1. How much do I need to save for a deposit?
Many lenders require a 20 per cent deposit plus additional costs, such as stamp duty, to approve your home loan.
Options and assistance if you don’t have a 20 per cent deposit
Government assistance such as first home buyer grants, shared equity schemes, or stamp duty exemptions, may be applicable. These options may vary by state.
If you’re not eligible for government assistance, Lenders Mortgage Insurance (LMI) might be the option for you. LMI is insurance that protects the lender against the risk of potential losses, in case you are unable to make your home loan repayments and the lender is unable to recover the outstanding loan amount from the sale of the security property. The cost of LMI is usually passed onto you as a fee payable at loan settlement. LMI could help you purchase a property with a smaller deposit, as some lenders may accept as little as a 5 per cent deposit plus costs if LMI coverage is available. LMI can allow you to get into the property market sooner compared to saving up the additional funds to reach that 20 per cent deposit.
2. Should I buy a home as an owner-occupier or an investor?
There are benefits and important considerations for both options and the best option for you will depend on your individual circumstances.
Owner-occupier benefits
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You may be eligible for government assistance schemes like the First Home Owner Grant and stamp duty exemption
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Stop renting and no longer worry about rental increases
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You can enjoy the home you bought
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You can try your hand at DIY home improvement while living in your new home.
Things to consider
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You will need to satisfy the bank that you can cover your loan repayments from your income, as you will not be receiving income from rent payments
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There may be limitations to where and what you can afford.
Investor benefits
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The rent payments you receive could cover some of, or the full amount of your home loan repayments
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You could buy what you can afford while renting where you want to live. This is called rent-vesting
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Tax deductions may be available in relation to the interest payable on investment loan and property-related expenses.
Things to consider
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There are additional taxes, and annual levies and costs associated with owning an investment property
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You may not be eligible for government assistance schemes like the First Home Owner Grant
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You will still need to invest time and money into managing and maintaining the property
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There may be periods of time when the property is vacant, and you will still need to cover your loan repayments from your income, as well as the rent or board for where you are living.
3. Are there specific attributes or conditions that are deal breakers
It’s easy to become captivated by a home and overlook important key factors that may be crucial when purchasing a home. To assist you during property inspections, we have compiled a brief checklist of crucial aspects to consider in and outside of the home. This will help ensure you don’t miss any important details when evaluating a property.
Outside the property
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Is there off-street parking? Is it free, timed or metered? Are there signs of damp around the house (e.g. bubbling paint, a musty smell)?
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What is the condition of the paintwork, windows, fences, gardens, roof and guttering?
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Is it possible to extend the property in the future?
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How much northerly sunlight does the property get?
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Is there external noise from traffic, trains and planes?
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Do neighbouring properties overlook the garden?
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Will the garden take a lot of effort to maintain?
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Is the storm water drainage system clear?
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Is the area prone to flooding?
Inside the property
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Check what is included – air conditioning, appliances, blinds, carpets, curtains, heating and light fittings
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Does it have appropriately sized bedrooms and bathrooms?
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What is the condition of the electrical wiring?
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Does the plumbing work? Are walls, ceilings and floors in good condition?
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Do all the windows and doors open and close?
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Is there enough storage space? (Linen cupboard, pantry, wardrobes, etc.)
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Do you have mobile phone coverage throughout the house?
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Are all fitted cupboards in good condition? Remember to check inside!
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Ask the agent if the home has an energy efficiency rating.
4. How familiar are you with the location and surrounding area?
It is recommended to thoroughly research and visit the area multiple times before making a purchase, especially if you intend to live in the home. Familiarising yourself with the area is crucial to make an informed decision. Some local amenities you should take into account, ensuring that the area meets your priorities and needs, are:
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Shops
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Schools and childcare
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Doctors/hospital
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Public transport
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How long will it take you to travel to work?
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Parks and leisure facilities
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Are there any local council planning changes or planned infrastructure developments in the near future?
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Food and entertainment.
Source: It’s my home 2023/2024
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