Let’s face it, there have always been challenges for a young couple who wish to buy their very first home and as land prices continue to rise, it can seem like Mission Impossible to be able to make that first purchase. In this article, we will take a look at the various obstacles that the first-time property buyer faces, with the aim of helping you gain a deeper understanding of property ownership.
- The Deposit – It is standard nowadays to pay at least 10% deposit when buying a house, with some lenders requiring as much as 20% as a down payment, which is a lot of money to find. This is the requirement that stops most young couples, who simply haven’t been able to save such an amount, and while some lucky couples have their parents’ financial support, most are unable to come up with the deposit when looking to buy a house. If, for example, you buy a single-story detached home from A-West Property, you have nothing to pay for 3 years!
- Applying for a Mortgage – If a person has just started work, their salary might be too low to qualify for a home loan, but if you have a partner, the lender would consider both of your salaries, which should be enough to qualify for a loan to buy a small property. Mortgage lenders, much like banks, assess a borrower’s risk factor, taking into account their current monthly expenses and how that compares with their earnings. If the lender feels that the applicant’s outgoings are too high, or their income too low, they might reject the loan application.
- Land Title Costs – There are costs involved when land ownership changes hands; in some countries it is called ‘stamp duty’, which might be shared 50-50 by the buyer and the seller and when you are planning to purchase a property, you need to check regarding taxation, stamp duty and legal expenses.
- Furnishings & Fittings – If you buy a new house, the chances are it will not be furnished and it is a major cost to furnish even a small home. When looking at housing developments, some do offer furnishings & fittings, meaning you can literally move in and have nothing to buy.
This is a great time for first-time buyers, as it is currently a buyer’s market, with so many completed houses sitting empty and if you can manage to find a housing project that is completed and also offers deferred payments, you should seize the chance to become a homeowner, as there will never be a better time to buy real estate.
A RBC mortgage specialist can help you get the best mortgage rate and terms for your needs. Learn what to expect when working with a specialist, and find out how they can help you save money on your mortgage.