An Essential Guide To Buying Your First Home

INTRODUCTION

The team at KDD Conveyancing understands that buying your first home is truly a magical time. But it can also be a challenging one. This is especially so as you navigate through the Offer and Acceptance Contract. Some considerations to take into include what special conditions to include in the contract and under what type of entity (single owner, joint owner, family trust etc.) it should be purchased.

A property will be your biggest asset and it will be your biggest commitment, so it’s important to get it right. Of course, understanding real estate jargon can be just as hard as getting the hang of the financial terminology. But it need not be too overwhelming.

IS IT THE RIGHT TIME?

The first thing to consider is whether it’s really the right time for you to be buying a property. Remember, a property is probably the most expensive thing you will ever buy and a mortgage is not something to be taken on lightly. We suggest seeking advice and guidance from a reputable finance broker to assist you in your quest to find the most suitable loan for you.

To ensure the banks or mortgage lenders look upon you favourably, make sure everything is in check before you even make the first move. This means ensuring your credit rating is good, you have a stable job and that you can produce the deposit required to secure the purchase.

It’ s also a good idea to have a clear understanding of exactly how much you will be allowed to borrow before you dip your toes in the property deep end. Lenders will look at your annual income and determine what you will be able to comfortably afford to repay in monthly increments. This is how they determine your borrowing amount. They’ll look at your tax return, recent pay slips and you will most likely be required to fill out a form that details your monthly expenses.

It’s important to remember that pre-approval is no guarantee of actually getting a loan. While it does give you some confidence when inspecting properties, it’s crucial to remember that the number suggested by the lender is not set in stone.

FIRST HOME BUYER’S GRANT

Depending on your circumstances, the property you’re purchasing and the state you live in, you may be eligible for a First Home Owner Grant (FHOG). The grant was introduced in 2000 to help first home owners get their foot in the property door.

In Western Australia, first home owners buying or building a new home can apply for a governmental grant of up to $10,000. Importantly, purchasing an established home does not qualify for the FHOG, but rather, home owners may be able to apply for the First Home Owner Rate of duty. There are, of course, a range of eligibility criteria to satisfy so it’s well worth doing your research or, if necessary, ask a property and settlement expert for some help.

3 WAYS YOU CAN BUY YOUR FIRST HOME

In WA there are three main ways in which you can actually purchase your first property – by private treaty, at auction and by an expression of interest. Each has their own pros and cons and you should research all of them before jumping into the property pool. It’s also vital that you read the contract front to back before signing anything. If there’s anything you don’t understand, definitely consult your conveyancer.

1. PRIVATE TREATY

Buying your first home via private treaty is the most common way to buy your first home. It begins with the seller setting a suitable price for their property and from there the real estate agent will then begin negotiations with interested home buyers with the objective to meet the seller’s preferred price.

2. AUCTION

This process of buying your first home requires you to meet a reserve price, meaning the minimum price the sellers would like the house sold for. From there interested home buyers will bid over each other and the highest bidder will win. As soon as the auction is over, the winning bidder is required to sign the contract on the day.

3. EXPRESSION OF INTEREST (EOI)

When buying your first home via expression of interest you will have to make a single offer. You may be asked to pay a deposit. From there the Seller will decide whether to accept or reject your offer.

THE HIDDEN COST OF BUYING YOUR FIRST HOME

Buying a house is more than just saving a deposit and discussing your options with lenders. You also need to consider stamp duty, building and pest reports, transfer registration fees and any government fees, lender’s mortgage insurance if required and then conveyancing fees. Be sure to speak to KDD Conveyancing to find out more about these fees.

Purchasing a property can be overwhelming; especially if it’s the first time you’re going through the process. It’s best you get advice, do your homework and be vigilant in your inspections. When in doubt, ask for help.

For prompt, efficient and a friendly service in Perth that gets conveyancing and settlement right, contact KDD Conveyancing Services for a chat about your first home buying needs.