Buying Your First Home

[DJninja]

What is the hardest thing to get round when buying a house for the first time?
The price of the house?
High interest rates?

Is there really a problem or is it the media sensationalising(sp?) something?

If anyone has any information on first home buying, its troubles and the affect on the economy that would be great.




Yes, this is for an assignment

 

[Matt H]

Ahh lachie... leaving things to the last minute tsk tsk

 

[LotteBum]

In my opinion, the problem is that people limit their suburb choices. For instance, I work with a girl who will only live in certain areas because she thinks she's good. Problem is, she and her partner don't make anywhere near enough to be able to afford a house in any of the areas they're looking in without substantial assistance from their parents. So they're continuing to rent in one of those suburbs.

Also, people tend to want IT, NOW. Why not start out smaller and cheaper?

Interest rates aren't an issue. They're still relatively low and fixed loans are far more flexible now than they were even this time last year.

Sure there are people who genuinely can't afford housing in any area, but I'm fairly confident that they are a minority.

 

[Mr Sheen]

I found getting a big enough deposit was the hardest thing. Sure all the lenders say they do no/low deposit loans , but only if you earn a very high wage. Also there was extra fees that i wasnt expecting.

 

[McBain]

Bought my first place a few months ago. I've been looking at the housing market for a while, so knew what I could and couldn't afford, so I picked an area I really liked and concentrated on it.

I was fortunate and had some inside contacts to get what I did, but I still spent close to 6 months looking for something.

But that's only part of the story - you've got to come up with a decent deposit, otherwise you get reamed by mortgage insurance. For me, that took a few years of saving, and then my mortgage broker/bank lender (both mountain bikers ) were able to rejig things a bit so that I avoided the insurance. Slightly increased repayment rate though (25yrs instead of 30, but that's ok).

There's also lots of other fees and stuff - everyone wants their cut - but that's where a decent conveyancer/solicitor makes things easier. Sure, you can do it yourself, but I reckon there's enough things to worry about with your first house.

 

[treggs]

Scrape together the biggest deposit you can for two reasons. You will owe less (thus paying less interest) and depending on the percentage you are borrowing it will make a big difference to morgage insurance. Morgage insurance gets very expensive if you are borrowing over 90%. At 80% it is nil. The biggest initial expense will be stamp duty so make sure you budget for it. The last property I bought the stamp duty was 20k.

Find yourself a reputable inspection service and ask lots of questions. No house will be perfect, even new ones, so don't worry too much about small things that need fixing but anything significant either budget for it or don't buy.

As a rough guide, figure out what you can afford to pay off in 15 years, take off 10% and that is your purchase price. The 10% allows for buying costs, a bit of furniture and minor repairs to get it right. 15 years allows for some of lifes changes but minimises interest payments. Anything over 15 years and you will be paying back a significant amount of the purchase figure as interest. (70-80%) Start small and upgrade as you get equity behind you. Moving costs are cheaper than 30 year loans...

The housing market is splitting in half. The top half is still going up in value and the bottom half is getting a bit cheaper. This is because first home owners are driving the prices down in their price bracket because they simply cannot afford any more. (Not surprising after the several year boom). Now is not such a bad time to buy for first home owners in my opinion. Although houses appear expensive at the moment, I don't see them getting much cheaper in the near future because of the booming Aussie economy. I believe the lower end of the market will slowly catch the upper half over the next few years...
Good luck

 

[cam-o]

a lot of the problem relating to interest rates is that people tend to borrow the maximum they can afford at a low rate and then complain when the rates go up. It's a simple equation, rates are still relatively low so there is a decent chance they will go up. You need to be sure you can still afford the payments if they do.

When we bought our place we got a rate of around 6.75%.
We ran our budget based on a way higher figure than that though. From memory we worked out we could afford our loan comfortably with rates anywhere up to 12%. If you can't do that, borrow less.