Five important things to consider when buying a new home

If you’re considering buying a new home, it can be difficult to know where to start. But there are a number of factors to consider that may help to simplify the process.

Buying a new home comes with many of the same steps as buying an established home, but with even more decisions to be made. This can be particularly challenging for first home buyers who are navigating the home buying process without experience.

That’s why it’s so important to be clear on what you’re looking for before you get started. Here are some of the things you might like to consider that may help you do just that:

1. Your budget

Understanding how much you can afford to borrow to pay for your new home is one of the most important steps in the process. It will allow you to determine the type of dwelling you can afford to buy, the locations you can afford to look, and whether your deal makers and deal breakers are reasonable for your price bracket.

Consider using RateCity’s borrowing power calculator for an estimate of how much you may be eligible to borrow, based you your income, expenses and other factors.

2. Your must haves

What are your main needs and requirements in a home? Be sure to differentiate between non-negotiables and nice-to-haves. Here are just some of the questions to ask yourself:

• How many bedrooms?
• How many bathrooms?
• Single storey or multi-level layout?
• Is a lock-up garage important to you?
• Open plan living or separate spaces?

If you’re buying a new property that hasn’t begun construction, or is still being constructed, you’ll likely have a say on the layout, fixtures, and other features. Of course, if you’re buying land and engaging a developer or builder separately, you’ll have even more control over the features and inclusions of the house. 

3. Location preferences

The suburbs you’re interested in can play a big part in the type of dwelling you may be able to afford. Popular suburbs with lots of buyer competition may limit your options, while less in-demand locales might offer more flexibility.

And if you’re looking to buy a vacant lot to build your property on, you’ll likely have more limitations on locations – particularly if you live in a capital city.

4. Government grant eligibility

If you’re a first home buyer, you may be eligible for a government grant or scheme to help you enter the property market. The First Home Guarantee, for example, enables eligible home buyers to purchase a home with as little as 5 per cent deposit without paying Lender’s Mortgage Insurance. 

Eligible residential properties include:

• An existing house, townhouse or apartment 
• A house and land package 
• Land and a separate contract to build a home 
• An off-the-plan apartment or townhouse  

Visit the National Housing Finance and Investment Corporation website for eligibility criteria and other information.

5. Your home loan needs

Once you’ve got a good idea of your budget the kind of property you’d like to buy, it’s time to start thinking about your home loan options.

There will generally be a difference in the type of loan you’ll need to apply for depending on whether you are looking to buy a brand-new home that’s already built, an off-the-plan property, or land to build a home from scratch.

Be sure to do your due diligence before you begin the application process and consider the differing costs of each. And if you think you could benefit from some personalised advice and specialised guidance, consider reaching out to a mortgage broker.

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