Buying Your First Home
Buying your first home is a huge step, both financially and emotionally. If you get the money side of things right you'll soon be sleeping soundly - under your very own roof.
We've also organised the essential things you need to know and plan for, to help you smooth the way into your first home.
- A savings history will help with your first application
- Do some research
- Check out the FHOG & NT concessions
- Get pre approved
- Extra costs to be aware of
- FHOG Tips
A savings history will help with your first application
Ideally you should try to save at least 5 percent of the purchase price for a deposit. Don't despair - it can be done! Here are a few tips to get you started:
- Draw up a budget so you know exactly what you spend your money on
- Clear your credit card debt as soon as possible
- Set up automatic payments into a separate nominated savings account
- Find a high-interest savings account. Consider online accounts as they generally pay higher rates of interest.
Before you take the plunge, do some research and get yourself some professional legal and financial advice. Here are some basic tips:
- Don't borrow more than you can afford
- Be prepared for interest rate fluctuations
- Don't be afraid to ask about fees and charges
- Be aware of credit card balances and limits and ensure you can afford your repayments
- Make extra repayments when you can
- Make your payments on time to keep your credit history clean
- Beware of other costs like legal and stamp duty costs
You could be eligible for the First Home Owner Grant (FHOG)
The government offers a tax free, one off payment to first home buyers who meet all the eligibility criteria.
First Home Owner Stamp Duty Concession
On 4 December 2012, the Northern Territory Government announced that the stamp duty First Home Owner Concession (FHOC) will no longer be available to first home buyers who enter into a contract to purchase a home, or land on which a home is to be built, on or after this date.
However, a person may be entitled to the increased First Home Owner Grant amounts, the $8500 Senior, Pensioner and Carer Concession or the Principal Place of Residence Rebate if they meet the relevant eligibility requirements for the respective schemes.
If your main priority is reducing debt, you have a choice
There are hundreds of home loans out there. Finding one with the right features for you could save you thousands.
- Consider package loans that offer rate discounts for the life of the loan
- Look for loans that let you pay more than the minimum monthly repayment at no additional cost
- Think about an offset facility
An offset facility is simply a transaction account that is linked to your home loan. The money you put into your account reduces the amount of interest you have to pay.
Get your loan pre-approved before you start looking for a home
Having your loan pre-approved means you're a serious player and places you in a much better position to negotiate than someone with no finance approved. You'll know your maximum purchase price and won't disappoint yourself looking at properties out of your reach.
Don't forget those extra costs
The real price of your new home will include things like government fees, stamp duty, legal costs, insurance, building inspections and council rates to name a few. When buying a house it's important to draw up a detailed budget that takes into account all possible costs, revise it and revise it again, to make sure you aren't in for any nasty surprises.
Tips on how to use your FHOG:
Dive into the market sooner
You could put your FHOG toward boosting your deposit. You could be a home owner sooner than expected!
Turn the unexpected into the expected
Many first home owners jump into purchasing property only to uncover many hidden costs. Use your FHOG as a 'slush fund' for unexpected costs like inspection reports and mortgage insurance.
Split the difference
If you have a split loan, is the fixed interest rate higher than the variable rate, or vice versa? Use the grant to reduce the balance on whichever portion of your home loan is incurring the higher rate of interest. This will save you money in the long term as the higher of your two rates will apply to a reduced balance.