What to consider when buying your first home
Buying your first home brings a whirlwind of emotions. Sure, there’s the feeling of independence and the excitement of entertaining friends and family in your very own space, but it’s also normal to feel nervous and overwhelmed.
It pays to do plenty of research and ask the experts lots of questions before you take the plunge. We’ve put together some tips to help you avoid potential traps and make the move to your dream home as stress-free as possible.
Location, location, location
A bungalow near the beach? An inner-city townhouse? You probably have your ideal type of house and location in mind but consider what’s important in your day-to-day life. Is it close to reliable and frequent public transport? Do you like to be in walking distance of a café or the local shops? If you have kids (or they’re in your future), check school zones and nearby parks. Make a list of essential versus desirable features. It’s rare to find a place that ticks every box, but you can make sure you tick the right ones.
Building inspection
No matter the age of your house, a building inspection by a reputable builder is a wise investment and can potentially save you thousands of dollars and headaches down the track. If the house is a bit older, consider having separate inspections by skilled professionals, such as plumbers, electricians, or salt-damp experts. And don’t forget to have a pest inspection. If termites have obliterated the timbers, or there’s another major fault, you’ll want to know before you sign the contract, not after you’ve moved in. If you’re buying a renovator’s delight, also be sure to check with the local council if the house is subject to any heritage protection. If so, this could affect the type of work you can undertake especially to the façade.
Finance
Fixed or variable interest rate? Stamp duty, conveyancing, lender’s mortgage insurance, redraw, and split loans. The list of strange-sounding terms and considerations seems endless, so speak to a trusted mortgage broker, accountant or financial planner before going to your first open inspection. Set your budget and have your loan pre-approved if possible. It’ll save you time by keeping your goals realistic and you can make offers with confidence, knowing what you can afford.
Long-term affordability
No-one wants sleepless nights worrying about mortgage re-payments and energy bills. So, for your long-term financial (and mental) wellbeing, be completely honest and realistic about the affordability of each house you inspect. Will you still be able to pay for life’s little pleasures like dinners out or weekends away? What about that bathroom renovation or outdoor kitchen you’re picturing? Don’t just think about today, consider the future too. Could you manage additional interest rate increases or ongoing maintenance costs?
Insurance
Before you sign a purchase contract, you’ll need to make sure the home is adequately insured. Premiums for home and contents insurance can vary widely depending on things like location, building materials and whether you have a security system installed. If you’re in a bushfire zone or flood-risk area, consider the effect this will have on your premiums.
Not all insurance policies offer the same cover so be sure to check specific inclusions and exclusions. This will help you find the right cover for your home and personal circumstances.
And don’t be one of the 80% of underinsured Australians, according to the Australian Securities and Investments Commission (ASIC). Make an accurate assessment of the cost to replace your home and contents to ensure you’re not caught short if the worst was to happen.
Home and Contents Insurance is issued by RAA Insurance Ltd ABN 14 007 872 602. AFSL No. 232525. Limits apply. Consider the Product Disclosure Statement and Target Market Determination available from the RAA website when deciding whether to purchase this product.