Thinking of buying your first home?
Many people dream of owning their first home, whether it's their first apartment when moving out of their parent's place, a townhouse with their partner, or because they're ready to expand their family and need more space with a house in the suburbs.
The process of buying property may seem daunting, and feel tough to know how to get started. You may have questions like: how much do I need to save? What is LMI and do I need it? Am I entitled to any first home buyer grants?
First off, well done for doing your research! Knowing your options and understanding what's needed will help empower you to make the right decision for you, and your circumstances. So, we're here to help navigate the process on becoming a first home buyer.
Things to consider when buying your first home
When considering buying your first home it's good to understand why you want to buy a home vs for example rent? Do your research and think about the pros and cons and what would suit your needs. Take a look at the types of locations, the types of properties, the costs involved and if the property matches your needs.
When you rent property you're really only occupying the space. You may not be able to do the basics like: hang picture frames with screws, or paint the walls, not to mention that your rental payments are only going towards the rent. On the other hand, you have the flexibility to move out at the end of the lease or may have the luxury of not being responsible if there is a major problem, like an electrical fault or burst pipe – your landlord may need to sort this out and cover the costs.
When you own your home it's your responsibility, you may need to cover the costs of any potential problems like burst pipes or damage. Although, as a home owner, it's yours - want green and purple walls? Go for it! Want to hang plants from the ceiling? Why not! You really can make that house your home.
From a financial perspective, one of the best parts of being a home owner is your home loan repayments can be seen as an investment, with each repayment going towards owning your property outright.
The legal talk
Looking to buy your first home may feel like you're dealing with a whole other language! LVR, LMI, strata, titles, stamp duty? What do all of these mean, and do they even apply you?
When you buy a property you will need to enlist the help of a licensed conveyancer or solicitor. They will help translate what is involved so you understand what you're actually signing up for. They will also act on your behalf to review or negotiate your contracts, can provide you with legal advice and just be there to help you with any further information.
We have a handy glossary of terms that you can also refer to, but you can always reach out to an HSBC one of our home loan mangers who will help answer any questions you may have – and don't forget, it's your first time buying a home, so don't be afraid of asking questions, we're here to help.
The cost of buying a home
When it comes to buying your first home there may be additional costs other than just the deposit to factor in, it's a great idea to look at your overall budget and factor in items like: LMI, stamp duty, and conveyancer fees.
These costs will vary, and in some situations may not even apply to you. For example, LMI (Lenders Mortgage Insurance) this is an insurance that a lender may require you to take out if you cannot provide a 20% deposit of the value of the property you wish to purchase or, if you are ever in a position where you're unable to make your repayments or default on your loan. This will ensure any loss to the lender will be covered by your LMI.
You can use online tools like Money Smart for tips on how you can keep your repayments on track. It's important to know that if circumstances change and you feel you are unable to make your repayments, speak to your lender first to see what options and help are available.
What about stamp duty? Stamp duty is a tax that is charged when you purchase your property. This costs can vary between states and in some cases, depending on the value of the sale may not even apply. So do your research and see if this is something you need to include in your budget. You can use the HSBC Stamp Duty Calculator to give you a better understanding on how much you should potentially set aside.
Doing your research can really pay off, so take a look and see what type of government assistance is out there and what you may be entitled to. You may be eligible for a first home owner grant or other savings schemes, which can help you become a first home owner sooner.
The process of becoming a first home buyer
We'll go into further detail on becoming a first home owner through our series, but here is a brief overview on the process:
- Know your budget
First, take the time to work out how much you could afford to borrow for a home loan, or are you entitled to any first home buyer grants. You should also familiarise yourself with all the additional costs you may need to cover when buying a home.
We have a few tips on how to save up for a deposit on a home.
- Finding the right home loan
There are several home loan options from fixed to variable, it's important to find one that suits you based on your circumstances and goals. Our guide will explain the most common home loan types.
- Find the right property
Location is important, but you also want to make sure your home suites your lifestyle, we can also help you understand the process of what happens when you find the right place.
- Owning that home
The big moment has arrived you've found the home you want. How do you go from making an offer to getting the keys? We'll explain it all.
Keep reading: How much do you really need to buy a home
