Finding Enough Financial Muscle for Your First Home

First home buyers are not serving too many aces these days. While I concede they are taking a beating from a very accomplished adversary (the investors), they are worsening matters by making a lot of “unforced errors”.

Australia, statistically, has the highest percentage of home owners on this planet. Need it be said then that you may be harbouring intentions of participating in this great Australian dream, too. If yes, do not but treat it as the most important decision of your career, one whose implications will be spread over the next decade, at least. Let me take you through the Dos.

Mortgage insurance

It is a widely circulated part myth-part fact that first home buyers have to fork out very high upfront fee. The reason it is partly a myth is because there are lenders who are willing to take a gamble with relatively low upfront fee if the buyer is ready to indemnify them with mortgage insurance.

This insurance does not beef up the buyer but protects the lender against buyer default. As a first home buyer, your first move should be to press your intentions of getting the mortgage insurance on the lender.

Interest rates

It is a well known irony that first home buyers, who are expected to be the least prepared, are often loaded with stiffest interest rates. Thankfully, the low interest rate environment has nearly negated this problem.

Today, extremely low interest rates imply that you can look forward to really lenient repayment terms. From your side, it is significant to seek information about the repayment terms of the variable or the part fixed-part variable loans.

Diligent research

Research formidably and key in on a couple of areas best suited to your budget. Look at the comparable sales report of the area to learn about the prices for which similar pieces of properties have been sold in the recent past. Make open house visits and this I recommend you to do without a prejudiced mindset.

Buyer’s agent

Talk to a well-informed buyer’s agent who can let you know about the most likely location of your interest and the kind of council compliance codes, zoning restrictions and town planning protocols applicable there.

A well-versed buyer’s agent will also let you into oft hushed up truths like “multiple industries versus single industry”, “ poor versus good historical capital growth” and “high versus low rental yields”, among other things.

Neighbourhood’s proximity to amenities

With the help of such competent professionals and aided by your diligence you can also learn about your neighbourhood’s proximity to chief amenities like transport hubs, schools and hospitals.

Bolstering savings account

No idea is worth as much as building up a smart savings account for yourself. For the purpose, do not shy away from cutting on all the possible wasteful spending.

If possible, move back to your parent’s house to cut down on rent. You will be well served by a First Home Saver Account. This one is backed by tax reprieves, a measure taken by the government to ease out the savings pressure on first home buyers.

How are you planning on saving for your first home?