Buying a first home...hints and tips

So we're thinking of hopefully buying a first home in the not too distant future. Still have to save more before its even considered, but looking for peoples hints and tips to saving, buying a house, how people have managed this on a budget or how people have managed to buy a house by thinking outside the square a little.
This is something i wouldn't rush into unless i felt 100% certain we could afford the next step.
Just want to hear other peoples experiences :)
Also, what is standard these days for a deposit?
Thanks!

I think the deposit depends on your bank for the most part. Although, when we got our first home, we had 10% and that was fine - but we still needed to pay mortgage insurance (blah) which was like, 3 grand or something!! and our loan was only for $249,000!!

We had 20% deposit for this place we are in now, but the bank wanted 30% deposit before no mortgage insurance was needed (cos we are out in the sticks, like 25kms from Launceston.. pffft) so we had to pay that too, but it was nowhere near as much.

I think most banks are still around the 10% deposit, some are 5% - however your mortgage insurance would be HUGE I imagine if you went with one for 5%.

We got the cheapest and most livable house for our first, and did it up a bit, made a little bit of a profit and then got another house in tassie which was in our price limit (so we could pay the mortgage on one wage) and its basically brand new - even though its in the sticks.

We wanted basically a house that we didn't have to do anything to (ie to make it livable!) and that we could just live in when the kids were young so we could spend all of this time with them, instead of spending it renovating. We'll sell up in 5 years time though and buy a bigger place.

Try to avoid Mortgage Insurance if you can.

Research the hell out of the areas you want to buy in. Get all the weekend papers, check out a few auctions and get a feel for the game. Cos it's a big FAT GAME.
When you feel more confident about what's going on, you tend to be able to spot whats fair and keep emotion out of it. Try to be a 'business' person.

xoxoxo

and beware of auctions

there are some dodgy realestate auctioneers out there and at some auctions they plant dummy bidders to push the price up.

If you can find something 'for sale' as opposed to 'for auction' you'd be better off going for it to save yourself the runaround.

and if you find something you like that is going for auction and its a rainy day, you should go to it because the stats show that rainy day's attract less bidders.

I'd never buy at auction - but they are interesting to watch.

Check with your state government if you fall into a low income category, as some of them run subsidised loan schemes. My sister qualified for being a single parent, basically it's a reduced rate of interest and your repayments are tiered against your income, rather than against interest rates (this is in South Australia). Worth looking into IMO.

We spent about 6 months watching the market (yes that means watching the newspapers & websites but also networking with r.e. agents in the area you're interested in) and went to lots and lots of opens to get an idea of what features etc are available in what price range. The house we finally bought was a lot more modest - and therefore priced a lot lower- than others we'd seen BUT had all the core features we wanted (think things like fencing, garages, usability of kitchen & bathroom in their current state, age of hot water & heating/cooling systems, condition of roof etc) without needing to spend any $$ on maintenance in the short term.

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Check with your state government if you fall into a low income category, as some of them run subsidised loan schemes. My sister qualified for being a single parent, basically it's a reduced rate of interest and your repayments are tiered against your income, rather than against interest rates (this is in South Australia). Worth looking into IMO.

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I worry about this - I'm not sure if it's exactly the same but this was done in Vic about 10 (?) years ago and ended in people never managing to make a dent in their debts and a huge class action against the govt.

Thanks for the imput so far. I don't think I'd ever go down the auction path, having said that, all this is just a thought process at the moment. Much more to learn and find out about.
What expenses are involved in buliding from scratch, as in before the actual house planning etc?
My plan at this stage is save more, then like Cammelot said, it would be a simple little place that can be done up over time to make me love it more, the nice newish place can wait for a while now!
Love to hear more from everyone :)

I got hold of both my (cheap) little do-er uppers before they even got advertised. I visited all the RE's in the area and made it clear what I wanted and I got a couple of callbacks.

It's hard to get a bargain these days but ...

if you see something that's advertised for auction and the RE agent doesn't have many properties in that area/suburb then they could have picked up the client because they've offered them reduced fees - meaning the seller is wanting to save a dollar here and there so might be quite eager to sell. This particularly applies to deceased estates or where the seller is elderly and needs a deposit on a nursing home place. Often they are prepared to take an offer before auction on the basis of one in the hand is worth two in the bush and it can be way below what they would get at auction. DP's family did this when selling FIL's home and our next-door-neighbour also sold her house for what I (and her RE agent) both estimated to be at least $50K below what she would have got at auction.

