Become a Creator today!Start creating today - Share your story with the world!
Start for free
00:00:00
00:00:01
First Home Buyer Fears
147 Plays1 month ago
In this episode, we dive into the journey of Molly and Sam, who faced fears of commitment, anxiety, and the daunting shift from saving to budgeting for a major debt. We'll tackle their "home ownership imposter syndrome," break down the biggest financial concerns, and share strategies to overcome the emotional side of this life-changing decision. With real-life examples, tips on government schemes, and advice from Hunter Galloway, you'll feel more confident, prepared, and ready to unlock the door to your dream home.
Want to take charge of your mortgage and build wealth? Get a free home loan health check from Hunter Galloway – the home for homebuyers. Visit huntergalloway.com.au or call 1300 088 065.
Recommended
Transcript
The Emotional Journey of First-Time Home Buying
00:00:00
Speaker
If you're thinking about buying your first home, you're probably feeling totally overwhelmed. And guess what? You're not alone. I recently spoke to Molly and Sam, who after years of saving were finally ready to take the plunge into home ownership, but instead of excitement, they were drowning in anxiety and fear of the unknown. They're excited to find their first home, but shifting from the savings mentality to the reality of a big debt and budgeting for repayments really freaked them out. To the point where they thought about delaying the purchase for another year, feeling like they weren't mentally ready. To help with this, we worked through the numbers, but the emotional side, that's where the real fear was.
00:00:30
Speaker
Molly even shared that her parents had never even owned a home and it left her feeling like she didn't belong. What she called her home ownership imposter syndrome. I want to share Molly and Sam's journey with you because if you're feeling like they did, I'll show you how we tackled the fear of the unknown, the specific resources that helped them and some encouragement that will carry you through the process no matter how daunting it feels. You're going to feel ready, confident, prepared to turn your dream of home ownership into reality.
Commitment Anxiety in Home Buying
00:00:53
Speaker
Welcome to the Buying Your First Home Podcast, your personal guide through the Australian housing market. Here we tackle the big questions and the small details that come up when buying your first home. From financial prep to finding the right neighbourhood, we're here to ensure that you've got all the knowledge at your fingertips. So let's take the first step towards unlocking the door to your new home.
00:01:18
Speaker
All right, so let's jump right in. Let's tackle one of the biggest fears first home buyers face, commitment anxiety. It's that nagging feeling in the pit of your stomach saying, am I really ready for this? This fear typically breaks down to three major concerns, the long-term nature of a mortgage, being tied to location and lifestyle changes that come with home ownership. Let's unpack each of these.
00:01:37
Speaker
A 30-year mortgage can sound like a lifetime, especially if you're in your 20s and 30s. But let's try and flip that and think of it as a long-term investment in yourself. Each mortgage payment is like putting money into your own pocket. On a $700,000 home using the 5% government home guarantee scheme and the current interest rate, your monthly repayment might be around $4,100. In the first year, around $650 a month of that goes towards building equity in your home. That's $7,900 in the first year alone that you're essentially paying back to yourself. Fast forward five years, you've almost paid $50,000 off that loan off.
Flexibility and Financial Planning
00:02:06
Speaker
It's a great way to have some full savings. Now let's address a big one, the fear of being stuck in one place. In an increasingly mobile world where you see people traveling on Instagram every day, the idea of being tied down can be pretty daunting.
00:02:16
Speaker
Enter Sarah, a 29 year old marketing executive who loved the idea of home ownership, but worried it would clip her wings. She found a pretty creative solution that might work for you as well. Sarah bought a two bedroom apartment in a popular suburb here in Brisbane. When she travels for extended periods, she rents out the second bedroom or even the entire apartment on Airbnb. So she can have a bit of a best of both worlds. Not only does this cover it mortgage repayments, even sometimes it can generate extra income. So here are some ways to maintain flexibility as a homeowner. ah If you are concerned about this, think about choosing a property in a high rental demand area that could be easy to rent out. It could mean you might only need to leave there for 12 months and turn to an investment property, making you feel less likely to be tied down by that home. Remember, owning a home doesn't mean you're stuck. It means you have a stable base to return to after all your adventures. Lifestyle changes.
