Thinking Of Buying Your First Property? Here's Everything You Need To Know!

We Ask A Real Estate Agent

Article heading image for Thinking Of Buying Your First Property? Here's Everything You Need To Know!

Michael Pead - Belle Property Canberra

With interest rates at an all time low and rentals becoming extremely competitive, it seems like the best time to crack the property market. 

But where do you start? How much do you need? What should you buy?

Belle Property Canberra's Michael Pead sat down with us to answer all the questions first time buyers may have!

Source: Belle Property Kingston 1 Bed Apt Kingston 

How much deposit do you need to save in order to get a loan? 

To save  for a deposit in most cases you need 5% or 10% of the full asking price. Most contracts of sale in  in the ACT allow you to exchange contracts on a 5% deposit amount of the asking price.

So best advice is save as much as you can to be able to purchase something within your budget, and therefore if something goes a bit above what you ideally would like to spend you have a little extra padding.

What if you don’t have that much? 

Generally banks look at key criteria's to assess whether you can service a  loan over a period of time based on income, savings,  your expenditure and cost of living etc.

Some lending criteria’s are extremely thorough so in some cases if you’d like to get yourself into the market and don’t quite have the funds a lot of buyers use their parents or close family members to take on some of the risk of the mortgage by acting as a guarantor. This usually involves them offering their home or savings as security against the loan, and agreeing to cover the mortgage payments if the homeowner defaults (misses a payment).

How much can I borrow from the bank?

Generally the bank or your mortgage broker will be able to determine what capacity you have to lend up to as mentioned above they look at key indicators such as your salary, how much you have saved, what expenses you have, and determine that you’re capable to service an amount over a period of time based on their assessment. Generally based on these assessments they will lend you what they think you’ll be able to service. (The banks want to lend money, that’s how they make money).

Here's a free calculator you can use to determine repayments!

What kind of things do lenders consider as “red flags” when borrowing?

Limiting your discretionary spending is much more attractive in the lender’s eyes, you’ve got to live like you’ve got that loan today. It’s good practice to actually make some cutbacks for three to six months, get comfortable with that, and then apply for a loan.

Source: Belle Property Kingston 3 bed Townhouse, Throsby

What are the most affordable areas to buy in and around Canberra right now?

Depending on what your budget is a number of areas in the Canberra region are worth looking at. Weston Creek is so central and  great value for money a good option,  Tuggeranong, Belconnen,  and just over the border in Queanbeyan are a number of good opportunities.

Should I buy a house, townhouse or apartment?

Again, depends exactly what you’re after, what suits your lifestyle, what you want in a property, where you want to live for example you may be after something low maintenance, you might want a garden with a bit of grass.

No one buyer wants exactly the same thing. I think all three options are great depending on your budget and where you want to live. You may not be able to  afford a house in an area you want to live  so a townhouse or apartment is a great option to get into that area.

What is stamp duty?

Stamp duty is a tax you pay when you buy property.

The ACT Government is offering stamp duty concessions in the ACT for some home buyers planning to live in their new property.

The following concessions will apply to contracts exchanged between 4 June 2020 and 30 June 2021:

  • No stamp duty on single residential dwelling blocks.
  • No stamp duty on off-the-plan unit (unit-titled apartment and townhouses) purchases up to $500,000.
    Buying ‘off the plan’ is when you sign a contract to buy a unit in a units plan before the units plan has been registered. 
  • An $11,400 stamp duty reduction for off-the-plan unit (unit-titled apartment and townhouses purchases between $500,000 and $750,000.

Is it worth building a new home?

Depends exactly what your situation you’re in and where you want to live. In most cases established suburbs have an existing home, so the cost to knock down rebuild can be substantial. There are a number of new suburbs offering blocks of land to build something  brand new. This  can be quite cost effective and a number of concessions to build so definitely worth look into.

Who should I speak to for advice about getting into the market?

Generally someone in property that  knows certain trends and which areas to buy etc. I’m happy to have a chat to anybody that would like any real estate  assistance about getting into the market.

Want some more advice? Hit up the team at Belle Property Canberra and find out what they've got to offer!

27 January 2021

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