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From zero to home owner

From zero to home owner

Buying a house or a unit of your very own is high on the wish list for most adults, but it can also feel very daunting. From the moment your mind turns to real estate, there are a lot of steps to take to arrive at the moment you walk through your very own front door. If you don’t know where to start, we’ve put together a handy seven step guide to follow.

1. Assess your financial situation

The first thing to do is to make sure that you’re in a realistic financial situation to be able to buy. Property is expensive and requires ongoing costs to service the mortgage and maintain the property, so if you’re in insecure employment or you’re not yet sure you want to settle in one place, it might not be the right time for you.

Banks are more likely to look kindly on your application if you have a history of steady employment and a solid credit rating and will take into account factors like the number of dependents and whether you have a partner with an income.

2. Work out your budget

You’ll need to have saved 20% of the purchase price as a deposit. While it’s possible to borrow with a smaller deposit, it does make it harder, and you’ll be on the hook for Lenders Mortgage Insurance (LMI).

The costs of buying a property also include stamp duty, conveyancing or legal fees, building and pest inspections and various types of insurance. There are various online calculators to help you estimate what these costs might total.

As a home owner, you’ll need to make ongoing mortgage repayments, but you’ll also be on the hook for other costs that are currently included in your rent. These include council rates, strata fees if you buy a strata title property, utilities and home maintenance. Your budget should take all of these into account when comparing against rental payments.

3. Shop around for home loans

Different lenders offer different home loan products. When you’re looking for the right one for you, take into account interest rates, whether the loan is tied or variable, the term of the loan (commonly 20, 25 or 30 years) and whether early repayment is allowed. If you want some advice, you can always talk to a mortgage broker who will help you sort through your options and find the right product for you.

4. Make a property wish list

Once you’ve talked to a bank and got conditional loan approval, you’ll know what your spending budget is for a home. Now is the time to work out what’s the most important factor for you. Make a list of things that are important – for example, location, a private garden, access to public transport or a certain number of bedrooms – and hit the real estate listings. You may have to compromise in some areas, so it’s important to have a clear idea of which things are preferences and which are deal breakers.

A real estate agent can be a valuable resource in helping you to find the right place.

5. Do your due diligence

Once you’ve found a home you’re interested in, it’s important to do some due diligence. This includes arranging building and pest inspections to identify any problems, as well as market research to arrive at a fair market price for the property. If you’re worried about the negotiating phase, consider hiring a buyers’ agent to help liaise with the seller.

6. Prepare for settlement

Once your offer is accepted and the contracts are exchanged, you can hand over the paperwork side of things to your conveyancer or solicitor, who will order the searches and arrange for an adjustment of rates and taxes before effecting settlement.

During this time, you will need to ensure that your lender will provide you with settlement funds by giving them the paperwork they request along with any additional information. You should also arrange building insurance, give notice on your current tenancy and make arrangements for moving your possessions.

7. Move in!

The moment you’ve been waiting for. Your conveyancer or solicitor will confirm the date and time of the planned settlement and inform you when settlement is complete. You can then pick up the keys from the real estate agent, move in and enjoy the satisfaction of owning your very own home.

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