00:02:56
Speaker
Home ownership comes with new responsibilities. No more calling the landlord when something breaks, but it also comes with newfound freedoms. Want to paint the walls hot pink? Go for it. Dreaming a vegetable garden? The backyard or balcony is yours to transform. These changes can be exciting, but they require a bit of financial preparation. Which brings me to the most important point, financial readiness. How much deposit do you need? The good news is you probably need less deposit than you think. In most cases, using the home guarantee scheme, you can buy a home with as little as a 5% deposit. So for example, on a $700,000 home,
00:03:23
Speaker
That's only $35,000 and if you live in a number of states like Queensland and New South Wales, the stamp duty is actually waived for first home buyers under certain purchase prices. So if you bought that home for $700,000, you'd save a further $20,000 in stamp duty costs. Now there's some other cases using government schemes where you potentially buy with as little as a 2% deposit. This applies to single parents using the family home guarantee scheme. For more info for on that, hit us up at huntergalloway.com.au. Can you afford the repayments?
00:03:46
Speaker
When looking at your borrowing power, lenders look at your ability to service the loan. In other words, they want to be sure you can make regular repayments. They'll consider your income, expenses, other debts you might have and potential interest rate rises. So when you are trying to work out how much you can afford, try and leave a bit of buffer or some savings left over at the end to cover repayments if you have some unexpected expenses to come up. We'll come back to that in a sec.
00:04:04
Speaker
For example, if your home loan repayments on a $500,000 loan at 6.5% or 3,200 per month, could you still manage if the interest rates rose by half percent? The repayments increased by about $100 a month. That's the kind of scenarios the lenders and you need to think about in the future. Overcoming commitment anxiety. Remember, it's normal to feel some anxiety about such a big commitment. Here's some strategies to help. Firstly, educate yourself. The more you understand about the process, the less daunting it can become.
Understanding the True Costs of Home Ownership
00:04:27
Speaker
Start small. If a house seems overwhelming with the yard noise, extra things to think about, consider an apartment's of first step on the property ladder.
00:04:33
Speaker
It can be a lot lower maintenance and less headaches if you're concerned about that. Think longer term. Visualize where you want to be in five, 10, 20 years. Does home ownership align with those goals? And lastly, don't be afraid to seek advice. Chat to a mortgage broker like us. We can offer you personalized solutions and just give you the numbers without even having to go through the next step so you can understand where you're at and where you can get to. Commitment to home ownership isn't about limiting your future. It's about creating a stable foundation for whatever that future might hold. Now let's tackle the big elephant in the room, money. It's normal to feel a little queasy when it comes to the financial side of buying a home. After all, it's likely the biggest purchase you're ever going to make. When budgeting for a home, a lot of people just focus on the deposit and mortgage repayments, but there's a little bit more to consider on that. So let's break down the costs you might come across. The deposit, mortgage repayment, lender fees, inspection fees, stamp duty, legal costs, moving expenses, home and contents insurance, council rates, and ongoing maintenance and affairs. That seems like a lot, but let me break it down. Meet Tom. We helped him with his home and thought he had it all figured out until he didn't. Tom got in touch with us. He found a $750,000 property and saved up to 10% deposit or 75 grand. He thought he was all set and ready to go, but here's how the actual costs break down. Deposit, 75,000.
00:05:42
Speaker
Stamp duty 10,925. Now this amount will vary on the state and depending on what concessions get available. Tom was based in Queensland and got a partial discount on the stamp duty being your first home buyer. Transfer duty another government fee $3,000. Rough lender fees $500. Building and pest inspection $600. Legal fees $2,000 including searches. Moving costs $1,000 and insurance $1,000 say for the first year.
00:06:03
Speaker
Total upfront costs $93,970. Tom only had $75,000 so he quickly had to find another $18,000 to cover these additional expenses. We also had the choice of increasing his loan a little bit but the lender's mortgage insurance costs were pretty high so he just borrowed some money from family to cover these unexpected costs. The key takeaway here is try and budget a little bit more than what you need. A good rule of thumb if you're in the savings stage is to add another 5% to the value of the property to have some extra savings to cover those costs.
00:06:28
Speaker
Now let's look at some of the ways to ease the financial burden to buying your first home.
