Top Five Strategies for First Time Home Owners

If you're an intending first time home owner, the idea of talking to lenders about mortgage fees and repayments, picking a property, and committing yourself to long-term repayments may appear overwhelming at first. Yet thousands of people take this journey every year - they buy their first house. Unlike quick cash loans or simple personal loans, home loans are a lot more complicated. Here are the top five strategies to make your home-owning adventure as smooth as possible.

1. Save a Big Deposit

Discipline yourself and save the biggest deposit you can manage. Remember you have options beyond saving up for your deposit alone - you use equity from the property of your parents, make use of pledges from relatives, and use your first home owner grant. The bigger your deposit, the more you can borrow. You will also be able pay off your mortgage much sooner and avoid having to pay extra for mortgage insurance. Saving at least 20 or 25 per cent of your purchase price is ideal, though this may vary depending on your circumstances. Make use of

2. Take Your Time and Shop Around

Use a timeframe for purchase by all means but don't rush into anything. Finalising something as complex as a property purchase takes much longer than straightforward transactions, such as a fast loan. Research longer-term property trends in the relevant suburbs if you are also thinking of buying for capital growth, otherwise take into account your future plans and make a decision based on long-term lifestyle and commuting factors. For example, if you and your partner are planning on having children and three dogs, there's no point getting distracted by the attractive two bedroom apartment in the city centre. Don't get emotional about the process because if this property falls through, there are other properties on the market to suit your needs.

3. Stick to Your Budget

First time home buyers usually have extremely high expectations that are dashed when they go shopping in today's property market. Always stay disciplined and understand that your first home, unless you inherit a lot of money in your youth, will rarely be your dream home. Buy only what you can afford to buy and keep in mind that you can always renovate, rebuild, or, once you've built up some equity, make another purchase. By keeping a realistic frame of mind and being modest in your expectations, you'll be more likely to avoid overextending yourself and be happy with your first purchase.

4. Know Your Fees and Obligations

Make sure that you're clear on the associated fees, charges, and repayment schedule for your mortgage. Lending fees, valuation fees, conveyancing fees, mortgage insurance, exit fees, and early repayment charges are just some of the common charges that may apply. There are other things to keep informed about before you make a decision, such as the different lending packages that are available, as well as the different property packages, such as buying off the plan. Always obtain specific advice from your lawyer and accountant.

5. Plan for Contingencies

If you are clear about your fees and obligations, you can better plan for contingencies. Calculate your average monthly payment obligations and make sure you have enough set aside for emergencies, such as patches of unemployment, illness, unexpected medical costs, or accidents and expenses.