5 First Home Buyer Tips

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Buying property can be an overwhelming process for any property buyer, least of all if you are buying for the first time. It is important to surround yourself with the right people who can help you through each of the steps. If you are considering buying property for the first time, or know someone who is, read below for our top tips to help first home buyers.

Financial incentives for FHBs

There are several incentives for first home buyers provided by the NSW Government and by the Federal Government. The grants are designed to make it easier for first home buyers to enter the property market. The incentives that are currently available include:

First Home Buyers Assistance Scheme

This scheme provides exemptions or concessions on transfer duty (otherwise known as stamp duty) for eligible first home buyers. The scheme applies to new and existing homes (sub $800,000), as well as vacant land on which the first home will be built (sub $450,000).

First Home Owner’s Grant (New Homes)

This is a grant of $10,000 for eligible first home buyers who are buying or building a new home. To be eligible, the purchase price must not exceed $600,000.

Shared Equity Home Buyer Helper

The scheme provides eligible home buyers purchase their own home with as little as 2% deposit. The NSW Government will contribute a proportion of the purchase price of a property in exchange for an equivalent interest in the property. The scheme applies to properties up to $900,000 in Sydney and other major regional centres and up to $600,000 in other NSW regional areas.\

First Home Buyer Choice

The First Home Buyer Choice will allow eligible first home buyers in NSW who purchase a property up to $1,500,000, the choice between paying stamp duty or opting for the annual property tax. The purpose of the scheme is to enable more first home buyers to enter the market by reducing the up-front costs.

First Home Guarantee

This is a federal Government initiative to support eligible home buyers to buy a home with as little as a 5% deposit without paying Lenders Mortgage Insurance (LMI). From 1 July, 2022 – 30 June, 2023, 35,000 FHBG places are available to eligible first home buyers. There are property price caps depending on the location and these include $900,000 for Sydney and other major regional centres and $750,000 for the rest of NSW.

Define your needs

Before giving up your weekends to inspect property, ensure it’s a worthwhile exercise by defining your needs upfront. This includes creating a list of property criteria that’s suited to your budget.

When compiling a brief, it’s important to first ask yourself, “What is the purpose of my property?” and, “Why do I want to buy a property?” This includes describing your long-term goals.

To define your needs, draw up a list of “must-haves” and “nice-to-haves”. This will help you make better decisions when searching for and negotiating on property. The must-haves should define your minimum requirements such as bedrooms, bathrooms, parking, size, and location. Compare your must-haves to your budget to determine if your brief is realistic. If your must-haves are achievable, create a list of nice-to-have features. Nice-to-haves features are items which you could be prepared to forgo if the property meets the majority of your other requirements.

Set your budget

The first step to determine your budget is to speak with a mortgage broker or banker, and a financial planner if you have one. These experts should strategically assess your circumstances and advise on what levels of finance you can afford to borrow.

Once you are clear on your financial position, the next step is to factor in how much you are prepared to pay for different property types. For example, will your budget be different for a house vs townhouse or unit? Would you prefer to buy a fully renovated property or a property requiring work? If the latter, is your budget reduced by a certain value to cover the renovation costs? All the above scenarios need to be explored in detail to determine your budget when considering different property types.

Understand the market

Having a grip on the property market is key to getting focused on your search to avoid spinning in circles. This means understanding the various price points properties are selling for within each suburb you’re considering buying into. Understanding the market also means keeping up with new property listings both on and off the market.

To get up to speed with the market, speak to the top local agents, explain your brief, and ask what properties they have coming up that could suit your needs. Look at the “Sold” section of the real estate portals to understand what type of property is selling in which areas. Consider how frequently property meeting your criteria is selling, and the prices they are selling for. This exercise will help you to understand if the type of property you are searching for exists within your budget and how easy or challenging it will be to find suitable properties in each particular suburb.

Preparing to bid at auction

Bidding at auction can be a daunting task for first home buyers. The auction process is fierce and come auction day, the public are watching. To manage nerves and set yourself up to be in a strong position, prepare in advance of the auction. This means having all your finance and due diligence sorted and being in a position ready to bid on the day.

To help prepare for the bidding process, talk to the agent and extract as much information as possible about the level of competition you’re likely to face. Verify this information by attending auctions of comparable properties a week or two in advance. Take note of how many buyers are registering for auction, how many are bidding, where people drop out of the race, and the final sale price. This exercise will give you an insight into your competition and what their price limits are.

The most important tip for auction preparation is to set your walkaway price before attending the auction. Emotion can cloud judgement so set your price limit with a rational frame of mind. And make sure to test your limit before the auction. Ask yourself at which price are you happy to see someone else buy the property?

If you’re a first home buyer needing extra help to find your first home, contact Nick Viner on 0405 134 645.

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