Choosing the Right Property and Timing
00:06:32
Speaker
Government schemes. There are a bunch of government schemes that are designed to help first home buyers into the market. The first home owners grant. The first home owners grant is a nationally funded scheme and the amount depends on location. In effect, it's a lump sum into the amount that the government will give you towards building or buying a brand new home that's never been lived in. The grant amounts range from $10,000 to $30,000 depending on the state. There's usually property values and caps that apply. For example, in Queensland, first-home buyers can receive up to $30,000 towards building a brand new home or units that have been lived in under $750,000. And just to be clear, this is not available on existing properties, only on brand new properties, the first-home guarantee scheme. The first-home guarantee scheme, which was previously known as a first-home loan deposit scheme, is a massive game changer for a lot of first-home buyers around Australia. Here's how it works. It allows first-time home buyers to buy with as little as a 5% deposit. In the background, the government guarantees up to 15% of your property value.
00:07:19
Speaker
So it means you don't need to get mum and dad or any friends and family involved to avoid paying lenders mortgage insurance, which will save you literally tens of thousands of dollars. There are some requirements to be eligible. You need to be a first home buyer or not have owned a home in the last 10 years. Your income needs to be under 125,000 if you're buying on your own or 200,000 combined as a couple. And there are a bunch of different price caps depending on your region. Check our website for more details on this. There are some other government initiatives to help you save, mostly around stamp duty concessions for first home buyers.
00:07:47
Speaker
Like I mentioned in the example before, you can save tens of thousands of dollars by not paying stamp duties as a first home buyer. There's the first home super saver scheme. It allows you to save your deposit within your superannuation and pay less tax. If you're unsure on the eligibility, hit us up on our free assessment our website and we can go through what you can potentially get when you're looking to buy your first home. Another massive fear that tackles first home buyers is the fear of making the wrong choice. That can be by choosing the wrong property, buying at the wrong time or experiencing buyer's remorse.
00:08:13
Speaker
And I see this all the time, you might rush out and think, now's the time, I better go buy. You buy a place only to realize that it's too small, the neighbors are noisy and there's issues and you'll want to move out soon after. Let me show you how to tackle this.
Avoiding Buyer's Remorse
00:08:23
Speaker
Meet James. I recently helped him. He's 32 years old from Perth. He spent months going through the finest details, agonizing over every property he looked at online. But at the same time, always convinced there was gonna be a better option around the corner. By the time he got in touch with me, he'd spent the previous two years looking online, having felt like he'd just missed out and missed out, and just pretty much paralyzed by the fear of making the wrong choice. Here's how I helped James work through this. I sent James his buyer's brief. This is a document that we send to a lot of first-time buyers we work with to help set a clear criteria of the must-haves and the nice-to-haves. For James, he was looking for a three-bedroom minimum within 10Ks of the CBD, close to public transport, and ideally under 600,000. The second thing, doing thorough research. Previously, James was just looking casually online.
00:09:05
Speaker
After we set that criteria, we set up his alerts on domain and realestate.com.au. I also walked in through some of our researching processes, which will include some links below. But one of his biggest concern was market timing. And after seeing some crazy property growth in the Perth market, he was wondering is now the right time to buy or is the market about to drop off?
00:09:21
Speaker
It's really not uncommon. One of the first questions he asked is, well, what if the price drops right after I buy? Here's how we tackled that. Firstly, we looked at the current market conditions. We looked at recent sales data in his targeted areas. He noticed that prices had started to stabilize after some pretty rapid periods of growth. This suggests that the market was starting to level out. Next, we looked at his personal finances. He felt like he had some financial stability. He was in a stable job, had a good savings buffer and was comfortable with the repayment amounts we were walking through. At the end of the day, no one's got a crystal ball and trying to perfectly time the market is nearly impossible. The best time to buy is really when you're financially ready and when you find a property that aligns with those needs. In James's case, he decided to buy because he found a property that ticked all these boxes based on his Briars brief. The research showed that the area had good long-term growth potential. He had a view for 10 to 20 years on how he wanted to hold that property and eventually turn to an investment.
