Unspoken Conversations are the topics that are often swept under the carpet, whispered amongst the closest of friends and bitched about by many. I want to create awareness about difficult things that people face in life; grief, mental health, money, illnesses, family troubles, relationship difficulties and putting yourself first. I want to tell the truth about things that really matter.

Wednesday, 6 June 2012

10 Things I wished I knew when buying a house.


Terminology used when buying a house:

Real estate agents, mortgage brokers, financial advisers, conveyances, mortgages, interest rates, settlement dates, cooling off periods, pest inspections, legal documents, joint bank accounts, house inspections, realestate.com.au, home loan repayments, budgeting and more!

Wow. I feel overwhelmed just writing these down. A what? A who? What the heck for? “Narh, she’ll be right mate, we’ll get by without them…”

You may be able to start to imagine just how overwhelmed you feel when these terms start being tossed around while you begin the exciting journey to purchasing your very own tree, piece of dirt and a place you can truly call home.

I admit it. I was so naive. The hardest part was done, we had our deposit. Then all we needed to do was: speak to a financial adviser about our budget, search on realestate.com.au for our dream home, jump in our car and rock up to open inspections, find our dream home, put in an offer, have it accepted and move on in!

Done and dusted.

You can imagine how surprised I was to learn that there was much more to the whole process.

Our Story...

By the end of 2011 my partner and I were determined to buy a house in Adelaide.

It was my partner’s second house and my first (but since getting engaged what’s his is mine and mine is mine…right?)

I’m proud to say that by the 31st of May 2011 we collected the keys to the house that ticked all of our boxes.

It was the best feeling. The house was the first BIG thing that we’d purchased as a couple. Our names were both on the loan and both on the same bank account. We’d done it together. We’d made one of our big dreams come true.

But what people don’t tell you is about the lead up to the big moment when you rush over to the Real Estate Agents to collect those shiny keys that unlock the door to your future.

It took us months to find a Financial Adviser whom we could truly trust with our future. The first one that we visited tried to convince us that we could afford a $900,000 loan. At the current interest rate of 6.2%, the repayments would be $3000 a fortnight…I think NOT!

We soon learnt that it was great to receive a Financial Advisers advice, but it’s just that, advice.

 You know what your income is. You know what kind of lifestyle you want to live post buying a house. You know what kind of future you want to have (maybe kids might be on the cards which means potentially dropping down to one wage down the track).

Me, being the nerdy one, cut a Home Loan Repayments Calculator out of The Advertiser. 

It truly opened up our eyes to just how much mortgage repayments were going to be. 

At the time we were looking at a $400,000 loan. We soon realised that fortnightly repayments, based on the current interest rate of 6.2%, would be are around $1200 a fortnight.

We went back to the drawing board.

We analysed every aspect of our budget. Food, gas, water, electricity, petrol, phone bills, car insurance, car registration, entertainment, presents, clothes, council rates, house and contents insurance, life insurance, income protection and many more I’m sure.

We soon learnt that what we could afford was more realistically between $250,000 and $325,000 in order to still have a life, renovate, pay the mortgages on both houses, travel, one day be able to have children and to be able to manage our money if the interest rates increased.

Let me tell you we were shocked when we realised it was going to be difficult to find something that ticked all of our boxes within this budget.

I remember walking through a house with salt damp, termites, the floors were uneven and the bathroom…eeek…I swear the cockroaches had made themselves happily at home.

Back to the drawing board again and again and again. 

We had almost settled on buying a unit with a small front and back yard when we found the house that we now call home.

It was in our budget. The kitchen and bathroom were clean and tidy, there were floor boards throughout the house, the bedrooms were big, there were built in wardrobes in every room and a shed out the back on a big block of land. At first, it seemed to good to be true.

We phoned the Real Estate Agent straight away.

On the Monday we went to an Open Inspection to view the house. As soon as we walked through the front door we knew we had to have it. We placed an offer that day.

On the Tuesday the offer was accepted.

On the Wednesday we started signing the papers which began the 48 hour cooling off period.

We had Thursday and Friday to have a Pest Inspection done on the house. On the Thursday we met with our Financial Adviser to go over all of our documents to receive loan approval. Then the conveyances (the people who make sure that your money is transferred to the bank by the right time) were called in to make sure everything went smoothly.

Settlement was set for the 31st of May and a month later, we moved in! Phew.

It all happened so quickly.

What we've learnt...

Seek advice from a Financial Adviser or a Mortgage Broker. This will help to give you an indication of how much you can loan based on your income. It’s a great place to start getting your head around the whole process. They can also recommend banks with the best interest rates.

Create your own budget. Without a doubt this saved our skin. You know what kind of a lifestyle and life you want to live. Plan your house repayments around that.

Have your finances pre-approved by a bank. This saves the stress of finding the right house but not knowing if you can afford it. With pre-approval, you step foot into a house KNOWING that it could be yours.

Don't forget about stamp duty. It adds around an extra $20,000 to your loan (at least). If your budget is $300,000, look for a house selling for $280,000.

Do your research. Find out what banks are offering the best interest rates, who is reliable and who other friends and family recommend.

Be prepared that your first home may not necessarily be your dream home. We all have to start somewhere and we can’t all start with the best of the best. You may find yourself returning to the drawing board time and time again.

Make sure you take in to account that one day, you may have a single wage. Someone might fall ill, lose their job or decide to pop out a baby! These all effect your income and in turn, your ability to make your repayments.

Try to keep your emotions at bay. Approach buying a house from an investment point of view and not an emotional one. By that I mean: can we afford this? Is this a smart long term investment?

When you let emotions get in your way, you may risk blowing your budget for something you fall in love with. The Real Estate Agents play on your emotions. They want to sell the house. They will push you to your limits.

Write down the questions that you want to ask the Real Estate Agent before inspecting the property. These could include: is there heating and cooling? How much do the council rates cost? When was the house built? Is there any asbestos on the property? Has there been any known termite infestations? Where is the plumbing and sewage located (important if you want to renovate)? Why are the people selling the house?

Do your research on the area. Is it the worst house on the best street or the best house on the worst street? What are the demographics for the area?

HAVE FUN! I really truly hope this hasn’t scared you off. Buying a house is the most rewarding thing I have done so far in my life. It also bought my partner and I closer and taught us just what we can achieve when we’re smart and when we put our minds to something.

Nothing beats the feeling of finding that house that ticks all of your boxes. And nothing beats sitting on your lounge, looking around you, knowing that this is YOURS and you can do whatever you want to it (with council approval of course!)
We bought our house and made it a home. I hope this helps you to one day do the same :)

Take care of yourself and those around you,

Kirsty xxx


Samara said...

ha ha...totally agree. If only it were as easy as buying acar (which, btw, who knew car buying was such a straight forward process??)


Zobes said...

Great article Kirsty. Buyers should always remember to speak to the experts. Too many Real Estate agents offering advice about nothing they are qualified to offer advice on. I hope all first homebuyers read it. Well done. Next blog can address middle aged lycra wearing bike riders congregating in coffee shops - I dont get it? Zobes

Kirsty Arnold said...

Haha Zobes you crack me up! Do you have any tips or a list of the FAQs for first home buyers or a list of terminology that we could use?


Genny said...

You should also consider the location. Always remember that real estate prices vary greatly from one place to another. It must also have proper road access and easily accessible in all conditions. And I also think that consulting a mortgage broker is essential when buying a house. This is because they can help in finding a home that offers affordability and with cheaper interest rates.

Genny Stutesman