First home buyers often make the mistake of not preparing enough for the process of buying a home. Being unprepared and completely unaware of certain important aspects of the home buying process can result in some shocking surprises. Here are a few important things that first home buyers must not forget when they make their purchase.
Some novice buyers make the mistake of falling in love with homes without getting it professionally inspected. In reality, even though a house may look beautiful and perfect from the outside, it may cleverly conceal very real problems that can end up costing you thousands later on. A professional inspector will thoroughly examine the house and reveal hidden issues such as pests, structural damage or structural weakness and rising dampness. When you know what’s wrong with a house, you can either walk away or make arrangements to get it fixed.
Lender’s Mortgage Insurance (LMI)
Some first time buyers get quite relaxed when they discover that they can obtain a mortgage without having to pay 20% of the property value. What quite a few of them don’t know is that borrowing more than 80% of a house’s value requires buyers to obtain Lender’s Mortgage Insurance. This is an insurance coverage that protects the lender should the buyer default. The only way to get around the LMI is to save up enough to make up 20% of the property value.
Stamp duty tax
Stamp duty is levied on almost all Australian property purchases. The amount payable depends on the price of the property and the state in which it is located. It needs to be paid upon settlement and the cost must be included in your budget. There are many online stamp duty calculators that you can use to identify the cost.
This is the process of transferring a property’s legal title from seller to buyer. This is a rather complex and tedious process which can be handled with the aid of a conveyance or a solicitor. Needless to say, conveyancing is an additional cost in your home buying process and first home buyers need to add that amount in their budget.
Once you have found that perfect house, you need to obtain the sales contract and get it looked over by your conveyancer or solicitor prior to making an offer.
First home buyers need a loan pre-approval letter from their lender. This document is sometimes overlooked until the last moment by some buyers. However, it is a very important document that will allow you to understand how much you can borrow. You will also need this letter to more with more confidence when you find the right home.
Capital Wealth Property offers a range of services specifically for first home buyers. If you are looking to enter the property market, consult Capital Wealth Property for the best financial and real estate support.