You can generally tell if it's an older person's house by the style of furniture/decor.

Is true mortgage insurance can be expensive but you also have to take into account the length of time it will take you to save up the extra deposit and what might happen to house prices in the meantime and the money you are paying out in rent etc. Often if you do the figures at the rate house prices are rising currently it works out better to say have a 10% deposit and pay mortgage insurance than spend another year renting to save the 20%.

Auctions are not always a bad thing particularly if you can be quite emotionally detached about a place so are not going to be pushed higher than you think is worth. The area I live in if wasn't prepared to go to auction would have reduced properties available by about 70%. Places do sell prior to auction occasionally, and often you can gleen info from an agent about why someone is selling and how likely they are to accept an offer prior to auction.

We were relatively new to Australia when we started looking to buy (a year or so here) so hadn't a clue really about how system worked over here and found this book which we got out the local library useful

The insiders guide to buying real estate [text] : by someone who buys real estate for a living / Patrick A. Bright.

Although this book does recommend seeing 100 properties before you start getting serious so you can get a good idea of the market and are able to value places quickly - so it ruined a fair few Saturdays for me - I think we had seen 92 when bought ours.

I ALWAYS felt I was paying too much when I've bought...but have always been proved wrong in the long run :lol:.

It might also be a good idea to get an idea of how much some things can cost to replace - if you are looking for something that needs a bit of work you need a realistic idea of what that will mean.

Research. Research. Research.

Know your area. know your budget. Know what your are and what you aren't willing to sacrifice (ie, needs v wants). Be willing to acept less then perfect (you can always upgrade later, you don't need the best straight away. Don't get to emotionally invested (extremely hard for some people), at the end of the day it is just a house, and there are others. You don't want to pay more then it is worth. Compare the asking price with the price of the other houses in the same area that have sold or are for sale - make sure the houses are comparable (ie, DLUG and 3bd +ensuite, compare against the same or similar).

Get yourself a good homeloan broker. Make sure you are aware of all the hidden extra costs (stamp duty, application fees, conveyencing fees, LMI, house and contents insurance, etc). You will need this on top of the deposit.

Good luck :) and have fun ;)

Okay...here are a few suggestions. Firstly ask yourself where do you want to live and what do you want to live in. Do you want to live inner-city, coastal or rural? Do you want to live in a house, apartment, farm, etc?
Make a list of what is important to you - number of bedrooms, car access, land size, number of bathrooms - but be prepared to compromise on some things.
Are you willing to renovate? Renovating is very common in cities but it is expensive and a difficult task to do with children.
I'd recommend that you look for at least one special feature - view, large backyard, period feature.
A lot of these tips I've got from LJ Hooker Real Estate's guide to buying. It is a good read and full of info...good luck!
It is an exciting time...

... a piece of advice that no one thought to tell me years ago was to find out if the house next door or even a few doors up is housing commission owned ... you will be surprised even in the nicest suburb, just one home standing on it's own in street is a commission home and not a bad looking house or unit accommodating tenants with drug, mental illness, etc ... and life can become hell with living next door people like that.

For example - my sister was living in a lovely unit in a gorgeous Sth East suburb in Melb to find the unit next door to her was owned by the housing commission, all the other units were owner occupied ... and the tenant had a shocking mental illness & she would physically harm herself & my sis would often awake to an ambulance turning up ... and then it got worst when the neighbour started stalking my sis & threatening her life ... the police wouldn't do anything as the neighbour had ' not ' physically harmed my sis.

I live in a nice area of Ballarat, well i thought so when we bought then found there to be a housing commission estate quite some distance away from us & far enough too but we didn't realise the primary school closest to us is the only school for the sorry to say unstable ferals with problems living there's children so when it's time for our DD to go to primary school we can't bring ourselves to send her with so many kids with problems there, the school looks beautiful but the school reports on the net were not as good a results as other schools. So our not looking into this before buying (and our DD was NOT conceived then) this has turned into a headache & concern for us as parents.