00:10:08
Speaker
and he was financially prepared and comfortable with the financial commitment. His plan was to rent out a bedroom or two in a year's time, so once that extra rent came in, he was easily covering
Organizing the Home Buying Process
00:10:16
Speaker
the payments. Now, let's talk about that other fear that crops up right before making an offer, buyer's remorse. That's the worry that you might regret your decision after you've already committed.
00:10:24
Speaker
Let's go through a couple of strategies to try and minimize this. Firstly, take your time. Don't rush your decision, sleep on it if you need to. A lot of agents in the market now trying to rush, rush, rush, get a decision, get an offer, present it to people, and properties are selling. If you're feeling too rushed, that's fine. Take a pause, take a step back, and reassess your options.
00:10:41
Speaker
That's where the bias brief can be really handy because you're going to know if the property meets your criteria, if it's your dream home and you're not going to regret making that decision because you really know what you're looking for. Second thing, get a second opinion. Where possible, get your friends and family involved. A second set of eyes can help you notice things you might have overlooked and really minimize that bias remorse. Thirdly, visualize your life there. Imagine your daily routine. Think about getting ready for work, your commute, how it's going to look. Does it make you feel excited or do you feel depressed about sitting on the train for two hours to get back and forth from work?
00:11:10
Speaker
And lastly, understand that no property is perfect. Every home is going to have some compromises, but focus on what matters most to you. The must-haves rather than the need-to-haves. And if you're still not sure on the property, try and work through these questions. Firstly, does the property meet my must-have criteria? Secondly, is it in my budget? Thirdly, have I done on my inspections, my due diligence and research, and I'm uncomfortable with the property? Fourth, can I see myself living here for at least five years? And fifth, does it have the potential for growth? If you can answer yes to all these questions, you're definitely on the track to making the right choice. And as I said earlier, there's no such thing as the perfect property. It's about finding the right home for you at this point in your life.
Handling Unexpected Home-owner Issues
00:11:45
Speaker
Process overwhelmed. I think this is probably one of the biggest ones. The home buying journey can feel like navigating a maze blindfolded, can't it? But don't worry, I'm here to break it down into really manageable steps. The first step is saving for your deposit. Without your deposit, it's gonna be pretty tricky to buy a home without the help of some parents or a guarantor. If you're still on the saving stage, think about the first home super saver scheme to try and boost up that savings and get you there quicker. If you've got your savings ready, great job. It's time to chat to a mortgage broker about a pre-approval. A lot of home buyers will reach out to us in that process to understand what their budget is. Sometimes it's much more than they realize or sometimes not quite as much. Getting clear understanding your budget will help you move on to the next step, researching and inspecting properties.
00:12:23
Speaker
Now I'd suggest creating a spreadsheet and comparing properties based on your criteria. For some people, I've seen this process take up to two years. So take this home upfront, create your buyer's brief, and then have a clear idea on what you want in that home. Next step, making offers and negotiation. From the chat with your mortgage broker, you should have an understanding of your maximum price and try and stick to that. When you start the negotiation, expect a lot of back and forth as just part of the process.
00:12:44
Speaker
The next step is getting a formal loan approval. This is where your mortgage break will take you accepted contract. Congratulations, you got the home, which need the bank to finally tick it off and see your loans approved and you're good to go. After your loans approved, we'll get the loan documents issued. You'll sign them and you'll be on your way to settlement, which is when you take over ownership of the new home. We've created a detailed home buying checklist that breakdowns all the steps further. Check it out in the link below and on our website. Now, I know that's a pretty brief overview of the home buying process. We have a detailed video on that.
00:13:09
Speaker
But feeling overwhelmed with this process is completely normal. It can look really complex, but it's not insurmountable. Try and take it one step at a time. Just focus on the current stage, not the entire end-to-end process. Use our downloadable checklist to keep you on track of the process, where you're at, and what the next step is. Don't be afraid to ask questions of your mortgage broker and the team that works with you, and celebrate some of the small wins along the way. Each step completed in the home buying process is process.
00:13:31
Speaker
Now let's talk about something many home buyers experience but few discuss openly. Buys remorse and unexpected issues. It's that sinking feeling that you get after making a big purchase or when you encounter problems you didn't anticipate. Buys remorse is more common than you think but let me take you through a couple of real life scenarios and how people cope with them. The noisy neighbor. Sarah bought her dream apartment only to discover her neighbors were night hours with the love of loud music.
