Buying your first home in Adelaide is likely to be the most important financial commitment you can make. It can be a daunting task for anyone who hasn’t been in the property market before. Moreover, it is little surprise that many find it overwhelming to take the first step towards property ownership.
One of the most significant things you can do to relieve your stress from the property buying experience is to educate yourself. Arming yourself with relevant information should give you the confidence to buy your first home in Adelaide.
In this article, we go over some of the critical steps and terms you should know as a first home buyer.
It can make sense to save 20 per cent of the purchase price of the property you want to buy. On top of that, extra amount to cover the other upfront costs of buying a house in Adelaide.
Purchasing any property with a larger deposit enables you to take a smaller mortgage with smaller repayments, and you will typically get a better interest rate.
Your borrowing capacity is an assessment of what you can afford to borrow based on your living expenses, debts and income. You can always explore the home loan calculator online to get an idea of your borrowing power.
There are plenty of fees incorporated with home loans. These include:
- Ongoing account keeping fees
- Application fees or one-off establishment fees
- Termination fees
- Early exit fees
- Refinancing fees and more.
Hence, before applying for a home loan, consult the loan specialist to find the best loan product that suits your circumstances.
When you don’t have enough deposit available, look for a guarantor to secure a home loan. Typically, an immediate family member (like a mother or father) can use the equity in their property as security against your mortgage. However, if you default on your loan for any reasons, your guarantor is liable for paying off your mortgage.
LMI (Lender's Mortgage Insurance)
LMI is an added cost to borrowers. If your mortgage deposit is under 20 per cent of the property’s purchase price, you may have to pay for LMI. It protects the lenders in the event you fail to make your home loan repayments.
SA First Homeowner Grant
If you build your first house in Adelaide, you may get access to the $15,000 grant from the SA government. However, you must meet its guidelines to qualify for this grant. And, the great news is you can use this amount towards your deposit.
An added cost on top of home loans and other charges is transfer or stamp duty. It is a tax imposed by your state government when you buy a house. However, you may be eligible for stamp duty concession, so it is best to check your local office of state revenue or lending specialist.