There really is no place like home, especially when it’s your very own. Here are ten handy tips to help you as you shift from being a renter, to becoming an owner.
We’ve all dreamt of owning our own house, but when you’re on the verge of taking that exciting first step from renter to homeowner, it can feel a little overwhelming. Will you be able to manage the mortgage payments comfortably? What type of house should you buy? Which area is right for you?
Well, because we know exactly how daunting this stage feels, we’ve put together 10 tips on making this transition as smooth as possible. And remember that the benefits to home-owning - from long-term financial security to building strong community ties - are huge. So it’ll all be worth it in the end.
Aim for as big a deposit as you can afford
. The bigger your deposit, the lower your loan to value ratio (LVR). If your LVR is higher than 80% you will need to factor in lender’s mortgage insurance
and the lender could charge you a higher interest rate. Though it’s not always possible, a deposit of 20% is the ideal.
Shop around for the best mortgage
. There are lots of different banks offering numerous different home loans to aspiring buyers. Do your homework, read reviews, take advice and use this calculator
to help you organise your budget and see what you can afford. You could also consider using a mortgage broker
to help you navigate this tricky territory, but bear in mind that not all brokers have access to all credit providers’ loans, so make sure you’re involved in the process and aware of what’s out there.
Get into a good savings habit.
Not only will this help you with the added financial responsibilities you’ll take on as a homeowner, a history of savings in your bank account will make you more attractive to a lender.
Know all the costs.
This seems obvious, but there’s more than just the deposit to consider when doing your calculations. If your deposit is less than 20%, there’s the lender’s mortgage insurance, then there’s: stamp duty (try this stamp duty calculator
), legal fees, a loan application or establishment fee (some banks waive this cost, so double-check), and pest and building inspections. You will also need money for the move, for furnishings, and if you’re moving into an older home, refurbishing and new appliances. Just make sure you’re setting aside the right amount of money so you don’t get any horrible surprises.
Be prepared for more financial responsibilities.
As a renter you would have had very little, if any, maintenance costs. Now you’re considering buying a home, you need to be financially prepared for a few extra costs. Make sure your monthly budget takes this into account, and put money aside for any emergencies, such as a blocked toilet or broken boiler. This means you won’t be left unexpectedly out of pocket.
Consider buying a new home.
Not only do new homes mean you are less likely to have unexpected outlays - such as appliance breakdowns or plumbing issues - but you won’t have to set aside huge sums for replacing old fittings with new ones or general refurbishing. On top of that, first time buyers looking at new homes are often favoured in terms of government grants and help-to-buy schemes. See below.
Find out if you’re eligible for a First Home Owner’s Grant
- or any other government schemes. The government offers a variety of housing grants and stamp-duty concessions and these are often targeted at first-home buyers - particularly those buying brand new homes. Find out what’s available
in your state and take advantage of it.
First time buyers looking at new homes are often favoured in terms of government grants and help-to-buy schemes
Avoid expensive fittings if you have a tight budget. One of the joys of owning your own home is that you can paint it and personalise it to your heart’s content. But if you have a strict budget, go for more reasonable fittings at first. You can always upgrade to those imported Italian marble worktops at a later date.
Choose a reasonable builder. If you’ve bought a piece of land, for example in a new Stockland community, and are building a new house, try saving on building costs by going for an up-and-coming builder rather than an older more established name who’ll be more expensive. Just make sure you read the reviews, check the accreditations and take a look at previous homes they’ve built.
Choose your area carefully and think long-term. Selling a house takes longer than ending a lease, so think carefully about the area you’d like to live in. You may enjoy living centrally at the moment, but is it going to suit you long-term? Living in a well-established central area may mean you have to go for a smaller property, as it tends to be far more expensive, and if you’re considering a family in the future, a bigger house further out might be a better option. Expand your search and you may find you can afford much more. New communities are great for expanding families and offer exciting new resources such as parks, schools and shopping centres - as well as a host of potential friends who are at a similar life stage to you.
There’s no doubt that first-time buyers have a lot to think about, but it doesn’t have to be a bumpy ride. Do your homework, keep an eye on that budget and think carefully about what’s best for you. With the right mindset and preparation, you’ll soon found yourself the happy owner of a set of keys to your very own front door - and a house-owning dream come true. Good luck.