What do you need to know about buying a home?

x_157_81445_0_14100830_300In short, a home is a lot of things: It’s a living space, a tangible asset and an investment for your future. Therefore, you don’t only benefit from the feeling of having something to call your own, but you also have a future boost for your finances.

Isn’t it cheaper to just keep renting rather than to fork out the cash for buying a home?

Not at all. You might think that you’re saving now, but in the long-run you’re worse-off financially. The money you’re spending on rent is going into someone else’s pocket, and meanwhile, you’re no better off in real terms. When you make your mortgage repayments, by contrast, that money is helping build equity on your home, creating an asset that you can use down the line.

What’s equity?

Home equity is simply the difference between the total value of your house and how much you have left to pay on your home loan. If your house is worth $500,000, for example, and you’ve still got $150,000 to go, then you’ve got equity of $350,000.

Equity is essentially the wealth that has grown on your property, as the value of your home has risen, whether due to market conditions or because of improvements you’ve made while living there.

What can I use equity for?

A variety of things. Maybe you’re looking to make an addition to your home or buy a new vehicle. Maybe you even want to take a holiday. Typically, homeowners will use it to invest, whether in shares or by using it to finance a second home loan on an investment property.

Others will use their equity to help fund their retirement, and downsize to a smaller, more affordable home.

What should I look for when buying a home?

This will depend on your particular needs. But definitely keep an eye out on what the neighbourhood is like – is it safe? If you’re hoping to start a family, are there schools nearby?

As for the home itself, look at aspects like the number of bedrooms and whether there is the possibility of making improvements down the line.

This is my first time buying a home. Is there anything that can help me out?

Each state has its own unique First Home Owners Grant (FHOG) scheme. In New South Wales, the FHOG gives $15,000 to first time buyers of property to help them get onto the property ladder.

However, the NSW FHOG applies only to new homes – those that haven’t been occupied before and not previously sold. You should also keep in mind that from first of January 2016, the FHOG will fall to $10,000, so it might be good to get in early.

Leave a Reply

Your email address will not be published. Required fields are marked *