Owning your first home is a milestone that will forever be cherished and something you should be proud of! When it comes to purchasing a first home, many first home buyers are often blindsided about what truly matters in a first home – the experience and making positive decisions that will benefit your future.
For first home buyers, they can often get caught up in believing myths about the homeownership process, which is one of the biggest mistakes a first home buyer can make.
Two common mistakes a first home owner can make relates to home deposits and forever homes.
Home Deposits
A common misunderstanding in society is that a home buyer, whether it’s a first home buyer, new home buyer or an investor, must have a 20% deposit to purchase a home.
If you have saved a 20% deposit to own your first home, congratulations! You are great at saving!
If you cannot save or have trouble saving for a 20% deposit, do not stress! Property prices and the cost of living have increased significantly compared to when your parents, grandparents or even great grandparents purchased their first home. In today’s society, saving for a 20% deposit may not be a realistic and measurable goal for you.
To put this in perspective:
If you are wanting to purchase your first home, the first step is to look at online real estate portals. You are scrolling through the suburb of your choice and looking at the homes available. You find the home you love… and it’s $360,000, so you work out what your deposit required will be. For a $360,000 home, a 20% deposit would be $72,000. For a first home buyer wanting to get their foot in the property market, a $72,000 deposit required for this home can be a very big setback in the homeownership process.
Fortunately, you can own a home from as little as 5% deposit by using the First Home Loan Deposit Scheme. Without using the First Home Loan Deposit Scheme, most banks like to see around at least an 8-10% deposit of genuine savings. Instead of needing $72,000 for a deposit for a $360,000 home, your deposit can be as little as $28,800.
But wait, there’s more good news! For any first home buyer wanting to own their first home, you may be eligible for the $15,000 First Home Owners’ Grant! If you are eligible, you can use the First Home Owners’ Grant with your deposit for the $360,000 home, and pay as little as $13,800 for your first home.
Forever Homes
When purchasing your first home, it is very easy to be caught up in the emotional side of each decision. The important decisions that must be made when purchasing can be very overwhelming for a first home buyer who has never gone through the experience before.
Although you may think so, you first home most likely won’t be your forever home or a palace. It is your home to live in to build your equity and wealth so you can purchase your dream home in the future.
For your first home, it is important you understand you should stick within your budget and realise and find something that matches your lifestyle. While owning a 6 bedroom home with a cinema on 1000m2 land size might be something you desire to live in, it is not realistic for your first home.
If you start thinking about what you want or desire in a home, rather than what is practical for you and your family’s lifestyle, finding a home suitable for your first home will make the process harder than it needs to be. Knowing and sticking within your budget is the key to becoming a successful homeowner.
It is important for first home buyers to realise that their first home is generally not their forever home or a palace. Instead, it is a home that helps you get out of the rental trap and learn about property so you are one step closer to finding your forever home!