate choices. Finding a property in a part of town which suits you is the goal. You may need to look at suburbs which are 'up and coming' rather than established areas. Driving around the area and looking at real estate advertisements is the best and simplest way of identifying a suburb which is going to match all your personal buying criteria. If you are short on time or moving from interstate, a Buyer's Agent can assist by doing the research and negotiations on your behalf.
A Buyer's Agent is an experienced licensed real estate agent who will generally save you more on the purchase price than their agreed fee. There is a low flat rate fee service offered by affordhome.com.au to assist with one of the most difficult parts of the buying process - finding the right home and negotiating the price. Our focus is south-east Queensland and northern New South Wales, however we can provide free advice if you are located in areas outside of this region.
4. When you find a home that could be right for you, get a pest and building inspection.
When you find a home and agree on the purchase price with the seller and real estate agent, the next step is to sign a contract for the purchase of the property. Each State has its own Contract however common to each area is the opportunity to include 'Special Conditions' of sale and purchase.
Firstly you will need to agree to the settlement date with the seller. This can be 30 days, 42 days or a longer period if both parties agree.
If you need to borrow money to purchase the property, you will need to include a clause stating that the Contract is "subject to finance approval".
It is also strongly recommended that the Contract be subject to a "pest and building inspection". This means you will need to engage a Licensed pest and building inspector. The inspector, or inspectors if one is a building inspector and the other a pest inspector, will come to the property and carefully look over all the structural and drainage aspects of the property to be purchased. They will also check to see if the property has been or is currently affected by insect damage such as termites.
The inspector will provide you with a detailed report identifying any minor or major issues that should be rectified. There may be significant issues such as extensive termite damage which may mean that it is not in your best interests to proceed with the purchase. Alternatively you may have the opportunity to negotiate with the seller as to what major issues will be addressed before sale, or if the selling price may be reduced to account for the cost of repairs or defect rectification.
Which leads to the next topic of this discussion: assessing the cost of essential renovation and repairs.
5. Assess the cost of essential renovations or repairs
The building and pest report will give you a guide as to what items you will need to repair before the property is safe or free of pests such as termites. You may need to repair drainage which is affecting electrical circuitry. You may need to fix dripping taps, rotten floor boards or roof leaks.
Assessing the real cost of essential repairs and renovations is important, particularly if you are on a tight budget and trying to ensure your 'affordable home' is just that.
If you need assistance assessing the cost of essential repairs, it is best to consult with a local plumber, electrician or carpenter and obtain some quotes. You can also seek advice from affordhome.com.au as to the estimated cost of repairs that need attention prior to finalising the purchase or moving in.
6. Negotiate the purchase price and get the best home loan
Negotiating the purchase price of your new home is a critical part of the whole transaction. If you are not confident of your negotiating skills, be sure to bring a trusted family member or friend along to assist you when speaking with the real estate agent who is selling the property.
Alternatively, as recommended earlier, appoint a Buyer's Agent to negotiate on your behalf. A Buyer's Agent is an experienced professional who will save you on the purchase price and ensure you have a Contract which reflects your 'Special Conditions' of purchase (such as Pest and Building inspection, finance approval and settlement period).
Once the purchase price is agreed and the Contract signed by both parties - seller and buyer - you will need to start applying for the home loan. If you already have a pre-approval, you can send a copy of the Contract to the lender or mortgage broker.
Otherwise you need to quickly make contact with a mortgage broker, home loan lender or bank to submit your application for a home loan and get it approved as soon as possible. In all Contracts, time is of the essence!
If you are eligible for a Government grant such as the First Home Buyer Support Scheme, then the home loan lender will assist with the application for the grant and process that as part of your home loan application.
It is also strongly recommended that you appoint a solicitor or conveyancer to manage the legal aspects of the Contract as it is 'conveyed' to settlement. If there are any problems with the loan approval process or settlement day for example, then the solicitor or conveyancer will be able to advise you and the seller in line with the legal obligations in the State in which the sale is occurring.
So that is a very brief summary of the six essential items to consider to help you buy an affordable home. There's no denying its a pretty complicated process whether you are a seasoned real estate professional or a new home buyer.
Always seek professional help where required and do plenty of homework before you step out and start looking. We are always here to help at affordhome.com.au and your first consultation is free.
Contact us at https://www.affordhome.com.au to schedule your first free consultation.