Can i ask a question too? If you are buying a rental property - and using the equity on your existing home - do you have to have a deposit?

smiles4u - good stuff on finding out who your neighbours will be. We also had a similar experience when we were renting, it got quite scary and finally ended when they burnt the unit. We did have a good experience though when we bought, both sides of the house were commission, but long termers. the only issue we had was getting the fences repaired, the Dept will not replace unless completely falling over. So if the fences are bad, be prepared for a long wait and many letters.

We bought at auction and we paid a great price. We were familiar with the market and we knew exactly how much we were prepared to pay.
We didn't bother going ourselves, we were going on holidays so we sent FIL with inscructions about how much he could bid up to and he got it for a little less than our limit. There can be a lot of emotion in auctions and they're no place for someone who can't control thier competitive instincts but if you can walk away from it (or send someone else) then you might pick up a place for a great price.

Start sussing out the market now - set up an alert with the realestate site and look the weekend papers, drop in on the open homes (DH and I still slow down when we see one), go to a few auctions, get to know the agents and so on.

If you start a shortlist early you might be able to identify a house that has been on the market for a while and hasn't sold. If the vendor is getting desperate they might drop the price big time. If a property falls through at auction hit them up with an offer the next week.

Some of our do's & don'ts (this is just my experience having been through the process a few times):
Do NOT go unconditional on a contract unless all conditions especially finance are approved. Finance should be approved in writing. I recommend asking for at least a three week finance clause. Agents will try to talk you out of this. We went unconditional on a contract on verbal confirmation and the following monday, they said - no sorry, the person who said that wasn't authorised :wall:. We did get a loan through a different bank but it was a very stressful experience. If the owners won't extend the deadline, let it pass. There will be other properties.
Get a building & pest inspection. And read it. If you can be there with them, even better.
Don't get emotionally attached - it is just a house.
There is a website that shows you how much the house was last sold for. This can be great for setting a price that results in a win/win - they make money & you don't pay too much. The longer it's been since the last sale, the more likely it is that this will happen.
Do know the area, and research sale prices. Most agents will tell you the sale price once a contract is unconditional. After all it is publicly available information once RPdata get around to publishing it.

If you are considering a house that is up for auction, my tips would be:
Get an independent valuation. Yes it costs a few hundred $$ but could save you thousands.
Get finance approved before you even think about bidding.
Set your limit and stick to it. Don't set the limit by what the bank will lend you but by what the house is worth.
Ask someone else to bid for you if you think you might be nervous. Make sure they know your limit. I overheard a couple bidding at an auction once for their daughter. They went over her limit but luckily for her they said they would pay the extra (about $8K). I wonder if they considered the extra stamp duty.
You can make an offer for a house that gets passed in at auction. Offer them less than the highest bid - make them realise how greedy they were :D


Ausgirl - you generally won't need a deposit if you have at least 20% equity. Note that the equity needs to be 20% of both properties. Of course it will vary from bank to bank. Some banks will allow you to have less if you pay mortgage insurance. You will probably have to cover your own costs and stamp duty is significantly higher on investment properties. A good broker will be able to help you.

HTH

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smiles4u - good stuff on finding out who your neighbours will be. We also had a similar experience when we were renting, it got quite scary and finally ended when they burnt the unit. We did have a good experience though when we bought, both sides of the house were commission, but long termers. the only issue we had was getting the fences repaired, the Dept will not replace unless completely falling over. So if the fences are bad, be prepared for a long wait and many letters.

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So glad you worked that out ... and so glad you worked it out i didn't mean all tenants in commission housing as i have had friends live in housing and they treated it as if it were their own home & kept them beautiful ... yeh, it's the tenants with drug &/or alcohol abuse or seriously mental probs i couldn't live within the same street of ... too hard to know if tenants have probs so better just to keep clear all together & not take the chance as could be harder to resell the house.

A couple of my tips would be - once you find a house you like - go there at various times of the day. Go at night, sit outside and see what the noise levels are like, traffic etc. You might also want to consider the position of the sun, where is the west, will the hottest part of the house be living/bedrooms, etc.
Also think about asking a few neighbours in the area how they like living where they are.
Are there alot of rentals, if so, that may mean unruely neighbours depending on the tipe of housing - ie older cheaper homes may attract younger people who may tend to have more parties.
Also think about driving any of your regular commutes from the home to each place to see how long the journeys are, what the traffic is like etc.