Buying your first home is exciting, but the landscape looks different in 2023 due to changing interest rates, first home buyer grants and other opportunities.
Here’s what to consider as you work towards making your exciting first purchase.
How much can you afford?
Before you can buy a home, you need to know what you can spend. This will depend on:
• The deposit you have
• Your budget and expenses
• Your debt
• Your income
• Any other savings or assets you have
• Interest rates
• The other costs associated with buying a home (legal fees, building inspections etc)
The first step is to speak with a mortgage broker, who will help confirm your budget and work with you on a plan for home loan approval.
Keep changing interest rates in mind
In 2023, it is important to keep changing interest rates in mind.
The Reserve Bank has indicated that it will keep increasing rates this year, which means the minimum cost of a home loan is going up. If you take out a variable-rate loan, your mortgage repayments may increase over the coming months.
You need to take this into account when figuring out how much you can afford to borrow, and more importantly, pay back. It’s a good idea to make sure you can afford to accommodate a few
payment jumps without being under too much financial strain.
Talk to your broker about locking in a fixed rate or choosing a split loan that keeps part of the rate fixed for a certain amount of time.
Explore First Home Owner Grants
If you are buying your first home, you should definitely find out what grants you may be eligible for.
For example, in NSW, the FHOG (First Home Owner Grant) applies when you buy or build your first new home, although conditions apply. There is also a Regional Relocation Home Buyers Grant, which provides a one-off payment of $7,000 to approved applicants to assist with the cost of relocating from a metropolitan area to a regional area.
The other incentive is the Regional First Home Buyer Guarantee, which can give you access to a home loan with as little as 5% deposit. Again, conditions apply, but it’s worth having a chat with your broker about what’s possible.
Consider stamp duty vs land tax (NSW only)
If you are a first home buyer in NSW, you now have a choice between paying stamp duty on your home or opting to pay an annual fee/land tax.
The recently introduced First Home Buyers Choice scheme allows first-time buyers to choose between these two options. Your choice will depend on a number of factors including how long you intend to maintain ownership of the property and how much you pay for it. The benefit of paying the land tax/annual fee is that you will need less of a deposit. The drawback is you will have to pay ongoing costs.
The NSW government provides a handy tool to discover whether you will be eligible for the choice and how much stamp duty you would have to pay as opposed to the annual bill.
Don’t skip the details
When you’re buying your first home, it can be tempting to skip important details like structural and pest inspections because you are excited about making a place your own.
If you buy a place, only to find that there are serious structural issues that need addressing, you will find yourself out of pocket.
Find a quality real estate agent
Buying a home is a huge task, even if you have done it before.
As well as working with a mortgage broker to secure finance and explore your options for grants etc, connect with a few local real estate agents in the area where you want to buy. Your agent will share valuable advice and let you know when a property that matches your criteria comes up for sale.
Get help to buy your first home in 2023. Contact me today at teresa@teresaberger.com.au.
