If you’re a first home buyer and haven’t got a clue what the best way to approach this huge decision is, or how to handle the biggest purchase in your life, I really envy you. Why? Because the advice you’re about to read here is something I wish I’ve had in my early house-hunting days. So here goes – see what you can learn from Lindsey’s experience, and implement:
“From the time we were married 11 years ago, my husband and I wanted to buy our own home rather than put our rent money into someone else’s pocket. Initially this was near impossible (our bank said that with the right deposit we could borrow a princely $90,000 toward a house), and we were fortunate to rent from a family member for some time until they sold their home. At that point we discovered just how poor our local rental market was and just how badly we wanted our own place. We rented a house that would do us for a short amount of time and started looking in earnest for real estate, and 7 months later we were moving into our very own place! Seven years later, we have made some changes to the house but are still very pleased with the choice we made and I know many of our friends have asked us for advice when they have reached the same point in their lives. Here’s what I tell them – and I hope it is of use to others as well!
Don’t be afraid to rent
We paid rent for five years before we bought a house. Yes, we would have liked to get into our own home sooner, but we were also aware of the extra costs that would come with home ownership. Besides the higher cost of a mortgage payment over our rent, we had to factor in homeowners insurance, council rates, and a slush fund for unexpected repairs (and there have been a few doozies!). There was no landlord to call when our oven stopped working or the bath cracked, the onus was on us. This can be satisfying but can also be a real frustration and stress on a shoestring budget. Make sure you are realistic about the costs of home ownership, both in your time and in your money, and buy when you know you are prepared for the commitment.
Do your research
Before we were in a position to buy our own home, I picked up every real estate advertising magazine available and was aware of the available houses and the price movements in our area. We considered adjacent suburbs with better pricing and ended up with a four bedroom renovated home on 997 square meters for the same listing price as a mouldy two bedroom ‘renovators delight’ on small land in our own suburb. When we considered the other suburbs, we took maps of the area to friends and asked them to circle the good and bad areas of town.
Think it through
Your home is your biggest purchase, and you certainly want your first home to be a place you remember well and enjoy living in. Our initial budget led us to inspect homes that were often less than livable. In one, the real estate agent pulled a small sapling up from a crack in the master bedroom floor and said ‘oops, that always happens!’ before leading us through the patched up kitchen with bulging water damaged walls and discussing the heavy metals that may be present in the soil. We were willing to do the hard work to make the places better, and there is certainly some charm in the idea of making a house your own, but you need to be realistic about your capabilities, the cost involved, and the final product. Often we would come home from seeing a house and then sit down to make a list of all the work that needed to be done and how much it would cost. The bargain two bedroom homes often didn’t look so appealing once we factored in pulling down asbestos laden garages, fixing badly done home handyman renovations, and repairing basic structural faults. In the end, we moved our price bracket and paid an extra $40,000 up front for a house that was already completed to a good standard.
Ask LOTS of questions
Ask your mortgage broker. Ask your bank. Ask the real estate agent. Ask your parents. Ask your tradie friends. Ask all the stupid questions you think you ought to know the answers to, because chances are these people have heard them all. It’s much better to explore all your options and know all your rights and responsibilities before you get in too deep. Ask a knowledgable friend to go through your shortlisted houses with you – a friend of ours walked through three houses with us and explained how to check that the walls were straight, how to see the difference between a good renovation job and an expensive mess waiting to happen, and what issues were worth worrying about and which were something innocuous and expected. Ask about the mortgage options you have, especially if you are considering renovations or other costs down the track – make sure you know the process of extending your loan or utilising your redraw facility. We discovered once our loan was established that the process for extending the loan for renovations was difficult, costly, and time consuming. We managed what we needed to do without the bank’s help, but I had to take an extra job outside the home to make it happen. In hindsight, I was very glad we had opted for the already completed home… and wished I had understood bank processes more thoroughly before presuming we could borrow easily to make improvements.
Your first home is not likely to be your last. What you need is a sturdy well built home that will meet your needs for the forseeable future, not the house with all the bells and whistles that will squeeze you out of any chance to improve your equity position. Understanding the difference between your needs and your wants can make all the difference in the satisfaction you feel in your eventual purchase. If we had looked for our own home immediately after leaving our family rental, we would have found every option disappointing. As it was, we HATED our short term rental with its damaged woodstove for heating, draughty windows and floors, water damaged cabinetry and broken appliances. In a way, this was fortunate because it helped us focus on what was important in our new home, and it meant I had a very giddy moment on our first night in the new house when I could look at the snowflakes outside and push a button to produce heat! Even greater satisfaction has come from the fact that our realistic choice enabled us to pay ahead on our mortgage, buy land, and start planning our own dream building project.
My first real estate experience was generally positive, and I believe the way we approached the process had a lot to do with that. Now that we have been in this house for 7 years, we have truly made it our own home. We have poured our personality into the renovations we did, we have made the home a stronger better and healthier place over time, and we have rejuvenated the gardens and historic plants that were here. We brought our daughter home to this house, we got our first (and second!) dog here, we started raising chickens and rabbits and growing our own food in our backyard. Now this place has also become our stepping stone to another real estate adventure, and I hope it will be just as exciting for the next first home buyer to walk through this front door and make it their own.”
Are Lindsey’s tips helpful? Do you have any tips or questions of your own? Leave a comment below – we want to know.