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First Home Buyers Guide for Victoria

First Home Buyers Guide for Victoria


A complete guide to buying your first home in Victoria

Buying a first home can be a daunting, difficult process. You may have heard of certain concessions to help get your foot on the ladder as a first-time buyer, but could be uncertain as to what they are. We at LJ Hooker will help guide you through the finer points of buying a first home in Victoria, from checking out potential houses, to sealing the deal.

Three ways to buy your first home in Victoria

Private Treaty

Purchasing a home by private treaty is a common way to buy. The vendor will choose a fitting price, and the real estate agent will then attempt to arrange a sale with interested parties for as close to the figure as possible after negotiations.

Tender

Buying a property through tender involves making a single offer, complete with a deposit of up to 10 per cent of the price. It's then up to the vendor to accept or reject the offer.

Auction

As with any auction, buying a house means meeting a reserve price - which is what the home must sell for at minimum. When bids climb higher than the reserve (as they often do) the largest bid wins. Once the auction is over, the winner is required to sign the contract there and then.

You can find out more by visiting the Victorian government's website for first home owners.

Figuring out finance

First things first - you'll need to know how much you can borrow. A good place to start is to estimate how much of a deposit you can save - 20 per cent of the usual price is the norm. You can secure a loan with a smaller deposit, but this can result in restrictive conditions being put on your mortgage. It's best to save as much as you can.

For example, a smaller deposit could see you hitched with lenders' mortgage insurance - sometimes, prohibitively expensive. Take a look at the MoneySmart website for more information, or speak to the team at LJ Hooker Home Loans, who can guide you through the process from start to finish.

The Victoria First Home Owner Grant

As with the other Australian states, Victoria has special monetary offers for those buying for the first time. This is called the First Home Owner Grant (FHOG), and it allows you AU$10,000 towards your first home. Be sure to check out your eligibility and other factors of the grant by having a read of its webpage. There are a few terms and conditions of getting a FHOG that may be of interest to you. For example, your home can be a house, apartment, unit, or anything in between, but it must be valued at $750,000 or less. You must be an Australian citizen or permanent resident, and never have received an FHOG before to take advantage of the grant, and you must not not have owned a home prior to 1 July 2000.  
 

What are the hidden costs of buying your first home in Victoria?

When buying a first home, it's accepted that you'll be paying certain fees along the way. Let's take a look at a few of them.
  • Stamp duty is the most obvious fee you'll have to pay. This tax, imposed by the Victorian government, is based on the value of the house you're buying. This means that it can be hugely variable, so the state's stamp duty calculator is a valuable tool in this instance.
  • Victorian homes are exempt from land tax, unless they are used as an investment property or a holiday home. You can find out more about land tax on the State Revenue Office's website.
  • Legal fees can range from anything between $500 and $3,000, depending on the complexity of contracts.
  • Applying for a loan can incur a fee up to $1,000, but that's rare. Sometimes, the lender will waive the fee.
  • Having a home independently valued will set you back around $300-$500.
  • Should you borrow more than 80 per cent of your new home's asking price, lenders mortgage insurance could be charged. This one-off payment can amount to $10,000.
  • A house inspection will cost around $300-$400. A strata report is a little less, at $200.
  • Council rates and strata fees begin from settlement, and will set you back between $500 - $800.
By speaking to the expert team at LJ Hooker, we'll talk you through these fees in more detail.

Choosing your first house in Victoria

Property reports and research


Taking the time to research the Victorian property market will give you a better understanding of housing availability, how much it will cost, and other options you'll have as a first-time buyer.
  • The LJ Hooker Open Market Report will give you a handy overview of the property market in Victoria. Your local LJ Hooker branch can also provide you with information specific to your needs.
  • The CoreLogic RP Data and Australian Property Monitor websites will show you the trends and current price shifts.
  • Country-wide websites including domain.com.au and realestate.com.au can show you precisely what's up for sale, and its asking price.
By preparing properly, you'll be able to get a clearer idea in mind of your ideal home. Whether it's a studio flat in a city centre, or a larger house in the suburbs, proper research can help you choose.

Where should you look for a home in Victoria?

As for the actual property search in Victoria, contacting your local LJ Hooker real estate agent is a great place to start. They know the local market intimately and would love to help you find your dream home.

As well as the sites like Domain mentioned earlier and realestate.com.au, local and state newspapers can be very useful for finding more information. More affordable suburbs tend to be on the fringes of the city or in regional areas, but the advice and experience of a professional agent can help you find a first home in places you had not thought to look.

Are house inspections important?

They are. This is because you’ll learn a whole lot more about your home than aesthetics alone, and it will also place you in a stronger bargaining position when negotiating price with the vendor.

If you go ahead without inspecting a house first, you're at risk of ending up with a home that needs big renovation - at yet more expense. When having your home inspection, ensure that you use a professional registered with the Victorian Building Authority.

Contract of sale

There are few pieces of paper more important than the contract of sale when buying your first house in Victoria. It includes vital details about the transaction, such as:
  • Contact details (including addresses) of the seller, buyer and others involved in the sale,
  • How and when the deposit is paid, and where it will be kept,
  • The time and date of the final settlement, and when the title will be transferred,
  • The length of the cooling-off period (in Victoria, this is three business days),
  • Other conditions of the sale, such as whether or not it is subject to finance.
The contract of sale can seem a daunting document, so it can be worth hiring a solicitor to help you sift through it. This will help iron out any difficulties that may arise.

Finalising the sale

Private treaty

Once you've found the perfect property, you'll want to make an offer. Ensure that you have figured out how much you are willing to pay, as well as what you can afford. are you going to go in with a high offer, or keep low low? Your tactics are up to you! Each offer, and counteroffer, has to be made in writing, signed by you. The agent is must pass on all offers to the vendor as soon as possible - this is the law. 

The seller will then choose whether or not to accept the offer. Often,  the price will be negotiated until both parties agree on a final figure. Once a price has been agreed, contracts of sale will be signed and exchanged, and the deposit will be paid. Finally, the settlement process begins, and the three-day cooling off period is triggered once you have signed. Take this time to go over the contract of sale again. 

Auction

When participating in a Victorian auction, you must pre-register with the agent first. An auctioneer will lead proceedings, with all bids recorded. Before the action gets underway, the seller will choose a reserve price, which is the bare minimum that the house will sell for. more often than not, the bids will go higher than the reserve, and the winning bid will have to sign the contract on the day. You'll also have to pay the deposit, and will lose the right to an inspection or cooling-off period.

Contract exchange and settling the sale

Once the contracts are exchanged, settlement begins. It's during this time that things are finalised - paperwork checked, finance approved if it hasn't yet been, and last preparations for the move begun. You are not permitted to move in until after your settlement date, which typically falls between 30 and 90 days after the period has begun.

Buying your first home in Victoria needn't be the headache that it may seem. With help from the experienced, professional team at LJ Hooker, you'll sail through it, so contact us today to find out what we can do for you.
 
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Further Reading
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    Understanding the different ways you can buy real estate is an important step when buying a property. Here is a look at the four main methods and a deep dive into buying at auction and via private treaty, the two most popular ways to buy in Australia. We review the auction process from the beginning right through to what happens on...

  • Cost of Buying Real Estate


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  • Getting a Home Loan


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