How to Save Money when Buying a Home in Melbourne
How to Save Money when Buying a Home in Melbourne
When you set out scouting for your dream home in Melbourne, the first thing you should know is that real estate in Melbourne and other important Australian cities like Sydney is always expensive. Yet, if you come across an advertisement for ‘cheap houses for sale in Melbourne’ you should take it with a grain of salt. For most people buying a home is a lifetime dream and being an informed buyer is the best way to ensure that you are not parting with $1 more than what is absolutely essential. Timing is an important factor since real estate in Melbourne will swing between a buyers’ market and a sellers’ market depending on the overall economic conditions. Therefore, you should research your options in-depth including cheap houses for sale in Melbourne. To maximize your savings in the process of buying a home in Melbourne and make the journey easier for you, we have culled out the following valuable tips.
Consider your personal finances and create a budget to understand how much you can save for a house deposit. If you have outstanding debts, try to clear them so that your credit score improves to facilitate a more attractive home loan. Ideally, you should have enough savings for a 20% deposit of the purchase price apart from incidental costs like stamp duty, the fee to the real estate agent, legal charges, etc. Remember that most of these expenses will not be factored into the home loan and will be your out-of-pocket expenses.
Understand How Much you Can Borrow
Each individual has a different financial situation and the amount of home loan you can get will depend on:-
- Your financial commitments and income
- House deposit and savings
- Credit report and credit score
Understand the numbers carefully and be realistic about the mortgage repayments that you can afford. Home loans come with fixed interest rates and variable interest rates. Which is your option? If you opt for a fixed interest rate, your monthly commitment would stay firm. On the other hand, a variable interest rate can make your monthly repayment up if the interest rates rise or move down when the interest rates fall (though that is very rare). Working with a real estate agent or a home loan broker at this stage can be beneficial for you.
Shop Around for the Best Home Loans
As of January 2022, Australian home loan rates are at historically low levels. But, at the same time, the federal government is asking lenders to be prudent about lending to highly indebted borrowers. This low rate of interest on home loans is driving up real estate in Melbourne and other major metros around the nation. That apart, your focus while looking for a home loan should be the interest rate charged on your loan. Do remember that a small difference of 0.25% can add up to a neat little pile across the tenure of your loan. There are several lenders each competing with the other to offer you the loan, subject to various eligibility conditions. Your real estate agent or mortgage broker can be of immense help in guiding you through the loan shopping process. Ideally, you should get a pre-approval from a lender before starting the process of looking for your dream home or cheap house for sale in Melbourne.
First Home Buyers
If you are buying a house for the first time ever in Australia, the federal government offers several concessions which can beneficially impact your cost of acquisition. However, the eligibility criteria and concessions offered vary from state to state. In some states, stamp duty is totally waived up to a value threshold or concessions offered beyond the threshold. Several digital resources are available to help you understand these concessions in-depth and as applicable to particular states.
Finding your piece of real estate in Melbourne is indeed thrilling and you may get carried away by emotions. But, it is very important that you stick to a budget and be very clear-headed while negotiating or bidding to buy your dream home. When you are buying a home for the first time, take time to observe a couple of auctions to understand how the auction process works. During the first two or three occasions, you may not even bid but the next time you do intend to bid, have an experienced family member or friend to help you. You can also consider hiring an experienced legal professional for help. When you bid at an auction and your bid gets accepted, you will need to immediately pay a deposit, often about 10% of the bid amount. In most territories and states, no cooling period is given for this payment.
When you buy privately, a contract of sale will be in place denoting a deposit amount and the time frame to pay it. Most states and territories allow a short cooling-off period in this case. You have the opportunity to rescind the contract and most of your deposit can be reimbursed if you give written notice.
Pest and Building Inspection
Once you have identified your dream home to buy, get a pest and building inspection from a professional. A building inspection will cover structural issues, dampness, electrical safety, cost of potential repairs, and maintenance while the pest inspection will cover termite activity and other pest issues. This can save you a significant amount of money in the years ahead.
There are many legal aspects when you buy real estate in Melbourne and therefore it pays to find a competent legal professional experienced in real estate transactions and conveyancing. The small fee that you pay will lead to significant gains over time.
If you need further help with saving money while selling real estate in Melbourne, please get in touch with us or directly contact us at 1300 090 992 & our experts will reach out to you.