What to think about when buying your first home

When it comes to purchasing your first home, there are any number of things to think about. From taxes to moving fees, and utility set ups to a home loan deposit, it’s easy to find yourself overwhelmed by unforeseen costs. However, you needn’t despair – buying your first home should be an exciting period of your life, so a bit of forward planning and effort can go a long way towards making the process a whole lot easier.

In fact, the latest Genworth Homebuyer Confidence Index has shown a record number of first home buyers now believe it’s a good time to purchase a home in Australia. If you want to join the throng, here are some of the most common costs you can face.

Stamp duty and taxes

The costs don’t end when you’ve saved the money for the deposit. Government regulated charges come into play when buying a home. Stamp duty is generally the largest of these taxes, paid on the purchase price of the property. The levy differs from state to state and typically rises the more expensive a property is. For example, the New South Wales has a stamp duty of $1,290 on properties worth between $80,001 and $300,000, plus an additional $3.50 for every $100.

Before you enter into a transaction it’s worth investigating what level is set for your area. There is often a required period in which you have to pay the tax as well. Make sure you’re aware of the timeframe to avoid being stung by a penalty.

Set up costs

Laying down the deposit on a first home buyer loan is just the start. Spare a thought for the one-off costs you’ll likely need to pay to get the property up and running. For instance, connection charges for both phone and internet, body corporate fees if you’re purchasing an apartment and ongoing rate payments to the local government.

There’s also the matter of insurance to protect your possessions against damage or less, especially during the moving process.

Balancing the costs

Determining what costs you’ll need to pay when buying a home for the first time is a crucial step towards figuring out how much you can afford to borrow. According to the Genworth survey, 10 per cent of first time buyers think that mortgage repayments are a barrier to buying a home.

However, you can offset some of these costs with first home buyer grants. Basically, state governments encourage home ownership among first time purchasers by offering incentives or rebates. You’ll need to check with your respective authority, as they vary across each state and territory – and even by property type.

Once you’ve got a solid idea of what you’ll need to pay, creating a budget and repayment schedule is incredibly useful for sorting out your finances in the long term. However, the Australian Securities and Investment Commission has determined that 43 per cent of Australians lack a clear savings plan. There are plenty of services out there to help you towards this goal, and have a chat with your lender to find a suitable option for you.