By Aurelio Tenaglia, Mortgage Choice in Parramatta
You've set the date, chosen the ring and finalised the guest list. For many couples, the decision to tie the knot coincides with plans to buy a first home. Mortgage Choice broker Aurelio Tenaglia walks us through the key considerations.
A first home purchase is one of life's major transactions, and for newlyweds it's an especially big step. It's a shared financial commitment and a lifestyle decision that will affect you both, so it makes sense to plan ahead for your first home to make this exciting phase of life achievable and stress-free.
Good advice is a first home buyer's best asset, and although older parents can share their experience, it's likely to have been some time since mum and dad took out a mortgage, and a lot has happened since then. Speaking to a variety of lenders or a mortgage broker will give you a clearer idea of how the home buying process works and the types of loans available. Even if you're not ready to buy straight away, these types of discussions will stand you in good stead when the time comes to purchase your home.
Along with the nuts and bolts of the purchase process, it's also important to have a clear idea of the costs involved in buying a first home. This is something that can come as a surprise to young newlyweds. If neither of you have previously owned property, you may be entitled to the $7,000 first home owner grant (FHOG), which makes meeting the cost more manageable but bear in mind you'll only receive one grant per couple.
If, like many first home buyers, you discover you would be thinly stretched to afford the location or type of home you'd like to live in, don't throw in the towel. There are other options worth considering.
One possible strategy is to rent the home you live and buy an investment property in a more affordable location. You won't get the benefit of the FHOG but after crunching the numbers many first home buyers discover the additional income, tax savings and capital growth generated by a rental property provide more value over time.
Of course not all newlyweds are first home buyers. If you currently own your home, getting hitched can be the catalyst for thinking about whether you home is large enough for your future needs or if you have sufficient equity to fund an investment property. Here too your mortgage broker can crunch the numbers to determine how much you could afford to borrow to upgrade your home or buy a rental property.
In circumstances where one member of a couple owns the home, the decision to refinance your loan can also offer the opportunity to put both names on the title deeds. It's a step that can cost just a few dollars in government charges but can add a tremendous sense of equality to your marriage.