House hunting essentials
The definitive guide to finding a home
Finding and buying a home can be a very stressful experience. Your Saturdays are now taken up with a raft of inspections and smiling suited and booted agents trying to convince you to buy, attend an auction, or “give feedback”. So how do you navigate all the pitfalls?
A list is always the best place to start, and like any other problem, the more you break it down the easier it becomes. There are things on the list that need to be mandatory, and others that you may allow some leeway with.
How much money you have to spend
This one is probably the overriding feature of what governs the home you will buy. It governs your search filters, it governs what is left from your pay packet every month but you will need some flexibility when thinking about the money you have, and the money you borrow.
There should be a few figures that you work with. The first is how much you can comfortably afford to sustain your lifestyle without severely curtailing you living standards. The second figure should be the absolute maximum you can borrow which may cause you short term pain but will get you more house.
All borrowings should look at your current position and what may happen to you in the future. It should also take into account where you are in your working life, the likelihood of potential income increases, and whether you will be growing a family.
Work out how much money you have and how much you are prepared to live with every week going towards your mortgage.
Many people subscribe to the idea of buying the absolute best you can afford for short term pain but long term gain.
What are your needs?
These vary widely from person to person and don’t confuse needs with wants. We need a bedroom to sleep in, you want a pool, get the difference? Write a list of the absolute basic needs that may include:
- Number of bedrooms
- Outdoor area
- Proximity to transport
- Move in immediately
The wants come into the above point on how much money you borrow and/or spend. These are things you can do without but would be nice to have which include things like:
- A pool
- Air conditioning
Get a good broker
You now know how much money you are prepared to put into your home, and you have your basic requirements. You now need to shop around to see what sort of risk profile you have and how much an institution is prepared to lend you based on your current financial position.
A broker will give you an idea of how much you can borrow, but they will also provide the flexibility to add to potential loans based on a specific property, or a change in your circumstance.
How do you find a good mortgage broker? Ask a lot of questions, ask friends who have had experience and interview at least 3 and see what they bring to the table. You may not have had a lot of experience in this area so never be afraid of asking questions. Terms can be confusing so make sure everything is explained to you. There is no such thing as a stupid question.
Lastly make sure you feel comfortable with them.
There is no substitute for pounding the pavement. The more properties you see the better idea of value you will have. Not all properties are comparable, but by viewing as many as possible you will start to get a feel for the market, what people are paying, and what you will have to pay for your home.
Use all the tools available to find properties – not all properties are in one place. Some properties will be listed on domain.com.au, but not on realestate.com.au. Get on an agent’s new listing mail list, be aware of when they hit the market and get there there fast.
Things to look out for in the property
Obviously if you feel you are moving towards potentially buying a property you should get a professional inspection, but there are a few things that you should be aware of and key an eye out for.
The obvious one is does the property need work? Will you need to replace a kitchen or bathroom? Paint or any other renovation work? If it does you need to get a professional estimate so you can build it into your costs.
Apartments are governed by another set of rules that don’t apply to stand alone houses. They are generally governed by Strata Laws and a large part of the building’s upkeep is paid for by the owners and run by a Strata Committee. If a building looks run down there may be a few causes, it could be due to a committee that is not proactive, (which is generally the case) or maybe it is lacking funds. There is a difference between lack of maintenance and structural problems.
Structural problems and/or waterproofing can be a major cause of financial pain for apartment owners who will have to cough up to fix them. Ensure that you get a strata report, but also pay for a building inspection by a qualified individual.
Strata reports will give you an idea of the financial health of the building and a general character as to how it is being run, but they do not tell the full story. Talk to residents, get a feel for the place. In short – do your homework.
Standalone houses are different with potentially different problems but the same approach. Look past the freshly painted walls and get an inspection, does that tree need to come down? Come back and have a look around the neighbourhood at night, check out the neighbours, you need to know who you will be living beside!
Make sure you are aware of any Local Government actions that may affect you, and/or State Government plans for the area, is there a highway on the way?
Always get a second opinion
It always helps to have a another set of eyes look at a property you have fallen in love with, someone who is impartial may bring things to your attention that you haven’t seen. Mums and Dads are excellent for this!
As always if you need any assistance to create a financial plan to save for that deposit, or to find you the right mortgage don’t hesitate to get in touch for an obligation free chat.