Newspaper article The Daily Mercury (Mackay, Australia)

Daunting Days for First Timers

Newspaper article The Daily Mercury (Mackay, Australia)

Daunting Days for First Timers

Article excerpt

UNLIKE most first times, when it comes to buying that first home, future owners need to get it right.

Yet almost two out of three first home buyers find the process confusing, according to's latest Consumer Intentions Study.

About 15% of those surveyed were "extremely confused" by the process, while 49% were "somewhat confused".

Property finance expert Bruce Brammall looked at what puzzled first home buyers.

Is there a "right" deposit amount? Not really. There's an ideal deposit amount which is 20% or higher, Mr Brammall says.

"The best way of doing it is to have 20% of the cost of the property, but realistically many first home buyers are not going to have that," he says.

"The major issue (with a deposit of less than 20%) is that you're going to have to pay Lenders Mortgage Insurance (LMI) and the more you borrow the higher the LMI is."

LMI is a fee charged by finance lenders, generally applicable on high loan terms.

"If you borrow 90% of the property's value it (LMI) can really kick up," Mr Brammall says.

"But it's almost unavoidable that first home buyers end up paying LMI. There aren't too many that have 20% plus stamp duty. Most first home buyers will have to pay LMI and I don't think that should stop them (from buying a property)."

So if you've only saved a 10% deposit and the property of your dreams is on the market, should you go for it?

Be realistic, Mr Brammall says. "If you wait until you've saved 20% of the property's value you might have to save another two or three years, and what's going to happen to property prices in that time?"

Legal requirements: What legal fees do you need to pay? Most buyers will need to hire a conveyancer who may also be a solicitor, to help with the legal requirements of the sale.

Conveyancing is the change of ownership of a property from one person to another. A conveyancer is somebody who facilitates this process, who may also be a solicitor.

For a conveyancer, it's best to budget for around $800 to $1,500, Mr Brammall says.

Many states have different rules and most offer concessions or bonuses on stamp duty, depending on the type of property purchased and the sale price. …

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