Five-Step Guide To Home Ownership

1. Planning
Setting a savings goal for a few years in advance is a must. Do a budget and work out what you can afford to save. After all, there's no point setting your heart on a mansion if you can only afford a cottage. As a general guide, your mortgage repayments should not exceed 30% of your before-tax income. Keep in mind, any existing debt will reduce the amount you can borrow for a home. A deposit is just one cost associated with buying a house. Others include loan application fee, stamp duty, legal costs, insurance and inspection fees. See a lender for a preliminary discussion on estimated costs and what size loan you can afford. Don't forget to factor is any perks you may be eligible for such as a First Home Saver Account or First Home Buyer's Grant.

2. Homework
Decide on a plan of action. Do you intend to buy or build? Are you after a house, townhouse or unit? The state of the market can vary greatly between suburbs and property types so it is vital to know how much money you can afford to spend before wasting your time looking around in the wrong suburbs. Short list the area you are interested in, then shop around for the best lender. Obtaining preapproval is wise if you want to stand a chance in a very competitive market. Most of the time, there are multiple offers for properties and sellers always go with a pre-approved offer. Pre-approval costs nothing and most lenders offer this service even before you begin your search. It is also wise to search out a solicitor or conveyancing firm to handle the legal documentation when you buy.

3. Buying a house
There are two main ways to buy a house or unit – private treaty or auction. At a private treaty you negotiate the purchase of the house, including the price, directly with the seller or more usually, a real estate agent representing the seller. It is a good idea to be aware of the prices being paid in the area and always remember that the seller's agent is acting only for the seller. Be aware that after you have signed the contract, you normally have a cooling-off period. An auction, on the other hand, can be quite scary so it's worth attending some auctions beforehand to get an idea of how they work. Make sure you have your lawyer look over the contract of sale before the auction and don't get carried away at the auction. Set your absolute limit and stick to it. There are plenty of other properties if you miss out. If you are successful, have a cheque (personal or bank) to cover the 5 to 10% deposit required on the day.

4. Pre-settlement
This is the time for building, pest and termite inspections. Check compliance of the property with local council by-laws, especially extensions. Check the inclusions you expect – stove, light fittings, blinds etc – are itemized in the contract. If they are not, you probably will not get them. Finally, know the terms of the settlement such as when you have to pay the balance of monies and take possession.

5. Post-settlement
When you finally buy your perfect home, kick back and enjoy it. This purchase, no doubt, is an important and expensive one. From now on, the biggest and most obvious change will be in your finances. Excess funds will now go into your mortgage instead of a savings account. Don't forget the date your mortgage is due every month. Better still, divide the amount in half and pay it fortnightly to save in interest over time. With a bit of luck, your property, too, will appreciate over time and contribute positively to your wealth creation.

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