Congratulations! Just being in a position to buy your first home these days is worthy of a high-five. Take a couple of moments to read some handy advice we’ve learnt along the way that may be useful for you on your journey…
- Buy within your means. We’d all love to live in the beautiful brand new mansion on the hill, however our budget doesn’t always match the dream. Sit down with a financier and work out what you can spend. And remember, this is your first home – it doesn’t need to be your dream home. Trying to jump ahead (often to keep up with friends/relatives) can be financially stressful. All first houses are memorable because they’re YOURS!
- Know your place. A suburb may sound good, but take some time to ask yourself the practical questions – is it close to bus/train. Are there suitable schools/preschools nearby. Shops, parks and even the beach are other considerations. Because you buy the block, but you LIVE in the neighbourhood.
- Be confident. If you act like a first home buyer, you’ll be treated like one. So always remember, you’re the buyer – you ultimately hold the cards, including the ability to walk away from a property. It’s your choice!
- Be informed. Your best weapon is knowledge, so do a whole lot of reading up – real estate websites are great (including this one!), the Mercury liftout etc. Anything you can get your hands on.
- Get experience. Attend as many open homes as you can in your preferred areas. Even if you’re not sure the house is quite right, it’s a great way to just learn a little more about the process and the right questions to ask.
- If in doubt, ask. Whether it’s a real estate agent, financial adviser or legal representative, never be afraid to ask a question. It could save you thousands – maybe more!
GLOSSARY OF COMMON TERMS
Yes, we admit, it’s an industry FULL of jargon! Here’s your quick guide to some of the more common ones – and of course, if you’re ever unsure about anything, just ask!
Contract Of Sale: Contains the details of the home and the conditions of sale. A seller arranges this with their solicitor.
Cooling Off Period: Once an offer is accepted, a 5-day cooling-off period begins. This allows the buyer to conduct building and pest inspections, their solicitor to review the contract. If it’s an auction, there is no cooling-off period. A 10% deposit is paid and contracts are exchanged immediately.
Deposit: At the end of the cooling-off period, the buyer must pay their deposit, usually 10%. The deposit cheque is held by either the agent or the vendors solicitor in a Trust account.
Exchange Contracts: Once the full 10% deposit is paid, your agent will get the seller to sign the contract. The buyer signs an identical copy and both are sent to each other’s solicitor. If either party backs out, they are liable for the deposit.
Settlement Period: Once contracts are exchanged, the settlement period begins (usually 42 days from the date of exchange). Sellers typically use this time to find another home (if they haven’t already), organise your finances and move out. Buyers start packing!
Settlement: The buyer pays the balance of the purchase price and picks up the keys. Normally the seller’s bank and solicitor will take their fees out of the settlement proceeds and issue them a cheque for the remainder. The real estate agent will probably take their commission and fees from the seller’s deposit.
Stamp Duty: In NSW, the government requires buyers to pay an additional ‘stamp duty’ on the purchase of a home. There is an exemption however for first home buyers who are purchasing a NEW home (up to $550,000 value) or vacant land intended for their first home (up to $350,000).
First Home Owner Grant (New Homes) Scheme: The First Home Owner Grant (New Homes) Scheme started from 1 October 2012, replacing the old First Home Owner Grant Scheme. The new scheme will only apply to first home owners who purchase or build a new home valued at up to $650,000. The grant will be $15,000 from 1 October 2012 to 31 December 2013 and will reduce to $10,000 from 1 January 2014.