The 3 most common questions first-home buyers ALWAYS ask

The proportion of first-home buyers is at an all-time high, with affordable prices and record low interest rates. South Australia’s first-time home-loaners have celebrated an 18-month rise, alongside Western Australia and Tasmania.

Date:

05-Sep-2019

Category:

Buying

Tags:

Author:

Amanda Smith

The 3 most common questions first-home buyers ALWAYS ask

The proportion of first-home buyers is at an all-time high, with affordable prices and record low interest rates. South Australia’s first-time home-loaners have celebrated an 18-month rise, alongside Western Australia and Tasmania.

Nationally, the average Australian home is just shy of $385,000 – over 18% of which are secured by first-home owners. But just because the South Australian property is set to rise in the next few years (up $55,000 in just three years for an average $550,000 home), entering the market should be a well-researched decision.

Now in our third generation, First National Nitschke Real Estate has worked with thousands of first-home buyers in the Adelaide Hills. So, let this article serve as part of your preliminary research, if you’re thinking of buying a house in the Hills or Fleurieu Peninsula.

1. How big should my deposit be?

If we were to suggest a figure it would be 20%. Put simply, you say 20% and borrow 80%. Of course, it’s possible to get a loan with 5-20% deposit, but there’s a catch – Lender’s Mortgage Insurance (LMI).

Say the property value is $385,000 and you saved $57,750. That’s 15% of the property price, so the loan would be 85%. You’ll pay approximately $3,400 in LMI. There is the option of providing a guarantor, leveraging the property they own as the 15% security deposit. You’ll need to come up with 5% to avoid LMI.

If your annual salary is $50,000, a $225,000 - $275,000 house loan is a realistic benchmark.

2. Is it better to buy an established home or build? 

There are grants available for first-home owners who construct a new home. This is a useful tool to help in your research. Building gives you more time to save a bigger deposit and there’s also less maintenance in the early years.

However, with an established home, you can move in sooner and there’s more opportunities to make improvements (and add value to the investment). It’s also easier to track and predict price movements with existing properties.

It’s best to talk to a team of property agents who can provide tailored advice, based on your situation, future goals and budget.

3. Is a one-bedroom apartment (location) better than a three-bedroom house (land size)?

Land appreciates in value, buildings depreciate. Buying a house based on land size is a good strategy. Historically, land has offered greater long-term capital growth. There are also strata fees with apartment buildings. Also, land will be attractive to a broader group, from singles to families.

While these answers only serve as a compass to point you in the right direction, pay attention to your logistical, financial, and emotional needs.

And, when you’re ready to talk to an experienced team of real estate agents who have lived and worked in the region for decades, get in touch with us. If the Hills is going to be home for you, Nitschke is your property family.