00:13:55
Speaker
Here's how she coped. She approached the neighbours politely and reached an agreement on some quiet hours. She invested in some noise cancelling headphones for when she needed extra quiet and tried to focus on the positives of her apartment, like the great location and natural life. Number two, the longer commute. Tom found his commute to work was a bit longer than you anticipated. His solution? He started using his commute time productively, listening to podcasts and audio books.
00:14:16
Speaker
He negotiated some work from home days with his employer to make it a bit easier with a commute in and out and remind himself why he chose the location. He wanted more space and a great community, which was part of his original buyer's brief. The best strategy I can give you to cope with buyer's remorse is focusing on the long term. Remember why you bought the property. Is it a stepping stone to your dream home or a long term investment? Making yours is an important thing too. Personalize your space to make it feel more like a home can make you appreciate what you have rather than the negatives. And I think give it time. Initial disappointments can fade as you settle in and you create more memories. Again, remember, no home is perfect. It's natural to have some doubts. The key is to focus on the positives and try and adapt to the negatives. Now let's talk about surprise problems that can crop up after you move in. Budgeting for maintenance and repairs. A good rule of thumb is to set aside one to 2% of your home's value annually for maintenance and repairs. For a $500,000 home, that's around $5,000 to $10,000 per year. This amount could be lower for an apartment as your strata or body corporate fees can cover some of these ongoing maintenance issues with the external building and the common areas.
00:15:14
Speaker
The thing with houses is they get old, things break, and you just need to accept that. Even on brand new properties, there's going to be some routine maintenance, some minor repairs, like leaky taps and things that go wrong. Try not to get too disheartened by them and fix them where possible. As far as preventative measures, when you're early in the process and you're still trying to make an offer and get a home, you really want to make sure you take time to understand that Billy and Pest report and get thorough inspections. I can't stress this in enough.
00:15:38
Speaker
Back when you're in the making the offer process a couple of steps ago, you really want to invest in a billion pest inspection. If they have any red flags, you can raise that with the current owners now, look to renegotiate the price or potentially walk away if it's too much for you to handle. If you're buying a unit complex too, there's no harm in dropping by on the weekend, change the neighbors in the common area and see if there's any issues that they've heard about in the building.
00:15:58
Speaker
Take time to research the area, more specifically around flood and crime risk, if there's any other area specific issues that you are concerned about. Even look at the sales history of the property. If it's been turning over every six months, there could be some issues there that you're not aware of. Where you can't prevent every issue being proactive upfront can save you a lot of stress and money in the long run.
Overcoming Home Buying Fears
00:16:15
Speaker
We've covered a lot of ground today, talking about the biggest fears that keep first-home buyers up at night. Let's recap some of what we've gone through. Firstly, commitment anxiety. Remember, a mortgage isn't just a debt, it's an investment in future. And owning a home doesn't mean you're stuck. It gives you a stable base to build your life around. Financial fears.
00:16:31
Speaker
Yeah, buying a home is a big financial step, but with proper budgeting and by taking advantage of some of the government schemes, it can be more achievable than you think. Fear of making the wrong choice. By setting a clear criteria, doing thorough research and getting professional inspections, you can make an informed decision you're going to be happy with for years to come. Process overwhelm. Break the home buying journey into manageable steps. Use some of our checklist and lean on the experience of a trusted professionals like us to help navigate the process smoothly. Buys remorse and unexpected issues. Just remember, no home is perfect.
00:16:59
Speaker
focus on the long-term benefits, try and find solutions, and take preventative steps to minimize surprises. I think the most important thing to remember here is that these fears are completely normal. Every first home buyer experiences them to some degree. Don't let these fears hold you back from your dream of home ownership. With the right preparation, knowledge, and support, you can overcome these fears too and step confidently in your new home. I know it can be hard to remember sometimes when you're in the thick of it, but buying your first home isn't just a purchase. It's a milestone in achievement in the beginning of an exciting new chapter in your life.
00:17:26
Speaker
So you ready to take the next step of home ownership? Remember at Hunter Galloway, we're here to support you every step of the way. Check out our website at huntergalloway.com.au to book a free consultation. And until next time guys, see you later.