Sydney is a magnificent city with year-round weather, stunning harbour views, and stunning architecture. You can’t get enough of the idea of living here and experiencing the distinctive Sydneysider lifestyle and experience that can only be found here.
However, the competition for properties in this area is fierce, and purchasers are putting out all the stops to acquire their property.
If you’re thinking of buying a house, an apartment, or a piece of land in Sydney, this post will tell you all you need to know before you buy and help you in obtaining your ideal home where you can raise your family.
1. It’s more difficult for you to buy a home than it is for your parents
Baby boomers will recall needing to scrimp and save for a down payment on a home. That may have been the case in their case.
However, assuming a savings rate of 15% of gross income, it didn’t take an average of 11 years for a worker on the median full-time salary (around $80,000) to save a 20% deposit on the median home value ($666,000). It just didn’t happen.
2. Never give up
Yes, it’s a difficult pill to swallow that the house you desire may have cost 20% less a year ago. However, it is what it is. And, absent a property crash, which almost no one expects, things will only get worse.
3. Expect the unexpected
Everyone else has been out there hocking themselves to their eyeballs in debt and pushing up prices while you’ve been faithfully sticking to your idea of what property should be worth.
I’m not claiming that it’s correct. I’m just suggesting that your one-person protest against the inequality of it all won’t make much of a difference.
4. Organize your finances
Calculate the repayments for the amount you can borrow once you know how much you can borrow to ensure you can afford to pay it back – the amount you can borrow may not be within your means to repay!
This is an important first step; you don’t want to fall in love with a home just to find out later that it is out of your price range. Worse, you buy the house just to find out you can’t afford it.
5. Make an offer
When you decide to make an offer on a house, you should request a copy of the selling contract from the realtor.
6. Lower interest rates benefit you
Lower interest rates make it more difficult to save a deposit, but they also raise the amount that financial institutions are ready to lend you. Why? Because when interest rates drop, you have more money in your budget to pay down a larger debt. You might be amazed at how much money the banks will lend you.
7. Organize the legal considerations
This is a legal requirement. Additionally, both real estate agents and lawyers should have professional liability insurance, which will cover you if any mistakes are made during the process.
Whether you engage a lawyer or a real estate agent to help you acquire a house, they should do the following key tasks:
Examine and assess the sales agreement.
- Exchange the sale contract with the seller’s legal agent.
- Make arrangements for deposit and stamp duty payments.
- Make a mortgage agreement.
- Examine any outstanding property payments.
- Make plans to modify your title.
- Help you with the settlement procedure.
8. Monitor your spending
If you do speak with a lender or broker, they will bombard you with questions to which you will have no answers. How much does power cost you? Haircuts? Entertainment? Food? Out to eat? Get ahead of the game by planning ahead of time and cutting costs where you can.
9. Look into the FHSSS
Savings in a bank account doesn’t get you very far these days. It can be enticing to invest in stocks, but volatility can make things difficult.
One option is the First Home Super Saver Scheme, which allows you to contribute to your superannuation at a 15% tax rate and then withdraw up to $50,000 for your first home. There are eligibility and withdrawal requirements, but if I were starting over, I’d look into it.
10. Reconsider your deposit
It’s good to put a whole 20% down payment on your first house, but it’s not required. I put down roughly 15% of the total. It is not commonplace for major banks to accept deposits of 10% or less from smaller businesses.
If you don’t have the entire 20% down payment, you’ll have to pay Lenders Mortgage Insurance (LMI), which can cost upwards of $10,000. The cost might be applied to your loan amount. If your income falls below a specific level, you can be eligible for the government’s First Home Loan Deposit Scheme. There are a limited number of spots available, and not all lenders are able to offer it, but it covers the cost of your LMI on loans with as little as a 5% deposit.
A separate system for single parents is available, with contributions as low as 2%.
11. Ask help from your parents
If you’re lucky enough to have it, swallow your pride and ask for help. Parents can act as guarantors on a loan to save you money on LMI. They may also simply give you cash in exchange for your deposit. It’s outrageous, yet it’s true.
12. Rethink the site
Consider whether you could reside in a suburb or two further away. Working from home has created new opportunities for people to live further afield, where prices are often lower.
13. Local real estate markets differ
Property prices rarely increase uniformly. So, if you’re looking for houses for sale in inner west Sydney, you want to consult real estate agents to determine which suburbs are undervalued. Take everything with a grain of salt, but it can’t hurt to inquire, can it?
14. Re-create your ideal home
It’s difficult, but you might be able to live in a smaller space. Prices for condominiums have not grown as quickly as those for single-family homes. Many young families are increasingly being raised in units or apartments. If you can, get one on the ground floor; they tend to feel homier and provide direct access to community areas.
15. Keep the basics in mind
When looking for a home, keep the following question in mind and give your best answer:
- Consider where you want to live.
- Is the house convenient for essential amenities?
- Is the amount of rooms in the house enough to meet your needs?
- Are the building’s structure and roof in good condition?
- What is the amount of noise in your neighbourhood?
- Is there sufficient natural light in your home?
- Is there sufficient electricity in the house?
- Is there proof of a termite infestation?
- Is there anything going on in the neighbourhood?
- Is the garden suitable?
