Property prices are expected to rise throughout 2024, leading first home buyers to employ savvy strategies to secure their first home.
Cost-of-living pressures and sharp increases in interest rates top the list of challenges that have compounded over recent years for first home buyers.
But this doesn’t necessarily mean that buying your first house is out of reach.
Here are four ways on how you can navigate the increasingly competitive real estate market:
1. Maximise Your Savings
Let’s face it, it’s going to take a bit of time to find the right home.
While you research and shop around, why not let your hard-earned dollars generate a few more dollars for you?
One way to do this is by opening a Cash Manager Account (CMA), which helps maximise your savings.
You get daily interest on your savings and have the benefit of accessing your cash when you need it.
Even better, you can earn interest on balances above $10,000 and below $5m.
This means, that unlike some banks who stop applying interest once you reach $100,000, a Cash Manager account continues earning interest right up until the $5M mark – which effectively means less hassle with having to move money around by not having to split savings accounts once you reach a certain limit.
2. Getting Finance Pre-Approved
First and foremost, it’s essential to have a clear idea of your budget based on your borrowing capacity and desired maximum mortgage repayments.
Having finance pre-approved with a confident, credit-assessed preapproval is crucial.
This pre-approval gives buyers the confidence to bid at auctions and make offers with certainty.
It ensures that when they find the right property, they can act quickly and decisively.
So, first things first: speak to a home loan specialist at your bank, or a mortgage broker, who’ll walk you through what you need to do.
3. Put Your Own Research Skills to Good Use
Having a clear plan of where to search and what types of properties to look for within your budget is essential.
There are several methods suggested for achieving this, one of which is to attend auctions and note property attributes such as land size, condition, bedroom count, orientation, location desirability, and distance from public transport and shops.
4. Embrace Government Support
For those who may have limited savings and are keen to get into the property market, government support may be the way to do it.
For example, the federal government’s First Home Guarantee allows first home buyers to purchase their first home with a deposit as low as 5%, without the need to pay Lenders’ Mortgage Insurance (LMI).
LMI is a single insurance payment that safeguards the lender if you’re unable to make your home loan repayments.
Typically, you’ll need to pay LMI if you’re borrowing more than 80% of your property’s value.
However, with the First Home Guarantee, the Government will support your home loan, acting as a guarantor so you won’t have to pay LMI.
So while you’re looking for the right place to get your foot in the door, an AMP Cash Manager account is a great option with no ongoing fees and great rates on values above $10,000 and below $5M – plus instant access to your money when you need it.