With interest rates at record lows, and Government incentives in place to simulate the market, the end of 2020 and start of 2021 has seen a massive increase in the number of first home buyers entering the market.
The current climate represents an exciting time for first home buyers to enter the market but many experts are worried that these buyers are not properly educating themselves before signing their contract and organising their finance.
The start of one’s property journey can be exciting but it can also be stressful if mistakes are made. It is for this reason that some experts are wondering whether there should be support options, even educational resources, available to first home buyers to ensure their first experience is as successful as possible.
Buying your first home can be costly if mistakes are made. There are many steps, and unexpected traps that you may fall in to if you are not careful. As such, access to unbiased education and resources before making the biggest investment most people make in their life could be incredibly valuable.
Education comes at many levels. Firstly, there are the fees and charges associated with buying your home – home loans, land tax, stamp duty and insurance considerations. Secondly, it’s worth taking a look at the long term. Is your first property purchase just one step on the way to building a larger property portfolio?
First home buyers need to understand how their mortgage will work? They need to understand the difference between different loans on the market – fixed or variable – and they need to understand all fees and charges. It’s important that first home buyers understand that the lowest possible interest rate is not necessarily the best.
First home buyers need to understand tax implications. They need to understand what they will need to pay and also what they can claim. Many first home buyers are actually buying an investment property so it is important to also understand if there are any tax deductions you can claim if this is the case. You should make sure that you have a basic understanding of what you can claim but then engage a trusted financial advisor to ensure everything is claimed and reported correctly.
First home buyers need education about insurance. If there’s one area you should never cut costs or cut corners then insurance is that area. First home buyers need to understand how to read and understand their policy, making sure they are covered for all the outcomes they are worried about.
With an apartment, there are also building insurance considerations. Make sure the Strata Managers are covering you in a way that you are comfortable with.
With renewable energy and climate change being a focus for many, you may also want to look at renewable energy sources and other sustainable options such as LED lights etc. Not only are these options good for the environment but they also ensure that you save money as well.
First home buyers also need to think long term. They need to understand options regarding future investments, and whether they will want to take out equity in the future for things like renovations or private school fees.
The options are endless, and owning your first property is every exciting. Property gives you so many opportunities for financial freedom. But it does come with risks and that’s why proper unbiased education is recommended.