First Home Buyer Mistakes When Buying an Apartment

As a primary teacher considering buying your first home, purchasing an apartment can be an excellent entry point into the property market. However, there are specific considerations and potential pitfalls that first-time buyers should understand before applying for a home loan.

Understanding Your Financial Situation

Before you begin searching for apartments, it's crucial to assess your financial situation thoroughly. Your borrowing capacity will determine the loan amount you can access from banks and lenders across Australia. Consider these key factors:

• Your current income and employment stability as a teacher
• Existing debts and monthly expenses
• Available deposit amount
• Your loan to value ratio (LVR)

Most lenders require a minimum 5% deposit, though having 20% or more can help you avoid lenders mortgage insurance (LMI). This insurance protects the lender if you default on your loan and can add thousands to your overall costs.

First Time Home Buyer Programs and Schemes

As a first-time buyer, you may be eligible for various government assistance programs. The Home Guarantee Scheme allows eligible buyers to purchase a home with as little as a 5% deposit without paying LMI. Additionally, first home owner grants (FHOG) and stamp duty concessions vary by state and can provide substantial savings.

First time home buyer schemes often include:

• Reduced or waived stamp duty
• Grant payments for new constructions
• Access to shared equity programs
• Specialised lending packages with interest rate discounts

Apartment-Specific Considerations

When buying your first home as an apartment, there are unique factors to consider that don't apply to houses:

Body Corporate Fees: These ongoing costs cover building maintenance, insurance, and shared facilities. Factor these into your budget alongside your mortgage repayments.

Building Inspections: Obtain both a standard building inspection and a strata report. The strata report reveals the financial health of the body corporate and any planned major works.

Rental Yield Potential: Even if you're buying to live in initially, consider the apartment's potential as your first investment property in future years.

Interest Rate Options and Loan Structures

When applying for a home loan, you'll need to choose between variable interest rate and fixed interest rate options. Variable rates fluctuate with market conditions, while fixed rates provide certainty for a set period. Many borrowers opt for a split loan combining both.

Consider these loan features:

• Offset account to reduce interest charges
• Redraw facilities for accessing extra repayments
• Interest rate discounts for professionals in education
• Flexible repayment options

The Application Process

The streamlined application process typically involves several steps:

1. Get pre-approved: This gives you a clear budget and demonstrates serious intent to sellers
2. Gather documentation: You'll need bank statements, payslips, tax returns, and employment verification
3. Submit your application: Your mortgage broker can access home loan options from multiple lenders
4. Property valuation: The lender will assess the apartment's value
5. Final approval and settlement: Complete legal requirements and take ownership

Having your documentation organised beforehand can expedite the process significantly.

Common Mistakes to Avoid

Many first-time apartment buyers make these errors:

• Failing to budget for body corporate fees and special levies
• Not researching the building's maintenance history
• Overlooking future growth potential in the area
• Focusing solely on interest rates rather than total loan packages
• Not considering investment loan options if circumstances change

Professional Support Makes a Difference

Working with experienced mortgage brokers who understand teachers' unique circumstances can provide significant benefits. They have access to banks and lenders nationwide and can identify packages specifically designed for education professionals.

A knowledgeable broker can help you understand the various loan products available, explain complex terms like LVR calculations, and guide you through both residential and investment loan application processes.

Buying your first apartment is a significant milestone that requires careful planning and professional guidance. With the right preparation and support, you can confidently enter the property market and secure a loan that suits your needs as a teaching professional.

Call one of our team or book an appointment at a time that works for you to discuss your first home loan options and start your journey towards apartment ownership.