The first home buyer’s checklist

Buying your new home is a life-changing event. It often coincides with moving out of home, not being a renter anymore, and transitioning into an ‘owner mindset’. It’s exciting and intimidating at the same time. It’s exciting because of all the new possibilities and intimidating because there are new responsibilities that you have to take care of for the first time.

1. Have a solid budget

Your home is going to be your biggest recurring expense for the next 25-30 years. You probably want to have a reliable budget that takes care of your mortgage and leaves something in the bank for some fun and entertainment.

For an easy way to set up a budget, use the 50-30-20 rule. It helps you balance your cash flow, so you can take care of all the essentials while still having a balanced lifestyle.

50% is for all your ‘must-haves’

• Mortgage
• Credit cards
• Bills
• Food
• Car

30% is for all your ‘wants’

• Clothes
• Phone
• Renovations
• Upgrades

20% is for all your ‘savings and debt’

• Straight into a savings account
• If you’re paying off debt, split into 10% for savings and 10% for debt
• Keeping this percentage steady and the deposits consistent is key

The 50-30-20 process is a simple and easy way to set up your budget without overthinking it and getting overwhelmed. Budgeting doesn’t have to be complicated. In actual fact, it should be simple, and you want it to be that way so you can stick with it.

2. Find out how much you can borrow

Knowing how much you’re allowed to borrow not only lets you plan effectively; it gives you the confidence to walk into auctions and open homes with the knowledge that you could buy the property.

It’s easy to find out how much a lender may allow you to borrow. Check out the Mortgage House home loan calculator to get an accurate representation of how much your home loan repayments will be.

Borrowing options vary from person to person and varies depending on income level and how much deposit you have. Currently, the Australian Government are still offering the first home buyer’s grant at $10,000 for NSW residents.

3. Prepare for fees and upfront costs

Fees can be an unwelcome surprise, especially when you’re excited to settle into your new home. Fees are a normal part of the home loan application process. There’s a lot of paperwork and processes that need to be taken care of in the background, and that’s why fees are charged.

The good news is fees are standardised and you’re not going to get slapped with a random amount. It’s best to get across the types of fees and upfront costs associated with your home loan so you can prepare in advance and have a seamless settlement.

4. Start visiting open homes

Make up a simple spreadsheet to help organise and rate your experiences during open homes. It can be an invaluable tool because it lets you capture your impressions. This way, you can see what you liked and disliked without trying to remember back.

Be sure to include:

• Suburb
• Number of rooms
• Garage
• Garden
• Price
• Miscellaneous

In your ‘Misc’ tab, include any information the real estate agent gave you for the house. Then you can rate each attribute out of 10 to determine the best choice.

When you like a house, be sure to get a building inspection done. The report will reveal if there are any serious issues with the building that might give you grief in the future.

It’s also a great idea to prepare for upcoming auctions. The key is to know the rules and your walk-away figure so you don’t get caught out.

Mortgage House

At Mortgage House, we’re no strangers to the homeowner’s journey. It’s an exciting and very rewarding one. If you’re thinking of applying for a home loan, you can Apply Online today to get started!